Customs, Excise and Gold Tribunal - Delhi
Hasmukh Dalpatrai Ganatra And Anr. vs Collector Of Customs on 4 December, 1986
Equivalent citations: 1987(11)ECR249(TRI.-DELHI), 1987(29)ELT81(TRI-DEL)
ORDER V.T. Raghavachari, Member (J)
1. M/s. Export Enterprises, of which Shri Hasmukh Dalpatrai Ganatra is the owner, had imported 992 takas of synthetic fabrics and cleared them under Bill of Entry No. 003415 dated 12-7-1982, the import being covered under 4 REP licences. Subsequently 79 takas were seized from the appellants, the ground being that they were out of the stock imported as aforesaid and that the provisions of Chapter IV-A of the Customs Act had been contravened in respect thereof. On adjudication the Additional Collector ordered absolute confiscation of the seized goods under Section 111(p) of the Customs Act and imposed personal penalty of Rs. 75,000.00 on Shri Ganaffa, Rs. 25,000.00 on M/s. Export Enterprises and certain penalties on others. An appeal was preferred to the West Regional Bench of the Tribunal against the said order by Shri Hasmukh Dalpatrai Ganatra and M/s. Export Enterprises. After hearing both sides two separate orders were passed by the Members of the West Regional Bench in which they had indicated the points on. which they were not in agreement. Thereupon papers were submitted by them to the President under Section 129-C(5) of the Customs Act. The President of the Tribunal under order dated 14-8-1986 constituted the present bench for hearing submissions on the points of difference arising under the orders of the Members of the West Regional Bench. The president had indicated that since the points of difference had been differently formulated by the two Learned Members of the West Regional Bench the Members of this Bench will formulate the points of difference on which submissions are to be heard.
2. Accordingly members of this Bench formulated the points of difference as follows :
(i) Whether, on the facts and in the circumstances of the case, the 79 takas in question were prohibited goods (for purposes of confiscation without option for redemption) as held by Shri Dilipsinhji, Member (T) or whether they were not prohibited goods as held by Shri Hegde, Member (3)?
(ii) Whether, on the facts and in the circumstances of the case, the levy of penalty of Rs. 75,000.00 under Section 112 of the Customs Act on Shri H.D. Ganatra was justified or Not?
(iii) Whether, on the facts and in the circumstances of the case, any penalty could be imposed on Shri H.D. Ganatra, under Section 117 of the Customs Act as has been done in the order of the Member (Judicial)?
3. Accordingly, after issue of notice to both sides, we have heard Shri S.P. Luthra, Advocate for the appellants and Shri K.C. Sachar for respondents.
4. The confiscation of the seized goods had been ordered under Section 111 of the Customs Act. Both Members of the West Regional Bench have held that the seized goods were liable for confiscation. Hence Shri Luthra himself does not question before us the correctness of the said conclusion. The confiscation has been ordered since no proper accounts as required to be kept under the provisions of Chapter IV-A of the Customs Act had been maintained in connection therewith. The confiscation was therefore under the provisions of Section 11 Up) of the Customs Act. The question is whether in respect of such goods confiscation of which had been ordered under Section 111(p) of the Customs Act an order for penalty could be passed under Section 112 of the Customs Act or whether an order for penalty can only be under Section 117 of the Customs Act. This would again depend on the interpretation of the provisions of Section 112(i) of the Customs Act which refers to goods in respect of which any prohibition is in force.
5. Shri Luthra submits that the goods had been validly imported in terms of REP licences produced in that connection and therefore they were not prohibited goods and hence no penalty could be levied under Section 112 of the Customs Act even if the goods may be liable for confiscation under Section 11 l(p). On the other hand Shri Sachar contends that the word "prohibition" in Section 112(i) would not be restricted to any prohibition in force at the time of import but would include even restrictions subject to which the import was permitted, including restrictions as enumerated in Chapter IV-A of the Customs Act with reference to the subsequent dealing with such goods.
6. Shri Luthra relied upon the decision of the Allahabad High Court in the case of Modi Rayon and Silk Mills (1978 ALd 855). He relies upon paragraph 9 of the said judgement which reads as follows :
"From the above definition of the 'prohibited goods' it would appear in order to attract the goods within mischief of the definition it is necessary that the import or the export of the goods should have been made without compliance of the conditions under which the goods could be imported or exported. It has already been found by the customs authorities that the import of the goods into India was not in contravention of any conditions. The petitioner has been found guilty only of non-compliance of the requirement prescribed under Chapter IV-A of the Act. In this view of the matter in our opinion the goods in question cannot be said to be prohibited goods and consequently the said clause of the second part of Section 112 could not be attracted."
He contends that, similarly, in the present instance also, the goods having been validly imported in terms of REP licences produced therefore, the subsequent failure to comply with the provisions of Chapter IV-A of the Customs Act could not make the importer Shri Ganatra liable for penalty under Section 112 of the Customs Act and penalty could be levied only under Section 117 of the Customs Act.
7. On the other hand Shri Sachar relies upon the decision of the Supreme Court in Sheikh Mohd. Omer v. Collector of Customs, Calcutta AIR 1971, Supreme Court 293 to contend that the word "prohibition" would take in not merely prohibition at time of import and export but would include restrictions or other controls relating to goods imported. We take note of the fact that the decision of the Supreme Court related to an import of 1964 (i.e.) prior to the introduction of Chapter IV-A of the Customs Act in 1969. We also take note of the fact that the judgement of the Supreme Court related to import of a mare which was not permissible in view of clause 3(1) of the Import Control Order, 1955 which restricted the import of animals, living, all sorts, unless the import was of one dog or one pet animal or birds in a limited number, subject to certain conditions. The Supreme Court was dealing in the said case with the contravention of the provisions of section 111(d) of the Customs Act under which the import of any goods contrary to any prohibition imposed by or under the Customs Act or any other law for the time being in force would render the same liable for confiscation. It was in that context that the word "prohibition" was construed and it was held as follows :
"Any 'prohibition' referred to in that section applies to every type of "prohibition". That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression "any prohibition in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947 uses three different expressions "prohibiting", "restricting" or "otherwise controlling" we cannot cut down the amplitude of the word "any prohibition" in Section 111(d) of the Act. "Any prohibition" means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition. From item (1) of the Schedule I, Part IV to Import Control Order, 1955 it is clear that import of living animals of ail sorts is prohibited. But certain exceptions are provided for. But none the less the prohibition continues."
8. A perusal of the REP licences produced to cover the import in question shows that no specially restrictive condition was attached thereto except the usual printed condition that the issue of the licence was without prejudice to the application of any other prohibition or regulation affecting the importation of the goods which may be in force at the time of the arrival. It is not the case that there was any other such prohibition or regulation affecting the importation of the goods at the time of their arrival. Section 2(33) of the Customs Act defines prohibited goods as "any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with". As we have seen earlier, the imports of the goods in question were not subject to any prohibition under the Customs Act or any other law for the time being in force except in so far as valid licences were required for their import. Nor was it subject to any condition subject to which the goods were permitted to be imported. In the circumstances the goods would not be prohibited goods within the meaning of Section 2(33) of the Customs Act. The mere circumstance that a licence would be required to be obtained under clause 3 of the Import (Control) Order 1955 would not render the goods prohibited. goods as defined in Section 2(33) of the Customs Act. On the issue of the licence the goods could be validly imported and, as we have seen, no condition has been imposed subject to which the import was to take place.
9. But the further question is whether, for the reason that the goods were such as were subject to observance of the provisions of Chapter IV-A of the Customs Act they would be goods in respect of which any prohibition may be said to be in force under the Customs Act for the purposes of Section 112 of the Customs Act. As earlier seen, the Supreme Court held (though in connection with the provision of Section 111(d) that the word prohibition occuring therein would contemplate a restriction also. The restriction in the present instance is not with reference to import, since the import was under a valid licence granted, but with reference to the dealing with the goods subsequent to import. This restriction had been imposed under Chapter IV-A of the Customs Act. Section 112(i) reads "in the case of goods in respect of which any prohibition is in force under this Act." Since, as earlier noted, the Supreme Court held that prohibition would include a restriction also we are satisfied that the restriction (as imposed under Chapter IV-A of the Customs Act) would also be a prohibition as contemplated in Section 112(1) of the Customs Act.
10. The Judgement of the Allahabad High Court relied upon by Shri Luthra proceeded on the basis that for imposition of penalty under Section 112 of the Customs Act two conditions are to be satisfied. They are (1) the person must done or omitted to do an act by reason of which the goods shall be liable for confiscation and (ii) the goods must be subject matter of any prohibition under the Customs Act or any other law for the time being in force. As Shri Sachar points out, the decision of the Supreme Court cited supra had not been considered by the Allahabad High Court and the principle laid down by the Supreme Court, as to how the word "prohibition" is to be construed, had not been considered by the Allahabad High Court.
11. Since, for the reasons mentioned earlier, we hold that though the subject goods may not be prohibited goods as defined in Section 2(33) of the Customs Act, they would be goods that were subject to prohibition (in the sense of a restriction) under Chapter IV-A of the Customs Act, we further hold that as the said goods were liable for confiscation under Section 111(p) of the Customs Act Shri Ganatra as the owner of the goods and who had failed to observe the restrictions under Chapter IV-A of the Customs Act, was liable to be penalised under Section 112 of the Customs Act.
12. In view of the finding that the goods (in the present case and having regard to the fact that they were covered by valid import licences) were not prohibited goods as defined in Section 2(33) of the Act and, therefore, the importation thereof was not prohibited under the Customs Act or under any other law for the time being in force, we hold that under Section 125 of the Customs Act an option for redemption was manadatory.
13. In the light of the above discussion our findings on the three points of difference between the two members of the West Regional Bench, as enumerated earlier, are as follows :
1. We hold that the 79 takas in question were not prohibited goods as defined in Section 2(33) of the Customs Act which could be confiscated without an option for redemption but that though they are liable for confiscation an option for redemption is mandatory. We note that so far as the quantum of redemption fine is concerned there has been no difference between the two members.
2. We hold that the levy of penalty of Rs. 75,000/- under Section 112 of the Customs Act on Shri H.D. Ganatra, was justified.
3. In view of the finding on point No. 2 our finding on this point is in the negative. We may further note in this connection that when the departmental representative was asked whether, in any event, any penalty can be levied under Section 117 of the Customs Act in the absence of any notice thereof in the proceedings before the Additional Collector Shri Sachar conceded that it could not be done.
14. Since we have recorded our findings on the points of difference, the records shall be sent back to the West Regional Bench for passing further orders in the appeal in terms of Section 129-C(5) of the Customs Act.