Customs, Excise and Gold Tribunal - Mumbai
Chandanmal Vardichand Jain vs Commissioner Of Cus. on 21 January, 2000
Equivalent citations: 2000(118)ELT519(TRI-MUMBAI)
ORDER G.N. Srinivasan, Member (J)
1. This is an appeal filed by the appellant against the decision made in Order No. S/10-5/87D, dated 5-2-1987 passed by the Collector of Customs, Mumbai whereunder he held that the 37 drums containing 20,000 MT, which were of copper scrap birch have violated the provisions of Section 111(d) of the Customs Act. He therefore levied a penalty of Rs. 1 lakh and imposed fine of Rs. 3,20,000/-.
2. The appellant was importer of metal scrap including copper scrap. They imported copper scrap from Singapore. They entered into a contract with K. Ramanlal and Co., Singapore by invoice dated 30-5-1986 whereunder the appellants were purchasing copper scrap known as birch 200 MT @ US cents 55.00 per pound CIF Bombay. Delivery should be made June/July/August 1986 shipment in containers, packed in second-hand steel drums. Invoice dated 19-2-1986 issued by the sellers Ramanlal, Singapore agreeing to sell 37 drums copper scrap birch shipped per ss Sindabad Merine sailing from Singapore to Mumbai bearing the Contract No. 4786/86. The net weight of the goods was 44092 pounds (20MT). By its weighment certificate issued by the sellers it is mentioned as 37 drums of copper birch and the certificate is dated 30-12-1986. By its certificate 9-2-1987 the sellers from Singapore inter alia certified that they were the factory-rejects .and they did not think it to be serviceable item. The certificate dated 10-2-1987 issued by Hitachi Cable (S) PTE Ltd. certified that the goods had no service value except for scrap value and the goods could not be considered as a serviceable item. The goods arrived on 30-12-1986 on which date the bill of entry was filed claiming the goods to be importation under OGL appendix 6 for the Import Policy for the period 1985-88. On 14-1-1987 the letter was written by importers inter alia mentioning that the previous consignment was considered as serviceable and therefore requested the Customs House to examine 100% under the Custom House supervision. By a letter dated 19-1-1987 they wrote to the Customs House that inter alia one containers is copper scrap even though in terms of NARI specification, according to the Custom House it is serviceable. They invited the attention of the Customs department to the case of import of Mhatre & Co. It was noticed that the material was serviceable identical to the appellants consignment and the said Mhatre & Co.'s consignment was released without fine and penalty after mutilation. They therefore wanted their goods should also be mutilated and their case should also be treated as Mhatre's import. They were heard on 2-2-1987 and the adjudicating authority namely Collector of Customs, Bombay while mentioning the circumstances under which the letter dated 14-1-1987 was written, did not agree with the contentions raised by the appellants holding inter alia that according to NARI specification goods have to be hydraulically pressed but the present goods were not. Therefore he held goods were liable for confiscation. He further held that since the goods were not covered under OGL they were not scraps. He therefore levied penalty and fine as in the earlier portion of the order. Hence the present appeal.
3. Shri Manoj Sanklecha appeared for the appellant and Shri A.K. Chatterjee, SDR appeared for the department.
4. Shri Sanklecha argued that the goods have been imported in a normal commercial way. It bargained between the seller and buyer that was copper scrap should be sold and bought. That is evidenced by the invoice, bill and the certificate of the supplier and the certificate of Japanese supplier who supplied the goods to the Singapore sellers. Shri Sanklecha further emphasizes that the goods should be treated as a scrap in terms of NARI specification and as per the bona fide conduct of the importers. It is the assertion of the learned Advocate for the appellant that the goods were always treated as the copper scrap. The overwhelming evidence submitted by the supplier would clearly indicate that the goods were only copper scrap and if the department was interested in disproving of the fact then burden lies with the department to show otherwise. He stated further that the character or the nature of the goods cannot be determined by visual examination. He further stated that in any event the department ought to have allowed the clearance of ultimately cleared after mutilation. He further says the penalty in this case ought not have been levied for bona fide action. He also emphasized the fact no redemption fine could be imposed inasmuch as the bona fides of the importer is very much writ large when they wrote a letter on 14-1-1987. The conduct of the appellant would show clearly that he is not an ordinary businessman who does business in a crooked way.
5. As against this ld. DR argued that the conduct of the appellant as highlighted by ld. Counsel cannot be accepted. He invited my attention to paragraph 2 and 3 of the Impugned Order. He stated that the goods have been imported in December 1986. Bill of entry was filed on 26-12-1986. Bill of entry was passed on second check basis on 30/31-12-1986. What prevented the party from clearing the goods after complying with the formalities? In the meantime the intelligence was gathered about the import of prime copper wire as indicated in paragraph 3 of the order in the guise of birch. The appellant wrote a letter on 14-1-1987. Shri Chatterjee emphasized the fact that the appellant was not as good person as Shri Sanklecha claims him to be. He stated that because of the existence of intelligence report the appellant has wrote a letter on 14-1-1987. He also stated the argument of Shri Sanklecha cannot be accepted regarding compliance of NARI specification. In the NARI specification the phenomenon of hydraulic press is not an ideal formula. It is an important element. This has to be highlighted by the adjudicating authority in the impugned order. No evidence has been produced to disprove the same by the appellant.
6. As far as the subsequent letter of the seizure is concerned, he stated that the goods were not available for examination now, therefore it is not possible for the department to examine the same from the chemical laboratory. The goods have been ordered to be mutilated by the order of the court. This itself would show that the goods imported were not of scrap. He therefore stated that in terms of the then existing Import Policy, the goods come under appendix 3 which required specific licence which is absent in this case. He therefore stated that levy of penalty and fine is perfectly justified.
7. I have considered the rival submissions. From the perusal of the papers it is very clear that the importer wanted copper birch. The sellers were from Singapore. Sellers purchased the goods namely the scrap from the sellers known as Hitachi Cables Pvt. Ltd. They also certified that the goods were of a scrap value and it has no service value. So far so good. But the case now revolves on NARI specifications.
8. The NARI specification defined scrap as follows :
"Birch 4 - no. 2 Copper Wire shall consist of miscellaneous unalloyed copper wire having a nominal 96% copper content (minimum 94%) as determined by electrolytic assay, should be free of the following : excessively leaded, tinned, soldered copper wire, - brass and bronze wire, excessive it content iron, and non metallics; copper wire from burning containing - insulation hair wire; burnt wire which is brittle and should be reasonably free of ash. Hydraulically - briquetted copper subject to agreement."
9. It is emphasized by Shri Sanklecha that NARI Specification at "Ex.C." has to be read in a conjunctive way and not in a disjunctive way. He stated that when other parameters mentioned in the specification had been complied with the fact that hydraulically pressing has not been applied with, will not militate the case against being within the term birch. To me the argument made by Shri Sanklecha is quite interesting. When we look into NARI specifications it mentions about existence of copper wire and also miscellaneous unalloyed copper wire having 96% of the content which is determined by electrolytic assay. But the word hydraulic has been mentioned in the specifications. Does it not mean that the goods must have been pressed hydraulically and the goods must have undergone that type of operation? If the goods have not gone into that type of operation then the term hydraulically will be meaningless. The NARI specification according to me, is a specification made by certain association and any country will not make any specification unless it was sure about existence of certain operations. The specification then mentioned by an association would not make it any meaning unless hydraulically pressed metal and has undergone that process. The process of hydraulic pressing according to me is an important element whether in a conjunctive or disjunctive manner, it is immaterial. The facts remains is hydraulic pressing is a must. If the hydraulically pressing is not a necessity a specification would not have mentioned in it. I am therefore of the view the argument made by Shri Sanklecha has to be rejected.
10. As far as the good conduct and bona fide of the appellant is concerned, it has been rightly pointed out by the SDR, Sri Chatterjee for the department that the bill of entry was filed on 26-12-1986. The assessment was made on 30/31-12-1986 on second check basis. If that was so, what prevented the appellant from paying duty and clearing the goods? It has been rightly argued by Shri Chatterjee because of certain intelligence report of clearance of the prime metal as scrap the appellant might have taken the route of writing letter on 14-1-1987. In this case show cause notice was waived. That may be probably the reason of waiver of show cause notice. When we look into this importation aspect when it attracts penalty we have to view it not with mathematical precision but preponderance of probabilities. I am therefore inclined to agree with the argument made by Shri Chatterjee in this regard.
11. The next point made by Shri Sanklecha is about the visual examination aspect. He states that whenever any fact is asserted by an authority and the other party disclaims it, it is on the part of the department to prove such assertion. Here the department is stating that the goods are of prime quality and it is not a scrap. Therefore Shri Sanklecha asserts that physical examination could not have been informed and ought to have been done by means of chemical examination test. This argument is attractive but on a closer examination it has to be rejected. The party files a Writ Petition in Court and the Court by its order dated 1-4-1987 permits the clearance of the goods after mutilation. The Court has taken into account all the facts i.e. the goods may be of a prime quality. That is the only possible explanation that could be made reading from the Order dated 1-4-1987. If that is not so, the Court would not have given that type of order. Moreover the subsequent order dated 30-6-1985 Division Bench directs the payment of Rs. 4,20,000/-. What does it mean? It means the goods have been wrongly imported. The order of Court of 30-6-1985 is passed on the agreed minutes of the parties. The only possible explanation could be the goods have been not strictly copper scrap and it has been ordered to be mutilated, that goods of prime quality should not be allowed to be imported. The goods having been cleared on 1-4-1987, it is the argument of Shri Sanklecha about metallurgical test acceptance and fallacy of department's case on physical examination cannot be accepted. This argument has to be rejected. As far as the mutilation is concerned, as observed earlier, the Court wanted to be very sure about the nature of the goods imported and ultimately user thereof.
12. The bona fide nature of the import by the appellant has been stressed by Shri Sanklecha. It is not as if the appellant did not know the nature of the imports made previously. In fact by its letter dated 14-1-1987 it cautioned the department about the serviceability of the imported goods. Knowing fully well the existence of the fact and the aspect regarding the absence of hydraulically press metals, the appellant tried to mutilate such circumstances by reading such letter, which could only be an after thought. The case is not based on any show cause notice, which the party itself has waived. I am therefore forced to come to this conclusion namely the possible conclusion can be made is appellant wants to be wriggle out of the situation.
13. The last but not the least is about the quantum of fine and penalty. The appellant, knew about the existence of previous imports. As noted by me earlier in the portion of this order the letter of 14-1-1987 relates to the same. The parties themselves agree for payment by means of agreed minutes of the order. It has been rightly argued by SDR that the goods are not covered under the OGL. The entire action taken by the importer according to me is wrong importation in the guise of scrap. I am therefore of the view that levy of penalty for violation of Section 111(d) is correct one, as imported goods require mutilation before clearance. The way it violates Section 111(d), it violates Section 111(m). I am therefore of the view no leniency can be shown. Moreover, it is not the first time they have imported this type of goods. Letter dated 14-1-1987 where previous importation were of serviceable nature and not scrap. I am therefore of the view, it is devoid of merits.
14. During the course of the argument, Shri Sanklecha following the judgment of Hindustan Ferodo Ltd. v. CCE, Bombay -1997 (89) E.L.T. 16 where in the instant case the point is regarding whether the goods will come within 111(d) of the Customs Act or not and whereas that case dealt with Rule 173 of the Central Excise Rules. I am therefore of the view that the case will not be applicable to the facts of this case.
15. The next case is Kakkar & Co. and Ors. v. CCE, New Delhi -1988 (35) E.L.T. 718. That was a case of synthetic rag whereas the facts of the case are entirely different from the facts of the instant case before me. The existence of definition of scrap of NARI, the existence of Writ petition and Orders made by the High Court are absent in the above case, hence the fact of the case will not be applicable to the instant case. In. the Supreme Court judgment in the case of CCE v. Hardik Industrial Corporation -1998 (97) E.L.T. 25 it is no doubt true in the said case mutilation has come into the consideration of the Court. But facts in that case are not identical with the facts of the case, here. In the present case there has been existence of previous imports which has been emphasized by the appellant themselves by its letter dated 14-1-1987. That fact is absent in the judgment in the case cited by Shri Sanklecha. Moreover the payment of penalty and fine as mentioned in the minutes dated 30-06-1985 are absent in that case. I am therefore of the view the judgment in the case cited by the ld. Counsel are not applicable to the case.
16. Hence I dismiss the appeal as devoid of merits.