Customs, Excise and Gold Tribunal - Delhi
Montana Valves And Compressors (P) Ltd. vs Commr. Of Cus. on 29 October, 1999
Equivalent citations: 2000(116)ELT220(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. The captioned four appeals arise out of the same order, therefore, they were heard together and are being disposed of this common order.
2. The facts of the case in brief are that an intelligence was received that M/s. Montana Valves and Compressors Pvt. Ltd. have imported certain consignments of Marine Engineering goods including Torrington bearing system under the guise of 'Ship stores' and cleared the same without payment of duty. The goods in fact were diverted and sold in the local market. Pursuant to this intelligence the premises of M/s. Montana Valves and Compressors were searched alongwith the premises of M/s. Alankar Shipping and Clearing Agents. Scrutiny of the seized records revealed that on and around June, 1993, M/s. Montana Valves & Compressors Pvt. Ltd. imported a consignment of 600 numbers of Torrington Bearing System from Singapore. M/s. Alankar Shipping & Clearing Agents acted for the importer to clear the goods. Bill of Entry was filed on 8-6-1993. Cargo was declared as 'Ship stores'. The Customs House Clearing Agent filed an in Bond Bill of Entry for Warehousing the cargo in Central Warehousing godown at Cotton Green. The cargo remained in the C.W.C. godown upto 26-7-1993. The Customs House Agent filed pink shipping bills in which the cargo was declared as 'ship stores' meant for SSK Controller of Procurement Naval Dockyard, Lion Gate, Mumbai. The shipping bill was signed by the importer. Signature and rubber seal of the official of Indian Navy was also arranged in the shipping bill to the effect that the cargo was meant for use by Indian Navy on board of their ships. On the basis of this declaration shipping bill was processed and removal of the said cargo was permitted under Section 90 of the Customs Act, 1962. The cargo was allowed to be removed from CWC Ware House under the escort of preventive officer of Customs Mumbai. Scrutiny of the seized documents further revealed that M/s. Montana Valves & Compressors was holding a Purchase Order, dated 24-9-1992 issued by the Steel Authority of India Ltd., Bokaro for 600 numbers of Torrington Bearing System. The seized documents also included copies of Sale Bill of M/s. Sea King Marine Industries Ltd. issued in favour of M/s. Steel Authority of India Ltd.
3. Enquiries were caused and statements were recorded. Shri Chetan V. Kothari, Director of M/s. Montana Valves and Compressors in his statement, dated 10-9-1997 stated that consignment of 600 pieces of Torrington Bearing System imported by M/s. Montana Valves Compressors from Singapore were diverted to M/s. Steel Authority of India Ltd. He also identified customs related documents filed by the said Customs House Agent (CHA). In his further statement Shri Chetan V. Kothari stated that sale proceeds of Torrington Bearing System sold to M/s. Steel Authority of India, Bokaro ware received by them by cheque/draft drawn in favour of M/s. Sea King Marine Service Inds. Ltd. an associate company of M/s. Montana Valves and Compressors. He deposed that entire plan of import of Torrington Bearing System and its subsequent removal and sale to M/s. Steel Authority of India Ltd., Bokaro instead of to SSK Controller of Procurement, Naval Dockyard was made by Shri Bhavesh Gandhi to evade Customs duty on the said cargo. Shri Chetan Kothari also stated that while processing the shipping bills, no Custom Official asked for any purchase order placed by Indian Navy on them for the said cargo as it was claimed as 'ship stores'. He stated that while taking delivery of the cargo, Shri Uchil, Preventive Officer was not present; that the cargo was thereafter taken to M/s. Orissa Transport at Camec Bunder instead of Naval Dockyard Lion Gate without escort; that Shri Duneja, Store Keeper in CPRO, Lion Gate, Mumbai signed in the shipping bill on behalf of Navy.
4. Shri Krishna Kumar Nair, Director of M/s. Alankar Shipping & Clearing Agency Pvt. Ltd. stated that M/s. Montana Valves & Compressors and M/s. Sea King Marine Services and M/s. Fairlon Engg. Pvt. Ltd. were their clients. He identified and confirmed that 16 consignments in fact were cleared through his company and he had filed the import related documents under his signature; that he never called for the purchase documents of Navy while filing the documents; that he simply relied on Shri Bhavesh Gandhi who had assured him that in case any problem arises with customs, he would handle it. He also stated that signature of Naval Officials were obtained and arranged by Shri Bhavesh Gandhi and Chetan Kothari on the shipping bills; that he never enquired whether the consignments had reached the Naval authorities.
5. Shri Bhavesh Gandhi in his statement dated 10-9-1997 deposed that in 1991, a company by name M/s. Montana Valves & Compressors was started; that in 1993, there was demand for Torrington Bearing Systems which had wide application; that they received order for supply of Torrington Bearing System to Steel Authority of India Ltd.; that M/s. Montana Valves imported the said bearings and cleared the same without payment of duty under Section 90 of the Customs Act, 1962; that they collected the said bearings through their Customs House Agents M/s. Alankar Shipping & Clearing Pvt. Ltd.; that the said goods have not been supplied to Indian Navy and therefore, they are ready to pay voluntarily the Customs duty on the goods. He further deposed that the purchase order was received from M/s. Steel Authority of India for 600 numbers of Torrington Bearing System which was placed on M/s. Sea King Marine Industries Ltd.; that the goods were imported on behalf of M/s. Montana Valves; that the cargo after importation was bonded in a warehouse claiming them as 'ship stores' so that it could be cleared without payment of Customs Duty; that as per his direction, pink shipping bill was filed for ex-bonding; that on the basis of their declaration the goods were cleared from the warehouse as 'ship stores'; that Shri Chetan Bhai Kothari obtained necessary attestations from Indian Navy; that the documents were fabricated showing supply to Naval Dockyard Stores, Indian Navy whereas in fact these goods were diverted in contravention of Section 90 of Customs Act, 1962 to M/s. Steel Authority of India Ltd., Bokaro; that 536 numbers of Torrington Bearing System were supplied to M/s. Steel Authority of India Ltd., Bokaro; that M/s. Montana Valves, M/s. Sea King Marine Industries and Fairlon Engg. Pvt. Ltd. were their group companies solely controlled by him. Shri Gandhi in his further statement stated that in 1992, they were facing severe financial crunch; that he on his own decided to implement the scheme of evading duty of customs by way of misutilising procedures of Section 90 of Customs Act, 1962; that in the case of import of Torrington Bearing by them, no purchase order was received from Indian Navy or any defence shipyard. Shri Premchand Krishanmani Tiwari, Manager in M/s. Orissa Transport Service Pvt. Ltd., Mumbai in his statement, dated 17-9-1997 identified transport documents of their company issued in connection with transportation of 536 nos. of Torrington Bearings to M/s. Steel Authority of India Ltd., Bokaro on behalf of M/s. Sea King Marine Pvt. Ltd.
6. Scrutiny of the seized documents and investigations revealed that M/s. Fairlon Eng. Pvt. Ltd. were engaged in supply of engineering equipments and other materials as ship stores to M/s. Garden Reach Ship Builders & Engg., Calcutta and M/s. Goa Shipyard Ltd., Goa. It was noticed that M/s. Fairlon Engg. Pvt. Ltd. had imported altogether about forty five consignments of Marine engineering products during the period 1992-97 out of this 9 consignments were supplied duty free to M/s. Garden Reach Ship Builders and Engg. and 30 consignments to M/s. Goa Shipyard Ltd. Out of the remaining six consignments two consinments of Hot Rolled stainless steel coils were supplied to M/s. S.S.K. Controller of Procurement, Naval Dockyard Lion Gate, Mumbai and four consignments were of ingots which were supplied to ocean going vessel M.V. Sea Horse Porbandar. Scrutiny of the documents further revealed that these six consignments were cleared by filing shipping bills under Sections 88 and 90 without payment of duty, the same were diverted enroute and sold in the local market and never reached the actual consignee mentioned in the shipping bills. On enquiry M/s. Garden Reach Ship Builders & Engg. Calcutta and M/s. Goa Shipyard, Goa revealed that M/s. Goa Shipyard, Goa had issued 30 Duty Exemption Certificate and M/s. Garden Reach Ship Builders & Engg. had issued 9 Duty Exemption Certificate in favour of M/s. Fairlon Engg. Pvt. Ltd. for supply of Customs Duty Free goods for consumption on Board by various ships and vessels. M/s. Garden Reach Ship Builders & Engg., Calcutta and M/s. Goa Shipyard Ltd., Goa confirmed about the receipt of the goods as well as remittances made by them. However, enquiries conducted with S.S.K. Controller of Procurement, Naval Dockyard, Mumbai revealed that the subject two consignments of stainless Steel Coils were not received by them nor any order for supply of the said items was placed on M/s. Fairlon Engg. Pvt. Ltd. Four consignments of tin ingots were cleared to public bonded warehouse at Adalaj Gujarat under Bond to Bond transfer. Similar enquiries conducted with Supdt, Central Excise, Adalaj revealed that the said four consignments of Tin Ingots transported from Bombay to Public Bonded Warehouse, Gandhinagar were cleared to Ocean going vessels and M.V. Sea Horse at Porbandar. However, verification caused with M/s. Velji P & Sons (Agencies) Porbandar revealed that the said four consignments of Tin Ingots were in fact not received by the said vessels during the material period at Porbandar. Shri Amitabh Ray, Director of M/s. Fairlon Engg. Pvt. Ltd. in his statement stated that firm is engaged in the manufacture of Marine engineering equipments; that for supplying such material, they were importing the materials from various foreign suppliers that Shri Bhavesh Gandhi on behalf of promoters and shareholders used to visit the shipyards from time to time and also participate in commercial and price negotiations with shipyard activities for major orders. Shri Amitabh Ray identified and confirmed about the consignments referred to. When questioned about the six consignments which were claimed to be cleared as SSK Controller of Procurement, Naval Dockyard, Lion Gate, Mumbai and M.V. Sea Horse in Gujarat, Shri Ray denied having any knowledge about the imports of the said two consignments of Hot Rolled Stainless Steel Coils and four consignments of Tin Ingots as ship stores on behalf of M/s. Fairlon Engg. Pvt. Ltd. Shri Ray also informed that he had never placed any order for procurement of the said goods nor he was aware as to who had signed the clearance related documents in respect of six consignments on behalf of his company.
7. On scrutiny of the seized records it was observed that M/s. Seaking Marine Services were mainly engaged in the supply of Marine Engineering equipments as ship stores to SSK Controller of Procurement, Naval Dockyards, Lion Gate, Mumbai. It was noticed that they imported altogether 12 consignments of Marine engineering products during the year 1992-97 and cleared them through the services of M/s. Alankar Shipping & Clearing Pvt. Ltd. Out of the 12 consignments, 8 consignments were claimed to be supplied to Naval Dockyard, Mumbai, two consignments were claimed to be supplied duty free to Adalaj Bonded Warehouse, Gujarat, one consignments was claimed to be supplied to M/s. Garden Reach Ship Builders & Engg. and one consignment was claimed to be supplied to M/s. Goa Shipyard Ltd., Goa. Enquiries also revealed that apart from the 12 consignments cleared through M/s. Alankar Shipping & Clearing Pvt. Ltd., there were two more consignments cleared as coil by the said firm. Thus M/s. Seaking Marine Services had imported 14 consignments, 7 consignments were claimed to have been supplied to SSK Controller of Procurement, Naval Dockyard, Mumbai, 2 consignments were claimed to have been supplied to Ocean Going Vessel M.V. Amour, Porbandar. Some consignments were supplied without payment of duty and the same were diverted enroute and sold in the local market. The picture about the diverted consignments that emerged is indicated below :
__________________________________________________________________________ S. Name of the No. of Description Consignee for Diverted to No. Company Con-' ship stores' sign- as per ments shipping bill filed __________________________________________________________________________ 1 MONTANA 1 Torrington Navy, Mumbai SAIL bearing Bokaro system 2 SEAKING 9 Seamless Navy, Mumbai Local Market S.S. tubes(4) (7) Components for Hydraulic filter (1) S.S. Plates (1) S.S. Plate Cutting (1) S.S. Coils (2) C.W.C. Adalaj (2) 3 FAIRLON 6 Hot Rolled Navy, Mumbai Local Market S.S. Coils (2) Tin Ingots (4) C.W.C. Adalaj (4) TOTAL : 16 __________________________________________________________________________ The above 16 consignments were cleared without payment of duty by manipulating the documents. The appellants were, therefore, asked to show cause as to why duty should not be demanded on the goods cleared as above under proviso to Section 28(1) of the Customs Act, 1962 by invoking the extended period of five years and why penalty should not be imposed. The appellants deposited the sums as under :
__________________________________________________________________________ S.No Name of the Total CIF Total assessable Customs Duty Party (In lNRs) value (In INRs) (In lNRs) __________________________________________________________________________
1. MVC 35,32,266 35,67,588 56,38,734
2. FEL 64,99,353 65,64,346 77,96,280
3. SMS 71,62,822 72,36,452 83,98,667 Total: 1,71,94,441 1,73,68,386 2,18,33,681 __________________________________________________________________________ Ld. Commissioner after considering the various submissions made before him ordered as under:
(a) I determine under Section 28(2) of the Customs Act,1962 the amount of duty as payable, as shown against each importer:
1. MVC - Rs. 56,38,734/- (Rupees Fifty six lakhs thirty eight thousand seven hundred and thirty four only)
2. FEL - Rs. 77,96,280/- (Rupees Seventy seven lakhs ninety six thousand two hundred and eighty only)
3. SMS - Rs. 83,98,667/- (Rupees Eighty three lakhs ninety eight thousand six hundred and sixty seven only) Since the amounts have already been paid on 11-9-1997 by MVC, on 15-9-1997, 16-9-1997 and 19-9-1997 by F.E.L. and on 15-9-1997, 18-10-1997, 11-11-1997 and 21-11-1997 by S.M.S. The same is accepted as full payment of the duty liability. There is no liability of interest under Section 28AB as duty not levied has been paid before the date of such determination.
(b) I impose a penalty on the importers as under :
1. MVC - Rs. 56,38,734/- (Rupees Fifty six lakhs thirty eight thousand seven hundred and thirty four only)
2. FEL - Rs. 77,96,280/- (Rupees seventy seven lakhs ninety six thousand two hundred and eighty only)
3. SMS - Rs. 83,98,667/- (Rupees Eighty three lakhs ninety eight thousand six hundred and sixty seven only) under Section 112(a) of the Customs Act, 1962.
(c) I impose a Penalty of Rs. 15,00,000/- (Rupees fifteen lakhs only) on Shri Bhavesh Gandhi Director of SMS under Section 112(b) of the Customs Act, 1962.
(d) I impose a penalty of Rs. 15,00.000/- (Rupees fifteen lakhs only) on Shri Chetan Kothari, Director of MVC under Section 112(b) of the Customs Act, 1962.
(e) I impose a penalty of Rs. 5,00,000/- (Rupees five lakhs only) on the CHA firm viz. Alankar Shipping Agents P. Ltd. under Section 112(b) of the Customs Act, 1962.
(f) I impose a penalty of Rs. 1,00,000/- (Rupees one lakh only) on Shri K.K. Nair, Director of the CHA firm under Section 112(b) of the Customs Act, 1962.
(g) The amount paid on account voluntarily towards penalty amounting to Rs. 10,00,000/- (Rupees ten lakhs only) on 3-12-1997 in the case of MVC and the amount of duty paid in excess of what is being determined in the case of SMS amounting to Rs. 10,76,880 (Rupees Ten lakhs seventy six thousand eight hundred eighty only) be adjusted against the penalty liability of MVC and SMS respectively and the remaining amount of penalty imposed should be paid forthwith.
(h) This order is being issued without prejudice to action that may be taken under Section 135 of the Customs Act, 1962 and/or under the provisions of Customs House Agents Regulations Act, 1984 and /or under the provisions of any other law for the time being in force."
9. Shri A.K. Jain, ld. Counsel appearing for the appellants raises the issue of lack of jurisdiction at the outset, stating that appointment of Shri S. S. Shekhon as Commissioner of Customs (Preventive), Mumbai does not appear in any notification of the Govt, of India; that the appointment/posting order, dated 14-5-1997 (S. No. 6) of Shri S.S. Shekhon as Commissioner of Customs (Prev.), Mumbai has not been gazetted till date as is required mandatorily in terms of OMS issued by the Govt, of India that appointment/posting order of Shri Shekhon does not conform to Article 77 of the Constitution of India (as the order was not in the name of the President of India). He submits that under the transaction of business rules all the acts are done in the name of the President. He submits that in the case of Shri S.S. Shekhon, President was the appointing authority and submits that in the standard form of appointment, the appointment of Shri Shekhon should have been done in the name of President which was not done and therefore, Shri Shekhon lacks jurisdiction. On the question of appointment he cited a lot of case law in support of his contention. He referred to and relied upon the decision of the Apex Court in the case of M.R. Balaji and Ors. v. State of Mysore (AIR 1963 S.C. 649). He also cited the judgment of the Apex Court in the case of Sant Ram Sharma v. State of Rajasthan and Ors. (AIR 1967 S.C. 1910). He submitted that the Hon'ble Bombay High Court in the case of Ashivin Prafulla Pimpalwar v. State of Maharashtra reported in AIR 1992 Bombay 233 in para 5.1 observed that "5.1. It has been well established by now that administrative instructions can also confer rights or impose duties. That was how the Supreme Court observed in Anglo Afghan Agencies that the Govt. was bound by representation in Export Promotion Scheme even if the Scheme is executive in character. The Government is bound to follow faithfully the norms prescribed by it, even if they are administrative instructions or executive orders. The aspect has been emphasised again in Sukhdev Singh v. Bhagatram, AIR 1975 S.C. 1331".
Referring to the judgment of Hon'ble Supreme Court in the case of Kedar Nath Bahl v. State of Punjab and Ors. reported in AIR 1979 S.C. 220, the ld. Counsel submitted that the Apex Court held "At any rate the earlier order of the Chief Minister dated Oct. 13 could not give rise to any right in favour of the appellant as it was not expressed in the name of the Governor as required by Article 166 of the Constitution. He submitted that in Article 166 of the Constitution of India, it has been set out that all executive action of the Govt, of a State shall be expressed to be taken in the name of the Governor".
Ld. Counsel submitted that Shri S. S. Shekhon the officer who adjudicated the case was not notified to be the Commissioner of Customs (Preventive), Mumbai. He submitted that under Articles 163(1) and 166(1) of the Constitution of India the advice of Council of Ministers becomes an order of State Govt. under Article 166, only when the decision of the Council is translated into action by issuing a notification in the name of the Governor.
He also cited and relied upon the decision of the Hon'ble Supreme Court in the case of State of Kerala v. Smt. A. Lakshmikutty and Ors. Ld. Counsel therefore, submitted that since Shri S.S. Shekhon was not appointed Commissioner of Customs (Prev.), Mumbai, therefore, his exercise of power to issue the SCN and to adjudicate the case is without jurisdiction and submits that since SCN and adjudication order lack jurisdiction they are void ab initio, therefore, the impugned order should be set aside. In support of his contentions he cited and relied upon the ratio of judgments reported in
1. AIR 1965 S.C 395
2. AIR 1979 S.C. 220
3. 1986 (4) SCC 632
4. 1987 (3) SCC 34
5. AIR 1970 CAL 346
6. AIR 1969 CAL 180
10. Shri Sanjeev Srivastava, ld. DR arguing the case for Revenue submits that Shri S. S. Shekhon was appointed as Commissioner and was transferred and posted as CCP. He submits that the transfer order was issued by the Govt. and since Section 4 of the Customs Act, 1962 provides for appointment of officers of Customs that the Central Govt. may appoint such persons as it thinks fit to be an officer of Customs. He submits that since the Central Govt. in exercise of the power under Customs Act and transaction of business rules appointed Shri Shekhon as Commissioner of Customs (Prev.), therefore, there was no lack of jurisdiction.
11. Countering the arguments of the ld. Counsel for the appellants, ld. DR submitted that the appellants have not furnished any evidence to show that Shri S. S. Shekhon's appointment has not been notified. He submits that there might be a delay or omission. He submits that every officer on promotion is so promoted in the name of the President as the President is the appointing authority. The promotion orders indicate the grade and the designation. He submits that simply because there is an omission if any in issuing of Notification, the contentions that Shri S. S. Shekhon has not been promoted/appointed as Commissioner is wrong and not tenable. He submits that the order dated 14-5-1997 is a transfer order and officer is posted from one place to the other. Transfer orders in respect of Collectors are issued by the Central Board of Excise & Customs. He submits that these transfer orders are issued by the Govt. in terms of Section 4(1) of the Customs Act, 1962. He submits that whenever an officer is promoted, the promotion order always is issued in the name of the President and thus the requirement of Article 77 of the Constitution of India is complied with. In the case of Vashitra Singh v. State of Punjab, the Apex Court held that the order has to be expressed in the name of the Governor as required by Clauses 1 of Article 166 then it has to be communicated. Ld. DR submitted that promotion of Class I Officer is always in the name of the President and thus the requirement of Article 177 is always complied with.
He submits that in the case of Kedar Nath Behl the Apex Court held the same thing i.e. in terms of Article 166, the order must be-expressed in the name of the Governor as required by this Article. He submits that in all the cases cited by the Counsel, the requirement was that the appointment must be in the name of the President or the Governor as the case may. Ld. DR submitted that this requirement is fully complied with in the case of Shri Shekhon.
12. We have heard the rival submissions on the question of jurisdiction. We find that the transaction of business rules refer to form of appointment order/notification. We have perused the order transferring Shri Shekhon as Commissioner of Customs (Prey.). We find that it is not a promotion order. But it is only a transfer order. In the Customs and Central Excise Deptt. officers are appointed to particular grade and designation, this is called promotion. Promotion orders are invariably issued in the name of the President. What was shown to us was a transfer order. Shri Shekhon was already a Commissioner of Customs/Central Excise. Transfer orders only change the jurisdiction. Thus, there was no lack of jurisdiction. We, therefore, over-rule the preliminary objection of jurisdiction.
13. The next point that was raised was that normally the processing and adjudication of appraisement cases is done by the Collector of the Port, the Counsel submitted that Shri S. S. Shekhon was not Commissioner of the Port but was Commissioner of Customs (Prev.) and therefore, he had no jurisdiction in issuing a SCN or adjudicating the case which involved appraisement. Ld. DR submitted that there is a division of jurisdiction in Bombay. Jurisdiction over certain areas is exercised by the Commissioner of Customs of the Port and in certain areas it is exercised by the Commissioner of Customs (Prev.). He submitted that in the instant case the goods were warehoused in areas where the jurisdiction lay with the Commissioner of Customs (Prev.). Since the goods were not in port areas, therefore, the jurisdiction was correctly exercised. The ld. DR submitted that this contention was not correct. The goods were warehoused in public warehouses which were within the jurisdiction of Commissioner of Customs (Prev.) and hence jurisdiction was correctly exercised.
14. On a careful consideration of rival submissions, we find that there is a notification on jurisdiction and in the notification it has been clearly brought out that the jurisdiction over the areas from which the goods were removed lay with the Commissioner of Customs (Prev.) and thus there was no lack of jurisdiction in this case. This objection is also over-ruled.
15. Ld. Counsel also submitted that there were six shipping bills which pertained to Adalaj and that Adalaj was in Gujarat and was in the jurisdiction of Commissioner of Customs (Prev.), Ahmedabad. He submits that Commissioner of Customs (Prev.), Mumbai did not have any jurisdiction over warehouses in the State of Gujarat. He submitted that there was a notification empowering Commissioner of Customs (Prev.), Ahmedabad to exercise powers in the State of Maharashtra, however such powers were not vested in the Commissioner of Customs (Prev.), Mumbai. He submits that thus the Commissioner of Customs (Prev.), Mumbai lacks jurisdiction to issue SCN for demand of duty or imposition of penalty in respect of six shipping bills on the strength of which goods were cleared from warehouses in Gujarat.
16. Ld. DR submitted that no doubt the goods were cleared from warehouses in Gujarat. However, they were diverted for local consumption in the State of Maharashtra where the CCP, Mumbai had the jurisdiction and since the Commissioner of Customs (Prev.), Mumbai had jurisdiction he had rightly exercised that power.
17. We have considered the rival submissions. We note that after warehousing the goods in Bombay, certain goods were further transported to Gujarat under bond and were re-warehoused in Gujarat. Shipping Bills were presented in Gujarat and the goods were cleared from warehouses in Gujarat, we therefore, hold that the Commissioner of Customs (Prev.), Mumbai had no jurisdiction over these goods which were warehoused in Gujarat and then cleared from there. In this view of the matter, the plea of the Counsel for the appellants on the question of jurisdiction of the Commissioner of Customs (Prev.), Mumbai over clearances from warehouses in Gujarat succeeds.
18. A number of arguments were adduced by the Counsel for the appellants on the SCN. In the SCN signature of the Commissioner of Customs (Prev.) did not appear. The word was 'signed - 22-12-1997'. There was an endorsement "attested Asstt. Commissioner of Customs (Prev.), M & P Wing, Mumbai" with the signature of the AC as Deepak Kumar with the date as 23-12-1997. The ld. Counsel submitted that DFA/SCN was initialled by the officer who was also the incharge of and was associated with the investigations whereas the intention of the legislature has been otherwise directing that there must be unbiased mind for issuing a SCN invoking extended period. The ld. DR submitted that Commissioner of Customs (Prev.) was working as a supervisory officer issuing general directions and therefore, cannot be called a biased mind. We have considered this contention. We note that the CC(P) was exercising general supervisions and therefore, it cannot be said that he was biased. It was argued that the SCN was not a notice inasmuch as it did not have the signature of the issuing authority. In this case the issuing authority was the Commissioner of Customs (Prev.), Mumbai. Ld. Counsel submitted that the signature of the issuing authority is necessary on the document to make it a valid document.
He submits that since signature of the Commissioner of Customs (Prev.) was not there and therefore, it was not a valid document.
19. (1) Ld. Counsel for the appellant submitted that draft SCN was prepared by the Inspector on his own without any instructions of the Commissioner; that it does not have full signature of the Commissioner but only his initials that after initials on the DFA, SCN Shri Shekhon did not order to issue, thereof; that fair copy was not put up for signature. He submitted that where the intention of a statute requires personal signature of a person, the same should be that of that person himself. Ld. Counsel submitted that there must be physical contact between that person and the signature put on the document to support this contention. He cited the decision of the Hon'ble Supreme Court in the case of Commissioner of Agricultural Income Tax v. Keshao Chandra Mandal reported in AIR (37) 1950 S.C. 265.
(2) He submitted that notice under the Income Tax Act which does not contain signature of ITO is not valid and all proceedings taken in pursuance of such notice are invalid. Ld. Counsel also submitted that signing of the SCN does not come within the formula of an obvious clerical mistake. He supported the above contention by citing and relying upon the decision in the case of B.K. Gooyee v. Commissioner of Income Tax reported in 1966 (62) I.T.R. 109 (Cal.). Ld. Counsel submitted that Hon'ble M. P. High Court in the case of Umashankar Mishra v. Commissioner of Income Tax reported in 1982 (136) ITR 330 held that the SCN proposing penalty under Income Tax must be signed by the ITO himself and that omission to do so shall invalidate the SCN. He submitted that non-signing of the SCN is not inconsequential technicality.
(3) Ld. Counsel for the appellant submitted that in the case of Punalur Paper Mills Ltd. v. C.C., Cochin reported in 1987 (31) E.L.T. 770, this Tribunal held that demand - SCN invoking extended period signed by AC on the instance of the Collector himself was not valid. He submitted that notice will not be valid unless it bears the signature and concerned seal of office. In support of his contention he cited and relied upon the decision of the Hon'ble M.P. High Court in the case of Commissioner of Income Tax v. Sattandas Mohandas Sidhi reported in 1988 (230) ITR 591.
(4) Ld. Counsel submitted that notice under Section 28 is not a notice simplicitor but a SCN. This notice has to be the one which is received by the person who is to show cause against the proposed demand and not the one which is lying in the file of the Department. He submitted that the words "serve notice" (and not serve a copy of notice) under Section 28(1) are of significance; that this expression means that the notice being served on the noticee is the notice under Section 28 and not one being kept in the file and that it was a statutory requirement. It was contended that initials on the draft notice lying in the file does not specify the requirement of a valid SCN under Section 28(1) of the Customs Act. He submitted that if a SCN is not valid the proceedings based on that invalid SCN would be illegal as per the law laid down in the case of Narayan Shetty v. Income Tax Officer reported in 1947 (15) ITR 30. Ld. Counsel submitted that if an adjudication order is not held to be valid order just because it does not bear the signature of the adjudicating authority but it is merely attested by subordinate gazetted officer how can a SCN be held as valid in the same circumstances, in support of his contention he cited and relied upon the decision of this Tribunal in the case of J. K. Leatherite Pvt. Ltd. v. CC.E. reported in 1996 (83) E.L.T. 467, Garden Reach Shipbuilders & Engg. Ltd. v. C.C.E. reported in 1987 (31) E.L.T. 545 (Tri.), Tribunal's Final Order No. D/224/91-NRB and A/431 /91-NRB, dated 8-8-1991 in the case of M/s. Chander Laxmi Tempered Glass Co. (P) Ltd. and the decision of this Tribunal in the case of New India Dyeing & Finishing Mills v. C.C.E. reported in 1992 (61) E.L.T. 471.
(5) Ld. DR replying the above contentions submitted that all the decisions cited and relied upon by the appellants are distinguishable and the facts in the cases cited by the appellants are not the same as those in the present case.
(6) We have heard the rival submissions. We have also seen the case law on the subject. In so far as the case of Commissioner of Agricultural Income Tax is concerned, we note that the case is on agriculture Income Tax whereas we are dealing with the Customs Act. It may, however, be seen that there is no requirement in the Customs Act that a SCN will go under the signature of a particular officer. The law requires that the proper officer shall issue the notice. Proper Officer has been defined in Section 2(34) of the Customs Act. In the instant case SCN was attested by the AC. The AC is a senior gazetted officer of the Customs Department and can sign SCNs. Thus, we find that the facts of the two cases are different.
(7) Ld. Counsel referred to the case of B. K. Gooyee v. Commissioner of Income Tax. In support of his contention that notice under the Income Tax Act not containing signature of ITO is invalid. We note that the facts in that case were that the notice under Section 34 of the Income Tax Act did not bear the signature of the Income Tax Officer, it further transpired that office copy of same notice was not signed by the Income Tax Officer. In these circumstances, the Hon'ble Calcutta High Court held that notice was invalid. In the instant case before us we find that the office copy of the SCN was initialled by the Commissioner and was attested by the AC and thus the facts in the two cases are different. So also can be said about the case of Shri Umashankar Mishra relied upon by the ld. Counsel of the appellants.
(8) Insofar as the contention of the ld. Counsel regarding demand -SCN invoking extended period signed by AC on the instance of the Collector himself is concerned, we note that the facts in the case of Punalur Paper Mills Ltd. are entirely different inasmuch as in that case the statute provided that the SCN will be issued by the Collector, in the instant case there was no requirement that it will be issued by the Commissioner and hence the facts of the two cases are different. In the case of Sattandas Mohandas Sidhi we note that the facts of the case were that for the assessment year 1985-86, Assessment Order, dated Nov. 18,1986 was considered wrong, proceedings, therefore, were started under Section 263 of Income Tax Act. Commissioner of Income Tax sent a telegraphic notice on March 28, 1989 to the assessee for making appearance on March 31,1989 to show cause as to why the Assessment Order should not be cancelled. In the instant case we note that SCN was prepared and initialled by the Commissioner and subsequently it was attested by the AC and issued. Thus the facts in this case are entirely different. The facts of the cases cited and relied upon by the Counsel are different and therefore, the ratio cannot be applied. In support of his contention he cited a lot of case law. Ld. Counsel referred to the judgment of the Hon'ble High Court of Rajasthan in the case of Jaipur Udyog Ltd. v. Commercial Taxes Officer. He submitted that the Hon'ble High Court held that service of the valid notice within a period of limitation is a condition precedent for assuming jurisdiction for reassessment under Section 12 of the Act. If the assessing authority fails to issue a notice which is valid in the eye of the law, he cannot acquire jurisdiction to reassess a dealer under the provisions of Section 12.
20. Ld. DR submits that this is a case wherein the second SCN which was declared invalid notice was issued after the expiry of the prescribed period of limitation and thus the facts in these two cases are different.
21. We have considered the submissions made before us. We find that the case law relied upon by the appellant has rightly been distinguished by the ld. DR. We agree that the cases do not help the appellant.
22. Ld. Counsel referred to the judgment of the Apex Court in the case of C.C.E. v. MM. Rubber Co. reported in 1991 (55) E.L.T. 289 wherein the Apex Court ruled that the date of such order or decision is the date on which the order or decision was passed or made that is to say when he ceases to have any authority to tear it off and draft a different order and when he ceases to have any locuspaetentiae. The Apex Court further held that normally that happens when the order or decision is made public or notified in some form or when it can be said to have left his hand. In the case of Secretary for India in Council v. Gopisetti Narayanaswami Naidu Guru, it was held that the decision cannot properly be said to be passed until it is in some way pronounced or published under such circumstances the parties affected by it have a reasonable opportunity of knowing what it contains. Till then though it may be written out, signed and dated, it is nothing but a decision which the officer intends to pass. It is not passed so long it is open to him to tear off what he has written and write something else. Ld. Counsel referred that the locuspaetentiae means a place for repentance; an opportunity for changing one's mind; an opportunity to undo what one has done; a chance to withdraw from a contemplated bargain or contract before it results in a definite contractual liability. He submitted that this is a definition given in Black's Law Dictionary, 6th Edition. Ld. Counsel submitted that the SCN dated 23-12-1997 was not a valid SCN inasmuch as it was not signed by the Commissioner of Customs (Prev.). He submitted that the case law cited above supports the view that a document unless it is signed by the issuing authority is not a valid document.
23. Ld. DR replying to the contention submitted that all the case law cited by the appellant pertains to Sales Tax or Income Tax matters where different acts administer those taxes and since the taxes are different, therefore, interpretation of the provisions of one cannot be directly applied for the interpretation of the provisions of the other act. Ld. DR submitted that all the decisions cited and relied upon by the appellants pertained to orders and not to SCNs. He submitted that here we are dealing with a SCN and not an order and that an order and a SCN cannot be put on the same pedestal. An order is a considered view and therefore, requires a signature and date of the maker of the order. He submits that in the instant case we are dealing with a SCN which in simple terms states what the allegations are and what is the evidence in support of those allegations and proposes, imposition of penalty and confiscation of goods etc. He submits that thus a SCN and an order cannot be placed on equal footing.
24. We have perused the case law. Before us the ld. Counsel placed a lot of emphasis on the use of the word "Locuspaetentiae' and submitted that since the SCN was not signed by the issuing authority, it could be changed before it was signed. We have also perused the other rulings of the Hon'ble Supreme Court and other Courts also. We find that the admitted position was that in the file DFA (Draft for approval) SCN (Show Cause Notice) was initialled. An initial is placed only for approval. No material has been placed before us to show that changes in the approved draft were made by any officer other than the Commissioner after its approval. Thus the SCN does not suffer from any legal infirmity.
We have also perused the case law relied upon by the appellant. We find that all these judgments are on 'orders' and not on Show cause notices. An order and a SCN cannot be equated and hence the ratio of the judgments cited cannot be applied to the facts of the present case with the same force.
25. Ld. Counsel for the appellants submitted that under the Customs law no provision requires signature on any decision, order, summons, notice or any other document. He submitted that under Section 153 of the Customs Act, 1962, order and notice have been treated at par. He submits that similarly attestation is not provided for under the Customs Act. Ld. Counsel referred to certain Orders-in-Original when "signed" - Collector (although these were also attested by the Gazetted Officer) had appeared instead of signatures of the Collectors, the same were held invalid on that account. He submitted that a SCN has to be treated on the same ground and cannot be treated differently. He further submitted that though there is no judgment of the Tribunal or of any Court with regard to such SCNs which are not signed but show 'signed Collector' instead. He submitted that different parameters of interpretation cannot be adopted for a demand SCN as compared to ones for an order even when the law is totally silent with regard to signature. He submitted that in all the four judgments 1996 (83) E.L.T. 467, Final Order No. 431/91-NRB, 1987 (31) E.L.T. 545 and 1992 (61) E.L.T. 471, the Department files contained the draft orders (approved and signed/initialled) with dates by the Collectors and when issued these had been duly attested by the Central Excise Gazetted Officer. In these cases remand was ordered by the Tribunal because the SCNs were not unsigned/challenged on the ground of non-signature. He submitted that in the instant case it was a draft SCN without any number, date, specification of the name of the noticee for whom it was meant only initialled but not signed by the Commissioner neither dictated by the Commissioner nor prepared at his instance and merely kept in his office file be treated to be a valid SCN under Section 28 of the Customs Act, 1962. Even when the unsigned SCNs which is actually served on the noticee itself did not carry initial of the Commissioner. On the contrary it showed therein certain details which did not appear on the DFA, SCN. He submitted that attestation of a document have no meaning when the signature of the maker therefore, does not appear on the document. He submitted that since there was no judgment on this issue under the Central Excise or Customs law, the ratio of High Courts' judgment under the Income Tax Act should apply in such cases.
26. Ld. DR submitted that in the case of New India Dyeing & Finishing Mills v. C.C.E. reported in 1992 (61) E.L.T. 471 which has been relied upon by the appellant the order which was signed was a draft letter whereas the note in his file showed that he had given a direction 'Please put up fair copy'. The Tribunal held that the order communicated in this case would have been valid if Shri Gowri Shankar had also signed the fair copy as per his own direction recorded in the file. Since he had only signed a draft, it cannot be said that what has been communicated was the final order.
27. We have considered the submissions of both sides. We find that the fact in this case and the case cited by the appellants are totally different. In the instant case before us there was no order proposing further signature of the issuing authority. Ld. DR submitted that in the case of Punalur Paper Mills Ltd. v. C.C., Cochin -1987 (31) E.L.T. 770, this Tribunal held -
"It is clear that the SCN for recovery of duty for a period beyond six months under that Section has to be issued by the Collector. This position also follows on a perusal of the statement of Objects and Reasons for the identical provision under Section 11A of the C.E. Rules, 1944. In the instant case this statutory formality has not been followed although the decision to issue the SCN was taken by the Collector. The non-compliance with the statutory formality of the notice having to be issued by the Collector would make the issuance of the show cause notice by the Asstt. Collector as a notice issued without jurisdiction".
Ld. DR submitted that the SCN was declared invalid inasmuch as the SCN was issued by the Asstt. Collector who was not competent authority to issue SCN. He submitted that in the instant case SCN was signed by the Collector in the file and was attested by the Asstt. Collector and issued to the assessee and thus the facts in the two cases are different.
In the case of Garden Reach Shipbuilders & Engg. Ltd. cited and relied upon by the appellant ld. DR submitted that it was a case of a adjudication order without signature and date which was under consideration of the Tribunal and the Tribunal after considering that the Departmental Representative could not show from the case records with him any copy of the order signed by the Collector. In the instant case we have seen the Department's file and we find that the SCN in the file has initials of the Commissioner and thus the facts in the two cases are different. Ld. DR submitted that attestation has a definite connotation that the file clearly showed that the SCN was approved and signed by the Collector that no changes whatsoever have been brought out to have been made after the signatures of the Commissioner of Customs and thus there was nothing wrong in the SCN and SCN was valid for all purposes.
28. We have heard the rival submissions on the issue of SCN. We note that in the case of Faucet Industries Ltd. v. C.C.E, Kanpur reported in 1998 (102) E.L.T. 599. This Tribunal held in para 5 "5. I have considered the arguments of both the sides and perused the records. The preliminary objection taken about the Supdt. having issued the show cause notice whereas the adjudication order was passed by the Addl. Collector does not appeal to me. The adjudication order being limited to the demand of duty falling within six months period, it has been appropriately decided by the adjudicating authority and the SCN in such a case could have been issued by a proper officer".
We also note that in the case of C.C.E. v. Delta Hamlin Ltd. reported in 1994 (71) E.L.T. 188, this Tribunal held that -
"Mere execution of bond and acceptance thereof by the ACCE, Chandigarh does not give him the jurisdiction in the instant case. Matter is not sought to be opened in the instant case of any violation of the condition by the ACCE, Chandigarh. What is sought to be done is reassessment of the goods and denial of the benefit of Notification 13/81 which had been given by the assessing authority of Delhi Custom House in terms of the procedure laid down by the authorities themselves. This reassessment in fairness could be reopened only by those authorities who made the original assessment and not by Asstt. Collector, Chandigarh".
In the case of Bombay Pharma Products reported in 1995 (75) E.L.T. 78, this Tribunal held that as regards the third question raised by the ld. Consultant before us we have perused the case record and noticed that the assessee has authorised his immediate junior officer for issuing the SCN on 17-6-1992. On 30-7-1992 the approved notice was put up to the Asstt. Commissioner. The same has been perused by the AC and he has initialled the same. The SCN has been issued only after the draft was perused and signed by the Asstt. Collector. Therefore, there is no infirmity in issue of SCN by other Gazetted Officer. The SCN deemed to have been issued by the proper officer. Thus we do not find any force in this objection also. The same is also rejected.
29. After disposing of the preliminary objections, we proceed to consider the case on merits. Ld. Counsel for the appellants submitted that Section 15 (1)(a) and Section 15 (1)(b) is attracted only when a Bill of Entry for home consumption has been filed. He submitted that for this reason only Section 68 and not Section 69 finds mention in Section 15 (1)(b); that in other cases Section 15 (1)(c) alone applies. He submits that since no Bill of Entry for home consumption had been filed by the applicants, the applicable rate of duty shall be according to Section 15 (1)(c) and not as per Section 15 (1)(b). He submitted that calculated in terms of Section 15 (1)(c) the amount of duty will be much lower.
30. In reply to this submission Shri Sanjeev Srivastava, ld. DR submitted that for purpose of rate of duty and Tariff classification, we have to see the facts of the case. He submitted that frequently the goods were declared as 'ship stores' and fraudulently the shipping bills were presented for clearance of the goods. In actual practice the goods have not been made use of as 'ship stores' but were diverted and sold in the home market and therefore, it is not the 'date in any other case' but it is the date in a case that the goods are cleared from a warehouse under Section 68 on the date on which the goods are actually removed from the warehouse. He submitted that the goods were actually removed from the warehouse in the instant case and therefore, for purpose of determination of the date for rate of duty and Tariff valuation, if any, will be the date of removal of the goods from the warehouse and thus duty shall be calculated in terms of Section 15(1)(b) Customs Act, 1962.
31. We have heard the rival submissions. We have perused the provisions of Section 15. In the instant case we find that the goods were fradulently cleared and in actual practice cleared not for shipment or for delivery on board of ship as 'ship store' but sold in local market. Since the goods were not exported for the purpose for which they were cleared from the warehouse and diverted into the local market for home consumption, therefore, even if a Bill of Entry under Section 68 of Customs Act was not presented the date of removal will be date for purpose of determining the rate of duty and Tariff valuation, if any. Thus it will be covered by Section 15(1)(b).
32. Ld. Counsel submitted that Section 88 or Section 90 modify Section 60 and after modification it does not prescribe any term that the warehoused goods cleared for re-export must be supplied to or loaded on the vessel (Indian Navy/foreign-going); that this means that such non-supply/non-loading of re-export goods would not tantamount to any contravention of Section 60 read with Section 88 or 90. He submitted that even otherwise the goods (plates, coils, ingots, cuttings) could not qualify 'stores' under Section 90(3) for not being capable for consumption on board.
Section 60 of Customs Act provides for permission for deposit of imported goods in a warehouse. Section 88 stipulates that the provision of Section 69 and Chapter X shall apply to stores (other than those to which Section 90 applies) as they applied to other goods subject to modification.
Section 90 sets out concessions in respect of imported stores for Navy. In the instant case we find that an application was made for warehousing the goods. In the Bill of Entry the goods were declared as 'ship stores' fraudulently. The goods were cleared on presentation of shipping bills as being taken on Board of a Naval ship or a foreign going vessel but in actual practice the goods were diverted to local market and sold there. Thus, there has been a contravention of Section 60 inasmuch as Section 60 was contravened because fraudulently permission was obtained to warehouse, the goods incorrectly declaring them as 'ship stores'. There has been a violation of Sections 88 and 90 inasmuch as the goods were not supplied as 'ship stores' or stores for the Navy but were disposed of in the local market by diverting them. Therefore, the contention of the appellant that there was no contravention of Section 60 read with Sections 88 and 90 is not tenable.
Ld. Counsel submitted that Section lll(j) shall also not be attracted particularly when the goods were cleared with the permission of a proper officer whereas Section lll(j) refers to such conditions which are required to be fulfilled by an exporter prior to his physically clearing the goods for exports.
32A. In the instant case we find that the goods were purported to be cleared as 'ship stores' or stores for Navy but in actual practice they were diverted to the local market. Thus there was a violation of the permission accorded by the proper officer and therefore, Section lll(j) violation is established because Section lll(j) provides any dutiable or prohibited goods removed or attempted to be removed from a Customs area or a warehouse without the permission of the proper officer or contrary to terms of such permission. In the instant case we find that permission was accorded to clear the goods as 'ship stores' or 'stores to Navy'. These terms were violated and hence there was a contravention of Section lll(j) and we hold accordingly.
33. Ld. Counsel submitted that in the SCN dated 23-12-1997 two ship bills Nos. 153 & 155 of M/s. Seaking Marine Service on which the orders for clearances for re-export had been passed by the proper officer on 18-12-1992 is barred by limitation in terms of Section 28(3)(a) according to which the date on which the proper officer makes an order for clearance of the goods is the relevant date to compute limitation of six months or five years as the case may be. He submitted that duty on these two shipping bills if calculated under Section 15(1)(c) works out to Rs. 2,80,333.00.
34. We have examined the provisions of Section 28(3)(a). It provides for relevant date for the purpose of Sub-section (1) in a case where duty is not levied and interest is not charged the date on which the proper officer makes an order for the clearance of the goods. We agree with the contention of the ld. Counsel that the proper officer had ordered clearance of the goods on 18-12-1992 whereas SCN was issued on 23-12-1997, therefore, demand for duty on these two shipping bills Nos. 153 & 155 is beyond a period of five years which is not permitted in terms of Section 28(3)(a).
It was contended for the appellants that since there was no violation of Section lll(j) and lll(o), therefore, imposition of penalty was not warranted. We have considered the provisions of the above Sections of the Act. We are satisfied that there was contravention of these Sections and we held that imposition of penalty is sustainable in law.
35. Ld. Counsel submitted that as soon as the investigating officers contacted M/s. Montana Valves & Compressors, Shri Bhavesh Gandhi disclosed all transactions not only about their firm but also about the affairs of M/s. Sea King Marine Service and M/s. Fairlon Engg. Pvt. Ltd. He submitted that within a short period the amount of duty calculated under Section 15(1)(b) was paid. He submitted that this showed the co-operation of the appellants and therefore, there should have been no penalty imposed. It was also contended that there was no repetition subsequently, therefore, penalty was not warranted. He referred to the Circular No. 685/17/20-694 issued by the Central Board of Direct Taxes clarifying that to encourage immediate voluntary compliance the Board has decided that proceedings under Sections 221 and 271 (c) for levy of penalties and proceedings under Section 276(b) for prosecution need not be initiated in cases where an employer voluntarily comes forward and pays the whole of the tax due under Section 192 alongwith interest liability under Section 201(1)(A) on or before July 31,1994. He submitted that in case of Bhavani Mills Ltd. the Hon'ble Madras High Court held that although there was no indication as to the date on which the tax on the suppressed turnover was paid, the facts show that even before the presumption notice was issued on Dec. 1980, the dealer had filed the revised statement and as per the revised statement, no suppression could be alleged. The levy of penalty under Section 12(5) was not justified. He submitted that the facts in the case of the assessee are identical and therefore, penalty was not justified.
36. We have examined the circular and the case law cited and relied upon by the appellant. We find that in the instant case there was a planned evasion of duty by making deliberately wrong declarations. The appellant did not come forward on their own, but disclosed the affairs only when the officers raided their business premises etc. Thus, we hold that imposition of penalty is sustainable.
37. Ld. Counsel submitted that penalty on the three appellants is excessive and harsh. It is much more than the duty which was not warranted as payment of duty was made within a week and that too much before the issuance of SCN. In support of his contention he cited and relied upon a circular issued by the Central Board of Direct Taxes pursuant to the judgment of the Hon'ble Supreme Court and Madras High Court. He submitted that duty evasion was disclosed suo moto and that full co-operation was extended to the investigating officers; that the amount deposited as duty was more than the duty calculated by the Department. He submitted that maximum penalty in such cases was 19% of the amount of duty involved. He referred to a long list of cases in support of his contention.
38. We have carefully considered the above submissions of the appellant. We have also examined the case law on the subject as well as the CBDT circular. We find that in the instant case the evasion was well planned and disclosure came only when the officers searched the premises of the appellant. Thus penalty was imposable. Regarding quantum of the penalty we note that the circumstances and facts are such as need reduction in penalty. We, therefore, reduce the penalty on M/s. Montana Valves & Compressors to Rs. 15 lakhs, on M/s. Sea King Marine Services to Rs. 14 lakhs and on M/s. Fairlon Engg. Pvt. Ltd. to Rs.16 lakhs.
39. Ld. Counsel submitted that the demand is time barred in respect of 7 shipping bills inasmuch as infraction of Section 90 is not proved nor established from the shipping bills themselves because the goods were neither stores under Section 90(3) nor had been delivered on Board a vessel of the Indian Navy; that this fact was known to the Customs authorities which is obvious from the endorsements on the shipping bills as also from the description of the goods. It was, therefore, contended that the demand was time barred.
40. Ld. DR submitted that Section 124 of the Customs Act read with Section 110 of that Act provides for issue of SCN. He submitted that Section 124 of the Customs Act does not lay down any time limit for issue of SCN; that time limit laid down under Section 110 of the Customs Act is for notice regarding seizure and does not limit the power under Section 124 of the Customs Act. In support of his contention he cited and relied upon the decision of the Apex Court in the case reported in 1997 (94) E.L.T. 459.
41. We have perused the rival submissions on limitation. We note that for purpose of demanding duty, Section 28 is the relevant section. Section 28 contemplates issue of notice for payment of duty not levied, short levied etc. and thus in the instant case, the notice should have been given as required under this Section. This Section clearly provides that the notice should be given within six months or within five years in certain circumstances.
The contention of the ld. DR was that there was no time limit and that time limit in respect of Section 124 read with Section 110 of the Customs Act, 1962 was only in respect of seized goods, on examination of the contentions we find that there is no force in the arguments of the ld. DR inasmuch as Section 124 read with Section 110 provide for issue of notice for confiscation of the goods and imposition of penalty and not for demanding duty. When there is a specific provision for issue of notice for demanding of duty etc. the notice for demand of duty can be issued in terms of Section 28 only.
42. Ld. DR further submitted that facts of the case revealed otherwise. He submits that evasion was pre-planned. He submitted that the goods were imported to meet the requirement of some local buyers including the Steel Authority of India Ltd. He submitted that an order was placed by Steel Authority of India Ltd., Bokaro with the appellants. He submitted that it was a case of fraudulent, wilful, misstatement of facts and suppression with the intention to evade payment of duty and therefore, five years period is applicable to the demands. He submits that all the demands are within five years and therefore, are not hit by limitation.
43. We have analysed the knowledge aspect also. We note that all the records for warehousing the goods and clearance thereof have been manipulated. Shipping Bills were presented deliberately for evasion of duty knowing full well that the goods are for sale in local market. No intimation was given to Customs about disposal of goods in the local market. Hence we hold that there was deliberate attempt to evade payment of duty. Hence larger period has rightly been invoked.
44. Ld. Counsel also relied on the judgment of this Tribunal in the case of J.K. Leatherite, Garden Reach Shipbuilders, Chander Lakshmi Tempered Glass and New India Dyeing & Finishing Mills. All these cases pertained to the orders and not to SCNs. Order cannot be placed at the same pedestal as a SCN. A SCN is a narration of the investigations and allegations stated briefly proposing action. An order on the other hand is a determination of the issue raised therein and therefore, the same standard cannot be applied to both. Thus the cases are distinguishable.
45. Having regard to the above facts we note that SCN was properly drawn as valid document. The objection of the appellant that the SCN was not valid is, therefore, rejected.
46. Ld. Counsel for the appellant also submitted that the Order-in-Original was not valid inasmuch as it was not signed by the Commissioner, except mention of Sd/also bearing attestation by Assistant Commissioner of Customs that the Order-in-Original is available in the Departmental adjudication file, DFA is written on the top that it is undated un-numbered prepared by the AC adjudication and not by the Commissioner; that it is only initialed by Commissioner and not signed that there are numerous corrections that these corrections are noted having been made in different language.
47. We have heard these contentions of the ld. Counsel. We find that nothing has been brought on record that the corrections, cuttings etc. were made subsequent to the signing or initialling of the order. From the copy of the order placed on record, we find that the order issued is numbered date is given, the order indicates the name of the parties. The order does not show any cutting or mutilation. Simply because the draft in the file was showing some cuttings, amendments etc. shows clearly that it was before the approval and once the approval is given and signed it becomes a part of the order of the officer who signed it. Thus we do not find any force in this contention of the appellant also.
48. In the light of the above discussions & findings, we hold
(a) Confirm the demand for duty on consignments cleared from warehouses in the jurisdiction of the Commissioner of Customs (Preventive), Mumbai.
(b) We set aside the order of determination of duty on consignments cleared from warehouses in the state of Gujarat on account of lack of jurisdiction. However, the Department shall be at liberty to enforce the Bonds, if any, in respect of these goods.
(c) We set aside the demand of duty and its determination in respect of Shipping Bills Nos. 153 & 155.
(d) We reduce the penalty on (i )MVC to Rs. 15 lakhs
(ii) FEL to Rs. 15 lakhs
(iii) SMS to Rs. 16 lakhs
(iv) Alankar Shipping to Rs. 2 lakhs
(e) The amount paid voluntarily towards penalty amounting to Rs. 10 lakhs on 3-12-1997 in the case of MVC and the amount of duty paid in excess of what has been determined in the case of SMS shall be adjusted against the penalty liability of MVC and SMS respectively.