Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Customs And Central ... vs Jayant R. Patel on 27 August, 2001
JUDGMENT
1. This is a Revenue appeal against the order in original No.CUS.3/96 dated 113.1996 by which the Commissioner has held as under:
ORDER The benefit of the DEEC Scheme shall be disallowed in respect of the said entire quantity of 1,66,888.18 Mtrs. of the said fabrics.
Under Section 111(d) of the Customs Act, 1962, I confiscate 50,088.18 Mtrs. of the said fabrics valued at Rs.12,02,100/- (CIF) and the two sample cardboard boxes containing samples of no commercial value. However, under Section 125 of the Customs Act, 1962, I give an option to Shri Jayant of Gaint to redeem the said fabrics on payment of a fine of Rs.2,00,000/- (Rupees Two lakhs only) in lieu of confiscation, within three months from the date of this order. On payment of the said redemption fine, the above mentioned 50,088.18 Mtrs. of fabrics shall be allowed to be cleared on payment of the appropriate duties of Customs leviable thereon, and on collection of the appropriate storage charges as per the instructions in force.
I order release of 1,16,800 Mtrs of the said fabrics valued Rs.28,03,200/- (CIF) to Shri Jayant on payment of the appropriate duties of Customs leviable thereon, and on collection of the appropriate storage charges as per the instructions in force.
I drop the proceedings initiated under the said Show - cause Notice against Praga and Shri Kishore.
Under Section 112(a) of the Customs Act, 1962, I impose a penalty of Rs.20,00,000/- (Rupees Twenty Lakhs only) on Shri Jayant of Gaint.
2. Against the above order, the party viz. Shri Jayant R.Patel had filed an appeal before this Tribunal and the Tribunal vide their order No.1516/96 dated 2.9.96 in para 7 to 14 has held as under :
7. We have considered the submissions. The point that arises for our determination is whether the appellants are entitled for the benefit of the Notification No.159/90 and in the alternative 204/92. In this case, the show cause notice was issued to the appellants even before the bill of entry was filed. The adjudication order was also issued prior to the filing of the bill of entry. The goods imported by the appellants are polyester fabrics. There are converted by the licence. The department alleges that these polyester fabrics cannot be used in the ladies garments which are exported. In support of this contention the department is relying on the panchanama dated 18-11-1992 wherein the trade panelist had made an observation that the above samples of fabrics are meant for use in the making of gents dresses. It is on this evidence the learned SDR contended before us that if these goods cannot be used in the garments of ladies which was actually exported then the appellants are not entitled for the benefit of this notification. Therefore, he relied on the decision reported in 1995 (75) E.L.T. 865. In this case, it is seen that the appellants have sought for the cross-examination of the persons who have signed the panchanama. In order to make the opinion of the expert admissible in evidence, it must be first shown that the persons who signed the same are experts in view of their qualification etc. In order to test this veracity, the appellants have sought for the cross-examination of these persons. The department had allowed the cross-examination of one persons Sri Venkateswara Rao. In Para 38.7.2.the adjudicating officer has mentioned the deposition of these witnesses in the cross-examination. He has stated that Venkateswara Rao in his cross-examination had stated that 100% polyester fabrics were being used in the manufacturing of coats, skirts and ladies, dresses, etc. and he had agreed that 100% wool was thicker than 100% polyester fabric. Therefore, the evidence of Venkateswara Rao who is one of the panellists is clear that this type of imported materials can be used for the manufacture of ladies dresses. In our view of the above evidence the opinion given by the trade panelist loses its evidentary value wherein it was stated that this is only suitable for making gents dresses lose its value. No reasons are furnished in the impugned order as to why this answer given by the witness that this can be used in the manufacture of ladies dresses cannot be accepted. The learned adjudicating officer also has not chosen to cross-examine this witnesses on this point. He has not given any reason in his order as to why this evidence of the witness Venkateswara Rao cannot be relied upon. On the contrary, in the adjudication order, it is stated that it is unnecessary to examine whether the goods in question are suitable for capable of being used in the ladies, dresses worn by the women folk abroad. We are not able to understand as to how this is not a relevant material. The very basis of the show cause notice is that the goods imported are not capable of use in the ladies garments which are exported. If that is the only allegation made in the show cause notice, we are at a loss to find out as to how this observation was made by the adjudicating officer that if is unnecessary to examine whether the goods in question are suitable or not suitable for being used in the ladies dress which are exported. In fact, in our opinion, this is the most important point to be decided in order to see whether the appellants are entitled for the benefit of Notification No.159/90. On the contrary, we see that the Collector was convinced that these question were used for the manufacture of the ladies garments and that is why he has allowed the import of these goods. Further, the evidence given by Venkateswara Rao clinches the issue in view of the fact that he has clearly stated that these goods imported are usable in the manufacture of suits and ladies dresses. The department has also taken five years to investigate the matter and no worthwhile evidence has been brought on record to show that these goods imported cannot be used in the manufacture of ladies dresses which are already been exported. It is further seen that the department wants to deny the benefit on the ground that Hyderabad is not a place which is mentioned in the abovesaid notification. In this connection, the learned representative had relied on the decision of the Hon'ble Calcutta High Court in the case of M/s. Kalinidi Woollen Mills (P) Ltd. v. UOI reported in 1994 (74) E.L.T. 827 (Cal.). It was held in that decision that the said condition is arbitrary and discriminatory and without jurisdiction and is violative of Articles 14, 19, 34 of 18 & 34 of the Constitution of India as well as ultra vires of Section 3 of the Imports & Exports (Controls) Act, 1947. This same view was taken by the Hon'ble Madras High Court in WP No. 2167 of 1990 and decided on 25-4-1990 [reported in 1991 (33) E.C.R. 419 (Mad.)] in the case of B.L.Tandon v. UOI. This decision of the Hon'ble Madras High Court in binding on this Tribunal.
8. Reliance was placed by the learned representative on the decision of Tribunal reported in 1996(63) ECR 111 in the case of M/s. Nitco Marble and Granite Pvt. Ltd. & Anr. v. CC wherein at Para 4, the Hon'ble President of the Tribunal delivering the judgment of behalf of the Bench observed as follows:
"4. When an exporter invoking the DEEC scheme exports goods ,they are subjected to scrutiny by the customs authorities who, on satisfaction make necessary entries in the export book of the quantity, description and value of the exported goods. The export book is required to be audited by the customs authorities on receipt of foreign exchange by the exporter. The audited book is submitted along with the licence to the licensing officer under DGFT since the import application would have already been made. Such authority if satisfied on examination and scrutiny makes an endorsement regarding transferability of the licence. It is by virtue of this endorsement that licence could be transferred, thereby passing on entitlement to duty free import of the permitted raw materials or components. This being the procedure required to be followed the matter receives scrutiny at the hands of two different authorities at two different stages. It may be possible for either of the authorities at the respective stages to examine the matter and arrive at the conclusion that the exported goods were not manufactured out of the goods in respect of which the import licence has been sought. If the customs authorities are not satisfied on examination of the exportable goods and the declaration and other persons, they would not make the requisite entries in the export book and that will be ordinarily the end of the matter so far as the DEEC scheme is concerned. If, however, the customs authorities on the basis of examination are so satisfied, they are required to make appropriate entries in the export book which along with the licence will be presented before the licensing authority to examine the entire matter and the satisfied about the correctness of the averments placed before it. If the licensing authority is satisfied that no advances licence can be granted under the DEEC scheme in regard to the export obligation which is said to have been performed, it is open to the authority to decline to grant advance licence. At the third stage in relation to chain, namely, the stage of import, neither the exporter nor the transferee of the licence would be required to be called upon to satisfy the customs authorities once again that the duty free import entitlement was legitimate. It is unnecessary for us to consider that what would be the procedure required to be adopted if one further examination irregularities in the performance of the statutory functions at the earlier stages are discovered. Irrespective of whether further examination or formation of opinion is permissible in the ordinary course, the importer cannot be required to prove once again the eligibility for duty free import of the permitted goods."
A perusal of this decision clearly go to show that if the licensing authority is satisfied that no advance licence can be granted under the DEEC scheme in regard to the obligation which is said to have been performed, it is open to the authority to decline to grant advance licence. It was also held in the decision that at the third stage in relation to chain, namely, the stage of import, neither the exporter nor the transferee of the licence would be required to be called upon to satisfy the customs authorities once again that the duty free import entitlement was legitimate. It was, therefore, held in that decision that irrespective of whether further examination or formation of opinion is permissable in the ordinary course, the importer cannot be required to prove once again the eligibility for duty free import of the permitted goods. This is what exactly the department is now asking the appellant to do. Therefore, the abovesaid decision squarely comes to the aid of the appellant and accordingly, we hold that the appellant is entitled for the benefit of Notification No. 159/90. Alternatively, it was contended that the appellant is also entitled for the benefit of Notification No.204/92. It is now seen that the appellants have filed the bill of entry after this notification was issued by the Govt. on 19-5-1992. Therefore, it is a relevant notification which has to be considered. As per Clause 4 of Chapter 1 of EXIM Policy 1992-97, it is made clear that licence issued before the commencement of this policy shall continue to be valid for the import/export of the items permitted thereunder. It is to be seen that whether this licence is a quantity based licence and the quantity based licence shall specify the names and description of items to be imported and the quantity of each item to be imported and the c.i.f. value of imports. In the present licence, the quantity as well as the value descriptions are clearly mentioned and therefore it is a quantity based advance licence. This licence issued for the previous policy period will continue to be valid for the present period also in view of the transitional arrangement as contained in Para 4 of Chapter 1 of EXIM Policy 1992-97. This argument of the learned representative is therefore having force and we accept the same. Therefore the alternative argument of the learned representative is that benefit of Notification No.204/92 applies to the appellant. In this notification Hyderabad is also included as one of the place wherein the import can be made. One this count also, the appellant should get the benefit. Therefore, we are of the view that the import of the goods is permissible and denying the benefit of these two notifications in the impugned order is not in accordance with law. We set aside the same and hold that the appellants are entitled for the benefit of these notifications in respect of the goods which are covered by the licence and not with respect to the goods which are found in excess.
9. In regard to excess goods, the plea of the appellant was that they did not know about the excess and therefore they stated that these goods are not excisable. The learned representative stated that there is no mis-declaration in this behalf as the bill of entry has not yet been filed that there is nothing to say that the appellants were aware of the excess. There is nothing on record to show that they have made any such correspondence with the supplier that it is in excess. In any transfer, the moment it is found that these goods weighing 50,088.18 mtrs. are in excess of the licence granted to the appellants and also the declared invoiced quantity, they are confiscable. The only question to be decided is whether the redemption fine of Rs.2.00 lacs is required to be reduced.
10. The learned representative stated that these goods are lying for more than 5 1/2 years, as the import was made in the year January 1992. The goods according to him have diminished in their value and these circumstances are also relevant for the purpose.
11. We have considered the submissions. In the fact and circumstance of the case, we reduce the redemption fine to a sum of Rs.1.50 lacs. The appellants are also liable to pay the appropriate duty in accordance with law at the time of clearance of these goods after payment of the redemption fine.
12. The next question is whether penalty can be imposed on the appellants. It is now seen that penalty imposed on the appellant is under section 112(a) of the Customs Act. It is also seen that this quantity was not invoiced which is in excess of the licence of the appellant. They have also not taken this matter with the supplier. There is no record in this case to show that the appellants have mentioned about this fact to the supplier that they have sent this excess quantity. The appellants are therefore liable to be penalised in this regard. We have already extended the benefit of the notifications to the appellant. Now the penalty to be imposed will be only with respect to the excess quantity which is imposed and the learned adjudicating officer has not given any specific reasons for imposing such huge penalty. In the fact and circumstances, the penalty is reduced to Rs.75,000/- (Rupees seventy five thousand).
13. At this stage, the learned representative stated that there was no point in the show cause notice that the appellant has to pay the storage charges and that the adjudicating authority should not have given any finding in this regard. We agree, However, the administrative Collector is to look into this aspect and make appropriate orders in this behalf.
14. In the premises, the appeal is disposed of in the above terms.
3. The Revenue had filed appeal before the Hon'ble Apex Court against the above order of the Tribunal and the appeal had been dismissed by the Hon'ble Supreme Court vide order dated 24.4.1997. In the present appeal the Revenue is aggrieved by the impugned order of the Commissioner.
4. Learned Counsel for the Respondents at the outset mentioned that the importer was also aggrieved by the impugned order and had filed appeal before this Tribunal and the Tribunal had passed an order in his favour which is already extracted above. He further submitted that the goods have already been redeemed and the order of the Tribunal has been confirmed by the Hon'ble Apex Court. It is his contention that the benefit of the Notification No.159/90 is available to the respondent. Therefore the appeal of the Revenue is infructuous and is required to be dismissed as the matter has reached finality.
5. The learned DR reiterates the grounds made out in the Revenue appeal.
6. We have carefully considered the submissions made and perused the records. The appeal of the respondent viz. Shri Jayant R.Patel arising from the same impugned order of the Commissioner has been disposed of by the Tribunal by holding that in respect of 100% Polyester fabrics covered by licence and usable in manufacture of suits and ladies dress, duty free import entitlement is not to be proved again by the exporter or transferee of licence once advance licence has been granted by the DGFT and accepted by the Customs authorities. Therefore the assessee is entitled to the benefit of exemption in terms of Notification No. 159/90-Cus dated 30.3.1990. Inasmuch as the appeal filed by the Revenue against the above decision of the Tribunal has been dismissed by the Hon'ble Apex Court, the Revenue appeal has become infructuous and is not maintainable. Ordered accordingly.
(Dictated and pronounced in open Court)