Customs, Excise and Gold Tribunal - Bangalore
Sri Subramanyam Iyyer Ratnam vs Commissioner Of Customs on 19 July, 2002
Equivalent citations: 2002(83)ECC715, 2002(150)ELT504(TRI-BANG)
ORDER S.S. Sekhon, Member (T)
1. The appellant filed the Bill of Entry No. 0896, dated 6.3.2002 for clearance of one used BMW 523 Car of 1999 make, for the clearance under OGL In the absence of the Import Documents, the appellant filed the Bill of Entry under Section 46 of the Customs Act for the purpose of classification and valuation. The intention was to get the value appraised in the absence of a Commercial invoice. They had claimed the clearance of the above Car under Freely importable in terms of 4(RE-2001) 1997-2002, dated 31.3.2001, under the appropriate Heading of the Tariff. The car was examined and as per examination report it was found to be a car of Model BMW 523 and furthermore, the Speedometer Reading as 002303 Mils. The proof for valuation was also accepted by the department. The produced certificates, as required, and also submitted to the department that they had complied with the Notification No. 4(RE-2001) 1997-2002, dated 31.3.2001 and requested to adjudicate the same without issuing any show cause notice. During the personal hearing the appellant submitted, he had complied with the above Notification and he was not aware of the Import of cars through Customs Ports other than Mumbai Port and requested to release the car.
2. The Commissioner of Customs ordered absolute confiscation of impugned car valued at Rs. 10,75,187 CIF under Section 111(d) of the Customs Act, 1962
3. The Grounds in the appeal are:
(a) The appellant had not attempted to import any of the goods into India in contravention of any rules and regulations prevailing in India.
(b) The Commissioner purportedly relied upon extraneous considerations which had no nexus of any kind whatsoever in with the goods brought in the instant case. This shows the non-application of mind on the part of the Commissioner. The goods brought for his bona fide use and for the use of his family members, purchased out of his hard earned money and that there is no loss of any foreign exchange in the import of the car.
(c) The submissions made by the appellant before the Commissioner at the time of personal hearing was not recorded in the manner known to law and order suffers from vice of non-application of mind.
(d) The value fixed by the department for the above said car is very high and the same has been fixed without there being any basis and even without taking note of the practice prevailing and has wrongly come to the conclusion that the appellant had committed an offence for which there is no proof or reasoning given in the order. The confiscation is not justified when assessee acted according to prevalent practice and the Customs relied upon in the case 7993 (63) ELT 119. In the present case the car was not prohibited goods and it is mandatory on the part of the Adjudicating authority to release the goods on payment of fine in terms of Section 125 of the Customs Act, 1962 and relied upon M/s. Mohini Bhatia where it has been held that when the goods are not prohibited for import at the relevant time and an option had given to the importer to redeem on payment of fine which does not exceed the Market Price of the goods less duty payable thereon as per Section 125(1) the Adjudicating Officer is under a mandatory duty to give option to the person found guilty to pay fine in lieu of confiscation and the Section 125 leaves option to the officer to grant the benefit or not so far as the goods whose import is prohibited but, no such option is available in respect of the goods which can be imported has held by Hon'ble Division Bench of the Andhra Pradesh High Court. The Hon'ble Supreme Court in the case of Hargovindas K. Joshi, it has been held that absolute confiscation of the goods by Collector without considering question of Redemption on payment of fine although discretion to do so and further it has been held that undoubtedly the authority under law to give an option to the importer to pay such fine as was considered appropriate by him in lieu of confiscation of the car. They relied upon:
(i) Rajesh Agarwal v. CC Calcutta .
(ii) Ismail Kunhl Abdulla v. CC Mumbai .
(e) The appellant states that, here is a case, where the bill of entry has been filed as per Section 46(1) and valuation (determining of price of imported goods) Rules, 1988, the normal principle for arriving at a proper price is in accordance with transaction value as per the Provisions of the Section 14 of the Customs Act, 1962 and this has not been followed.
(f) Material documents collected by the department to make out a case against them (appellant) has to be given, but this was not given.
(g) The Commissioner of Customs erred in adopting the conditions governing the second-hand used car in 4(RE) 1992-97 dtd. 31.3.2001. Such a stipulation of the functional parts as in a new car, need not necessarily by/will not be available in second-hand or used cars. It is a matter of customary and practice to adopt the deduced value method under Rule 8 of CVR 1988 and the acceptance of Transaction Value is very rarely accepted in respect of second hand/used cars. Hence, there is an apparent contradiction in the impugned order. It is the normal commercial practice that the price list is applicable to all dealers world wide but discounts vary.
(h) The appellant submit that, he had satisfied all the conditions of Notification No. 4 (RE-2001) 1997-2002, dtd. 31.3.2001 and furthermore, the above imported car having a Speedometer and the Commissioner of Customs himself had admitted that the appellant had complied with must of the provisions of the Notification 4(RE-2001) 1997-2002, dtd. 31.3.2001 and hence, the car must not be confiscated absolutely.
(i) The appellant in all other ports where the car been imported were allowed to be released on Redemption Fine even though the car been imported in ports other than Mumbai Port and the appellant importing the car in ICD, Bangalore, is only a non-awareness of the same.
4. We have heard both sides and find:
(a) The Commissioner has ordered the absolute confiscation of the car under import, without arriving at any reasons as to why the Redemption Fine cannot be considered and/or granted. The Hon'ble Supreme Court in the case of Hargovind Das K. Joshi , had observed that the Additional Collector of Customs in that case had assumed that he was bound to confiscate the goods because he is not adverted to that aspect in that order. The Hon'ble Supreme Court held that he undoubtedly had the authority under the law to give an option to the importers to pay such fine as was considered appropriate by him. Therefore, the Hon'ble Supreme Court was of the opinion that the order for absolute confiscation passed in that case was required to be remitted back to the Collector for that limited purpose of whether or not to give an option to the importers in that case. Following the same, we would also set aside this order and remit the matter back.
(b) We find that motor vehicles have been allowed for clearance on Redemption Fine for infringements of the ITC Public Notices for the last so many years at various Customs stations all over India. Examining this plea of established practice and precedent treatment of imports of cars we find:
(i) Hon'ble P.B. Mukherjee in the case of Mercantile Express Co. Ltd. 1978 ELT J552 had held:
8. The Customs now say that they are not bound by their previous decision whether the doctrine of precedents applies in its full rigor to Administrative Agencies and officers, and whether a reasonable latitude should be given to them or administrative tribunals to correct or modify their previous decisions may still remain a debatable controversy in the world of law; nevertheless I am clearly of the opinion that neither the Appraiser nor the Collector of Customs can change his mind from time to time in respect of the same article by assessing them in the case of one importer under one section and the assessing item for another customs to do so will lead to utter confusion in the very basis and principles of taxations and grave uncertainty in business and foreign trade. Its more serious result will be the most unfair discrimination of taxes in respect of the same goods with regard to different importers. That cannot be permitted by the Constitution which insists on the equality of law as one of its fundamental guarantees. I am therefore inclined to hold that the Customs are bound by their own precedents in administration taxing statutes involving the very basis of taxation in respect of a particular article and not leave it to them to modify their own previous decisions but to leave it to them to apply to Courts or Parliament or Legislatures as the case may be to put the law beyond doubt....
This view of binding effect of precedent treatment of their own precedents in administration of Taxing Statutes has been approved in subsequent decisions.
(ii) In the case of S.S. Kothari the Calcutta High Court while examining the conduct of the Commissioner as Adjudicating, and ordering absolute confiscation, of a Motor Car, imported without a licence, when the practice was to allow the import of similar cars on Redemption Fine, upheld the view of the Calcutta High Court in para 8 (extracted herein above) in the case of Mercantile Express Co. (supra) by holding:
15. No doubt the Court was concerned with the interpretation of the tariff item, but the principles laid down therein are equally applicable in the case like this. The issue involved here relates to the taxing statute or the fiscal enactments and the Customs Authorities are bound by their previous decisions. If the authorities have on previous occasions allowed the importer to release the imported car upon payment of the fine in lieu of confiscation, they cannot unless there are compelling reasons, depart from the previous decisions.
(iii) This view of binding nature of Administrative Precedent Treatment of imports, has been considered by the Division Bench of Calcutta High Court in the case of CC, Calcutta v. Uday Engineering Enterprises and Ors. upheld the decision in the case of Mercantile Express Co. (supra) and distinguished it by holding this decision is clearly distinguishable for the simple reason that in that case unlike the present one there was no dispute about the nature of goods, and upheld that a 'factual error could always be corrected.' In the case before us there is no factual dispute brought on record, regarding the nature of goods under import herein. No contrary decision has come to our notice. Therefore, being bound by the Calcutta High Court decisions, we cannot approve the following finding arrived at by the learned Adjudicator to order absolute confiscation.
(iv) And also we find that a reasonable expectation of the present importer could not be frustrated by the absolute confiscation ordered as we find that the 'principle of legitimate expectation' as laid down in Halisburry Law of England, Edition Vol. I(1) Para 81 has been relied upon by the Madras High Court and referred to as:
A person may have a legitimate expectation of being treated in a certain way by an administrative authority though he has no legal right in private law to receive such treatment the legitimate expectation arises either from a representation or promise made by the authority including and implied representation or from consistent past practice.
(underlining supplied) Ref. Sunshine International v. CC Madras 1993 (42) ECC 282 (Mad) The Hon'ble Madras High Court further held in this case that Customs authorities cannot take a different view with regard to import of some goods as to whether to confiscate completely or to grant an option to pay a fine. We therefore, would order, on the same lines, as regards the treatment to be meted to imports of cars. We find the Tribunal in the case of Shah Tools & Bearings Co. v. Commissioner of Customs after considering Calcutta High Court decision in the case of Uday Engineering Enterprises and Ors. found and held:
8. It was also held that if erroneously such releases were made at an earlier stage, they cannot penalize such importation at a later stage until the error is found and notified to the importers.
If absolute confiscation of cars was warranted, a Public/Trade Notice should have been issued of warning the importers who were expecting a 'Liberal Trade Control Regime' to mean release/free import of cars and not absolute confiscation thereof. No such notice was issued. Since in the present case we find that the infringement of the ITC Public Notice arrived at are curable defects at the speedometer in miles could be ordered to be mutilated by its removal and replaced by a speedometer in Kilo meters and as regards the non-import at the Port of Bombay and other minor procedural infractions. The subject car should be released on a nominal Redemption Fine as we cannot uphold the absolute confiscation of the same in the facts of this import.
(c) Since the lower authority has not indicated any market price, we are not able to determine the quantum of margin of profit and hence the fine and penalties if any. We would leave that on the Commissioner to decide the same in the remand proceedings being ordered herein.
(d) The appellants plea on valuation is kept open.
5. In view of our findings, we set aside the order and remit the matter back for de novo adjudication to re-determine the value, the fine and penalty, if any, which could be levied in this case.
Appeal disposed of in above terms.