Customs, Excise and Gold Tribunal - Tamil Nadu
Pushpit Steels Pvt. Ltd. vs Commissioner Of Customs on 10 August, 2000
Equivalent citations: 2001(130)ELT520(TRI-CHENNAI)
ORDER S.S. Sekhon, Member (T)
1. Miscellaneous application for expeditious hearing of appeals allowed as goods lying uncleared and appeals taken up for hearing for decision by this order. The appeal is against the order of the Commissioner of Customs, Kochi, wherein duty of Rs. 27,96,382 has been demanded and consignment of HSM scrap imported vide Bill of Entries No. 7724/23-11-1998, 83029/31-2-1998, 8593/23-12-1998, 8698/28-12-1998, 32/4-4-1999, 33/4-1-1999 and 34/4-1-1999 were found liable for confiscation under Section 111(d) and 111(m) of the Customs Act, 1962. However, as only 655.43 MT of cargo was under seizure and therefore this amount of scrap was ordered to be confiscated under Section 111(d) and 111(m) of the Customs Act, 1962 with option of redemption on payment of fine of Rs. 7,50,000 besides penalty of Rs. 5 lakhs was imposed on appellants-importers i.e. M/s. Pushpit Steels (P) Ltd. under Section 112(a) of the Customs Act and penalty of Rs. 1 lakh was imposed under Section 112 (a) of the Customs Act, 1962 on Anand Kumar Garg.
2. (a) Three BEs were filed for HMS scrap and were cleared duty free on advance licences on Bill of Lading as per chart given below :
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Sl. Bill of Entry Bill of Lading Adv. Licence No. Expiry
No. No. dt.
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1. 7724/23-11-98 APLU006405988 P/0483935/C/XX/33 11-9-98 / 30-9-98 /C/94
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2. 8029/3-12-98 KWT/XPK/207 -do- -do-
/ 044/29-9-98
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3. 8593/23-12-98 APLU006406568 P/W/03497924/C/X 30-9-98 /29-9-98 X/31/C/93
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Total quantity of the HMS scrap covered by these three BEs was 436 MT out of which 356 MTs could not be located and was said to have been consumed and 70 MT was seized at the factory premises of the importer at Pondicherry.
(b) In the following BE, 585 MT of the HMS scrap was imported by the same importer through Kochi port.
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Sl Bill of Entry Bill of Lading Adv. Licence No. Date of No. expiry
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1. 8698/28-12-98 APLU006406585 E/W/0363903/C/ 30-9-98 /29-9-1998 XX/32/C/94
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2. 32/4-1-1999 -do- -do- -do-
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3. 33/4-1-1999 APLU006406610 P/W/036390/C/X -do-
/29-9-1998 X/32/C/94
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P/W/0483615/C/ -do-
XX/33/C/94
P/W/0363941/C/ 24-9-98
XX/32/C/94
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4. 34/4-1-1999 APLU006406611 P/W/0363941/C/ 24-9-98 /29-9-1988 XX/32/C/94
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These BEs were not assessed, but were taken over by the DRI officers who had developed intelligence that the said importer was misusing the Advance Licences with the help of bogus import documents and was clearing HMS scrap duty free. Enquiries were conducted by the DRI officers with the shipping agents and others, including the original exporters who were issued with the said import licences and the consequent to these enquiries, 28 containers of scrap covered by the four BEs pending clearance at Kochi Customs House were removed from Kochi Port escorted to the importer's manufacturing premises at Pondicherry, where they were examined and seized on various dates from 12-2-1999 to 18-2-1999. Show cause notice was thereafter issued by the Additional Director General of the DRI resulting in the above said order of the Commissioner of Customs, Kochi.
3. Appearing on behalf of the appellants, Shri Rawal, learned Counsel reiterated the grounds made in the appeal and submitted the following points.
(a) the subject goods are placed under the OGL and no licence was required for import and as such irrespective of the fact whether the Bill of Lading are ante dated as alleged, even otherwise the order of confiscation could not have been passed.
(b) DRI cannot issue show cause notice under Section 124 read with Section 28 of the Customs Act, 1962
(c) There is no allegation of intent to evade payment of duty in terms of Section 28 of the Act by fraud or collusion and as such the bar of limitation for issue of show cause notice can be put into operation. In the alternative, subject to what is submitted above, if all or any duty is liable to be paid, appellants being the actual users, is entitled to concessional rate of duty in terms of the Customs Notification No. 23/98 (Sl. 123). Part of the goods weighing 426 MTs have been cleared on BEs assessed by the Proper Officer, without any adverse remarks after physical verification and this cannot be the subject-matter of confiscation since the said order of assessment tantamounts to order of adjudication and the Customs authorities have no power to review their own orders.
(d) Since the goods cannot be directed to be confiscated, therefore, levy of redemption fine and penalty cannot be ordered.
(e) He also relied upon the decision in the case of Mahendra R. Saraf & Co. v. C.C., Bombay of the North Regional Bench of the Tribunal vide Final Order No. A/567/97-NB, dated 21-4-1997 to submit that confiscation of the goods is not called for when admittedly as in this case, the goods are freely importable. He also relied upon the decision in the case of C.C. v. Pune Roller as reported in 1997 (89) E.L.T. 604 and also the decision of M/s. Batmen's Home Products (Pvt.) Ltd. reported in 1997 (95) E.L.T. 278 (T). As regards the demand being barred by limitation he relied upon the decisions HMM - 1995 (76) E.L.T. 497; Padmini Products & Chemphar.
(f) Since the appellants-importer is the actual users they are entitled to the benefit of concessional rate of duty subject to the conditions which are to be carried out post importation only.
4. The learned DR submits that:
(a) so far as the Bill of Lading dates are concerned, Section 46(4) prescribes a declaration to be filed subscribing to the truth of the contents of such Bill of Entry. In the present case, the Bill of Lading dates are not true and correct and manipulated which amount to mis-statement and misdeclaration.
(b) Section 11(2) (u) of the Act read with Section 111(m) of the Customs Act, 1962 would render the liability for confiscation.
(c) Provisions of Section 110 of the Customs Act, 1962 permits seizure to be effected at any place.
(d) Goods are admittedly freely importable with a rider that on payment of appropriate customs duty and in this case, appropriate customs duty was not paid and was not intended to be paid. He submitted that Section 28 is invocable because the Bill of Lading which were presented are manipulated thereby resulting in clearance of some goods duty free which were not required to be cleared duty free.
(e) As regards Notification 23/98 actual user condition has to be fulfilled in terms of having furnace in the factory and the benefit of this Notification was not available to the importer as the importer was trying to clear the goods under advance licence with nil rate of duty. The concessional rate of duty was not available on manipulated documents.
(f) DRI officers are declared to be Customs Officers and the Commissioner's order and findings on this point as in para 51 of the Order-in-Original are reiterated.
In view of the above submissions, the appeal should be rejected. He also reiterated the written submission dated 12-4-2000.
5. The learned Counsel in the rejoinder submitted that there is no misdeclaration vis-a-vis goods under clearance and therefore Section 111(m) as contended by the Revenue cannot be invoked. Similarly goods being not prohibited, will be outside the scope of Section 111 read with Section 2(33) of the Customs Act, 1962.
6. We have considered the submissions and the material on record and find that:
(a) Para 13 of the Customs Appraising Manual Vol. II, (Second Edition) printed in 1990 stipulates that:
"if at the time of importation it is found that the licence against which the goods have have been imported does not cover the goods or if the goods are not covered by open general licence under which the goods have been imported, clearance of the same against a valid import licence if produced by the importer may be considered, provided that the importation is otherwise bonafide".
Therefore, we find it was incumbent on the 'proper officer' of the Customs to have considered the present impugned imports on the four BEs pending assessment under OGL since they are not restricted for import otherwise. This has not been considered along with the request of the importers for eligibility of the Notification No. 23/98-Cus. for use as actual users. The Commissioner has found in para 50 as follows:
"The next contention raised by the importers is that, they being actual users, the applicable rate of duty is only 31.56% as against the demand of 612.46% made in the show cause notice. They have also stated that they are making the claim as per Notification 23/98-Cus. I find that there is no material evidence in file to show that the importers are actual users of imported goods, except the claim made in the written submission given at the time of the personal hearing. It is also seen in the entry made in the advance licences that the duty foregone is 61.46%. Moreover, no such declaration, as to them being actual users, have been made by the importers in the respective Bill of Entry. Hence the claim now made by them can only be seen as an attempt to reduce the amount of duty payable, now that they have to pay duty for the imported goods."
We are not able to appreciate this finding as there was material evidence on record about the importers being actual users of imported goods to accept the claim made since the order itself in para 21 records -
"The 28 containers of scrap seized by Senior Intelligence officer, DRI on 8-2-1999 were sealed by Customs bottle seal and transported to the factory premises of M/s. Pushpit Steels (P) Ltd., Pondicherry under the escort of DRI officers. The above said 28 containers of scrap were opened, destuffed and examined in the presence of Superintendent of Central Excise, Range III, Pondicherry and cargo contained in the containers were seized by Superintendent of Central Excise, Range III Pondicherry under the following mahazars Mahazar Quantity 12-2-1999 146.675 MT 270.865 MT 16-2-1999 146.940 MT 18-2-1999 20.950 MT"
which indicates very clearly that the importers are bringing such like goods which and are being consumed in their factory at Pondicherry and little efforts made on the part of the investigating and adjudicating authority could have established beyond all doubts whether the importers were having furnace in the premises or not. Therefore, the order regarding confiscation of the goods covered by 4 BEs amounting to 560 which were seized before the assessment of these BEs is required to be set aside with a direction that the said BEs should be re-assessed by the 'proper officer' of the Customs House Kochi and the claim of the appellant-importers should be examined for the benefit of the Notification 23/98-Cus. by that officer and BEs assessed for clearance on appropriate duty as, we find no reason for confiscation of the goods under clearance which are not even assessed by the proper officer.
(b) When goods are otherwise eligible for clearance without the licences in question, confiscation under Section 111(d) cannot be upheld (relied on Tribunal order No. A/567/97-NB, dated 21-4-1997 by the learned Counsel). The production of advance licence and acceptance would involve the benefit of clearance duty free under the relevant DEEC exemption Notification and mere claim of such exemption Notification is not rendering the goods covered by the four BEs eligible for confiscation under Section 111(m). We rely on the decision in the case of Northern Plastics reported in 1998 (101) E.L.T. 549 (S.C.).
(c) We find there is substantial force in the arguments of the learned Counsel that the demands of duty under Section 28 of the Customs Act, 1962 have to be made by the proper officer and not by the DRI officers, since proper officer of Customs has been designated by the law. Interpretation as arrived at by the learned adjudicating authority in para 51 of the impugned order and issue of demand under Section 28 of the Customs Act, 1962 is therefore not upheld in view of the decision in the case of Pune Rollers as reported in 1997 (89) E.L.T. 604 and. Bakeman's Home Products Pvt. Ltd. v. CC as reported in 1997 (95) E.L.T. 278 for the goods covered by the four BEs under assessment. The theory of "committy of courts" postulates that when there are two or more courts having parallel jurisdiction over the same matter, as in the present case i.e. the Commissioner of Customs and the ADG of the DRI exercising concurrent jurisdiction and powers of the Customs Officer, then the jurisdiction of the second and the other authorities are eclipsed when any one of the authorities has taken cognizance of a particular issue. In the present case, the four BEs have been filed in the Kochi Customs House for clearance of the imported goods and noted cognizance has therefore been taken by the proper officer of the Kochi Customs. Therefore, the jurisdiction of the DRI to take cognizance of the matter of issue of demand under Section 28 by issue of said show cause notice is automatically eclipsed till an order under Section 47 of the Customs Act, 1962 is passed in the matter by the assessing officer of Kochi Customs. In the case of Ramnarain Biswanath reported in 1988 (34) E.L.T. 202 at page 224, 226, the Tribunal it was held :
"In fact if the Collector starts disregarding the action taken by another, chaotic conditions will prevail and a citizen would never be at rest. This could not be the intention of the legislature or the Government or even the Department of Revenue itself for the matter."
Therefore, if the DRI had the information/intelligence about the manipulated documents being presented for imports and they did not want to share the same with the Kochi Customs, they should have awaited the intention to have been converted into a reality by proper officer having accepted such documents in question and finalise the assessment. The act of seizing the goods covered by the four BEs sealing the container and removing it to Pondicherry in the absence of an order of the 'proper officer' of Customs Kochi under Section 47 or 49 of the Customs Act, would be in contravention of Section 45 of the Customs Act, 1962 as no such orders under Section 47 or 49 by the proper officer of Customs are before us. We find that Section 110 of the Customs Act, 1962 does not inhabit the powers of seizure of goods anywhere in India, but the same have to be exercised along with the other powers/duties/obligations under the other Sections of Customs Act, 1962. The confiscation and seizure of the goods covered by the four BEs by DRI and again Central Excise Supdt. at Pondicherry is therefore not called for in this case. Therefore, the show cause notice and order of confiscation of goods covered by the four BEs pending assessment is required to be set aside. These BEs are required to be assessed by the proper officer of the Kochi Customs as per law and directions in the Appraising Manuals. The appellant-importers be given an opportunity to produce such other licences, including the claim under OGL, as they may be advised in the matter, to produce before the proper officer of the Kochi Customs.
(c) As regards the seizure of 71 MTs of scrap we find no infirmity in the seizure of the goods in the factory premises which were assessed duty free, and cleared earlier, where the Bill of Lading (BL) date was alleged to be not correct. We uphold the show cause notice and the power of the DRI officers to issue show cause for goods which have already been assessed by the proper officer of the Kochi Customs House. Since we have to set aside part of the order and the show cause notice for the four BEs, the total demands of duty made will have to be re-determined along with redemption fines and consequently the penalty. The matter regarding part of consignment of earlier goods seized at the factory at Pondicherry has to be kept open for re-adjudication and re-determination of the redemption and penalty as per law. The appellant-importers on the other hand will also have the full freedom to contest the proposed confiscation under Section 111 (d) and (m) of the Customs Act, 1962 which should be re-determined by the Commissioner of Customs, Kochi. In view of the decision in the case of Northern Plastics reported in 1998 (101) E.L.T. 549 (S.C.) no findings are therefore being arrived at on the liability of confiscation under Section 111(d) and (m) for this part of seizure.
(d) In view of our findings so far as the order regarding 561 MT covered by four BEs pending clearance in the Kochi Customs the same is required to be set aside along with the show cause notice and the BEs are remanded back for assessment by the proper officer of the Kochi Customs House.
(e) The order regarding confiscation of 71 MTs of scrap seize at Pondicherry cleared in the earlier consignment is set aside. Show cause notice regarding this part of seizure at Pondicherry and confiscation of the said quantity is required to be upheld and remanded to the Commissioner, Kochi Customs, for re-adjudication.
(f) In view of our findings the orders on penalty and duty demand are therefore required to be set aside and remanded for de navo adjudication.
7. We order as above and allow the appeals accordingly.