Madras High Court
M/S.Sogo Synergy Pvt. Ltd vs Customs on 27 May, 2021
Author: C.Saravanan
Bench: C.Saravanan
W.P.No.11062 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved On 25.03.2021
Pronounced On 27.05.2021
CORAM
THE HON'BLE MR.JUSTICE C.SARAVANAN
W.P.No.11062 of 2017
and
W.M.P.No.12005 of 2017
(Through Video Conferencing)
M/s.Sogo Synergy Pvt. Ltd.,
Rep. by its Vice President,
Shri G.R.Lawhale,
No. D-1/1, Hayes Court,
3rd Floor, 11/9, Hayes Road,
(Off. Richmond Road)
Bangalore – 560 025. ... Petitioner
Vs.
1.Customs, Central Excise & Service Tax,
Settlement Commission,
D/o Revenue, M/o Finance
Govt. of India
Additional Bench, 2nd Floor,
Narmada Block, Customs House,
60, Rajaji Salai, Chennai – 600 001.
2.Commissioner of Customs,
Chennai – II, Commissionerate,
Customs House, No.60,
Rajaji Salai, Chennai – 600 001.
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https://www.mhc.tn.gov.in/judis/
Page No 1 of 19
W.P.No.11062 of 2017
3.Addl. Directorate of Revenue Intelligence
Chennai Zonal Unit,
27, Adarsh Towers,
G.N.Chetty Road, T.Nagar,
Chennai – 600 017. ... Respondents
Writ Petition filed under Article 226 of the Constitution of India,
for issuance of a Writ of Certiorari, to call for the records of the 1 st
respondent in Order No.12-13/2017 dated 31.01.2017 in S.A.(C)63 &
64/2016-SC and quash the same insofar as it seeks to absolutely
confiscate the goods seized (hard disk drives) on 13.01.2016 valued at
Rs.91,93,230/- and Rs.12,04,605/- by the 3rd respondent at Bangalore
godown and Chennai branch premises of the petitioner entity.
For Petitioner : Mr.B.Satish Sundar
For Respondents : Mr.V.Sundareswaran
Senior Standing Counsel.
ORDER
Heard the learned counsel for the petitioner and learned Senior Standing Counsel for the respondents.
2. The petitioner is aggrieved by the impugned order dated 31.01.2017 passed by the first respondent Settlement Commission in ______________ https://www.mhc.tn.gov.in/judis/ Page No 2 of 19 W.P.No.11062 of 2017 Order No.12-13/2017-Cus. in so far as it has ordered confiscation of goods seized from the petitioner's godown at Bangalore valued at Rs.91,93,230/- and the goods valued at Rs.14,72,634/-.
3. The learned counsel for the petitioner submits that these goods were seized on 13.01.2016 by the third respondent in respect of which Show Cause Notice dated 11.07.2016 was issued to the petitioner. The said Show Cause Notice called upon the petitioner to show as to why :-
i. the exemption benefit claimed and availed under the Central Excise Notification No.12/2012-CE dated 17.03.2012 Serial No.255 in respect of 17 bills of entry as detailed in worksheet-I to the show cause notice, should not be denied and the corresponding duty on merits be demanded as per the quantification made in the said worksheet;
ii. consequently, the differential duty amounting to Rs.61,26,333/- (Rupees sixty one lakhs twenty six thousand three hundred and thirty three only) in respect of the 17 bills of entry as detailed in worksheet-I to the show cause notice should not be demanded in terms of Section 28(1) of the Customs Act, 1962; iii. interest under Section 28AA of the Customs Act, 1962 should not be recovered on the differential duty amounting to Rs.61,26,332/- (Rupees sixty one lakhs twenty six thousand three hundred and thirty two only) in respect of 17 bills of entry as detailed in worksheet-I to the show cause notice evaded by them; iv. the declared description of the impugned goods ______________ https://www.mhc.tn.gov.in/judis/ Page No 3 of 19 W.P.No.11062 of 2017 imported vide 17 bills of entry as mentioned in column no.5 of the worksheet-I to this notice should not be rejected and held as refurbished goods as detailed in column no.12 of the said worksheet;
v. the impugned refurbished goods seized in the godown premises of the importer at Bengaluru, as detailed in worksheet-II to this notice, totally valued at Rs.91,93,230/- (Rupees ninety one lakhs ninety three thousand two hundred and thirty only) should not be confiscated under Section 111(d), Section 111(m) and Section 111(o) of the Customs Act, 1962 read with Rule 17 of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 read with Section 11(1) of Foreign Trade (Development and Regulation) Act, 1992 and Rules 11 and 14 of the Foreign Trade (Regulation) Rules, 1993 for importing refurbished goods and for wrong availment of the notification benefit;
vi. the impugned goods (other than the refurbished goods mentioned in para supra) seized in the godown premises of the importer at Bangaluru, as detailed in worksheet-II to this notice, totally valued at Rs.14,72,634/- (Rupees fourteen lakhs seventy two thousand six hundred and thirty four only) should be confiscated under Section 111(m) and Section 111(o) of the Customs Act, 1962 for wrong availment of notification benefit;
vii.the impugned refurbished goods seized in the branch premises of the importer at Chennai, as detailed in worksheet-II to this notice, totally valued at Rs.12,04,605/- (Rupees twelve lakhs four thousand six hundred and five only) should not be confiscated under Section 111(d), Section 111(m) and Section 111(o) of the Customs Act, 1962 read with Rule 17 of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 read with Section 11(1) of Foreign Trade (Development and ______________ https://www.mhc.tn.gov.in/judis/ Page No 4 of 19 W.P.No.11062 of 2017 Regulation) Act, 1992 and Rules 11 and 14 of the Foreign Trade (Regulation) Rules, 1993 for importing refurbished goods and for wrong availment of the notification benefit;
viii.the impugned refurbished goods seized in the branch premises of the importer at Chennai, as detailed in worksheet-II to this notice, totally valued at Rs.24,800/- (Rupees twenty four thousand and eight hundred only) should not be confiscated under Section 111(m) and Section 111(o) of the Customs Act, 1962 for wrong availment of notification benefit;
ix. the impugned refurbished goods imported and cleared by the importer totally valued at Rs.7,69,10,673/- (Rupees seven crores sixty nine lakhs ten thousand six hundred and seventy three only) as detailed in worksheet-II to this notice (excluding the value of the refurbished goods seized at their two godowns mentioned supra) and not available for seizure should not be held liable for confiscation under Section 111(d), Section 111(m) and Section 111(o) of the Customs Act, 1962 read with Rule 17 of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 read with Section 11(1) of Foreign Trade (Development and Regulation) Act, 1992 and Rules 11 and 14 of the Foreign Trade (Regulation) Rules, 1993 for importing refurbished goods and for wrong availment of the notification benefit;
x. the remaining impugned goods imported and by the importer totally valued at Rs.18,20,274/- (Rupees eighteen lakhs twenty thousand two hundred and seventy four only) and not available for seizure as detailed in worksheet-II to this notice (excluding the value of the seized goods mentioned supra and the value of the refurbished goods) should not be held liable for confiscation under Section 111(m) and Section 111(o) of the Customs Act, 1962 for wrong ______________ https://www.mhc.tn.gov.in/judis/ Page No 5 of 19 W.P.No.11062 of 2017 availment of notification benefit;
xi. penalty should not be imposed on them under Section 112(a) and also under Section 114AA (separately) of the Customs Act, 1962; and xii.the amount of Rs.61,26,333/- (Rupees sixty one lakhs twenty six thousand three hundred and thirty three only) and Rs.3,78,852/- (Rupees three lakhs seventy eight thousand eight hundred and fifty two only) voluntarily paid by them during the course of investigation, should not be adjusted towards duty, interest and other adjudications liabilities.
4. The allegation against the petitioner in the Show Cause Notice was that from 2013 onwards, the petitioner had paid lesser amount of additional duty of customs on the imported goods payable under the Central Excise Notification No.12/2012-C.E. dated 17.03.2012 as amended from time to time with effect from 30.04.2015. The total value of consignments imported by the petitioner was estimated as Rs.7,69,10,673/-. Out of which, on 13.01.2016, a portion of the consignments was seized at petitioner's godown at Bangalore and at Chennai as detailed below:-
Place Value Remarks
Chennai Rs.12,04,605/- Refurbished contrary to
Hazardous Wastes (Management,
Handling and Transboundary
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https://www.mhc.tn.gov.in/judis/
Page No 6 of 19
W.P.No.11062 of 2017
Place Value Remarks
Movement) Rules, 2008.
Bangalore Rs.91,93,230/- - do -
Bangalore Rs.14,72,631/- Other than Refurbished
5. During the course of the investigation, the petitioner squared up the duty liability insofar as the short payment of additional duty of customs equivalent to the central excise duty payable under Central Excise Notification No.12/2012-C.E. Dated 17.03.2012 which was sought to be appropriated in the said Show Cause Notice. The petitioner also paid the interest thereon which was also sought to be appropriated in the above Show Cause Notice. After the seizure was effected on 13.01.2016, the petitioner claimed that there was a fire accident in the petitioner's godown in Mysore Road, Bangalore, as a result of which, the seized goods valued at Rs.91,93,230/- and Rs.14,72,634/- as detailed above were destroyed.
6. The petitioner therefore decided to settle the case before the first respondent Settlement Commission. On 31.01.2017, the impugned order ______________ https://www.mhc.tn.gov.in/judis/ Page No 7 of 19 W.P.No.11062 of 2017 came to be passed by the first respondent Settlement Commission. It gave the following substantial relief to the petitioner:-
i. DUTY: The Additional differential amount of Customs Duty in this case is settled at Rs.61,26,333/- (Rupees sixty one lakhs twenty six thousands three hundred and fifty three only). As this amount stands paid by the applicant as confirmed by the Revenue, no further liability subsists in this regard.
ii. INTEREST: The interest liability is settled at Rs.3,78,852/- (Rupees three lakhs seventy eight thousands eight hundred and fifty two only). As this amount stands paid by the applicant as confirmed by the Revenue, no further liability subsists in this regard. iii. FINE: The refurbished goods seized from the godown premises of the applicant firm at Bangaluru totally valued at Rs.91,93,230/- are confiscated absolutely under Section 111(d), Section 111(m) and Section 111(o) of the Customs Act, 1962 read with Rule 17 of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 read with Section 11(1) of Foreign Trade (Development and Regulation) Act, 1992 and Rules 11 and 14 of the Foreign Trade (Regulation) Rules, 1993. iv. The goods (other than the refurbished goods0 seized from the godown premises of the applicant at Bangaluru totally valued at Rs.14,72,634/- are confiscated under Section 111(m) and 111(o) of the Customs Act, 1962. However, a fine of Rs.15,000/- (Rupees Fifteen Thousand only) is imposed on the goods under Section 125 of the Customs Act, 1962 in lieu of confiscation.
v. The impugned refurbished goods seized in the branch premises of the applicant firm at Chennai totally ______________ https://www.mhc.tn.gov.in/judis/ Page No 8 of 19 W.P.No.11062 of 2017 valued at Rs.12,04,605/- are confiscated absolutely under Section 111(d), Section 111(m) and Section 111(o) of the Customs Act, 1962 read with Rule 17 of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 read with Section 11(1) of Foreign Trade (Development and Regulation) Act, 1992 and Rules 11 and 14 of the Foreign Trade (Regulation) Rules, 1993. vi. The impugned goods (other than the refurbished goods) seized from the godown premises of the applicant at Chennai totally valued at Rs.24,800/- are confiscated under Section 111(m) and 111(o) of the Customs Act, 1962. However, a fine of Rs.500/- (Rupees Five Hundred only) is imposed on the goods under Section 125 of the Customs Act, 1962 in lieu of confiscation.
vii.The impugned refurbished goods imported and cleared by the applicant totally valued at Rs.7,69,10,763/- at their two godowns were not available for seizure at any point of time, but were contemplated for confiscation under Section 111(d), Section 111(m) and Section 111(o) of the Customs Act, 1962 read with Rule 17 of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 read with Section 11(1) of Foreign Trade (Development and Regulation) Act, 1992 and Rules 11 and 14 of the Foreign Trade (Regulation) Rules, 1993. Hench the Bench holds these goods as liable for confiscation, however, refrains from ordering confiscation in the absence of seizure of goods.
viii.The remaining goods imported by the applicant valued at Rs.18,20,274/- (excluding the values of seized goods mentioned at vii above) were not available for seizure at any point of time. Hence the Bench holds these goods as liable for confiscation, however, refrains from ordering confiscation in the absence of seizure of goods.
ix. PENALTY: Taking into account the facts and ______________ https://www.mhc.tn.gov.in/judis/ Page No 9 of 19 W.P.No.11062 of 2017 circumstances of the case, the Bench imposes a penalty of Rs.3,00,000/- (Rupees Three Lakhs only) on M/s. Sogo Synergy Pvt Ltd, Bangalore – the applicant – under the provisions invoked in the Show Cause Notice and grants immunity in excess of the above amount. x. Taking into account the facts and circumstances of the case, the Bench imposes a penalty of Rs.50,000/- (Rupees Fifty Thousand only) on Shri Jayamuni Rao, Managing Director of M/s.Sogo Synergy Pvt Ltd, Bangalore – co-applicant – under the provisions invoked in the Show Cause Notice and grants immunity in excess of the above amount.
xi. PROSECUTION: Subject to the payment of the above mentioned amounts, the applicant and the co-applicant are granted immunity from Prosecution under the Customs Act, 1962, in as far as this case is concerned. xii.The above mentioned amounts of Redemption fine and penalties are to be paid within 30 days from the date of receipt of this order.
7. The petitioner is aggrieved by the absolute confiscation of the goods valued at Rs.91,93,230/- which were destroyed in the fire accident without any corresponding relief to the petitioner for redemption fine as was done in the goods other than the refurbished goods which valued at Rs.14,72,634/-. The petitioner is also aggrieved by the said order primarily on the ground that the Insurance claim settled by Insurance Company has to be paid to the Customs Department and not to the ______________ https://www.mhc.tn.gov.in/judis/ Page No 10 of 19 W.P.No.11062 of 2017 petitioner since the goods were absolutely confiscated without any redemption fine.
8. It is submitted that the petitioner is a dealer of Hard Disc and Computer Hard Work in India. The hard disks which were imported by the petitioner were found to be pre-dominantly refurbished after import.
It is therefore submitted that on several occasions, the goods imported contrary to the restrictions were allowed to be redeemed on payment of fine and penalty and exported back under the provision of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 read with Section 11(1) of the Foreign Trade (Development and Regulation) Act, 1992 and Rule 11 and 14 of the Foreign Trade (Regulation) Rules, 1993. In this connection, reference was drawn to the imports made under the following three Bills of Entry and the corresponding Orders-In-Originals :-
Sl. Bill of Entry Value of Import Order-in-original Redemption No. fine & Penalty No Date Declared Re-determined No Date 1 3321169 19.09.2013 Rs.11,54,064/- Rs.17,86,322/- 23586 16.01.2014 Rs.1,00,000/-
+ Rs.25,000/-
2 3310506 19.09.2013 Rs.24,12,945/- Rs.27,73,332/- 23587 16.01.2014 Rs.1,00,000/-
+ Rs.25,000/-
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https://www.mhc.tn.gov.in/judis/
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W.P.No.11062 of 2017
Sl. Bill of Entry Value of Import Order-in-original Redemption
No. fine & Penalty
No Date Declared Re-determined No Date
3 2517321 24.06.2013 Rs.24,70,660/- Rs.39,26,896/- 17/201 19.12.2015 Rs.7,85,000/-
6 + Rs.1,95,000/-
4 3868705 11.01.2016 Rs.54,46,134/- Rs.54,46,134/- 50224/ 28.09.2016 Rs.3,00,000/-
16 + Rs.95,000/-
9. As per Section 127J of the Customs Act, 1962, the order of the Settlement Commission is final. It reads as under:-
SECTION 127J. Order of settlement to be conclusive. - Every order of settlement passed under sub-section (5) of section 127C shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force.
10. Therefore, ordinarily, it is not open for the applicant, who has settled his case before a Settlement Commission, to re-open the same by appropriating and re-appropriating a portion of the order.
11. The question that arises for consideration in this Writ Petition is whether the petitioner is entitled to have the order of Settlement Commission modified to the extent it is against the petitioner. In the decision of the Hon'ble Supreme Court in Union of India and Others ______________ https://www.mhc.tn.gov.in/judis/ Page No 12 of 19 W.P.No.11062 of 2017 Vs. Ind-Swift Laboratories Limited, (2011) 4 SCC 635, it has been held as follows:-
22. An order passed by the Settlement Commission could be interfered with only if the said order is found to be contrary to any provisions of the Act. So far as the findings of fact recorded by the Commission or question of facts are concerned, the same is not open for examination either by the High Court or by the Supreme Court. In the present case the order of the Settlement Commission clearly indicates that the said order, particularly, with regard to the imposition of simple interest @ 10% per annum was passed in accordance with the provisions of Rule 14 but the High Court wrongly interpreted the said Rule and thereby arrived at an erroneous finding. So far as the second issue with respect to interest on Rs. 50 lakhs is concerned, the same being a factual issue should not have been gone into by the High Court exercising the writ jurisdiction and the High Court should not have substituted its own opinion against the opinion of the Settlement Commission when the same was not challenged on merits.
12. However, in paragraph No.14, the Hon'ble Supreme Court has indicated that such orders can be challenged in a higher forum.
Paragraph No.14 of the said Judgment reads as under:-
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14. The order of the Settlement Commission also indicates that full immunities were granted to the respondent from penalty and prosecution. The aforesaid order was not challenged by the respondent in any forum and, therefore, it became final and conclusive in terms of Section 32-M of the Act, which states that every order of settlement passed under sub-section (7) of Section 32-F would be conclusive as to the matters stated therein subject to the condition that when a settlement order is obtained by fraud or misrepresentation of fact, such an order would be void. According to the said provisions, no matter covered by such order could be reopened in any proceeding under the Central Excise Act or under any other law for the time being in force. Although, subsequently, an application by way of clarification was filed by the respondent, the said application was, however, not entertained. It was held that the said application is misconceived, particularly, in view of the fact that no such issue was raised before the Commission. Since, however, a writ petition was filed by the respondent challenging only the second order of the Settlement Commission and the subsequent letter issued from the office of the appellant, on the basis of which the High Court even proceeded to interfere with the first order passed by the Settlement Commission, we heard the counsel appearing for the parties on the issue decided by the High Court also.
13. The facts on record indicate that petitioner has got substantial relief despite past dalliances of violating law. The petitioner had got habituated of importing refurbished hard disk contrary to the provisions ______________ https://www.mhc.tn.gov.in/judis/ Page No 14 of 19 W.P.No.11062 of 2017 of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 and the provisions of the Foreign Trade Management (Development And Regulation) Act, 1992.
14. The petitioner has not made out a case for interference. The petitioner had got habituated in importing refurbished hard disk contrary to the law and took chances. Whenever the petitioner was caught, the petitioner paid redemption fine but continued to import even though such orders should have deterred the petitioner from importing such refurbished hard disk. The petitioner however continued with the charade and gambled with the law.
15. The petitioner ought to have therefore considered it to be lucky not once but atleast four times. It cannot get more avaricious and expect the court to lend its olive branch when there is no irregularity in the impugned order. On the other hand, the first respondent Settlement Commission has shown mercy on the petitioner by allowing substantial benefit to the petitioner.
16. The facts also indicate that goods valued Rs.7,69,10,763/- and ______________ https://www.mhc.tn.gov.in/judis/ Page No 15 of 19 W.P.No.11062 of 2017 Rs.18,20,274/- were not available for confiscation as the petitioner had already sold the refurbished hard disk and taken advantage. The first respondent Settlement Commission has therefore refrained from ordering confiscation of the goods or imposing redemption fine as they were not available for confiscation.
17. The first respondent Settlement Commission has ordered absolute confiscation of the seized goods which were in the custody of the petitioner which were allegedly lost in the fire accident in the petitioner’s godown in Bangalore. The goods would have absolutely stood vested with the Government in terms of Section 126 of Customs Act, 1962 if adjudication proceedings were allowed to go on or in the alternative, allowed to be redeemed by the petitioner on payment of redemption fine under Section 125 of the Customs Act, 1962.
18. Having opted to settle the case before the first respondent Settlement Commission, it is not open for the petitioner to dissect the order of the first respondent Settlement Commission and appropriate a portion of the order which is favourable to it and reject a portion which is ______________ https://www.mhc.tn.gov.in/judis/ Page No 16 of 19 W.P.No.11062 of 2017 against the petitioner. The petitioner cannot approbate and reprobate the said order.
19. The order of the first respondent Settlement Commission is a package and it is not a substitute for an adjudication order that would have been passed by an adjudicating authority under the Act. It is for the petitioner to take advantage of it as it is or face the consequences by violating it.
20. Therefore, I do not find any merits in the present Writ Petition.
Under these circumstances, this Writ Petition is liable to be dismissed and is accordingly dismissed. No cost. Consequently, connected Miscellaneous Petition is also closed.
27.05.2021 Internet : Yes/No Index : Yes/No jen To ______________ https://www.mhc.tn.gov.in/judis/ Page No 17 of 19 W.P.No.11062 of 2017
1.Customs, Central Excise & Service Tax, Settlement Commission, D/o Revenue, M/o Finance Govt. of India Additional Bench, 2nd Floor, Narmada Block, Customs House, 60, Rajaji Salai, Chennai – 600 001.
2.Commissioner of Customs, Chennai – II, Commissionerate, Customs House, No.60, Rajaji Salai, Chennai – 600 001.
3.Addl. Directorate of Revenue Intelligence Chennai Zonal Unit, 27, Adarsh Towers, G.N.Chetty Road, T.Nagar, Chennai – 600 017.
______________ https://www.mhc.tn.gov.in/judis/ Page No 18 of 19 W.P.No.11062 of 2017 C.SARAVANAN, J.
jen Pre- delivery order in W.P.No.11062 of 2017 and W.M.P.No.12005 of 2017 27.05.2021 ______________ https://www.mhc.tn.gov.in/judis/ Page No 19 of 19