Customs, Excise and Gold Tribunal - Tamil Nadu
V. Solomon Jeyapandian And Ors. vs Cc on 21 December, 2001
Equivalent citations: 2002(102)ECR86(TRI.-CHENNAI), 2002(148)ELT810(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. In these batch of appeals, com mon question of law and facts are involved. Hence they are taken up to gether for disposal as per law.
(A) Appeal Nos. C/678 to 689/2000:
2. In these appeals, appellants had imported second-hand machin ery against the EXIM policy which required the appellants to obtain im port licence, in terms of which, the said goods could be imported only by the actual users and in accordance with the procedures laid down in para-5.4 of the Procedures 1997-2002, the said second hand machineries, shall not be transferred, sold or otherwise, disposed of, within a pe riod of 5 years from the date of import except with the prior permission of Director General of Foreign Trade. As per the procedure, the Actual User shall furnish to the Customs at the time of clearance of goods, (i) self-declaration to the effect that the second-hand capital goods being imported has a minimum residual life of five years (ii) declaration to the effect that he is the actual user.
3. Appellants filed declarations as prescribed in the Handbook of Procedures to the effect that the said imports were made under Actual User Condition of the imported second-hand printing machine would be installed at their factory premises. They also declared that this would abide by the relevant provisions of the EXIM policy.
4. However, on investigation in the set of appeals, arising from Or-der-in-Original No. 55/2000 (Commr.) issued on 29.8.2000, the said Intelligence Officers attached to DRI on visit to the premises of M/s. DJR Arts and its godown at various places in Chennai on 29.6.1999 found that the imported second-hand printing machines had been kept in different godowns. It was found that D. Joseph, proprietor of DRJ Arts had floated, in the name of his relatives, 11 firms and had made all other proprietors of the firm to file Bill of Entry and give undertakings and cleared the goods on the pretext of the actual user. However, on investigation and recording of statements of all the persons which revealed that relatives of D. Joseph had merely lent their names to the companies and D. Joseph had imported with the sole idea to sell the second-hand printing machines in the market and make profits. They had never been installed in the premises of the importer and it was in contravention of the declarations filed. Therefore, 74 imported secondhand printing machines were detained and it was found that 3554 numbers of second-hand printing machines which had been imported had already been sold in the local market in violation of the EXIM policy. The show cause notice dated 13.12.1999 was issued under Section 124 of the Customs Act calling upon all the persons to explain why the goods should not be confiscated and penalty imposed for having committed such violation. All the persons clearly gave statements that it was D. Joseph had invested money and opened the firms in 10 relatives' name. They also stated that they had nothing to do with the machine. Shri D. Joseph also admitted having committed offence in writing. In view of this the Commissioner ordered for confiscation of 74 numbers of machines valued at Rs. 56,74,519/- and granted option to the party to redeem the goods (without naming to whom it is required to be redeemed) on payment of fine of Rs. 25 lakhs under Section 125 of the Customs Act, 1962. He has imposed penalties against appellant D. Joseph of Rs. 2.50 lakhs in terms of Section 112(a) and Rs. 1 lakh on T. Jebaraj and Rs. 50,000/- each on rest of the parties in terms of the Or-der-in-Original referred to above.
5. Arguing for the appellants Shri A. Vijayaraghavan, Consultant contended that the actual user condition had been fulfilled and there was no evidence that the import was made in dummy name. He contended that they had filed Bill of Entry correctly and that there was no charge of undervaluation, misdeclaration or extra remittance having been made. It is his submission that the initial statements given by the parties have been retracted regarding the fact that D. Joseph was master minded the importers for selling the goods in the market. It is pleaded that D. Joseph had not held himself to be the importer before the department at any time before clearance of the goods for home consumption. On the other hand, appellant firms had filed all documents in their own name holding themselves as importers before clearances. Therefore, in the absence of any evidence to the contrary, merely based on the initial statements given under coercion and later retracted, appellant D. Joseph alone cannot be regarded to be as "importer" in respect of goods related to his firms. He submitted that in respect of 74 machines, which were held to be confiscated, the same have not been sold and are still in the possession of the importer and therefore in that circumstances, there is no violation and the said goods could not have been ordered to be confiscated and directed to be released on payment of fine. It was also argued that out of 74 printing machines, only 58 machines had been imported through Tuticorin and balance 16 had been imported through Chennai port and therefore the Commissioner of Customs, Trichy had no jurisdiction to initiate proceedings against 16 numbers. It was also pointed out that the Commissioner had not specifically given the option to any individual to redeem the goods but mere stated that he gives option to the party to redeem the goods. Therefore, the order is bad in law as there was no specific mention to the person who is required to redeem the goods. He contends that on that count alone the order is required to be set aside. It was also argued that so long as the goods have not been sold or transferred, there is no violation of condition of EXIM policy and there should not have been any order of confiscation in this case.
6. Ld. DR Shri A. Jayachandran pointed out that the Ld. Commissioner had no option but to impose redemption fine with regard to 354 numbers of second-hand printing machine after having held the same to be confiscable under Section III (o) of the Act. He contended that this is patent error and even Revenue has not filed any appeal, the matter is required to be remanded back for passing appropriate orders on imposition of fine on 354 numbers seized machines in the light of Apex Court Judgment rendered in Jain Exports Pvt. Ltd. v. UOI, ; Westen Components Ltd. v. CC, New Delhi, ; Mangala Textiles v. CCE, Rajkot, ; Dy. Chief Controller of I 81 E, New Delhi v. K.T. Kosalram, 1999 (110) ELT 366 (SC); Abdul Aziz Aminudin v. State of Maharashtra, 1999 (110) ELT 225 (SC). He pointed from these judgments that once there is violation in respect of declaration filed, then the goods are required to be confiscated and fine to be imposed. He contends that the order is clearly vi-olative of the Supreme Court judgments cited supra and therefore even if Revenue has not filed any appeal, the matter may be remitted back for passing appropriate orders. On the issue of non-filing of appeal by revenue, Ld. SDR drew the attention of this Bench to the Apex Court Judgment rendered in CC (Sea) Chennai v. Ballarpur Industries Ltd., wherein in similar circumstances, the Apex Court disagreed with the Tribunal's view that without revenue's filing of appeal, the Commissioner had no powers to interfere or pass orders and that it was not open to the Collector to raise question as to the correctness or genuineness of the seal on the refund application as it involves a detailed enquiry. The Tribunal had held that such a power could only be exercised under Section 28 and as the Revenue had not initiated proceedings, therefore the Tribunal held that the order passed by the Commissioner of Customs under Section 129D(2) is beyond the scope of his power for the reason that the Collector cannot go into fresh facts or fresh evidence and he has to confine himself to the facts already on record. The Hon'ble Apex Court disagreed with this view and took a view that it was not possible to agree with Tribunal's view that the Commissioner has travelled beyond the record and culled out fresh facts or fresh evidence in support of his conclusion. The above cited case, the Hon'ble Apex Court further held that the Collector restricted himself to the examination of the facts apparent from the record and drew the inferences and conclusions of his own on an appreciation of the material on record and in the light of the extent procedures. The Apex Court further held that the Commissioner did not launch upon an investigation of the facts which can be said to be extraneous to the record placed before him and therefore set aside the basic assumption and view taken by the Tribunal as incorrect and justified the Collector' s action in taking a view despite revenue no! having raised a question in their refund application under Section 129D(2). As Judgment directly applies to the point raised by the Counsel in this case that revenue has not filed any appeal and the Tribunal cannot direct on remand for fixing redemption fine. He also pointed out that the Ld. Commissioner has not specifically mentioned the party to whom the option of redemption has to be given and therefore he agrees with the Ld. Counsel that the order is bad in law and requires to be remitted back. However, he submitted that as the conditions have not been fulfilled with regard to 34 numbers of machines, they are liable to be confiscated and fine & penalty imposable. He submits that the Tribunal in the case of Nirmal Surekha and Ors. v. CC, Amritsar, 2001 (45) RLT 156 (CEGAT-Del.) have upheld the imposition of penalty on similar import of second-hand machinery which was sold in the market against the policy.
7. On a careful consideration of the submissions, we notice that both sides are agreeable to the point that the order has not been passed correctly in terms of law for the reason that the Commissioner of Customs has not indicated to whom the 74 numbers of machine is required to be released even if the order is required to be given effect to. On this count alone, the order is required to be set aside for de novo consideration. Further, we notice that appellants had admitted and given in writing that even if the entire amount was funded by D. Joseph, they had no intention to set up the firm and the idea was only to sell the imported machines in the local market and that they had already sold 354 Nos. of second-hand machinery. Therefore, the Ld. Counsel's arguments that subsequent retraction will have an effect and that 74 Nos. of machines were not sold and that there is no contravention regarding these machines is not acceptable, in view of the fact that there is clinching evidence on record including the admission that appellant had no reason to set up the units and had no means to put up the same. The burden of proof has shifted on the appellants to show that they had all the necessary materials, means and they had independently funded the amounts for setting up their own units as the actual users. Such a burden has not been discharged. Instead, the investigating authorities have clearly found that they have violated the conditions of EXIM policy and the declarations given at the time of clearing of goods along with Bill of Entry and therefore their present statement that 74 Nos. of machines are not confiscable is not accepted. In view of infirmity in the order that the Commissioner has not correctly named the person to whom it has to be released, therefore the order on this count is set aside and the Commissioner is required to readjudicate with regard to 74 Nos. of machines which have been seized and Redemption Fine has been imposed. Further, we notice that the Commissioner has ordered that 354 Nos. of second-hand printing machines are liable for confiscation under Section III (o) of the Customs Act but has not ordered for confiscation as the goods are not available. In this connection, it was brought to our notice by Ld. SDR and DR that once the goods are found to be confiscable, the Commissioner has no choice but to order for confiscation and impose penalty as held by the Apex Court in the case of Jain Exports Ltd. v. UOI, , in para-6 to 13 as noted herein below:
6. Since the question regarding the legality and the validity of the imports has been finally concluded by this Court in the appeal from the decision of the Delhi High Court, the only point which remains for our consideration is whether the importers had acted bona fide, in that, they had in good faith assumed that the non-edible variety of coconut oil was not a canalised item and could, therefore, be imported under Open General Licence (OGL). As stated earlier the importers' contention that Refined Industrial Coconut Oil was no a canalised item under Item 5 of Appendix 9 of the relevant import policy has already been negatived by this Court. Therefore, there can be no dispute that the import of the two consignments in question was illegal and liable to confiscation under Section 111(d) of the Customs Act. Ordinarily, therefore, the Collector of Customs was entitled to impose a redemption fine in lieu of confiscation, apart from penalty under Section 112 of the Customs Act. The quantum of the redemption fine would depend on the facts and circumstances of each case and no hard and fast rule can be laid down in that behalf. So also the mere fact that the importers had acted in good faith and bona fide will not entitle them to claim that the entire redemption fine must be waived. Even in such cases the fixation of the quantum of the redemption fee will depend on the totality of the facts and circumstances of the case. Therefore, even if in a given case the importers show that their action was bona fide, that by itself will not entitle them to a waiver of the full redemption fine unless the totality of the facts of the case so warrant. We must, therefore, at the outset clarify that we do not read the decision in D. Navinchandra and Co. and B. Vijay Kumar (supra) as laying down any such absolute rule.
7. We now come to the question whether on the facts and in the circumstances of this case there is warrant for waiving the redemption fine, wholly or partly. The learned Counsel for the importers placed reliance on the following facts to make good his submission that the importers had acted bona fide in believing that the non-edible variety of coconut oil was not a canalised item and could, therefore, be imported under the OGL. The import was made against the additional licences issued during the policy period 1980-81 and hence the fact that the Letters of Credit were opened on 31st July, 1982 and the imports were actually made in September 1982 was of no consequence. The further fact that the edible variety of coconut oil was a canalised item under the 1982-83 policy period should not weigh in judging the bona fides of the importers. The importers believed in good faith that the non-edible variety was not canalised as they were so informed by the Chief Marketing Manager of STC by his letter dated 30th October, 1980.
8. Besides, counsel urued, when M/s. Jain Shudh Vanaspati Ltd., a sister concern, imported industrial coconut oil under the 1980-81 policy, the Collector of Customs by his order dated 17th December, 1980 held the import illegal and imposed a redemption fine of Rs. 25 lakhs. This view was reversed by the Board by its order dated 23rd January, 1981 which view was confirmed by the Government of India by its order dated 31st March, 1981. Subsequently, in May-June 1981 clearances were permitted both by the Bombay and Kandla offices of the customs department and hence the importers had every reason to believe that the non-edible variety could be imported under the OGL. The Collector of Customs, Ahmedabad, was bound by this view but he chose to ignore the same which was not proper. Reliance was also placed on certain imports made subsequent to the imports in question under the 1980-81 policy which were cleared vide Bill of Entry of January, 1983 of M/s. Jayant Oil Mills and Allana Impex Pvt. Ltd. Lastly, attention was invited to a letter dated July 12, 1985 of the DGTD to M/s. General Foods Pvt. Ltd., Bombay, stating that the non-edible variety could be imported under the OGL if it related to the 1980-81 policy. Counsel concluded by saying that the importers had paid the redemption fine of Rs. 3 crores and Rs. 2 crores on 24th January, 1983 and 23rd February, 1983 to show their bona fides. We now proceed to deal with these submissions.
9. Before we address ourselves to the question whether the facts and circumstances of this case warrant a total or partial waiver of the redemption fine it is necessary to bear in mind the fact that the fixation of the quantum of the redemption is in exercise of the discretionary jurisdiction of the authorities under the Customs Act and ordinarily this Court, while exercising jurisdiction either under Article 32 or under Article 136 of the Constitution, would be slow to interfere with such an order unless it is shown to be thoroughly arbitrary or whimsical resulting in gross miscarriage of justice. As pointed out above, the mere fact that the action of the importers was bona fide will not per se entitle them to a waiver of the entire redemption fine but the Court would have to bear in mind the totality of the circumstances and the benefit, if any, derived by the importers from the illegal import. It is in this background that we must examine the question whether the Collector's order imposing the redemption fine and the Tribunal's refusal to interfere therewith require interference at our hands in the present proceedings.
10. At the outset we deem it proper to mention that the importers are an experienced Export House well versed in the policies and procedures in regard to the import and export of goods. Their function in the transactions in question was to import the goods as holders of Letters of Authority and pass them over to the licence holders who in turn would dispose of the goods to actual users in accordance with the terms and conditions of the licence. However, it is well established that the consignments in question were sold on high-sea-sale basis under the cover of the Letters of Authority and separate agreements with the licence-holders. The importers have not, despite the opportunity given to place on record such material as is relevant to the question of bona fides, disclosed information and details regarding the transaction for appreciating why the sale was effected on high seas and the profit, if any, derived therefrom. The Tribunal has noted:
However, the appellants, despite the direction from the Delhi High Court to produce relevant details for determining the quantum of redemption fine have not given any details regarding the landed costs and other expenses including the sale price on high sea sale basis for arriving at the appropriate quantum of profit.
Even during the course of the hearing before us we repeatedly inquired of counsel for the importers to show us from the record whether or not the transactions in question had yielded any profit and, if yes, the quantum thereof but we did not receive a satisfactory reply. In fact as pointed out by the Tribunal the importers had failed to place the said material on record for reasons not difficult to guess. Therefore, even after two opportunities, the first given by the Delhi High Court and the second by this Court by the order under review, the importers have deliberately failed to place this vital information on record. Counsel for the importers requested us to give him time to procure and place the said material on record but we saw no reason to grant further indulgence and permit the importers to do so belatedly when they had failed to do so for no valid reason. Even at his belated stage no particulars regarding the material proposed to be produced were given. Besides such belated production would prejudice the opposite side. That apart, such evidence can have probative value only if produced promptly and not otherwise. It is thus obvious that the failure to produce such vital and material evidence impinges on the claim that the importers had acted in good faith. This single fact in our view is sufficient to non-suit the importers.
11. It is indeed true that in the case of Jain Shudh Vanaspati Ltd., the Board as well as the Government of India while interpreting the relevant entry in the import policy of 1980-81, taken the view that the non-edible variety of coconut oil was not canalised. Even the Chief Marketing Manager of the STC had by his letter dated 30th October, 1980 conveyed that the non-edible variety was not canalised through them. True it is that an authoritative clarification could have been obtained from the Chief Controller of Imports & Exports who was competent to clarify the position and not the Chief Marketing Manager of the STC. This is also clear from what this Court observed in the decision in appeals arising from the decision of the Delhi High Court. This Court said:
The STC was not competent to bind the customs authorities in respect of their statutory functioning....
But we cannot overlook the fact that the view taken in the case of Jain Shudh Vanaspati Ltd. was that the non-edible variety was not a canalised item. If the matter had rested there it would lent support to the submission of the importers that they bona fide believed that the non-edible variety could be imported under OGL since it was not a canalised item. But since the imports in question, though under the 1980-81 policy, took place in 1982 under the Letter of Credit dated 31st July, 1982, the importers who are experienced in handling import and export of goods and well versed with the policies and procedures in that behalf must be assumed to be aware of the subsequent developments. The Chief Controller of Imports & Exports had issued circulars from time to time clarifying that the non-edible variety was a canalised item and the Collector of Customs, Ahmedabad had placed reliance thereon. This was the precise grievance made by the importers before the Delhi High Court, vide paragraph 48 of the judgment. The Collector has pointed out that while revalidating the additional licence dated 4th November, 1980 it was specifically stipulated that during the period of revalidation items which do not appear in Appendix 5 and 7 of the 1982-83 import policy shall not be imported and since the commodity in question did not figure in either of the appendix could not be imported under OGL. The importers who are well versed would have realised that in view of this position the statement in the letter of the STC cannot carry any weight. In this background if the Tribunal felt the letter of the STC was being used as a cover to put forth the plea that the imports were made bona fide, it cannot be said that the inference raised by the Tribunal was unwarranted. In the circumstances it is difficult to believe that the importers were not alive to this changed situation which necessitated import of both varieties of coconut oil through the STC. The letter of the DGTD was issued in 1985 much after the import in September 1982 and hence it could not have influenced the importers in importing the two consignments and, therefore, can be of no avail in determining the mental approach of the importers prior to actual import. For the same reason the decisions in the case of M/s. Jayant Oil Mills and M/s. Allana Impex cannot advance the case of the importers.
12. Before we part we must mention that after counsel for the importers could not secure an adjournment when the matter was taken up for hearing on 23rd April, 1993, he argued the matter at length. It was only during the course of the hearing that we inquired of him if he could point out from the record whether or not the transaction had yielded any profit. When he could not give a satisfactory reply he again asked for an adjournment to produce the relevant material which we declined. The hearing concluded on the same day. Notwithstanding the same their advocate on record filed a letter dated 28th/30th April, 1993 stating that an application was moved for rehearing because a very crucial document having a direct bearing was not brought to the notice of the Court. Even with these applications Nos. I. A.3 & 4 of 1993 the so-called crucial document was not appended. In these applications the re-hearing was sought on the very same grounds on which an adjournment was sought earlier. This was followed by yet another communication which included a certificate of the Chartered Accountant to which was appended a statement of accounts showing that the importers had incurred a substantial loss in the sale on high seas basis. We are indeed surprised at the attitude of me learned Advocates representing the importers. It betrays a misconception that any document can be produced at any time and stage of the proceedings and the Court can be expected to reassemble to give a fresh hearing or a second innings to fill the gaps left by the importers because of their default merely because they have the means to afford it. We cannot countenance such a demand and must deprecate it strongly. We do so and reject both the applications. To allow them would encourage multiplicity of hearings and create a wrong precedent.
13. For the foregoing reasons we are satisfied that the importers' contention that the redemption fine should be wholly waived or substantially reduced as their action in importing the goods under OGL was bona fide is not well founded. Even if the transaction has in fact resulted in a loss (we cannot delve into it for the first time in this Court) it will not make any difference. We feel that taking cover under the earlier orders passed in the case of MA. Jain Shudh Vanaspati Ltd., and the letter of the STC, the importers have tried to create the impression that they were innocent victims of the subsequent interpretation put on the relevant entry, ignoring the fact that the licences were revalidated on certain terms and conditions which did not permit import except through the STC. We are, therefore, satisfied that the import under OGL was not a bona fide act. We, therefore, dismiss both the appeals as well as the writ petition with costs. Hearing cost quantified at Rs. 10,000/-.
8. On a reading of the above judgment, it is very clear that once the goods are held to be confiscable, then the redemption fine has to be imposed notwithstanding the plea of bona fide belief held by the importer or having acted in goods (sic) faith. Therefore, this finding of the Apex Court binds the authorities and Courts throughout the country and it is binding law in terms of Article 141 of the Constitution of India. The Commissioner has committed an error which is patent on record and the Tribunal in terms of Section 128B of the Customs Act and pass orders to modify any order which is patent and illegal. Further, we notice that the Apex Court clearly held in the case of Westen Components Ltd. v. CC, New Delhi (supra) that when the goods have been released on execution of a bond, then in such a case, even the goods are not produced and or not found, the fine is required to be imposed. The short order of the Apex Court is extracted below:
It is contended by the learned Counsel for the appellant that redemption fine could not be imposed because the goods were no longer in the custody of the respondent-authority. It is admitted fact that the goods were released to the appellant on an application made by it and on the appellant executing a bond. Under these circumstances, if subsequently it is found that the import was not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods, then the mere fact that the goods were released on the bond being executed would not take away the power of the customs authorities to levy redemption fine.
In the present case, there is clear undertaking given by the party to fulfil the terms of the EXIM policy. The fact that they have violated the said condition clearly is against the undertaking given by them and therefore even if the goods are not sold or not available, they are required to be confiscated as correctly held and cannot be released without imposition of penalty in terms of law laid down by the Apex Court. We notice that the Tribunal in Mangala Textiles (supra) have clearly held that if the goods have been held to be confiscable, the redemption fine is imposable even goods is no longer in custody of the department and in this regard the Tribunal relied on large number of judgments. Further, we notice that in the case of Abdul Aziz Aminudin (supra) the Apex Court clearly noticed that post-import of "actual user condition" had been violated and the party had confessed about his office. In such circumstances, the Apex Court clearly held that in view of contravention of law the imposition of sentence was justified and upheld the order of punishment. In the case of Dy. Chief Controller of I & E, New Delhi v. K.T. Kosalram (supra), the Apex Court in a similar circumstances, where party had violated the "actual user condition" and sold the goods to someone else, was held to be violated and upheld the prosecution's proceedings and imposed a sentence and fine.
9. In view of this Apex Court Judgment cited (supra) and also that rendered in the case of CC v. Ballarpur Industries Ltd., (supra) the order of the Commissioner holding that the goods are not available and penalty cannot be imposed, is against the law as laid down therein. Therefore, the order is required to be set aside and remanded back to the original authority to re-adjudicate on these seized machines and pass a correct and appropriate orders including fine and penalties afresh after granting an opportunity to the appellants.
(B) Appeal No. C/7/2000:
10. This appeal arises from Order-in-Original No. 68/99 dated 8.10.1999 by which the Commissioner has noted that the imported one number used Planeta offset printing press with tower coater, under each bill of entry totally declaring the value of CIF of Rs. 13,1,000/- was imported against the restriction placed in para-5.3 of EXIM policy 1997-2002 as amended up to 1st April 1999 as per which said goods required import licence. Appellant importer had imported against the specific provisions of the EXIM policy and hence such import was considered to be liable for confiscation under Section 111(d) of the Customs Act read with Section 3(3) of the Foreign Trade (D&R) Act, 1992. Hence, he ordered for confiscation of the goods but granted redemption of the same on fine of Rs. 4 lakhs, besides imposing a penalty of Rs. 80,000/- under Section 112(a) of the Act.
11. Arguing for the appellants, Ld. Consultant Shri M.S. Ku-maraswamy admitted that appellants had contravened the provisions of the Import and Export Policy in not obtaining a licence. His only argument is that they were the actual users and as they had a bona fide belief that the said import could be done. In view of the policy prior to 1.4.1999 granting the importers to import second-hand machineries they had done so. He submitted that, although, he does not want to contest on the merits of the matter, but contended that in view of appellants being actual users, the redemption fine should not have been imposed and as there is no intention to defraud the policy, penalty was not leviable.
12. On the other hand, Ld. SDR Shri G.S. Menon arguing for revenue contended that once the EXIM policy laid down the restrictions for obtaining import licence, and if against the policy, the goods have been imported, then they are clearly confiscable. He contended that in view of offence having been brought home and not contested, the confiscation cannot be challenged. He pointed out that the value of goods being more than Rs. 13.11 lakhs, fine of Rs. 4 lakhs is justified and not excessive. Likewise, he contended that penalty under Section 112(a) of Rs. 80,000/- works out to less than 10% i.e. about 7% which is normal and keeping with the practice and is justified.
13. We have carefully considered the submissions made by both sides. We notice that the Tribunal in the case of Nirmal Surekha and Ors. v. CC, Amritsar (supra) on a similar violation, it was held that as the goods had been sold to an actual user and that transferees were the actual users and that there was nothing in the Import Export policy that they could not import these machines on their account and that the customs duty had been paid, therefore the Tribunal reduced the fine and penalty. In view of this finding of the Tribunal, the matter has to go back for reconsideration. However, we observe that redemption fine is required to be imposed for the reason that the Apex Court has already held in Jain Exports Pvt. Ltd. and other cited cases (supra) that once a violation of the condition of the Import Export Policy has been noted, then redemption fine has to be imposed. Therefore, the matter is remitted back of reconsidering the quantum of fine and penalty. In view of the plea that the goods have been sold to the actual user this has to be verified by the original authority after granting opportunity of hearing to appellants and re-decided in terms of judgments noted in the above noted appeals.
(C) Appeal Nos. C/390 to 395/2000:
14. In all these appeals, the Commissioner has clearly noted that Shri A. Gunasekaran, proprietor of M/s. Safire Litho Graphers had floated eight other firms with the sole purpose of importing second-hand printing machines and other allied machineries and that same were sold in the market by violating the EXIM policy. The Commissioner after due consideration has directed that 103 second-hand printing machinery found in different godowns could be released to the importers by taking undertaking from them that they shall not sell the same. While, he has directed that 91 machines which are already sold to be confiscated and in lieu, a fine of Rs. 56 lakhs should be paid and penalty of Rs. 25 lakhs imposed on Shri A. Gunasekaran, while he has imposed a penalty of Rs.1 lakh each on Shri Section Manickavasagam, Prop. of M/s. Priyanka Printers, Section Chandrakanth, Proprietor of M/s. Parvatham Enterprises, B. Srinivasa Rao, Proprietor of M/s. Srinivasa Lithographers, C. Ayyaraj, prop, of M/s. Rajeswarai Enterprises, while he has imposed a sum of Rs. 2 lakhs on Shri V. Annadurai, Prop of M/s. Shri Lakshmi Offset Printers and Prop of M/s. Anand Printers.
15. In all these set of appeals, Learned Counsel Shri Jayachandran argued the matter and contended that in a similar matter, the Chief Commissioner in his order No. 7/99 dated 31.1.2001 in the case of M/s. Orr Jay Process and others has imposed a fine of Rs. 25 lakhs against the confiscation of 389 numbers of machines valued at Rs. 2,93,74,056/-, while he has given the option to redeem 71 Nos. of machines seized, which had not been sold on payment of Rs. 3 lakhs. In a similar allegation of the main person having floated godowns i.e. R. Ja-nardhanan, penalty imposed on him was only Rs. 10 lakhs, while against all the 23 persons in whose name the Bill of Entry were filed a nominal fine of only Rs. 5000/- imposed each. Ld. Counsel contended that there cannot be any discrimination in the matter and there has to be uniformity with regard to imposition of fine and penalties and therefore he prayed for remand of the matter so that appellants can re-agitate the issue.
16. Ld. SDR/DR argued the matter and contended that the order of Chief Commissioner relied upon by the Counsel cannot be the basis for confiscation, fine and penalty in the matter. He submitted that the Tribunal in the case of Nirmal Surekha and Ors., 2000 (45) RLT 156 upheld the penalty of Rs. 2 lakhs on a similar offence, however, ordered for setting aside the redemption fine. He contended that Nirmal Surekha's case cannot be followed in view of large number of Supreme Court's judgments cited by him which are noted (supra), wherein, it has been clearly held that RF is required to be imposed under any circumstance once the violation has been noted. He contended that in the present case the violation has been clearly noticed and therefore the imposition of fine and penalty on A. Gunasekaran and penalty of Rs. 1 lakh each on others and Rs. 2 lakhs on V. Annadurai is justified. He submitted that order of release of 103 second hand printing machinery to the party is not correct as each individual importer had admitted that the goods were not owned by them and it was in the name of A. Gunasekaran. In view of this Ld. DRs submitted that the order itself being not correct requires to be set aside and remanded back to the Commissioner for proper adjudication in the light of Supreme Court and Tribunal judgments cited by them.
17. On a careful consideration of the submissions and on examination of the matter, we notice that the importers in this case have clearly admitted that they had no interest in the import of these machines except that they had given their names to A. Gunasekaran who was the person who had imported and dealt with the machines. In view of this submission, the order of release of 103 second hand machines to individual importers does not appear to be a correct order as the said persons have not claimed release in their individual names. Therefore, the matter has to go back to the Commissioner as submitted by Ld. SDR/DR for de novo consideration on 103 second-hand machines directed to be released to the individual importers. In so far as the confiscation of 91 machines, which have already been sold, is concerned, we do not find any infirmity in such order of confiscation. Ld. Counsel also did not seriously contest, but however, he pleaded before us that order of Chief Commissioner of Customs in the case of M/s. Off Jay Process and Others be considered wherein fine & penalty imposed are on a lesser quantum. We notice that although there is Judgment of Tribunal in the case of Nirmal Surekha and Ors. (supra), wherein penalty of Rs. 2 lakhs has been upheld but the Tribunal has noted that transfrees were the actual users and there was nothing in the Import Policy that they could not import these machines on their own account and as appropriate duty has been paid, fines, though, leviable are required to be set aside. From this judgment, it is clear that though RF cannot be set aside, this portion of order setting aside the fine cannot be given effect to. In the light of Apex Court Judgment and the Bench which passed the Judgment in Nirmal Surekha and Ors. have themselves in the light of Mangala Textiles (supra) have clearly held that redemption fine is imposable even when goods is no longer in the custody of the department. However in Mangala Textiles, the Tribunal have not taken into account the Apex Court Judgment rendered in Westen Components Ltd., which was not looked into while passing orders on redemption fine in the case of Nirmal Surekha and Ors. (supra). Therefore, in order to have uniformity on fine and penalty it is but proper that the matter is remitted back to the original authority to reconsider the pleas of the appellants and take into consideration of all the judgments and orders and pass appropriate orders with regard to confiscation and penalty afresh after giving an opportunity to the appellants.
(D) Appeal No. C/675/2000:
18. In this appeal, the Ld. Commissioner of Customs, Trichy has imposed penalty of Rs. 3 lakhs under Section 112(a) of the Customs Act on the appellant Shri V.S. Gopalasamy, Prop of M/s. Ideal Process. However, as the goods have already been sold and not available, though, he held that the same are liable for confiscation, but has not imposed any fine.
19. The party has requested the case to be decided on merits in terms of written submissions.
20. Ld. SDR and DR rely on the judgments and contended that the matter has to go back to the Commissioner for re-adjudication on fine and penalty as submitted by them in the light of judgments cited (supra).
21. On a careful consideration of the submissions, we agree with Ld. SDR/DR that the matter is required to be remanded for de novo consideration in the light of the findings already recorded (supra). We have given a clear finding that in the light of judgments noted, once the goods have been found to have violated the policy and undertaking, even they are liable for confiscation and if they are not available or sold, the fine is required to be imposed in terms of Supreme Court Judgment rendered in Westen Components Ltd. (supra) and the Tribunal Judgment rendered in Mangala Textiles (supra). Therefore, taking into consideration all the findings already recorded, the impugned order is set aside and matter remanded for de novo consideration to the Commissioner with the direction to readjudicate the matter on fine and penalty after taking into consideration the judgments cited and the submissions that would be made by the appellants in the personal hearing that should be granted by the Ld. Commissioner.
22. In conclusion, it has to be noted that even the Apex Court in the case of Hargobind Das K. Joshi v. CC 1987 (14) ECC 233 : 1995 (58) ECR 246 (SC) at page 234 (SC) have observed that even if goods in question viz. Zip-fasteners could be imported freely for whatever worth it is, the option to give redemption on payment of fine has to be exercised by the concerned officer in accordance with law as is considered appropriate in the facts and circumstances of the case after hearing the appellants. The Apex Court noted that there is no doubt that the concerned officer will take into consideration all the relevant circumstances including the submission urged on behalf of counsel for the appellants that the goods in question, zip-fasteners can at present be imported freely, for whatever it is worth. In the cast of Muthreja &, Co., Delhi v. CC, New Delhi, 1987 (10) ECR 157 at page 158, the Tribunal held that in the absence of a valid import licence or customer (sic) clearance permit, the importation was clearly a prohibited one and the authorities were all within their rights to order absoulte confiscation of the goods under Section 125. The Tribunal further held that there is no warrant in law for the contention that only absolutely prohibited goods can be confiscated absolutely. It happens at times when prohibited goods are confiscated, the authorities give importers an option to have the goods redeemed on payment of an adjudged amount of fine in lieu of confiscation. It has been held by the Apex Court in the case of M.G. Abrol Additional CC v. Shantilal Chhotalal and Co., 1984 (ECR) 503 at p. 516 (SC) that the formal order of confiscation had to be passed after the necessary enquiry and therefore when passed in the present case after the goods had actually left this country cannot be said to be an order which could not be passed by the appropriate authorities.
23. In the case of Jain Exports Pvt. Ltd. v. CC , the Tribunal held that the goods had been imported not for actual use by the appellants or by the licence-holders. The admitted fact is that they had been disposed of on high sea sale basis. Hence, the obvious motive is for trading in the imported goods. The motivation for trading can only be on availability of profits through the import from the goods imported. Therefore, the Tribunal held that appellants motivated by profit considerations, had launched on the massive import as late as on 31st July 1982 by opening the Letter of Credit knowing fully well that during the period of import, even the actual users have to approach the canlising agency for their requirement and by importing this canalised item, they could make considerable profit by way of sale. The Tribunal therefore unable to appreciate the plea of the advocate that there was good faith about the lawful nature of the import and the good faith was provided by the letter from S.T.C did not agree for non-imposition of redemption fine.
24. In the case of P.C. Joshi v. CC, New Delhi 1987 (12) ECR 667 at pp. 67-71, it has been held that the power to give option to the importer to get release of the prohibited goods upon payment of fine is a power coupled with duty and in any event, it should be exercised fairly and reasonably and not arbitrarily and capriciously.
25. In the case of Dynamics , the Apex Court observed that imposition of a quantum of fine is purely in exercise and discretion by a quasi-judicial authority like the Tribunal and such discretion should be exercised judiciously keeping in mind the profit margin of the goods. Depending upon the facts and circumstances of the case there may be a nominal variation in the percentage of fine in each case and such nominal or marginal variations are inevitable particularly when a quasi-judicial authority is called upon to exercise a discretion. This principle was noted in Krishanlal Balram v. CCE 1988 (37) ELT 209 at pp. 310-11 (T) and Mangalore Chemicals and Fertilizers Ltd. v. CC . The Hon'ble Delhi High Court in the case of Jain Exports v. UOI, observed that resort to Section 125 of the Customs Act, 1962, to impose fine in lieu of confiscation cannot be so exercised as to give a bonanza or profits for an illegal transaction of import. This was followed in the case of Silver Enterprises v. CC & CCE, by the Tribunal.
26. In the case of Pandurang Bagwal Patel v. CCE & Customs, 1987 (10) ECR 684 at p. 688, the Tribunal held that the appellants had clearly stated at the earliest opportunity that they are in no way concerned with the currency at all, and having admitted it, they cannot go back on it and change their stand at a later point of time and belatedly make a claim in reply to the show-cause notice. The evidence on record, the Tribunal observed, clearly established that appellants are not entitled to make any claim in respect of the currency under seizure, nor the appellants were able to convince on evidence about their rights or title to the same under law. In that view of the matter, the Tribunal held that appellants had no legal title to the currency under seizure.
27. The Apex Court in the case of Sheik Mohd. Omar v. CC did not agree with the argument of the Ld. Advocate for the appellants seeking to interpret the term "prohibited" referred to in Section 125 of the Customs Act based on the distinction between "prohibited" and "restricted" or "otherwise controlled" in the Imports & Exports (Control) Act. The Apex Court held that this question is no longer open to controversy. It was observed by the Madras High Court in the case of Indian Overseas Bank v. CC, Madras 1984 (2) ECC 253 at pp. 263, 264 (Mad.) that though the imposition of personal penalty contemplated under Section 112 has been set aside by the appellate order, yet there is no other go than to permit the petitioner-bank who is the owner of the goods and in whose favour the bills has been endorsed, to redeem the goods, when the order of the first respondent dated 6th August 1980, gives the importer (the fourth respondent) an option under Section 125, It could only mean the "owner" because, as is seen above, Section 125 uses only the word "owner". Therefore, it has to be observed that when an adjudication takes places either under Section 111 or under Section 124, the adjudication is in relation to the goods. This must be clearly borne in mind. The object of the Customs Act generally is to see that there is no illegal importation of goods. The various policies under the Import Trade Control are enunciated with reference to the economic conditions of the country and one cannot claim an inviolable right with regard to importation. An item which is freely importable today may be subject to restrictions tomorrow or even altogether banned. In other word the import of a particular goods may be licit today but become illicit tomorrow. Thus, the power of the Authorities under the Act is to determine whether a particular import is licit or illicit. The Section 112 imposes the personal penalty on the person concerned in the import. It is very wide in its amplitude, Section 111 dealing with confiscation does not contemplate any person. The procedure for confiscation is set out in Section 124. Both these sections relate only to the goods and not to the person. It is true, unless there is a person involved, there cannot be an importation. The confiscation under Section 111 following the procedure under Section 124 would definitely take within it the owner (the petitioner bank). Though the imposition of personal penalty contemplated under Section 112 has been set aside by the appellate order, yet there is no other go than to permit the petitioner-bank, who is the owner of the goods and in whose favour the bills had been endorsed, to redeem the goods. When the order of the Collector of Customs gives the importer an option under Section 125, it could only mean the "owner" because Section 125 uses only the word "owner". This is the position explained in the case of Indian Overseas Bank v. CC, Madras 1984 Tax. L.R. 2427 at pp. 2434, 2435 (Mad.)
28. A restriction on import subject to certain conditions would operate as a prohibition if the conditions are not conformed to. There is thus already noted judicial authority that a prohibition will include restriction just as, in the sphere of fundamental rights, there is authority that a restriction will include prohibition as well as observed by the Calcutta High Court in the case of Sheik Mohd. Omar v. CC affirmed by the Apex Court in .
29. It is now beyond doubt that imposition of a fine in lieu of confiscation is discretionary with the authorities. But they must give specific reasons in every case as to why a particular penalty, may be the more onerous of the two, was imposed? There is no authority for such a proposition. If there be indications that an inferior tribunal felt that its discretion was fettered, although there was by law no limitation imposed, or that it had none, and in that view chose the more onerous of the two penalties provided, then only a superior court may remit the case and ask the inferior tribunal to exercise this discretion according to law. In the absence of such indications, the discretion exercised by an inferior tribunal should not be interfered with as observed by the Calcutta High Court in the case of Sheik Mohd Omar v. CC .
30. The judgments have strong bearing on the present case and the authority, while re-adjudicating the matter, should keep in mind the law laid down in these judgments and not to merely go by the fact that the Chief Commissioner in similar cases has imposed a very nominal fine and penalty on the party who did not claim ownership and washed off the hands at the earliest point of time, cannot be asked to take the goods on payment of redemption fine. They have clearly and categorically stated that they have nothing to do with the import of machineries. The law as stated above should be looked into while adjudicating the case.
31. Thus, all the above appeals are disposed of by remand for de novo consideration to the original authority on the above terms.
(Pronounced in open Court on 21.12.2001)