Custom, Excise & Service Tax Tribunal
Shree Dhoot Trading & Agencies Ltd vs Mumbai on 19 December, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NOS: C/747 to 750/2011
APPLICATIONNO: C/Stay-1855 to 1858/2011
[Arising out of Orders-in-Original No: 58/2011/CAC/CC(I)/ SHH/Gr.VB dated 25/08/2011; 59/2011/CAC/CC(I)/ SHH/Gr.VB dated 26/08/2011 passed by the Commissioner of Customs (Import), Mumbai.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri Anil Choudhary, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Videocon International Ltd.
Shree Dhoot Trading & Agencies Ltd.
Appellant
Vs
Commissioner of Customs (Import)
Mumbai
Respondent
Appearance:
Shri K.R. Bulchandani, Advocate for the appellant Shri Navneet, Additional Commissioner (AR) for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of hearing: 19/12/2012 Date of Pronouncement: 31/01/2013 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
There are 4 appeals directed against Order-in-Original No. 59/2011/CAC/CC(I)/SHH/Gr.VB dated 25/26-08-2011 passed by the Commissioner of Customs (Imports), New Custom House, Mumbai. As all the appeals arise out of a common order, they are taken up together for consideration and disposal.
2. M/s Videocon International Ltd. (VIL in short) entered into a contract dated 26-2-1988 with M/s V/O Technointorg, USSR, for export of Toshiba Colour Picture Tubes (CPT in short), Model 510ZAB (PM) and degaussing coils. On 2-6-88, they were issued Additional Licence No. P/W/3280748C/XX/08/B/88 for exports made during April87 to March88. In July, 1988, M/s Shree Dhoot Trading & Agencies Ltd. (SDTAL in short) purchased Additional Licence No.P/W/3280748C/XX/08/B/88 from the open market for part of the value.
2.1. M/s SDTAL imported 6300 Nos. of Toshiba CPTs , Model 510ZAB(PM) from Japan and they gave a letter of authority to M/s VIL. On 26-7-88, M/s VIL filed Bill of Entry for Warehousing vide B/E No. 2003/1 for the said CPTs. The said B/E was assessed finally under section17 of the Customs Act, 1962 and order for clearance to warehouse was passed under Bond No. CWp20/2485 after debiting the Additional Licence permitting the import of CPTs. M/s VIL purchased the imported CPTs from M/s SDTAL vide invoice no. 1014 for a sum of Rs. 67,56,750/- On 9-8-88, M/s VIL sought permission to export the said CPTs bonded in the warehouse and filed a Bond Shipping Bill dated 11-8-88 for export of CPTs and Free shipping bill for export of indigenously procured degaussing coils to USSR. They also sought permission from the Asst. Collector, Export Department for export of imported CPTs from bonded warehouse under section 69 of the Customs Act with a copy of invoice dated 5-8-88 and additional licence as endorsed on the reverse of the invoice.
2.2. As there was no response from the department, they filed a writ petition No. 2625 of 1988 in the honble High Court of Bombay seeking directions from the honble court to the customs authorities to allow export of the imported CPTs under section 69 of the said Customs Act. The honble High Court vide order dated 25-8-88 granted interim relief to M/s VIL directing the customs department to allow export of the said goods upon VIL furnishing a bank guarantee to the extent of full import duty payable on the CPTs and further granted liberty to Customs authorities to adjudicate the matter and initiate action against M/s VIL and M/s SDTAL for contravention of the law, if any. On 9-9-88, M/s VIL exported the imported CPTs to USSR. In the meanwhile, on 26-8-88 M/s VIL had filed another Bond shipping Bill and Free Shipping Bill vide S/B Nos. 548700 and 548701 which was allowed clearance under the order of the Collector of Customs, without any objection.
2.3. The honble High Court finally disposed of WP No. 2625 of 1988 on 16-1-2002, by directing the department once again to adjudicate upon the matter with regard to payment of duty on the consignment exported within a period of 4 months. The said order was challenged by the appellants before the honble apex court vide SLP (C )6001 of 2002 who vide interim order dated 22-3-2002 stayed the proceedings. On 7-10-2002, the honble apex court vacated the stay and directed M/s VIL to appear before the adjudicating authority with a direction that no order be passed by the Adjudicating authority without leave of the honble apex court.
2.4. A show cause notice dated 31-12-2002 was issued to M/s SDTAL and M/s VIL asking them to show cause as to why 6300 pcs. Of Toshiba CPTs imported with a value of Rs.67,15,257/- should not be held liable for confiscation under section 111(d) of the Customs Act and why customs duty amounting to Rs. 91,52,206/- together with interest @18% p.a from 5-8-88 till the date of payment of duty should not be recovered and why penalty under section 112(i) of the said Customs Act, should not be imposed on them. The grounds for confiscation alleged in the notice was that at the material time, CPTs were allowed to be imported only by Actual Users and by Export Houses and Trading Houses. The Additional Licenses issued to Export Houses/Trading Houses after 1-4-88 were non-transferable. Therefore, the CPTs imported by M/s SDTAL could not have been cleared for home consumption unless it is sold to Actual Users and sale of the same when the goods were under bond by M/s SDTAL to M/s VIL was in contravention of the Import (Control) Order, 1955.
2.5. The notice was replied to by the appellants. On application by the department, the honble Supreme Court vide order 29-4-2004 permitted the department to issue orders with a direction that the said order will not be enforced till further orders from the apex court. The department passed the order dated 18-5-2004 imposing a penalty of Rs. 10 lakhs on VIL and a penalty of Rs.5 lakhs on SDTAL apart from confirming the duty demand. The said order was challenged by the appellants before the honble High Court by way of civil appeal 6637 of 2002.
2.6. The honble Supreme Court vide order dated 15-12-2010 disposed of the civil appeal by setting aside the Order in Original dated 18-5-2004 observing that the question of limitation is a relevant issue and the same goes to the root of the adjudication proceedings and remanding the matter to the Customs Authorities to decide the matter afresh in accordance with law.
2.7. On remand, the Commission of Customs (Imports) have passed in the impugned order dated 25/26-08-2011. In the said order, the ld. Commissioner has held the imported goods, namely. 6300 pcs of CPTs are liable to confiscation under section 111(d) of the Customs Act and has imposed a fine of Rs 25 lakhs in lieu of confiscation under section 125 of the said Customs Act. He has also confirmed a duty demand of Rs. 91,52, 206/- under the proviso to section 28(1) of the Customs Act together with interest under sections 28AA/28AB ibid. He has imposed a penalty of Rs.20 lakhs each on both M/s. STDAL and M/s VIL. Hence the appellants are before us.
3. The ld. Counsel for the appellant made the following submissions:-
3.1. In the present case the into bond B/E was filed on 26-7-1988 and the same was finally assessed on 4-7-88 after all verifications including the validity of imports under Additional Licence dated 2-6-88 produced by VIL. The show cause notice demanding duty under the proviso to Section 28(1) was issued on 31-12-2002, that is, after a lapse of 14 years from the date of assessment of the bill of entry. The allegation of suppression made in the show cause notice, though baseless, permits the authorities to invoke the extended period of maximum 5 years from the date of order of clearance of goods. Thus the show cause notice is hopelessly time-barred.
3.2. There is no suppression on the part of the appellants as the letter dated 11-8-88 addressed to the Asst. Collector of Customs, Export Department, seeking clearance of the imported CPTs from bond for exports had categorically set out all the details of the transaction, including imports under Addl. Licence and intention to export the CPTs under section 69 of the Customs Act. The department was, therefore, fully aware of the whole transaction and nothing was suppressed. Therefore, even the extended period of 5 years is not available.
3.3. The delay in the issue of show cause notice was never condoned by the honble Bombay High Court. In fact, the honble high court had permitted the adjudication of the transaction vide interim order dated 25-8-1988 and then by final order dated 16-01-2002. However the Department did nothing for over 14 years. The honble apex court in their order dated 15-12-2010, on the contention raised by the appellants that the adjudication proceedings are barred by limitation, had observed that the contention of time bar is a relevant issue and the same goes to the root of the adjudication proceedings. The ld. Commissioner has wrongly given a finding in the impugned order that there was a stay on adjudication by the honble courts. There was no such stay whatsoever, save and except, on adjudication during the period 22-3-2002 to 7-10-2002. Therefore, the respondent can not give a finding that the show cause notice was not issued in view of the stay orders given by the courts.
3.4. Ld. Commissioner has wrongly taken refuge under Sec. 28(7) since the said section was introduced with effect from 8-4-2011. The period involved is 1988. Section 28(7) has no retrospective effect. Moreover, the limitation period had already expired and therefore, the stay to adjudication proceedings for the period from 22-3-02 to 7-10-02 is irrelevant. Further the stay given by the honble apex court during 22-3-02 to 7-10-02 relates to the adjudication proceedings and not to the issue of the show cause notice.
3.5. Though no limitation period is provided for issue of show cause notice under section 124 , and though section 28(1) is not invoked for demand of duty in the notice, the impugned order has confirmed the duty demand under the proviso to Sec. 28(1). Further the honble High Court of Bombay in the case of Parekh Shipping Corporation vs. ACC, Bombay [1995 (80) ELT 781 (Bom.)] has held that issue of show cause notice under section 124 after a lapse of 12 years is beyond a reasonable time and the bond executed should also be for a duration of 5 years.
In the light of the above, the show cause notice is grossly barred by time.
4. On merits of the case, the ld. Counsel made the following submissions:-
a) The Additional Licence produced for import of CPTs was issued to an Export House for prior exports made during 1987-88. The said Addl. Licence is endorsed under para 215 of the Exim policy of 88-91 and is a freely transferable licence under para 216 and is neither subject to actual user condition nor restricted to sell of imported goods to actual users and SDTAL are transferees of the said licence for consideration.
b) The holder of additional licence can import OGL items listed in Appendix6 List 8 Part I as on the date of issue of the licence and as on the date of import. CPTs as on the date of issue of Addl. Licence as also on the date of import, were specifically listed under sl. No. 821(5) of Appendix 6 List 8 Part I of AM 88-91 policy and were allowed for import under para 23 of OGL order no. 1/88 dated 30-3-88. Being transferable licence and not subject to actual user condition, provisions of clause 5(3) (ii) of Import Control Order are not applicable.
c) The import of OGL items appearing in Appendix 6 List 8 Part I of AN 88-91 is permissible to both the actual users and Export/Trading Houses under para 23 of OGL order 1of 88 dated 30-3-88 and by heading to Appendix 6 List 8 Part I of AM88-91 read with para 215(2)(i) of the said policy Para 216 categorically provided that Addl. Licences will not be subject to actual user condition.
Therefore, the validity of the Addl. Licence produced was not questioned by the Customs authorities while assessing the B/E and debiting the Addl. Licence, clearing the CPTs and allowing bonding after debiting the addl. licence.
4.1. As regards the allegation that the appellant did not produce copy of the Addl. Licence and copy of the B/E, the ld. Counsel submitted that as they were not in possession of the Addl. Licence, they had requested for a copy of the same from the department and the department has wrongly thrown the burden on the appellants. He further submits that as per the prevailing practice, when the B/E was assessed, production of addl. Licence was a pre-condition as that enables the assessing officer to decide on the legality and validity of the import. The assessing officer verifies whether or not the imports are in accordance with the licence. After the appraising officer is satisfied that the goods are covered by the licence, he debits the customs copy of the licence to the extent of value of imports. Thereafter, the licensing department makes entries in the licence register with the particulars of the license debited and also retains the customs copy of the licence debited. In the present case, the validity of imports made by the appellant was never questioned either at the time of imports or at the time of exports till the issue of the show cause notice after a period of 14 years from the date of clearance of the imported goods. Therefore, the allegation made in the notice in this regard is baseless and the burden of production of copy of the licence can not be shifted on to the appellant when the department itself was required to retain the customs copy of the addl. Licence.
4.2. As regards the allegation that the appellants could not have sold or transferred the goods while they were in bond and the sale of CPTs by SDTAL to VIL was in violation of Import (Control) Order, 1955, the ld. Counsel submits that as per clause 5(3)(ii) of the Import Control Order, goods for the import of which a licence is granted shall be property of the licensee at the time of import and thereafter upto the time of clearance through the Customs. However Addl. Licenses issued to Registered Export Houses can not be subject to such a condition for the reason that addl. Licences are made freely transferable under para 216 of the exim policy. The nature of transferability of an addl. Licence necessarily excludes such licences from the deemed condition under clause 5(3)(ii). Otherwise, the transferability of the addl. Licence will have no meaning and rights granted by section 64(c) of the Customs Act to the owner of the warehoused goods to sell, export in bond etc. will be rendered infructuous as sec. 69 of the act permits clearance of the goods for export. Sec. 59(3) of the Act also permits transferability while the goods remain warehoused. Thus the attempt of the department to extend the applicability of clause 5(3)(ii) would be contrary to provisions of section 64 (c ) and section 69 read with section 59(3) of the Customs Act, 1962 and para 23 of the OGL order No. 1/88 dated 30-3-88. Thus sale of imported CPTs by SDTAL to VIL was not in contravention of the provisions of the Import (Control) Order.
4.3. With regard to the allegation that the importer had no where claimed that the import was for the purposes of re-export and the CPTs have been exported without any process of sub-assembly, the ld. Counsel submitted that this allegation has no legal basis. The B/E does not prescribe any declaration from the importer as to the purpose for which the goods are required. Further re-export of the goods can be in the same form or in a different form as provided for under sections 64(c) and 69 of the Customs Act. He also relies on the decision of this Tribunal in the case of MJ Exports [1992(60) ELT 161] upheld by the honble apex court wherein the re-export of the import goods in the same form has been upheld.
4.4. In view of the above legal and factual position, the ld. Counsel submits that there has been no violation of the Exim Policy or the Import (Control) Order as alleged and therefore the question of confiscation of the goods under section 111(d) of the Customs Act does not arise at all. Consequently imposition of redemption fine is also not sustainable. In as much as the confiscation is not sustainable, the question of imposition of penalty on the appellants also does not arise.
4.5. In addition to the above, the ld. Counsel further submits that under the same contract, subsequent identical imports of CPTs were allowed for re-export to Russia after the CPTs were bonded on final assessment and clearance order, under Bond shipping bill No. 548709 dated 26-8-88 and free shipping bill no. 548701 dated 26-8-88. This export was allowed under the order of the Collector of Customs in file No. S/6 Gen.1060/8803 as is evident from the endorsement on the bond shipping bill. No objection has been raised in respect of the said transaction till date. Therefore, in the present case also, a different treatment could not have been made as the circumstances were identical.
5. The ld. Addl. Commissioner (AR) appearing for the Revenue made the following submissions:-
5.1. As regards the time bar aspect, he re-iterates the findings given in the impugned order in this regard.
5.2. The import of items specified in Appendix 6, List 8, Part I was subject to actual user condition. Though Export Houses and Trading Houses could import these items under Addl. Licence as per para 215 and the licences so issued in the name of the said Export /Trading Houses will not be subject to actual user condition, and the licences were also freely transferable, the transferability was only in respect of the licences and not with respect to the goods. In other words, if the imports are undertaken on the strength of the additional licences transferred, the transferee should be an actual user. Otherwise, the entire objective of actual user condition becomes infructuous. The import licences including Addl. Licences are subject to the provisions of Import (Control) Order, 1955. As per clause 5 (3)(ii), the goods for the import of which a licence is granted shall be the property of the licencee at the time of import and thereafter, upto the time of clearance through the customs. In the present case, the clearance of the goods had not taken place from the bonded warehouse and the importer is bound by the provisions of warehousing which stipulates that he will be responsible for the goods under section 59(3) of the Customs Act which stipulates that a bond executed under this section by an importer in respect of any goods shall continue in force notwithstanding the transfer of the goods to any other person or the removal of the goods to another warehouse. The ld. AR further submits that when the goods were in the bonded warehouse, the title to the goods could not have been transferred to a third party who is not an actual user. In the present case, the importer is SDTAL who imported the goods on the strength of addl. licences purchased from the market. Therefore, they could not have sold the goods to VIL, who is not an actual user, when the goods were still lying in the warehouse as clearance implies clearance for home consumption. Thus there is violation of the provisions of the import policy attracting confiscation of the goods under the provisions of section 111(d) of the Customs Act, 1962.
5.3. As regards the exports undertaken by VIL, the ld. AR submits that as per clause 3 of the Export Control Order No.1/88 dated 30-3-88, in respect of goods specified under Schedule I, exports could have been undertaken only in accordance with a licence granted by the Central Government. Colour Picture Tubes and sub-assemblies of colour TV containing colour TV picture tubes are specified at sl. No. 2798 of Part B of Schedule I . The said list deals with items export of which is allowed on merits or subject to ceiling or other conditions to be specified from time to time. Further as per clause 15(g), export is not permitted in respect of any goods imported and bonded on arrival in India for re-export to any country outside India, except Nepal and Bhutan. In other words, since the CPTs were bonded on their arrival in India with the Customs, the re- export of the same by VIL to Russia is prohibited and therefore, such goods become prohibited goods in terms of section 2(33) of the Customs Act. Therefore the goods are liable to confiscation. The argument of the appellant that section 64(c) read with section 69 and 74 is misplaced as the said sections can not over ride the provisions of exim policy. The provisions of the said section would apply only when the exports are not prohibited by the exim policy. He also relies on the decision of the apex court in the MJ exports case (supra) in support of his contention.
In view of the, the ld. AR submits that there is contravention of the exim policy both in respect of imports as well as exports and hence, the goods are liable to confiscation under the provisions of section 111(d) of the Customs Act. Once the goods are liable to confiscation, imposition of fine in lieu of confiscation and penalty are consequential. Accordingly he pleads for upholding the impugned order.
6. We have carefully considered the submissions made by the sides. Our findings and conclusions are discussed in the ensuing paragraphs. There are two issues that needs to be considered in the instant case. One is, demand of duty under section 28 of the Customs Act and the other is, liability to confiscation of the goods under section 111(d)of the said Act and the consequential imposition of penalties.
6.1. The demand of duty in the present case has been made under the provisions of section 28(1) of the Customs Act. As per the said provisions, whenever there is a short levy, short payment, non levy, non payment or erroneous refund of duty, the notice for determination of duty and its recovery has to be issued within a period of 6 months from the relevant date. In case the short levy, non levy etc. is due to collusion, fraud, suppression, wilfull mis-statement of facts with intent to evade payment of duty, the time limit gets extended to 5 years. In the present case, the goods were imported vide B/E dated 26-7-88 and were cleared from the bonded warehouse for export on 9-9-1988 in terms of the honble High Courts order. The show cause notice has been issued for recovery of duty vide notice dated 31-12-2002, that is, after a lapse of more than 14 years. In other words, the notice was issued not only after the normal period of 6 months but also after the extended period of 5 years had lapsed. Therefore, clearly the demand is time barred. The Revenues contention that the delay in show cause notice is attributable to the pendency of the matter in the honble High and the apex court and this period should be excluded while computing the time limit is not sustainable for the following reasons.
6.2. While passing the interim order on 25/8/1988 in Writ Petition No. 2625 of 1988, filed by VIL, seeking permission to export the goods, the honble high court of Bombay had given liberty to the department to adjudicate the case. The relevant portion is extracted below:-
Respondents and their officers at liberty to adjudicate on the transaction and if necessary take, initiate action against the Petitioners or the Dhoot Trading for contravention of the law, if any. Thus there was no restriction placed on the department either for issue of notice or adjudication of the notice in accordance with law.
6.3. While passing the final order in the said writ petition on 16th January, 2002, the honble High Court observed as follows:-
In view of the interim order, the petitioners have already exported their goods. Now what remains is the adjudication of the duty and satisfaction thereof. The respondents in spite of grant of liberty to proceed with the adjudication of duty failed to adjudicate upon the same. The respondents failed in their duty to protect interest of revenue. However, considering the involvement of public revenue, we direct the respondents to adjudicate upon the question of payment of duty on the consignment exported by the petitioners as expeditiously as possible, at any rate, within four months from the date of receipt of writ of this order from this court. 6.4. The above order was challenged by the appellants before the honble apex court by way of SLP and the apex court vide interim order dated 22/3/2002 granted stay. Vide order dated 7-10-2002, the department was allowed to continue the proceedings subject to the condition that no order shall be passed without the leave of the court. The SLP was finally disposed of by the apex court on 15-12-2010 and the honble apex court observed as follows;
In view of the aforesaid position, counsel appearing for the appellant has submitted before us that the said adjudication proceeding is barred under the provisions of section 28 of the Customs Act. The aforesaid issue which is sought to be raised in this appeal is a relevant issue and the same goes to the root of the adjudication proceeding. The adjudication proceeding has been completed by passing an order but the said order is yet to be enforced as this Court did not permit such enforcement.
Considering the facts and circumstances of the case and since a number of issues are sought to be raised by the appellant herein, we deem it appropriate to allow the appellant to raise all these issues before the adjudicating authority so as to set at rest all issues including the issue on limitation. The said issue has not been considered by the Adjudicating Authority in the order passed. Consequently, all the contentions that could be raised by the appellant before the Adjudicating Authority could again be urged which shall be considered afresh by the Adjudicating Authority and thereafter pass a fresh order in accordance with law giving detailed reasons for its decision..
6.5. Thus from the above decisions of the honble High Court of Bombay and the honble apex Court, there was no stay in adjudicating the case except for a brief period from 22-3-2002 to 7-10-2002. Thus the show cause notice demanding duty is hopelessly time barred and consequently the confirmation of duty demand along with interest thereon under the proviso to section 28(1) read with 28AA/28AB of the Customs Act, 1962, does not sustain and we hold accordingly.
7. The next issue for consideration is whether the sale of CPTs while in customs bond by SDTAL to VIL and the subsequent export of the same by VIL to Russia is permissible under the provisions of exim policy or not. The appellants contention is that the actual user condition is not applicable to addl. licences issued to export/trading houses and such licences are freely transferable as per the provisions of paras 215 and 216 of the exim policy as they stood at the relevant time. From the records of the case, it is clear that the addl. Licence was not issued to SDTAL but was purchased by them from the market. The additional licence under which the imports have been made is Licence No. P/W 3280748 dated 2-6-88, that is, it has been issued after 1-4-88. Para 217 (9) of the Exim policy states as follows:-
Additional licences issued to Export Houses/Trading Houses after 1-4-88 on exports during 1986-87 or earlier periods, will be non-transferable. These licences will be valid for import of the goods appearing in Part I of List 8, Appendix 6 of the Policy. 7.1. Further as per Clause 5 (3) (ii) of the Import Control Order, it is a deemed condition of every licence -
that the goods for the import of which a licence is granted shall be the property of the licensee at the time of import and thereafter upto the time of clearance through customs. 7.2. The second proviso to clause 5(3) of the said Order further stipulates as follows:-
Provided further that the conditions under items (i) and (ii) of this sub-clause shall not apply in relation to (a) licences issued to eligible export houses or trading houses for import of goods meant for disposal to actual users under the import policy for registered exporters; and (b) licences issued to Public Sector agencies owned or controlled by Government, Central or State for disposal of goods to Actual Users under the import policy in force. 7.3. A combined reading of all the above mentioned provisions make it abundantly clear that additional licences issued to Export Houses after 1-4-88 were non-transferable. Even in situations where they had been transferred, the goods imported under the licence should remain with the importer at the time of import and thereafter up to the time of clearance through customs. Keeping the goods in a custom bonded ware house is not clearance of the goods through customs. Clearance takes place only when goods are debonded. The only exception is when the import of goods are meant for disposal to actual users under the import policy. There is no doubt that CPTs under import were subject to actual user condition. Even though Export Houses/Trading Houses could import the same under addl. licences issued to them , such export houses or trading houses or the transferees of such licences could dispose or sell the goods only to actual users. If the interpretation claimed by the appellant is permitted, then it would defeat the very purpose and object of actual user condition attached to the import of goods specified under Appendix 6 List 8 Part I. In the present case neither SDTAL nor VIL were actual users of the imported CPTs. The policy defined "Actual User (Industrial)" means a person who utilises the imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit. Thus the transfer of the CPTs by SDTAL to VIL when the goods were bonded in the warehouse was clearly a contravention of the import policy and the import control order as they stood at the relevant time and we hold accordingly.
7.4. The next issue for consideration is whether the CPTs could have been exported as such by M/s VIL in the facts of the present case. Export Trade Control Order (No.1/88) dated 30th March, 1988, in clause 3 thereof provides as follows:-
3. Restrictions on export of certain goods.- (1) Save as otherwise provided in this Order no person shall export any goods of the description specified in Schedule I, except under and in accordance with a licence granted by the Central Government or by an officer specified in Schedule II. 7.5. Colour Picture Tubes are specified in Schedule I Part B Serial No. 2798. The said Part deals with Items export of which is allowed on merits or subject to ceiling or other conditions to be specified from time to time. The appellants have not produced any evidence to show that they had the requisite licence to export the impugned goods. The contract of sale with the USSR buyer was in respect of CTV assembly consisting of sub-assemblies of CTV consisting of Toshiba CPT model No. 510 ZI B22TC05 with integrated beck components, deflection yoke and corresponding to the picture tube PCBs socket neck components including parity magnets and degaussing coil as per buyers design and specification for manufacturing colour television. Assuming that the appellant had the requisite permission from the competent authorities, it could have been only for CTV assembly specified above and not for CPTs per se. In the present case, since VIL sought to export CPT from customs bonded premises, no CTV assembly was exported as envisaged but individual pieces and components for the CTV assembly. Thus there was violation of the provisions of the Export Control Order also. Thus the exports undertaken as per the order of the honble High Court were not in accordance with the exim policy as they stood at the relevant time and we hold accordingly.
7.6. Thus from the facts obtaining in the present case, it is very evident that both SDTAL and VIL colluded and connived with each other to illegally import CPTs circumventing the provisions of the Exim policy and also exported the same in contravention of the said policy. In view of the above factual and legal position, the imported goods are liable to confiscation under the provisions of section 111(d) of the Customs Act, 1962 and we hold accordingly. Since the goods have been allowed to be exported subject to execution of bond and bank guarantee by the honble high court, they are liable to redemption fine in terms of the provisions of section 125 of the Customs Act and the appellants are liable to penalty under the provisions of section 112 of the said Act.
7.7. In the present case, the show cause notice has been issued under Section 124 of the Customs Act, 1962. Under the said section, issue of a show cause notice prior to passing of an order of confiscation or imposition of personal penalty is mandatory, but the language of Section 124 is clear and precise and no restriction of or limitation or even a fetter is imposed as regards the time when proceedings may be initiated by issue of a show cause notice as held by the honble High Court of Bombay in the case of Mohanlal Devadhanbhai Choksey and Others vs. M.P. Mondker and Others [1988 (37) ELT 528 (Bom.)]. Thus, confiscation of goods, imposition of fine in lieu thereof or imposition of penalty are not subject to any time bar.
8. The last issue for consideration is the adequacy of the fine and penalties imposed in the impugned order. A fine of Rs.25 lakhs have been imposed on the goods valued at Rs.67,15,257/- Considering the fact that the goods have been exported with a value addition of about 5% (FOB value of exports is Rs.70,87,500/-), we find that the redemption fine imposed is excessive. Accordingly we reduce the redemption fine from Rs.25 lakhs to Rs. 5 lakhs in line with the value addition which is the profit margin on the transaction. As regards the penalty, a penalty of Rs.20 lakhs each has been imposed on M/s SDTAL and M/s VIL. Considering the amount of duty sought to be evaded, the penalty imposed is on the higher side. Accordingly, we reduce the penalty from Rs.20 lakhs each to Rs. 5 lakhs each under the provisions of section 112(a) & 112(b) of the Customs Act, 1962.
9. To sum up, we hold that the duty demand of Rs. 91,52,206/- under section 28(1) of the Customs Act, 1962, is grossly time-barred and accordingly the same is set aside. We uphold the confiscation of the goods under the provisions of section 111(d) of the Customs Act. However, the redemption fine under section 125 of the said Customs Act is reduced to Rs. 5 lakhs and the penalties on the appellants from Rs.20 lakhs each to Rs.5 lakhs each. The appeal is disposed of in the above terms.
(Pronounced in Court on 31/01/2013) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 27