Calcutta High Court
Manjushree Minerals Ltd. vs Collector Of Customs on 11 June, 1993
Equivalent citations: 1995ECR451(CALCUTTA), 1993(68)ELT273(CAL)
JUDGMENT Ajit K. Sengupta, J.
1. This application has been made for modification of the order passed by this Court on 26th August, 1992. To appreciate the scope of the application it is necessary to state the facts leading to this application. The appellants imported second-hand diesel engines with or without gears allegedly on the strength of a licence issued by the licensing authorities. A consignment of such engines consisting of 208 pcs. arrived at Calcutta sometime in August, 1991.
2. The appellants initiated proceedings in this court in November, 1991 under Article 226 of the Constitution for release of the said consignment. The Court directed the respondents to issue Show Cause Notice within the time specified and the goods were directed to be removed to a bonded warehouse. On 26th December, 1991 Show Cause Notice was issued by the respondents, which was challenged by the appellants in a second writ petition. The appellants also asked for release of the said consignment. By an order dated 27th February 1992 the Court of the first instance directed the appellants to reply to the said Show Cause Notice within the time specified. The Court also directed release of the goods on certain terms and conditions. The matter was then taken up on appeal. The Appeal Court by the orders dated 20th March and 3rd April, 1992 passed certain directions regarding disposal of the matter by the adjudicating authority in pursuance of the Show Cause Notice issued by them. Thereafter on 24th April, 1992 an order of adjudication was made by the adjudicating authority. The appellants preferred an appeal before the Customs, Excise & Gold (Control) Appellate Tribunal against the said order of adjudication. The appeal was admitted by the Tribunal waiving the condition of pre-deposit of penalty imposed by the adjudicating authority by furnishing ITC Bonds. However, the Tribunal did not pass any order as regards release of the consignment. The said appeal is still pending.
3. Thereafter, an application was made by the appellants for modification of the said order dated 20th March, 1992 passed by a Division Bench of this Court and for release of the goods on payment of admitted duty and upon furnishing ITC Bonds for the entire disputed duty and the redemption fine as imposed by the adjudicating authority. In the said application several other prayers were also made.
4. The said application came up before this Bench for hearing and by the order dated 26th August, 1992 the appeal and the application were disposed of in the manner following :-
"After hearing the learned Advocates appearing for the parties, we dispose of both the applications by the following order :-
(a) The Collector of Customs and/or the respondents shall release 200 sets of diesel engines imported by the appellants upon the appellants paying the assessed duty on such engines.
(b) The appellants shall furnish ITC Bond for the assessed duty in respect of 200 sets of diesel engines which shall be retained by the customs authorities until the disposal of the appeal(s) pending before the Tribunal.
(c) The goods shall be released within a week from the date of furnishing the bond and payment of assessed duty.
(d) The Tribunal shall dispense with the requirement of deposits of redemption fine and/or personal penalty imposed in these cases by the appellant while admitting the appeal(s) and the appeal(s) shall be heard on merits. The Special Bench of the Tribunal shall dispose of the appeal(s) within 6 months from the date of communication of this order but preferably by 31st December, 1992."
5. It is made quite clear that release of the goods in terms of this order will not in any way prejudice the rights and contentions of the parties in the pending appeals before the Tribunal.
"The appeals are treated as on the day's list and are disposed of in terms of the foregoing order.
Filing of paper books is dispensed with. The undertakings given in that behalf will stand discharged.
Liberty to apply.
All parties including the Special Bench of the Tribunal to act on a signed copy of the minutes of this order on the usual undertaking."
6. Thereafter the present application was made on 4th September, 1992, inter alia, for the following reliefs :-
"(a) The order passed on 26th August, 1992 by this Bench in Appeal No. 163 of 1992 (Manjushree Minerals and Anr. v. Collector of Customs) and Appeal No. 162 of 1992 (Rita Minerals & Industries Pvt. Ltd. v. Collector of Customs and Ors.) be suitably modified and/or varied directing the respondent/authorities to release the entire consignment consisting of used diesel engines imported by the petitioners on the basis of payment of admitted duty, on the basis of invoice value and securing the difference of duty as alleged by the customs authorities in their order in original by way of Bank Guarantee and P.D. Bond and/or any other terms this Court may deem fit and proper;
(b) The respondents be directed to refund the licence to the petitioners after debiting the same of the c.i.f. value and/or invoice of the subject consignment forthwith."
On 7th September, 1992 the following order was passed by this Bench :
"This application has been made for modification of the order dated 26th August, 1992. After hearing the learned Advocates appearing for the parties, following modification is made :-
The appellant will be at liberty to take delivery of 200 sets of diesel engines upon payment of the admitted duty on c.i.f. value and upon payment of the 50% of the difference in duty in cash and furnishing a bank guarantee to the extent of balance 50%. In other words, the bank guarantee shall be furnished to the extent of Rs. 16 lakhs and the balance Rs. 16 lakhs shall be paid in cash. Such bank guarantee shall be furnished to the satisfaction of the Collector of Customs.
It is stated by Mr. Roy Chowdhury that if the appellant succeeds before the Customs, Excise & Gold (Control) Appellate Tribunal, the excess payment, if any, will be refunded to the appellants with interest @ 18% from the date of the payment till the date of the refund.
The undertaking given by the appellant before the learned Trial Court as recorded in the order dated February 27,1992 will continue till the disposal of the appeal pending before the CEGAT.
So far as the question of return of the licence is concerned, that will be considered after the affidavits are filed. Affidavit-in-opposition shall be filed by 25-9-1992, affidavit-in-reply by 11-11-1992 and" the matter is adjourned till 13-11-1992.
All parties concerned to act on a signed copy of the minutes of this order on the usual undertaking."
7. The only question which calls for determination is where value of imported goods is enhanced by the customs authorities whether the import licence has to be debited on the basis of such enhanced value or on the basis of C.I.F. or invoice value of the subject consignment. At this stage it may be mentioned that the adjudicating authority determined the value of the goods for the purpose of duty at Rs. 19,16,850 as against the declared value of Rs. 2,42,311.11.
8. Mr. Bhaskar Sen, learned counsel appearing for the appellants has contended that customs authorities are not entitled to debit the licence on the basis of enhanced value as determined by the customs authorities in the adjudication proceeding. It is his contention that the appellants have imported further consignments at Delhi and import licence has to be produced before the Delhi Customs Authorities after such licence is debited by the Customs Authorities and such debit must necessarily be of CIF value and/or invoice value of the subject consignment. He submits that it is incumbent on the customs authorities to return the licence after such debit so that the consignment arrived subsequently may be delivered by the Delhi Customs Authorities. Strong reliance has been placed on a decision of the Division Bench of this Court in Sneha Traders v. Collector of Customs and Ors. reported in 1992 (60) E.L.T. 68.
9. Referring to Section 14(1) of the Act, the learned counsel has submitted that the actual price paid is not relevant for the purpose of determining the assessable value as the assessable value shall be deemed to be the price at which such goods or like goods are ordinarily sold at the time and place of importation and exportation in the course of international trade. Mr. Sen has relied on several decisions in support of his contentions to which we shall refer later.
10. It is also the contention of Mr. Sen for the appellants that determination of assessable value under Section 14(1) of the Act in the adjudication order is now the subject matter of an appeal before the Tribunal. Once an appeal is preferred, the decision loses its character of finality and what was once res judicata, again becomes res sub judice. In view of the above, it is contended that the appellant's licence cannot be debited by the enhanced assessable value as determined in the adjudication order which has lost its finality.
11. In short the submission of Mr. Sen is that determination of assessable value u/s 14 has nothing to do with the determination of actual CIF value of the goods which is only relevant for the purpose of debiting licence. It is for the customs authorities to show that the amount over and above the contracted price was paid by the importer to the foreign suppliers.
12. It has been contended by Mr. Roychowdhury, Senior Counsel appearing for the respondents, that the licence cannot be returned, nor any TRO can be issued to the appellants as, firstly the licence is a forged one, and secondly, the licence value has been fully utilised as would appear from the adjudication order. It is his contention that in Sneha Traders (Private) Ltd. (supra) this Court has not laid down that the c.i.f. value has to be taken into account for the purpose of determination of the value to be debited against the licence. It is also the contention of Mr. Roychowdhury that, in this case, the goods are liable to be confiscated inasmuch as the licence is a forged one and the licensee has imported under the guise of diesel engine and its spare parts, gear boxes, compressors, alternators and clutches. The contention of Mr. Roychowdhury is that the appellants have violated both the clauses, 3(1) and 3(2) of the Import Control Order, 1955 and as such the appellants are liable to be proceeded against. It is also his contention that according to the Customs Appraising Manual, telegraphic release order cannot be issued in a case where either the licence is a forged one or there has been a mis-declaration as to the description of the goods under Sections 111(d) and 111(m) of the Customs Act, 1962, read with Section 3(2) of the Import Control Order.
13. We have considered the rival contentions. In Sneha Traders (Private) Ltd. (supra) a Division Bench of this Court held that even if the assessable value of goods is increased under Section 14 of the Customs Act, 1962, the import licence is to be debited only by the actual price paid by the importer to the foreign supplier. In the case the price paid by the writ petitioner (Sneha Traders) to the foreign supplier for the subject import was according to the agreed contract price of US $ 775 per M.T. No amount over and above the said contract price was paid by the said writ petitioner to the foreign supplier. No such fact had been found or alleged in the said case. Under these circumstances the Division Bench in Sneha Traders (supra) held that the import licence should be debited only by the value arrived at on the basis of the said price of US $ 775 per M.T. c.i.f.
14. There the Division Bench relied on a decision of the Bombay High Court in the case of Union of India and Ors. v. Glaxo Laboratories (India) Ltd., . In that case the Bombay High Court held that whatever figure the customs want to debit, they must necessarily debit as c.i.f. value and never value as defined in Clause 2(e) of the Import (Control) Order. The c.i.f. value for the purpose of licence as per the first clause of that instruction is inclusive of the commission allowed by the supplier. After deducting commission, the balance price is alone relevant for calculating the foreign exchange. Therefore, there is one kind of valuation for the purpose of assessment to customs duty but another for the purpose of c.i.f. value which is to be debited to the licence. This value to be debited consists of the items viz. the price of the goods and the commission allowed and where the commission is not apparent on the surface, it is the duty of the Customs authorities to find out and add to it the said price so that the price of the goods plus the commission and the freight and insurance would constitute the c.i.f. price for the purpose of debiting to the licence.
15. In our view, unless it can be shown and proved by the Customs authorities that the importer has paid to the foreign supplier more than what has been reflected in the agreement or invoice the c.i.f. value has to be taken as the basis for debiting the licence. In this case it has neither been found nor has been alleged in the adjudication order that the contract or invoice price is not the price which the appellants had paid to the foreign supplier.
16. Under the Customs Act, 1962, where duty is payable on an ad valorem basis, the valuation of the goods for the purpose of assessment of the Customs duty is made under Section 14(1) of the Customs Act, 1962. Section 14(1) of the Customs Act, 1962 provides as follows :-
"14(1). For the purposes of the [Customs Tariff Act, 1975 (51 of 1975)] or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be (...) the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale."
17. The language of Sub-section (1) of Section 14 is absolutely clear. It is not the actual price which is paid for the goods which is relevant for the purpose of determining the assessable value. The value of the goods for the purpose of charging customs duty shall be deemed to be the price at which such goods or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation or exportation as the case may be in the course of international trade, where the seller and the buyer have the interest in the business of each other and the price is the sole consideration for sale or offer for sale. Thus even if certain goods have been purchased by an importer at a value, say, for example, US $ 100 per M.T., for the purpose of determining the assessable value, the Customs authorities would have to determine the price at which such or like goods are ordinarily sold or offered for sale at about the same time and at about the same place of importation in course of international trade. If such valuation is found determined by the proper officer at $ 200 per M.T., then for the purpose of assessable value under Section 14, the value would be treated as US $ 200 per M.T. However, the valuation for the purpose of Customs duty, i.e. assessable value, has nothing to do with the actual c.i.f. value of the goods which, in the example given above, is only $ 100 per M.T. In other words under Section 14(1) of the Act, the value for the purposes of assessment of duty would be the deemed value. Even if the invoice price is proved to be true price as agreed between the parties, for it is the international market price which is the real value for the purpose of Customs duty. Thus the deemed value in terms of Section 14 is the price at which such goods are ordinarily sold or offered for sale at the place of importation.
18. It is true, in the instant case, for the purpose of payment of Customs duty the assessable value has been enhanced by the adjudicating order, but for the purpose of debiting the licence the declared c.i.f. value has to be taken to be the basis in the absence of any finding that the importer has paid something over and above the declared c.i.f. value. The international price of imported goods is a relevant factor for determining the assessable value for the purpose of Customs duty, but the same is not relevant for debiting the import licence. The authorities have to determine the real value of the goods. The import licence speaks only of the c.i.f. value of the goods for the purpose of debiting the licence. The c.i.f. value cannot be equated with the real value of the goods which may be determined by the Customs authorities taking into account all the relevant facts and circumstances of the case.
19. There is another aspect of the matter. Assuming that the value as determined in the adjudication order by which the import licence has to be debited, the said adjudication order is now subject to an appeal before the Tribunal. It is well settled that once an appeal is preferred the decision loses its character of finality and what was once res judicata again becomes res sub judice.
20. A Division Bench of this Court in Satyanarayan Prasad v. Diana Engineering Company, , has observed as follows :-
"Once the appeal was preferred from the Order, that order lost its finality. A decision liable to appeal may be final until the appeal is preferred. But once the appeal is filed, the decision loses its character of finality and what was once res judicata again becomes sub judice, i.e. a matter under judicial enquiry. The appeal destroys the finality of the position, the decree of the lower court is superseded by the decree of the Appeal Court. In other words, once an appeal is filed from a decree or order in a matter it becomes a pending matter."
21. Therefore, it is not correct to urge that the licence has to be debited by the enhanced assessable value as determined in adjudication order which may or may not be sustained by the Appellate authority.
22. Mr. Roychowdhury, learned Senior Counsel appearing for the respondents, has drawn our attention to the observations and findings of the adjudicating authority. Since the appeal is pending before the Tribunal, these observations and findings of the adjudicating authority are of little significance. The whole purpose of the issuance of the show cause notice and the adjudication order is to determine the assessable value under Section 14 which, as we have said, has no material or relevant bearing on the determination of the actual c.i.f. value of the goods for the purpose of debiting the licence. It is not the case of the Customs authorities that the c.i.f. value as reflected and declared in the agreement or invoice does not represent the correct c.i.f. value and the importer has clandestinely paid to the foreign supplier more than what has been shown in the agreement.
23. Mr. Roychowdhury has sought to distinguish the judgment of the Division Bench of this Court in Sneha Traders (supra). Our attention has been drawn to the observation made in paragraph 38 of the said judgment where the Division Bench observed as follows :-
"Thus in any event, there was or could be no scope to allege any violation of provision under Section 111(d) of the Customs Act in the instant case."
24. Mr. Roychowdhury's contention is that in the case of Sneha Traders (supra) there is no allegation of violation of Section 111(d), which, however, is not the case here. Here there is a specific charge of violation of Section 111(d). In our view, it is immaterial whether the allegation regarding violation of Section 111(d) of the Customs Act is made or not against an importer. Even if there is an allegation of violation of Section 111(d) several consequences might follow such as confiscation of goods, imposition of personal penalty etc., but in deciding the question as to how the licence has to be debited one has to take only the declared c.i.f. value of the goods imported in the absence of proved fact of making payment of more than the declared c.i.f. price.
25. As we have indicated, Mr. Roychowdhury has also contended that in the instant case there is a finding that the import licence is a forged one. It is not for us to determine this issue as to whether the licence has been forged or not. This is the subject matter of the pending appeal before the Tribunal. Suffice it to say that by a letter dated January 21,1992 the appellants wanted certain information from the Assistant Chief Controller of Imports & Exports. In the said letter it was, inter alia, stated as follows :-
"(a) In your letter under reference you have stated that the list of items sought to be imported with the description "with/without Gears" has not been issued by your office. Please furnish copy of list of items attested by your office at the time of issuance of licence and/or on subsequent occasions;
(b) Whether list of items produced by the importer before Collector of Customs is forged/fake or genuine;
(c) Whether the signature and seals of your Offices/Office appearing on the list of items produced by importers and now annexed herewith are genuine or fake;
(d) In your letter you have confirmed that last correspondence with the importer and your office in respect of above licence is of May 1991. Please furnish copies of such correspondence with enclosure, if any;
(e) In list of items attached with licence and annexed herewith as stated in para (e) the stamps of your office dated 7-5-1991 and 14-8-1991 are appearing. Please state whether those are genuine or fake or whether of your office or not."
26. The said letter was received by the Joint Chief Controller of Imports & Exports (who is also a party to the writ petition) on 21st January 1992, but no answer was given to the said letter. Mr. Sen is, therefore, right in his submission that the silence of the licensing authority would indicate that the licence was genuine and the list attached to that licence was also issued by the said authority only. It is pertinent to mention that several other letters were also issued to the licensing authority and their attention was drawn to the discrepancy mentioned by the Customs authorities in the show cause notice as to whether the licence permitted import of engines with gear boxes, compressors, clutches, alternators and other accessories, but the licensing authority (who is also a party to the writ petition) never came forward with the required clarifications to contradict the stand of the appellants, nor have they taken any steps against the appellants for suspension or cancellation of the said licence on the ground that it has been forged. This fact supports the contention of the appellants that the case of the forging of the licence has not been established by the Customs authorities.
27. Even the stand of the Customs authorities in this regard shows that they did not treat the licence as forged. The Customs authorities have allowed the subject goods to be cleared against the very same licence which they have labelled as forged. They have also purported to debit the very same licence with the assessable value as determined by the adjudicating authority. The adjudicating authority has passed an order for release of the goods upon payment of redemption fine in lieu of confiscation against the very same licence. In our view, the Customs authority cannot take inconsistent stand by accepting the licence as valid for some purpose and by treating it as forged and thus being non-existent for some other purpose.
28. As indicated the Customs authorities have raised two objections regarding the telegraphic transfer order for release after debiting the licence, firstly the licence stands fully utilised in view of the adjudication order and secondly the licence is forged and as such there is no licence at all. These objections are inconsistent and destructive of each other. The Customs authorities have not taken any one of the aforesaid stands categorically and specifically. If the licence is non-existent because it is forged, there is no question of its full utilisation. If the licence is valid, in that event the Customs authorities have to proceed on the basis of the declared c.i.f. value of the goods unless, as indicated, the Customs authorities establish that the importer has paid more than what has been disclosed as the c.i.f. value. The licence can only be debited to the extent of the invoice value and as such the appellants are entitled to the return of the licence after the licence is debited to the extent of the c.i.f. value of goods imported in Calcutta. We cannot take any notice of the allegation that the licence is forged. Till date the Licensing authorities have not taken any steps for suspension of the licence in exercise of their power under the Import Control Order; no proceeding has been initiated under the Imports and Exports (Control) Act.
29. In East India Commercial Co. Ltd. v. Collector of Customs the Supreme Court held that a licence obtained by misrepresentation does not make the licence non est, with the result that the goods should be deemed to have been imported without licence in contravention of Imports and Exports (Control) Act and Customs Act. It was also held that a licence obtained by fraud is only voidable; it is good until avoided in the manner prescribed by law.
30. If, there be any fraud or misrepresentation making the licence voidable at the instance of the party who may be aggrieved the licence cannot be discarded as non est. The licence has neither been suspended nor cancelled. Accordingly, it must be held that the licence is subsisting and valid. That apart, it is for the Licensing authorities to decide as to the validity of the licence and not the Customs authorities. The Customs authorities are bound to proceed on the basis of the licence unless the licence is cancelled or suspended.
31. Mr. Roychowdhury has, however, relied on the Customs Appraising Manual, Vol. II, which speaks of debiting of licence in case of adjudication. Our attention has been drawn to para 12 at Page 142 of the said Manual, which reads as under :-
"It has been provided under the Imports (Control) Order, 1955 that in the cases where the goods imported do not conform to the description given in the licence, the licence may be treated as having been utilised for importing the said goods. This implies that in the case of an importation held as unauthorised, the licence against which the goods have been imported should be debited with the value of the goods. The licence should also be suitably endorsed with the facts of adjudication."
32. The aforesaid paragraph would clearly demonstrate that all that is required to be done is that in the licence a suitable endorsement has to be made regarding the assessable value determined in adjudication. The Customs Appraising Manual cannot say that the assessable value as determined under Section 14(1) has to be the actual c.i.f. value and the licence has, therefore, to be debited to the extent of the value as determined in the adjudication order. The Customs Appraising Manual cannot add to the words of the Statute or the Rules. It has not been laid down in the Act or Rules that the c.i.f. value shall be replaced by the assessable value for the purpose of debiting the licence.
33. For the reasons aforesaid, we are of the view that there is no merit in the contentions raised by the Customs authorities. We, therefore, direct the Customs authorities to debit the licence on the basis of the declared c.i.f. value of the imports, made in Calcutta and return if to the appellants. It will not, however, prevent the Calcutta Customs to forward the order of adjudication to the Delhi Customs.
Stay asked for is refused.