Customs, Excise and Gold Tribunal - Delhi
Costa Foods vs Collector Of Customs on 7 July, 1988
Equivalent citations: 1989(43)ELT279(TRI-DEL)
ORDER Harish Chander, Member (J)
1. M/s. Costa Foods, Cochin-682 002 have filed an appeal being aggrieved from the Order-in-Original No. AP/INT/11/86, dated 6th April, 1987 passed by the Collector of Customs, Cochin.
2. The facts of the case are that M/s. Costa Foods, Cochin, had filed 31 shipping bills for the export of frozen marine products including frozen frog legs. The exporter had declared in the shipping bills (a) the exports were made in discharge of the export obligation under DEEC scheme and (b) they were not claiming drawback of duty on packing materials viz. corrugated board master cartons, duplex board inner cartons and polythene sheets. The exporters were issued an advance Licence No. P/L/0342342 dated 3.9.1983 and a Duty Exemption Entitlement Certificate Book No. 005173, dated 12.9.1983. In part 'C'of the DEEC book, the list of materials to be imported under the scheme was shown as (1) 33 metric tonnes white card board, other than ivory board, (2) 21 metric toones of kraft paper and (3) 15 metric tonnes of polythene moulding powder for a total CIF value of Rs. 5 lakhs. In part 'E' of the DEEC book, the resultant export products were shown as "Frozen shrimps, frogs legs, cuttle fish" and other marine products, duly packed in the packing material made of the items allowed for import. The net weight of the packing materials made of white card board, kraft paper and polythene moulding powder was not to be less than 30 metric tonnes, 19.09 metric tonnes and 14.28 metric tonnes respectively for an FOB value of Rs. 80 lakhs to foreign countries within six months from the date of clearance of the first consignment against the advance licence.
The exporters imported 32.9835 metric tonnes white card board under Bill of Entry No. FF. 931/84, dated 8.3.1984,15 metric tonnes high density polythene moulding powder under bill of entry No. FF. 944/84, dated 9.3.1984 and 11,139 metric tonnes kraft paper under Bill of Entry No. FF.1319/84, dated 21.3.1984 and cleared the same duty free under G.O.I Notification No. 117/78, dated 9.6.1978 as amended by Government of India Notification No. 125/85 dated 12.4.1985. These imports were made through Madras . Port.
The exporters filed shipping bill No. 899, dated 9.9.1983 for their first export of 205 cartons frozen shrimps through Cochin in discharge of the export obligation under the DEEC scheme. In the invoice and the shipping bill they had declared that the inner cartons were of duplex board and the master cartons were of corrugated board. Further, they had not claimed drawback of duty on these packing materials. No mention was made in any of these shipping documents to the effect that these packing materials were made out of imported white card baord, kraft paper of HDPE.
The exporters got the endorsement at part 'F of the relative DEEC book and claimed discharge of export obligation. They had also produced certificate in form T of the DEEC book before the D.C.C.I & E, Cochin. As there was information that the exporters had not utilised the imported items for the purpose for which they were imported duty free under Notification No. 117/78 and that they had exported only locally made packing materials, the office premises of M/s. Costa Foods, Cochin were searched by the officers of the Custom House Cochin on 4.1.1986 and incriminating documents useful for the proceedings under the Customs Act, 1962 were seized. Summons under Section 108 of the Customs Act, 1962 was issued to Shri Rasheed, Partner of M/s. Costa Foods to appear before the Appraiser, Special Investigation Branch for giving evidence in the enquiry.
3. Scrutiny of the seized documents revealed that they had imported 32.9835 metric tonnes of white card board under Bill of Entry No. FF.931.84, dated 8.3.84 valued at Rs. 3,05,099/-, 15 metric tonnes of high density polythene moulding powder under Bill of Entry No. FF. 944, dated 9.3.84 valued at Rs. 1,43,772/- and 11.139 metric tonnes of kraft paper under Bill of Entry No. FF. 1319, dated 21.3.1984 valued at Rs. 55,143/- and cleared them free of duty under Notification No. 117/78 dated 9.6.1978. It was also revealed that they had purchased locally made corrugated board cartons and duplex board cartons and used them for packing the export cargo. No evidence was available to show that the imported white card board, kraft paper and polythene moulding powder were converted into cartons and polythene sheets, as specified in the advance licence and DEEC book.
As it appeared from the scrutiny of the seized documents that the exporters had contravened the provisions of clause (d) and (e) of Government of India Notification No. 117/78, dated 9.6.1978 (as amended), and that they were liable to pay duty on the imported white card board and also as they had made wrong declaration in the shipping bill for getting the export obligation discharged, a show cause notice was issued to them under Section 124 of the Customs Act, 1962, calling for their explanation as to why they should not pay duty on the imported white card board and why they should not be penalised under Section 114 of the Customs Act, 1962.
4. In the written representation the appellants had contested the jurisdiction of the customs department and had also argued that Section 113 of the Customs Act was not applicable as it related to only export goods and the present matter related to import of packing material only.
5. The Learned Collector did not accept the contentions of the appellants and had ordered the payment of customs duty of Rs. 5,66,739/- relating to white card board imported and also imposed a personal penalty of Rs. 50,000/-. Being aggrieved from the aforesaid order, the appellants have come in appeal before the Tribunal.
6. Shri A.K. Jain, the learned advocate has appeared on behalf of the appellants and had reiterated the facts. Shri Jain, the learned advocate has argued that the appellants' case is fully covered by a judgment of the Tribunal in the case of Metro Exports v. Collector of Customs, Cochin reported in 1988 (14) ECR 169. Shri Jain has argued that the facts of the present case are exactly the same. There are similar circumstances and in view of the earlier judgment of the Tribunal, the appeal filed by the appellants should be allowed.
7. Mrs. Vijay Zutshi, SDR and Shri C.L. Chakraborty, JDR have appeared on behalf of the respondent. The learned senior departmental representative has stated that in view of the earlier judgment of the Tribunal, she has got nothing to say and her arguments are the same which were in the case of Metro Exports v. Collector of Customs, Cochin in 1984(14) ECR 169 and she has pleaded for the dismissa o the appeal.
8. We have heard both the sides and have gone hrough the facts and circumstances of the case. In the matter before us the clearance of the imported goods was made at Madras. The show cause notice was issued by the Collector of Customs, Cochin and the adjudication has also been done by him. The facts of the present case are similar to the case of Metro Exports v. Collector of Customs, Cochin in 1988(14) ECR 169. Para Nos. 10,11 and 12 of the said judgment are reproduced below:
"10. Since the two preliminary submissions of Shri Jain are fundamental to the validity of the impugned order, we propose to deal with them first. Taking first the question of the Cochin Collector's jurisdiction to demand duty in the present case, we have to note the import of the goods took place at Madras. Their clearance duty free in terms of Customs notification was granted at Madras. In terms of the said notification, a claim was required to be made to the Collector of Customs, Madras for exemption from duty. A bond/legal undertaking for complying with the conditions specified in the notification was to be executed before such authority as may be approved by the Central Government. A declaration was to be filed by the appellants before the Asstt. Collector binding themselves to pay on demand an amount equal to the duty leviable, but for the exemption, on the imported materials in respect of which the conditions laid down in the notification had not been complied with (this declaration was filed before the Assistant Collector of Customs, Madras). There is, therefore, no manner of doubt that the Assistant Collector of Customs or the Collector of Customs, Madras was the proper authority who was the return a finding of non-compliance with the conditions laid down in the notification and to demand customs duty in respect of the quantity of goods in respect of which the conditions were not complied with. It is, of course, true that the use or utilisation of the imported materials in the present case was not in the Madras Collector's jurisdiction. If the Cochin Collector had reason to believe that the conditions laid down in the notification had been violated necessitating proceedings against the appellants which could have led to demand of duty, penalty, etc., the proper course would have been for him to report the matter to the Collector of Customs, Madras to enable the latter to proceed against the appellants in accordance with law. The Cochin Collector, however, seems to have assumed jurisdiction to deal with the matter himself. The analogy with Central Excise Rule 196 as sought to be drawn by Shri Naik is applicable. The rule itself provides for demand of duty by the proper officer having jurisdiction over the applicant-user who may have got his requirement of materials cleared duty-free or at concessional duty in terms of Rule 192 from a manufacturer situated in another officer's jurisdiction. Such is not the case here. The two decisions cited in this context are of no help to the Revenue. Shri Naik has sought to justify the demand on the plea that what was demanded by the Cochin Collector was not really duty but only an amount equal to the duty leviable. This contention is, on the face of it, untenable. For one thing, what the notification makes the importer liable to pay on demand is an amount equal to the duty leviable but for the exemption. No doubt the duty has to be quantified in an amount but, for that reason, it does not cease to be duty. For another, the Collector himself has no such illusion. He has quite clearly and categorically asked the appellants to pay the customs duty demanded in the show cause notice. If indeed the amount in question was not duty it could not have been demanded in terms of an adjudication order under the Customs Act but only in enforcment of the bond or legal undertaking executed by the appellants, if necessary through appropriate proceedings in a Civil Court. Shri Naik's contention has, therefore, to be, and is, rejected.
11. The department has not produced any notification or other legal provision (none has been placed before us) under which the Cochin Collector was conferred jurisdiction to demand duty in respect of goods imported at Madras and cleared by the Madras Customs either generally or in this particular case. The Central Government has issued notifications under Section 4 of the Customs Act appointing Collectors of Customs and lower officers for different jurisdictions. In terms of these notifications, the respective jurisdictions of the Collectors have been clearly spelt out (see, for example, Notification No. 36-Cus., dated 1.2.1963, as amended). Notification No. 37, dated 1.2.1963, as amended, appoints the Collector of Customs and Central Excise, Cochin, as the Collector of Customs in his jurisdiction. Evidently, it does not extend to Madras Port for which the Collector is the Collector of Customs, Madras, vide Notification No. 36, dated 1.2.1963. There are, of course, a few officers appointed as Collectors with all-India jurisdiction such as the Director of Revenue Intelligence but the Collector of Customs, Cochin is not one among them. In these circumstances, we hold that the Collector of Customs, we hold that the Collector of Customs, Cochin had no jurisdiction to demand duty in the present case and consequently, we set aside the demand.
12. Thus, we are now left with only the penalty imposed by the Collector on the appellants. The order does not in terms spell out the provision of the Customs Act under which the penalty has been imposed. However, the show cause notice called upon the appellants to explain why, in the circumstances stated in the notice, a penalty should not be imposed on them under Section 114 of the Customs Act, 1962. We have, therefore, to proceed on the basis that penalty has in fact been imposed under Section 114, though it is not clearly stated so. The Cochin Collector, in any event, could not have imposed any penalty for alleged violation of the Customs notification in question since, as we have already held, the demand for duty could not have been made by him and it follows that any adjudication leading to imposition of penalty in connection with any alleged violation of the notification could not also have been made by the Cochin Collector. Now, Section 114 provides that any person who, in relation to any goods, does or omits to do any act, which act or omission would render such goods liable to confiscation under Section 113 or abets the doing or omission of such a act, shall be liable to the penalties are prescribed in the case of different types of goods. The first type is goods in respect of which any prohibition is in force under the Customs Act or any other law for the time being in force. It has not been shown before us that in respect of the exported goods, there was any such prohibition. This provision has no application to the present case. The second type is dutiable goods other than prohibited goods. "Dutiable goods" in this context evidently means goods liable to export duty. The Department's case is not that the exported goods were dutiable or that they were exported without payment of duty. This provision again has no application. The third and the last type is goods that are exported case, we are not concerned with goods which were exported under claim for drawback. In fact, the admitted position is that exports of the goods covered by the 38 shipping bills, including the four relating to goods shipped after the import of materials at Madras, were effected without claiming any drawback thereon. If this is so, then, the provision is Section 114 enabling the Collector to levy penalty in the case of goods exported under claim for drawback is also not applicable to the present case. What appears to have happened (though we do not wish to pronounce any verdict on this) is that the appellants seem to have claimed duty drawback on cartons made out of non-duty paid imported materials in certain shipments which, however, are not the subject matter of the present dispute because the Collector, in his order, has not demanded repayment of the drawback amount which he should have done if the present dispute was in relation to such shipments. Perhaps, there are separate proceedings in this regard. Be that as it may, it is obvious that in the case before us, the penalty has not been imposed on the ground that the appellants had exported goods under claim for drawback though they had made out of non-duty imported materials."
9. In view of our above observations, we set aside the demand of Rs. 5,66,739/-and also quash the penalty of Rs. 50,000/- levied by the Collector.
10. In the result, the impugned order is set aside and the appeal is allowed.