Customs, Excise and Gold Tribunal - Bangalore
Shri Mohammed Yaseen vs Cc on 21 June, 2005
Equivalent citations: 2005(102)ECC305, 2005(189)ELT56(TRI-BANG)
ORDER
T.K. Jayaraman, (T)
1. This is an appeal against order in original dated 12/10/2004 passed by the Commissioner of Customs, Bangalore. The facts of the case in brief are as follows.
2. The Customs Officer, conducted certain investigations in connection with the import of a car attempted to be cleared by the Appellant vide Bill of Entry No. 02438 dated 08/09/1999 by manipulating certain documents in order to avail certain benefits. Revenue proceeded against him by issue of Show Cause Notice dated 15.11.1999. The original authority confiscated the car absolutely and imposed a penalty of Rs. 1,00,000/- on the appellant vide Order in Original 6/2000 dated 04.02.2000. The appellant appealed to the Commissioner (Appeals) who vide Order No. 140/2000 dated 07.04.2000 ordered pre-deposit of Rs. 50,000/- as a condition for hearing the appeal under Section 129E of the Customs Act. The commissioner (Appeals) in his Order in appeal No. 11/2002 -cus, dated 25.01.2002 ordered release of the car on payment of Redemption fine of Rs. 1,00,000/- and further he reduced the personal penalty to Rs. 50,000/-. The appellant addressed the department vide his letters dated 07.02.2002, 20.03.2002 and 27.06.2002 for release of the car and offered to pay the appropriate duty. Later he came to know that the department had already disposed the car. The Appellant was not put to notice before release of the car. Therefore, he addressed a letter to the commissioner of Customs on 27.06.2002 for payment of the full value of the car. Since, the department turned a deaf ear to his request, he filed a writ petition in the High Court of Karnataka for relief. The Honourable High Court directed the department to consider the representations and pass appropriate orders in accordance with the law. Consequent to the direction of the High Court, the Commissioner of Customs has passed the impugned order. In the impugned order it is stated that the car was disposed on 01.08.2001 because the original authority had confiscated the vehicle absolutely and there was no stay by the Commissioner (Appeals). The Commissioner further ordered that the duty liability of the petitioner being Rs. 5,39,578/- and the amount realized by the sale of the car being Rs. 4,10,100/-, the appellant is not entitled to receive any thing from the department and is liable to pay the difference in duty of Rs. 1,29,478/-. The appellant is vehemently challenging the findings of the Adjudicating Authority.
3. Sri. Lakshminaryana, learned advocate appeared on behalf of the appellants and Sri. R V Ramakrishnappa, learned JDR appeared for the Revenue.
4. The learned Advocate adduced the following arguments.
(i) The Order in appeal 11/2002 dated 25.01.2002, where in the appellant was allowed to redeem the car has become final as there was no appeal against that order by the Revenue. Hence it is binding on the respondent to implement that order and release the car. Instead, to cover up the lapses of his Officers who sold the car while appeal proceedings of the appellant before the Commissioner (Appeals) was pending respondent justified their action of disposal of the car in accordance with law, which is contrary to judgments of the Hon'ble Supreme Court, High Court and Tribunals.
(ii) Even though the following judgments were cited before the respondent he distinguished the judgments and rejected the request of the appellants Sprint RPG India Ltd v. Commr., of Customs - 2002 (140) ELT 73 (Del) Northern Plastics Ltd., v. CCE - 1999 (66) ECC 338 (SC) Kailash Ribbon Factory Ltd v. CCE, and UOI - 2002 (81) ECC 678 (Del) Shilps Impex v. UOI B.K. Sarogi v. CC, New Delhi 2004 (96) SC 1885 State of Gujarat v. MM Haji Hasam - AIR 1967 SC 1885
(iii) The department could not have disposed of the car during the pendency of the appeal proceedings. Hence the appellant is entitled to the value adopted by the department plus 12% interest, as has been awarded by the court.
(iv) The appellant is not required to pay the duty when the car is not released to him and hence the respondents contention that the appellant is not entitled to receive any amount as the liability of duty is more than the Assessable value of the car as well as sale proceeds realized thereon.
(v) The respondent has failed to observe that an amount of Rs. 50,000/- paid towards pre-deposit should have been refunded to the appellants.
(vi) The respondent has failed to intimate the appellate authority that the car in question has been already disposed of as required when the appeal proceedings were in progress. Nor the department had put in notice to the appellant. This clearly smacks of malafide on the respondent.
5. The learned JDR reiterated the points in the Order in Original.
6. We have gone through the records of the case carefully. Every citizen knows that the order passed by a judicial authority is not final. There is always recourse to appellate forum. When an Assistant commissioner passes an order it is not a final order. There is a provision for appeal. When an additional commissioner passes an order that is also not final. The appellant can always appeal to the Commissioner (Appeals) under Section 129 of the Customs Act. When the Commissioner (Appeals) orders pre-deposit of an amount it means that he is going to take up the case for examining the Order in Original passed by the Additional Commissioner. When the Additional Commissioner absolutely confiscated the car and imposed a penalty of Rs. one lakh on the appellant the appellant approached the Commissioner (Appeals) who ordered depositing an amount of Rs. 50,000/-. The appellant deposited the amount ordered by the Commissioner on 22.01.2000. In these circumstances, one can never hold that the absolute confiscation of the car by the Additional Commissioner has become final and the department can dispose of the car even without informing the Appellant and also the Commissioner (Appeals). Unfortunately, the Commissioner's understanding of the legal position is revealed in the following findings;
"22. In appeal No. 37/2000 Cus, the Commissioner of Customs (Appeals) vide order No. 140/2000 dated 07.04.2000 under Section 129 E of Customs Act, 1962 had ordered that the appellant should deposit an amount of Rs. 50,000/- out of Rs. 1,00,000/- imposed by the Additional Commissioner in the said Order-in-Original for violation of provisions of the Customs Act, 1962 within 30 days of the receipt of the order and subject to the deposit of the said amount, the deposit of balance amount of penalty was dispensed with and its recovery stayed pending examination of the appeal in its turn for decision on merit. There was no stay on the absolute confiscation of the car as ordered by the original adjudicating authority. The said order of the Commissioner (Appeals) which is an interim order under Section 129 E of the Customs Act, 1962 does not speak anything about stay of the confiscation of the car and other articles found in the car. Further as per Section 126 of the Customs Act, 1961, on confiscation, the property vests in Central Government. Therefore, the department was free to deal with the goods in any manner deemed fit in accordance with law. Hence the car was disposed on 14.08.2001 pursuant to the Order-in-Original as there was no impediment for the department to sell the same."
7. The moment Commissioner (Appeals) orders payment of pre-deposit, the order of the Additional Commissioner remains only is suspended animation. It has no finality. Department cannot sell the car saying that it has been confiscated absolutely.
8. In our view it is an irresponsible act on the part of the Revenue to have disposed of the car without notice to the appellant even when the appeal is pending. If the interpretation of the commissioner of customs is to be accepted then there would be no necessity to have an elaborate judicial system. Such a view of the Commissioner is also subversive of the judicial system. Once the absolute confiscation ordered by the adjudicating authority has been set aside by the commissioner appeals and when the Commissioner (Appeals) order has become final the Commissioner of Customs, Bangalore cannot hold that the absolute confiscation was in accordance with the law. We would like to reiterate that in this case the order of the Commissioner (Appeals) only has reached finality and not that of the Additional Commissioner.
9. In the Kailash Ribbon factory Ltd case (referred supra), the Hon'ble Delhi High Court held that it is a serious lapse on the part of the department when it auctioned confiscated goods without permission of the Tribunal during pendency of the appeal without even giving notice to the appellants. It was held that the department has to refund the declared value of the goods with interest per annum from the date of auction of the goods.
10. In the Spring RPG India Ltd case, while passing strictures against the Customs Department, the Delhi High Court has observed "It had, in our opinion, a moral obligation to inform the CEGAT as also the Supreme Court of India that the goods in question have already been sold in auction. It failed and/or neglected to do so. Prior to putting the goods in question to auction, it was expected that the petitioner would atleast be put to notice that on payment of additional duty it could get the imported goods cleared. It is really also a matter of great surprise that the Airport Authorities also sold the goods within two days of the receipt of the list of such goods."
11. The observations of the Hon'ble Apex court in the shilps impex case are reproduced below.
"2. After hearing the Counsel for the parties, it is quite evident that the petitioner-firm was entitled to receive from the respondents Rs. 4,35,000/-, being the price of the goods, Rs. 1,80,000/- which he had paid as duty, Rs. 2,00,000/- for the redemption fined which was paid and a sum of Rs. 50,000/- which was levied as penalty which has also been paid by the petitioner-firm. The petitioner having paid the duty, redemption fine and penalty was entitled to the return of the goods but as the goods had disappeared they were not returned. It is for this reason that the petitioner has become entitled to get back what he had paid and, in addition thereto the value of the goods. Mr. Mukul Rohtagi, the learned Additional Solicitor General states that some money has already been paid to the petitioner-firm. The balance amount will be paid within a period of four weeks. List the matter after six weeks."
12. In the Bhogilal Mehta v. UOI - 2004 (60) RLT 06 (Cal) the Calcutta High Court has ordered that when the goods were sold during the pendency of appeal before CEGAT, the value as indicated in seizure memo and not sale proceeds of the goods should be paid to the petitioner.
13. The above decision has been followed by the Hon'ble Tribunal in the case of Sufal Dutta v. CC, (Prev), W.B., reported in 2004 (63) RLT 196 (T-Kol).
14. Normally, an appellate order is not expected to worsen the situation of an appellant. In this case, had the appellant not appealed, his liability would be only Rupees one lakh penalty without the car. Strangely, after getting Appellate order, due to the departmental action, the Appellant ends up with a liability of Rs. 1,29,478/- (Rs. 5,39,578/- - Rs. 4,10,000/-). Strange are the ways of bureaucracy. It appears that the remedy is worse than the disease.
15. In view of our observations, we hold that the ratio of all the above-mentioned cases is squarely applicable to the present case. It is very clear that the department has sold the goods on the understanding that the first order of the original authority is the final order. In other words when the appeal was pending the car has been sold without informing the petitioner and also the commissioner (appeals). Hence the appellant is entitled for the full mahazar value of the car. Since the goods were not released to the appellant as per the order in appeal neither the duty nor the penalty is chargeable from the appellant, as the goods have disappeared for no fault of the Appellant. Hence, we order payment of Mahazar value and interest @ 12% p.a., from the date of auction. As regards the penalty deposited, the same is liable to be refunded in view of the ratio laid down by Hon'ble Supreme Court in the Shilps Impex case. The impugned order is set aside and appeal allowed on the above terms.