Customs, Excise and Gold Tribunal - Delhi
K.K. Manufacturing Co. vs Commissioner Of Customs on 28 November, 1996
Equivalent citations: 1997(91)ELT635(TRI-DEL)
ORDER J.H. Joglekar, Member (T)
1. These three appeals arise out of the same order-in-original and are, therefore, being taken together for disposal.
2. The three appellants had imported polyester [filament] texturised yarn under cover of advance licences and claimed their clearance without payment of duty. Since some documents were incomplete, the goods were permitted to be temporarily bonded. The licences were issued in March, 1985 and bills of entry for the clearance of the goods were filed in November, 1986. Pursuant to the investigations launched by the Customs authorities, the advance licences were suspended by the licensing authority in July, 1987 and were latter cancelled in February, 1988. Show cause notice dated 6-1-1988 was issued to the appellants alleging that the goods were liable to confiscation and that the importers were liable to penalty. After hearing the importers, the Additional Commissioner in his order dated 31-10-1990, confiscated the goods imported under three bills of entry, prescribed fines in lieu of redemption thereof, and also imposed penalties upon the three appellants and also on the proprietors thereof.
3. Shri L.P. Asthana, ld. Advocate arguing for the appellants, stated that the orders of confiscation of the goods under Section 111 (d) of the Customs Act, 1962 were not valid. He stated that the goods were imported in November, 1986 and at the time of importation, the subject licences were in force and valid. Their subsequent cancellation could not result in the goods being held to be without licence on the date of import. For this claim, he relied upon the judgment of the Supreme Court in the case of East India Commercial Corporation v. C.C.E., Calcutta reported in 1983 (13) E.L.T. 1342 (S.C.) and also on the Tribunal's judgment in the case of Sneh Sales Corporation reported in 1993 (63) E.L.T. 128. Referring to the judgment of the Supreme Court in the case of Fedco Pvt. Ltd. and Ors. reported in AIR 1960 S.C. 415 on which reliance was placed by the adjudicating authority to negate the ratio of the East India Commercial Corporation Judgment (supra); the ld. Advocate claimed that the ratio of this judgment is not applicable to the present case. He, further, submitted that while in the cited cases, the goods had already been cleared, in the present case, the appellants not having exercised option for redemption, the goods were still in the possession of the Customs. He stated that this aspect was not relevant in terms of the judgment of the Supreme Court in the case of Union of India v. Sampat Raj Dugar reported in 1992 (58) E.L.T. 163 (S.C). As regards the imposition of the penalty on the appellants, the ld. Advocate claimed that since the goods were not liable to confiscation, no penalty was imposable under Section 112 of the Act. He, further, claimed that the act of the adjudicating authority in imposing penalties on the business concerns as well as. on sole proprietors thereof was wrong in law in terms of the judgment of the Tribunal in the case of Universal Commercial Corporation v. C.C., Delhi reported in 1994 (69) E.L.T. 150 (Tribunal).
4. Shri G.D. Sharma, ld. DR arguing for the revenue, stated that the scheme of licensing in the present case was different from that in the cases cited by the appellants and the ratio thereof was not applicable to the facts of the present case.
5. We have carefully considered the submissions made by both the sides.
6. The two judgments of the Supreme Court, namely, East India Commercial Corporation as well as Fedco Pvt. Ltd. were considered by the Tribunal in their decision in the case of Sneh Sales Corporation. In this case, the goods were imported vide Bill of Entry dated 31-10-1986 and the licences were cancelled on 18-12-1986 on the ground that the licences were obtained by fraud and mis-representation. The Tribunal held that the licence continued to be valid till it was avoided. It was held that the cancellation of the licence, being subsequent to the import of the goods, the cancellation had no effect on the imports and, therefore, the imports could not be treated as unauthorised. In the present case also, the licence was cancelled subsequent to the imports as shown by the date of the Bill of Entry. Following the ratio of this judgment, we hold that the imports made by the appellants under the cover of licences, which were subsequently cancelled as having been obtained by fraud, were valid at the time of importation. The orders of their confiscation under Section lll(d), therefore, do not sustain and have to be set aside.
7. Penalty under Section 112 can be imposed only where the act or omission by any person renders any goods liable to confiscation under Section 111 of the Act. Since in these cases, we have held that the goods were not liable to be confiscated, the orders of imposition of penalty also do not sustain.
8. We, therefore, allow these appeals, set aside the orders of the Additional Commissioner in so far as they relate to the appellants and direct consequential relief, if any.