Customs, Excise and Gold Tribunal - Delhi
Surya Prabha Sales Corpn. vs Collector Of Customs on 4 January, 1993
Equivalent citations: 1993(67)ELT571(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. This appeal has been filed against the order dated 4-5-1990 passed by the Collector of Customs (Preventive), West Bengal Customs House, Calcutta by which he had ordered confiscation of a consignment of ball bearings absolutely under Section 111(d) read with Section 111(j) of the Customs Act, 1962. The brief facts are that the appellants imported a consignment of 17 cartons of ball bearings against the Import Licence issued by the Dy. Chief Controller of Imports & Exports in favour of Mount Abu Agro Industries, Gandhinagar, Distt. Sirohi, Rajasthan. The appellants, herein, effected the import on the basis of letter of authority from Mount Abu Agro Industries, in terms of para 118(1) of the Hand Book of Import Export Procedures, 1985-88. The goods on import were assessed to duty on the Bill of Entry filed by the appellants' Customs House Agents and the duty amount of Rs. 3,53,333/- was also paid thereon. However, before the goods could be physically examined and cleared, the Dock Intelligence Unit of the Customs House seized the consignment in pursuance of certain inquiries initiated by the Customs House. This was based on the seizure of 4 cartons of ball bearings from the consignment in the Docks by the DIU from a lorry which was found to have been loaded into the lorry on a forged loading permit from the Calcutta Port Trust. Subsequently, all the 17 cartons were detained and seized for action under Section 110 of the Customs Act, 1962. The Customs House conducted certain inquiries at Sirohi, Rajasthan where the licensee, in whose name the import license had been issued, namely, Mount Abu Agro Industries, was supposed to be located. The inquiries revealed that there was no such firm at the address given. The license produced was an Actual Users License and the Customs House inquiries revealed that the SSI Certificate on the basis of which the Actual Users License was issued, had been fraudulently obtained since the District Industrial Authorities informed the Department that they had not issued any such Certificate. The Customs House found that the ball bearings imported were restricted goods on the Import Policy 1985-88 and were covered by Serial Number 107(a) of Appendix 2 Part B of the Policy. It is a restricted item import of which is allowed only against an Actual Users License. The Customs House, therefore, issued show cause notices to various parties including the appellants for confiscation of the goods since they had been imported against fraudulently obtained Actual Users License. The proceedings culminated in the impugned order of the Collector. In his order, the Collector held that the appellants, herein, acted as an agent on behalf of M/s. Mount Abu Agro Industries, who are the license holders. The Collector also held that there is nothing on record to suggest any role played by the present appellants in obtaining the license fraudulently and it appeared that they acted in good faith. He also observed in the order that his order in this case is without prejudice to the right of the appellants, herein to take any legal action against either M/s. Mount Abu Agro Industries or Shri Mohan Kumar, proprietor of that firm to compensate them for importation of the goods and other charges incurred by them in this regard. He also ordered that the amount of duty paid by the appellants, as customs duty, be refunded to them.
2. Shri Sunder Rajan, Ld. Consultant appeared for the appellants and contended that the Collector ought to have released the goods to the appellants, who had obtained a proper letter of authority for the import as per the Import Policy. The Ld. Consultant also cited and relied upon the Supreme Court decision in the case of East India Commercial Co. Ltd., Calcutta v. Collector of Customs, Calcutta reported in 1983 (13) E.L.T. 1342 (S.C.) to say that the license, even if obtained by fraud, is only voidable and not void and that and it remains valid in the case of transfree till it is suspended. It was submitted that in this case license has not yet been cancelled. He also relied upon, in this context, the Calcutta High Court decision in the case of Chemi Colour Agency and Anr. v. Chief Controller of Imports and Exports and Ors reported in 1987 (30) E.L.T. 175 (Cal.) to say that suspension or cancellation of import license, subsequent to the import of the goods, will not make the license invalid to cover the import. He also relied upon the Bombay High Court decision in the case of Shivshankar Tilakraj v. Union of India and Ors reported in 1987 (28) E.L.T. 342 (Bom.) to say that the Customs authorities are not empowered to enquire into the genuineness of the license.
3. Shri V.K. Sharma, Ld. SDR appearing for the department, contended that the department has made an enquiry with regard to the license and had found that it had been fraudulently obtained by producing bogus SSI Certificate which has been confirmed by the District Industries Authorities of Sirohi, Rajasthan. Therefore, the license is void ab initio. The licensee, therefore, having obtained the license by fraud, cannot authorise another and transfer ownership and, the Ld. SDR submitted the licensee cannot confer a better title on another than what he himself has. Rebutting the arguments of the Ld. Consultant that the order of the Collector imposing penalty on Mohan Kumar, proprietor of Mount Abu Agro Industries, would show that the person really existed as the proprietor of that firm, the ld. SDR submitted that such penalty was by way of caution only, in case he surfaces later. He, further, relied upon the decision in the case of Omex (India) v. Collector of Customs reported in 1991 (51) E.L.T. 573 (Tribunal) wherein, under similar circumstances, the Tribunal held that the import was unauthorised and the order of confiscation is in order. He also relied upon the case law reported in 1987 (29) E.L.T. 340 in the case of ESPI Industrial Corporation v. Collector of Customs, Bombay to say that the Customs authorities can enquire into whether the importers are actual users. In the same context, he also relied upon the decision reported in 1990 (47) E.L.T. 424 in the case of Plastic & Metals (P) Ltd. v. Collector of Customs. The Ld. SDR submitted that once the goods have been found to have been imported against fraudulently obtained license, the goods become offending goods liable to confiscation and the appellants have not been vested with rights for seeking clearances of the goods on the basis of import license which is invalid ab initio.
4. Submissions made by both the sides, herein, have been carefully considered. The question is whether the import against the import license, produced in this case with the letter of authority, was valid or not. On perusal of the import license, photo-copy of which is available on record, shows that it is issued to small scale industrial unit, which is the class of importer for license. Description of the goods is that the goods imported against this license shall be used only for servicing and maintenance whether free or at price of the machinery, equipment manufactured by the licensee. The appellants, herein, had sought to import the goods on the basis of a letter of authority for which the appellants were to get their service charges plus interest on their investment of money, but it has been found by the department the SSI Certificate, on the basis of which the actual user license had been issued was a bogus Certificate and the District Industrial Authorities at Sirohi, Rajasthan also confirmed that they had issued no such Certificate. The department had, further, found that there was no such firm of the name of Mount Abu Agro Industries at 25, Gandhi Nagar, Abu Road, Rajasthan. Therefore, it is clear that the import license had been obtained by fraud. The appellants' arguments that such license, obtained by fraud, is voidable and not void, that at the time of import of the goods it had not been cancelled, and that, therefore, they should be allowed to clear the goods on the license, is not acceptable because there is a Supreme Court decision contra in the case of Fedco (P) Ltd. and Anr. v. S.N. Bilgrami and Ors. reported in AIR 1960 (S.C.) 415. In that case, decided by a 5 Judges Bench presided by the Chief Justice of India, it was held that the entire scheme of control and regulation of imports by licenses is on the basis that the license is granted on a correct statement of relevant facts and that if the grant of the license was induced by fraud or misrepresentation, that basis disappeared. It was also held that it would be absolutely unreasonable that such license should be allowed to continue. It is, further noted that in another case before the Madras High Court in the case of J.B. Trading Corporation v. Union of India reported in 1990 (45) E.L.T 9 (Mad.), the East India Commercial Corporation's case was cited by the petitioners, but the Court on the other hand, quoted with approval the Calcutta High Court decision in the case of S. Mohd. v. Assistant Collector of Customs reported in AIR 1970 (Cal.) 134 in which the Bilgrami case decision of the Supreme Court (supra), was followed by the Calcutta High Court. Yet another aspect which needs to be noted is that the decision of the Supreme Court in the case of East India Commercial Co. was distinguished by the Supreme Court in the case of Abdul Aziz v. State of Maharashtra reported in AIR 1963 (SC) 1470 holding that the earlier decision of the Supreme Court was under the earlier Import Trade Control Notification of 1948 whereas the provisions of the subsequent Import (Control) Order, 1955 were wider.
5. Therefore, it is found that the view taken by this Tribunal in the Omex (India) case cited by the Ld. SDR finds support in the Supreme Court decision in the case of Fedco (P) Ltd. (supra). In the Omex (India) case also, the factual position was same. In that case as well the license was obtained through fraud and misrepresentation in the name of a party which was not in existence. The license was operated upon by a letter of authority holder and at the time of import, it had not been suspended. The Tribunal held that if a license is issued in the name of a person whose existence is not there or if it is in the name of dead person, it cannot be considered to be valid and it has to be deemed as void since its inception. It may also be noted that the Bombay High Court in the case of Roche Products v. Shri N.B. Sonavane, Collector of Customs, Bombay -1987 (32) E.L.T. 547 (Bom.) had held that confiscation of illegally imported goods after observing there was an unauthorised import under a false declaration of actual use is within the powers of Customs Authorities. Therefore, in this case the Collector was right in holding that the goods imported against actual users license obtained fraudulently by the lincesee cannot be allowed clearance to the appellants who are the holders of letter of authority from that licencee and the confiscation of the goods is in order. The appeal is rejected.
6. The Cross Objection by the department is only in the nature of comments on the appeal and as such it is mis-conceived and, therefore, rejected.