Customs, Excise and Gold Tribunal - Tamil Nadu
M.K. Elumalai vs Collector Of Customs on 18 August, 1994
Equivalent citations: 1995ECR105(TRI.-CHENNAI), 1994(74)ELT742(TRI-CHENNAI)
ORDER S. Kalyanam, Member (J)
1. This batch of 35 appeals are taken up together and disposed of by this common order as the issue involved in each of the appeals is common. These appeals are directed against the respective orders of the Additional Collector of Customs, Madras denying each of the appellants the benefit of TR concession in terms of TR Rules, 1978 as amended by Rules 1992 read with Customs Notification No. 137/90 issued under Section 25 of the Customs Act, 1962, the Act for short, as amended by Notification No. 156/90, dated 27-3- 1990. The appellants are represented by learned Counsels and Consultants etc. and initially Shri P.C. Kothari, the learned Counsel for appellant Arjunan in Appeal No. C/388/92 led the other Advocates and Consultants and made submissions. Most of the submissions of Shri P.C. Kothari were adopted by other parties. In some cases, the Consultants and Advocates added few more points. The goods involved in. almost all the cases are only Air Conditioners 5 except in few cases such as Appeal No. C/91/92 - P. Natarajan where in addition to Air Conditioners, Video camera is also involved. Likewise in the case of appellant M. Subramanian (C/208/92) in addition to Air Conditioner, TV, VCR, Video Camera, Sony Music System, music organ etc. etc. are also involved. In the case of this appellant, the benefit of TR concession was denied on the ground that since he did not have any work permit he could not have earned money to buy the goods in question.
2. Shri P. R. Prasad, the learned SDR for the Department submitted that in the declaration form use of the articles in question for a period of one year is ; mentioned and the appellants having subscribed to such declaration cannot contend that Air Conditioners will be permissible for import under TR Rules even if they are new notwithstanding the fact that Notification No. 137/90, dated 20-3-1990 does not stipulate any such "usage" condition.
3. Shri P.C. Kothari, the learned Counsel made the following submissions. Once the appellants satisfy the legal requirement for availing of the benefit of TR concession which benefit has been admittedly availed in respect of many items as baggage, to single out Air Conditioner or for that matter few more items like Video Camera and denying the benefit of TR concession is not sustainable in law and there cannot be partial acceptance of the TR concession Rules once a person satisfies the legal requirement of stay abroad for the stipulated period and conforms to statutory formality in seeking availment of TR concession by filing the necessary declaration. The statutory authority is merely called upon under law to examine and consider the question as to whether the claimant has fulfilled the requirement in terms of the Customs Notification No. 137/90 issued under Section 25 of the Act read with TR Rules, 1978 as amended. In all the cases the adjudicating authority has denied the benefit of TR concession to the appellants only on the ground of status or solvency which is not relevant for application of TR Rules. The adjudicating authority being a quasi-judicial authority has to be objective in his assessment of the evidence available on record and the proceedings being penal in nature, the broad principles of criminal jurisprudence are applicable and the Adjudicating Authority should not resort to conjecture that a person who has brought Air Conditioner by reason of not having the status a rich person is likely to violate the conditions by effecting sale of the same at a future date and on the basis of such assumption or presumption cannot deny the person concerned the benefit of TR concession and effect confiscation of the same i.e. Air Conditioner.
4. Shri Vaidyanathan, the learned Consultant for some of the appellants contended that the term baggage is defined under Section 2(3) of the Act according to which 'baggage' includes unaccompanied baggage but does not include motor vehicles. The Baggage Rules have been framed by virtue of Section 79 of the Act and under TR Rules, 1978 articles except Air Conditioner, were permissible for clearance free of duty provided the condition stipulated thereunder was complied with, i.e. the articles should have been in the possession and use of the passenger concerned for a period of one year. The learned Consultant further referred to Customs Tariff Act, 1975 and in particular Heading 98.03 under which duty leviable in respect of baggage goods is 300% and in order to give special concessions to baggage goods, the Government issued concessional Customs Notification No. 137/90 under Section 25 of the Customs Act, 1962, dated 20-3-1990 under which the duty leviable on the items specified was only 25%. The learned Consultant further submitted that the Import Control Order 1955 is framed under the provisions of Import/Export Act, 1947 and by virtue of the same licence is required in respect of articles specified under Schedule I therein and in regard to baggage items a special exception was carved out under Clause 11(1)(g) which was of course subject to a proviso that a person concerned should not display the same for sale till after the market price depreciated by less than 50%. The learned Consultant also referred to the Public Notice No. 27/80 as amended by Public Notice No. 131/86, dated 13-11-1986 issued by the CCI & E clarifying that baggage items like Air Conditioner can be imported without an import licence. Reference was also made to the Handbook of Procedures Clause 10 and also Clause 11 of the Import Control Order, 1955 exempting import licence for baggage goods.
5. Shri Rasiak Ali, the learned Counsel appearing in Appeal No. C/205/92 contended that the learned Collector is in error to have invoked Section 111(d) of the Customs Act, 1962 since the imported goods in question are baggage goods and the same cannot be held to be in contravention of law. It was submitted that Guide to Baggage Rules issued to the Public by the Grievance Cell, dated 25-7-1991 in para 9 clarifies permissibility of bringing Air Conditioner under TR Rules. Having announced to the Public at large such concessions subject to certain conditions such as the stay of the passenger abroad for a period of two years the Department would be estopped from contending contra and denying the benefit of the concession on the ground that the parties are likely to commit offence or breach at a future date. The learned Counsel also submitted that affordability is not a relevant criterion.
6. Shri Ganesan, the learned Counsel for appellant in Appeal No. C/388/92 urged that his client has been denied the benefit of TR concession in respect of Video Camera in addition to Air Conditioner. It was urged that he is running a Video Parlour and therefore, the question of selling the Video Camera would not arise and adopted the arguments of other Counsels/Consultants.
7. The others i.e. Kumaraswamy, Arokiasamy, T. Dhandapani, Consultants and Shri Rajagopalan, Advocate, etc. adopted the arguments advanced by the other Advocates and Consultants and only highlighted the status of their clients.
8. Shri P. R. Prasad, the learned SDR contended that the articles attracted a higher rate of duty and also import licence is required for clearance of the same subject to the provisions of the Act providing as exception to the baggage goods. He pleaded that baggage means bona fide baggage for the personal use of the passenger concerned and if the status of the person concerned indicated that the goods are not bona fide baggage for the personal use of the passenger concerned, it is open to the adjudicating authority to deny or decline the T.R. concession which cannot be claimed under law as a matter of right. It is the discretion on the part of the adjudicating authority depending on the facts and circumstances of each case. He further submitted that in the baggage declaration forms the passengers have subscribed to the "use" of the goods in question for a period of one year even though Notification No. 137/90 does not envisage such condition.
9. Shri J.M. Jayaseelan, the learned DR supplementing the arguments of the learned SDR urged that Notification No. 137/90 is issued under Section 25 of the Customs Act, 1962 and gives concessional duty to bona fide baggage like Air Conditioner read in conjunction with TR Rules, 1978 and Section 79 of the Customs Act, 1962. He further submitted that the objective satisfaction of the adjudicating authority is the relevant criteria for the grant of concession under the TR Rules as otherwise the benefit is likely to be abused.
10. I have carefully considered all the submissions and indeed heard the arguments by the learned Counsels/Consultants, S.D.R. and the D.R. for more than a day. I have also gone through all the relevant records and the impugned orders. The primary question that arises for my determination in the above batch of appeals is whether the appellants are entitled to the benefit of TR concession 1978 under which the goods i.e. Air Conditioner which is the item involved in all the appeals, is permissible for clearance under concessional rate of duty @ 25% in terms of Notification No. 137/90, dated 20-3-1990. There are some appeals where in addition to Air Conditioners other items such as Video Camera is also involved and in one appeal viz. C/208/92, the benefit of TR concession was denied on the ground that the appellant was not in possession of any work permit.
11. It would be seen that the adjudicating authority has denied the benefit of TR concession in terms of TR Rules, 1978 and also the benefit of Notification No. 137/90 in respect of the goods i.e. Air Conditioner and certain other goods i.e. Video Camera.
12. Under Customs Act, 1962, under Section 2(3) the word 'baggage' has been defined as one that includes unaccompanied baggage but does not include motor vehicles. Section 79 of the Customs Act, 1962 under which TR Rules, 1978 have been framed reads as under :
"79. Bona fide baggage exempted from duty:
The proper officer may, subject to any rules made under Sub-section (2), pass free of duty:
(a) any article in the baggage of a passenger or a member of the crew in respect of which the said officer is satisfied that it has been in his use for such minimum period as may be specified in the rules;
(b) any article in the baggage of a passenger in respect of which the said officer is satisfied that it is for the use of the passenger or his family or is a bona fide gift or souvenir. (2) xxxx (3) xxxx".
13. I find that prior to 20-3-1990 when the TR Rules were amended and Notification No. 137/90 was issued the following items were not allowed free of duty:
(1) Motor Vehicles, (2) Vessels, (3) Aircrafts, (4) Cinematograph films 35 mm and above, (5) Airconditioners, Refrigerators and Deep Freezers.
However, under Customs Notification No. 195/80, 55/82 concessional rate was available to Air Conditioners, Refrigerators and Deep Freezers.
14. The TR Rules, 1978 initially permitted clearance of the goods except those mentioned above duty free subject to certain conditions that the passenger concerned should have been abroad for a period of two years and the articles in question should have been in one's use and possession for a period of one year. A further condition was that the passenger concerned must have come to India for good and stayed for one year. The benefit of duty free concession was taken away subsequently in respect of certain goods like Air Conditioner, VCR, TV etc. and it is only in this context the Customs Notification No. 137/90 and 120/90 under Section 25 of the Customs Act, 1962 was issued. It would thus be seen that the benefit under these Notifications and also under earlier T.R. Rules, 1978 permitted duty free clearance of the goods subject to certain conditions and the goods otherwise attracted 300% duty. In terms of Customs Tariff, 1988, Chapter Heading 98.03 this concessional Customs Notification No. 137/90 was subsequently amended by Notification No. 156/90, dated 27-3-1990 and Notification No. 106/90, dated 25-7-1991. Reference can also be made in this context to Import Control Act, 1955 issued under the provisions of the Import/Export (Control) Order, 1947 in exercise of the power conferred by Section 3 of the Import/Export (Control) Act, 1947 (Act No. 18). Section 3 of the Import (Control) Order, 1955 placed restrictions on the import of certain goods to the effect that no person shall import any goods of the description specified in Schedule 1, except under and in accordance with a licence or a customs clearance permit granted by the Central Government or by any Officer specified in Schedule II. The Import Control order itself introduced Clause 11 (Savings Clause (1) which carves out an exception in respect of baggage goods from the purview of import licence under Customs Act, 1962 and Clause 11 for the purpose of convenience is reproduced below :
"11. Savings (1) Noting in this order shall apply to the import of any goods:
(a) xxxxx
(b) xxxxx
(c) xxxxx
(d) xxxxx (dd) xxxxx
(e) xxxxx
(f) xxxxx
(g) by the person as passengers baggage to the extent admissible under the Baggage Rules for the time being in force except quinine falling under Heading Number 29 of the Schedule I exceeding five hundred tablets or 1 /2 lb. powder or one hundred ampoules;
provided xxxxxxxx Provided further where any goods are exempted under this sub-paragraph, the exemption shall be subject to the condition that such goods shall not be sold, advertised or offered for sale or displayed in a shop, until (a) in the case of TVs which have been used for a period not less than 5 years from the date of clearance by such person or passenger or member of the crew, or (b) in the case of other goods when market price has depreciated to less than 50% of their market price when new except fire arms which cannot be sold or transferred during the life time of the importer for consideration or otherwise."
15. Public Notice No. 27/80 as amended by Public Notice No. 131/86, dated 13-11-1986 issued by the CCI & E also clarified that import of baggage goods should be allowed for personal use without any import licence. In this regard I may also mention that in the impugned orders the adjudicating authority has referred only to Public Notice No. 27/80 whereas at the relevant time the said Public Notice was amended by Public Notice No. 131/86, dated 13-11-1986. I may also refer to Hand book of Procedures April, 1990 - March, 1993 granting exemption from import licensing procedures and also from Import Restrictions in respect of import of baggage goods under Savings Clause 11(1) of the Import (Control) Order, 1955. Para 10 of the Handbook of Procedures AM 1990-93 is reproduced below :
"10(1) No import licence or Customs Clearance Permit is required for the import of goods, mentioned under the Savings Clause 11 of the Import (Control) Order, 1955. (2) xxxx
16. Therefore, a harmonious construction of the above provisions extracted would bear out that a person would become eligible to claim the benefit of TR Rules provided the conditions envisaged are satisfied. In the present batch of appeals, the goods were brought only in the year 1991 and prior to 1-4-1992. The law as it stood at the relevant time for the goods brought by the appellants as baggage was Notification No. 137/90 issued under Section 25 of the Customs Act, 1962 referred to above. The Department has not disputed the fact that the appellants who claimed the TR concession had stayed abroad for the required period of two years and the only ground on which the benefit under Notification No. 137/90 was denied was that by virtue of the status of the appellants the goods brought i.e. Air Conditioners could not be said to be "bona fide" baggage item for use of the passenger concerned. I am afraid, I cannot accede to this view of the learned adjudicating authority. It is settled law that if a person brings or imports goods in contravention of law it would attract confiscation proceedings in addition to penal consequences. The proceedings under the Act are penal in nature and the persons contravening the provisions of the Act would be liable to prosecution in addition to confiscation of the goods and also levy of penalty. Therefore, a quasi-judicial authority while applying the provisions of the law will be called upon only to go into the question as to whether there is any contravention of the law at the relevant time, when the goods are imported as baggage. As stated above, the only condition envisaged under Notification No. 137/90 read with TR Rules, 1978 is that the passenger concerned should have stayed abroad for a period of two years. As a matter of fact the previous condition enjoining possession and use of the article for a period of one year was dispensed with. The only condition attached to the import of the baggage goods was that the same should not be displayed for sale or advertised or offered for sale until the market price has depreciated to less than 50%. Therefore, the learned adjudicating authority has proceeded on the basis that the persons concerned did not have the status for use of Air Conditioner and therefore, the goods presumably have been brought for effecting sale. I am afraid this reasoning of the adjudicating authority is not acceptable, for fastening penal consequences where the proceedings are penal in nature. In other words, it would not be proper or legal to presume that a passenger concerned is likely to commit an offence at a future date and on that basis confiscate the goods brought by him in the absence of any contravention at the relevant time and in praesenti when the goods are actually brought. It is not the case of the Department that the appellants are not otherwise eligible to the benefit of TR concession. As a matter of fact all the appellants (except in Appeal No. C/208/92) have been given the benefit of TR concession in respect of all other items excepting the Air Conditioners and in two cases video cameras were also not given the benefit. Air Conditioners have been confiscated only on the presumption that by virtue of the status of the passengers (appellants) this item cannot be considered as bona fide baggage and the passengers (appellants) would effect sale of the same.
This reasoning of the adjudicating authority is not sustainable either on facts or on law. Even though the status of a person and his family background may be relevant factor to consider as to whether the person has brought the item for his bona fide use, till after a breach is committed or a contravention of law is noticed, it would be premature to jump into a conclusion that the item has been brought for effecting sale and not for bona fide personal use and therefore confiscable. It is opposed to the basic tenets of our jurisprudence. No doubt, it is open to the Department to keep a track in regard to the goods in question and take suitable action as deemed fit or proper if the department finds that any breach is committed by any person (appellants) in regard to the goods in question under the TR Rules by violation of the conditions stipulated therein. Anticipating a contravention or breach in future and effecting confiscation in praesenti will not be permissible in law. Therefore, in this view of the matter I am inclined to hold that when all the conditions in Notification No. 137/90 and the provisions of TR Rules, 1978 are admittedly satisfied the appellants would become entitled to the TR Rules and the goods would not be liable for confiscation and the persons in the absence of having been found to have contravened any provisions of the law or committed breach at the relevant time cannot be fastened with forfeiture of the goods and other penal consequences and to deprive the persons and their property on the basis of an anticipating contravention or breach under the provisions of the Act is not sustainable in law. In this view of the matter, I modify the order of the adjudicating authority and hold that the appellants would be entitled to the benefit of TR concession under TR Rules, 1978 and also in terms of Notification No. 137/90 referred to supra in respect of the Air Conditioners in question.
17. For the same reasons, I modify the order of the adjudicating authority in regard to Video Camera and hold that the appellants concerned would be entitled to the benefit of TR concession.
18. So far as appellant in Appeal No. C/208/92 M. Subramanian is concerned, the adjudicating authority has denied him the benefit on the only ground that he did not have a valid work permit and therefore could not have purchased the articles. The learned SDR in this regard conceded that the appellant is otherwise eligible to the benefit of TR Rules, 1978, but contended that in the absence of any valid work permit it is for the person to explain as to how he managed to get the goods and in the absence of proof to the contrary he would become disentitled to the benefit of TR Rules.
19. It is not disputed that the appellant is otherwise eligible to the TR concessions 1978 satisfying the other parameters. If a person had lived abroad for a period of two years with or without a valid work permit that does not mean that he would not have the necessary wherewithal to procure or buy the goods in question. Even if the person concerned had committed any contravention of law of the country from where he had brought the goods that would not disentitle him to the benefit of the TR concession 1978 provided the other conditions of stay abroad for two years etc. are satisfied. Since the benefit of TR concession is denied to him on the only ground that he did not have any valid work permit and no other reason, I am inclined to hold that the appellant would be entitled to the benefit of Customs Notification No. 137/90 in respect of the goods. In regard to the other goods not covered by the above Notification, the appellant will have to satisfy the authorities in support of his claim for TR concession otherwise. In this case I am not expressing any opinion on the merits of the issue on the other items.
20. It would not be out of place before parting with these appeals to refer to certain practice of the Department permitting clearance of Air Conditioner under TR Rules in Madras, Bombay and other Collectorates. The particulars of such clearances of Air Conditioners at Madras were given on behalf of the appellants with notice to the other side. This would bear out that the Department has been releasing Air Conditioners. The specific particulars in respect of release of Air Conditioners in Bombay Collectorate though not given; a specific plea was made by the appellants and the Department is not able to deny the same much less produce any evidence contra in this regard though the learned SDR was directed to verify the same. I also refer to the order of the Government of India dated 10-8-1992 on a Revision Application filed by one Shri Mohd. Ghulam Rafiq, where Air Conditioner was released. The observation of the Government of India in para 4 of their order is reproduced below :
"While status of a person is a relevant factor and Government will not like baggage to be allowed clearance on concessional rate even when it is clear that the importer does not have the means to afford it, one finds that appellant's family seems to be reasonably well off (his father and brother are running a travel agency and also a printing press and he was also having a balance of Rs. 50,000/- in his NRE account with State Bank of India, Paramblur. Government, therefore, while setting aside the orders of lower authorities so far as they relate to the applicant direct that the air-conditioner brought by the applicant be cleared as per the provisions of the Notification No. 137/90 if the applicant is otherwise eligible."
21. The appellant in C/296/92 M.K. Elumalai has produced a letter from Indian Bank dated 23-3-1992 to the effect that in his NRE SB Account he is having a credit balance of Rs. 54,345.95 and in the NRE Term Deposit Account a credit balance of Rs. 1,00,000/-. It is seen that this amount of Rs. 1,00,000/- was earlier deposited in United Commercial Bank, Kanchipuram as seen from the receipt dated 23-7-1993. His case also has been rejected by the lower authority on the ground of status to possess an Air Conditioner.
22. On a query from the Bench the learned Counsels/Consultants represented that the appellants comprised the following categories i.e. Building Supervisors, Mechanic, Car drivers, Building Contractors, Store Keepers, Crane operators etc. etc. earning substantial salary and in the Gulf countries, being desert area good perks like air conditioned accommodation etc. were provided by their employers.
23. In the result the appeals stand allowed in the above terms.