Customs, Excise and Gold Tribunal - Mumbai
M.Ambalal & Co. vs Commissioner Of Customs on 30 April, 2003
Equivalent citations: 2003(159)ELT944(TRI-MUMBAI)
ORDER
Gowri Shankar, Member (Technical)
1. In March 1991, the officers of the Collector of Customs (Preventive), Bombay seized from the premises of M. Ambalal & Company and from its employees rough diamonds of the value of Rs. 3.32 lakhs approx and cut and polished diamonds valued at Rs. 84.47 lakhs. In the course of the investigation, statements were recorded of Maganbhai Dayabhai Patel, a partner of the firm and other persons to the effect that the rough and polished diamonds had been smuggled into India by passengers and that the cut and polished diamonds have been obtained by polishing such rough and unpolished diamonds. On the basis of these statements and other documents, notice was issued to M. Ambalal & Company and the other persons concerned proposing confiscation of the diamonds under Clause (d) of Section 111 of the Act and imposing penalties on various persons concerned. On adjudication, the Collector ordered confiscation of the diamond with an option to redeem them on payment of fine of Rs. 60 lakhs. He also imposed penalties of varying amount on the persons involved. His order relating to M. Ambalal & Co. was confirmed on appeal by this Tribunal and the penalties on other persons being set aside. M. Ambalal & Co. filed a writ petition under Article 226 of the Constitution of India in the Bombay High Court. During the pendency of this petition, Kar Vivad Samadhan Scheme, 1998 was promulgated. The firm therefore availed of the provisions of the Scheme and deposited half of the penalty on it and the fine, withdrawing the petition before the High Court. The Commissioner accepted this declaration and passed orders settling the matter under the kar Vivad Samadhan Scheme, 1998 providing that the declarant can redeem the goods on payment of duty.
2. However, when the firm approached the Commissioner of Customs in 1999 to redeem the goods, it was told that it will have to pay appropriate duty. It challenged this order of the Commissioner before the High Court and meeting with no success, carried the matter to the Supreme Court. The Supreme Court, by its order passed on 6.9.2002 in September 2002, directed that the proper assessing officer shall determine what amount of duty could be demanded in respect of the diamonds, after considering the contentions that the parties may raise. After considering the contentions that were raised before him in the hearing, the Commissioner has passed the orders assailed in this appeal. In that order, he has held that duty is payable at the rate of 250%, the rate of duty applicable to baggage classifiable in heading 98.03 of the tariff. He did not accept the contention raised before him that by virtue of the result of the investigations, the diamonds have been ordered to be confiscated on the ground that they were smuggled and in the case of cut and polished diamonds that it is manufactured out of rough diamonds and that at the relevant time by application of notification 247/78 diamonds were unconditionally exempted from payment of basic customs duty and auxiliary duty. This is the sole contention with which we are concerned in this appeal.
3. The counsel for the appellant relies upon the judgment of the Supreme Court in Associated Cement Companies Ltd. v. CC 2001 (128) ELT 21 in which the Court has accepted the contention before it that drawings and designs brought in by Kato, an employee of Toshiba Japan would not be liable to duty under tariff heading 98.03 because the tariff heading 49.06 of the tariff in which they were otherwise classifiable carried nil rate of duty. He relies upon the portion of the judgment, in which sentence of the judgment which reads:
"and if no customs duty is chargeable either by reason of tariff not providing for it or because of the exemption notification, those goods will not be regarded as dutiable goods on which duty has not been paid."
4. The departmental representative adopts the reasoning of the Commissioner when he says that the exemption notification will not apply because the diamonds were not declared by passengers, brought on their arrival and relied upon the ratio of the Supreme Court in Montana Valve & Compressors (Pvt.) Ltd. v. CC 2002 (145) ELT A164. He further contends that rules relating to baggage only provides for imports of bona fide baggage for personal use. He contends that if exemption is granted to goods for which no declaration is filed, the consequence will be that various persons would import without filing bill of entry.
5. In the part of its judgment with which we are concerned the Supreme Court dealing with the argument concerning the liability to duty of blue prints imported by the importer reverted the decision of the Tribunal that blue prints imported either by courier or by an individual would be liable to duty and would be classifiable in heading 98.03 of the tariff as baggage notwithstanding that heading 49.06 which is otherwise applicable carries nil rate of duty. The Tribunal had relied upon the judgment of the Supreme Court in ICC v. Vazir Sulta Tobacco Co. Ltd. 1996 (83) ELT 3. The Supreme Court took the view that the definition of "dutiable goods", contained in Section 2(14) of the Act was somewhat different from the definitions of "excisable goods" contained in Section 2(d) of the Central Excise Act and said that "with regard to Section 2(14) of the Customs Act 'the expression' "chargeable to duty and on which duty has not been paid" indicates that goods on which duty has been paid or on which no duty is leviable and therefore n duty is payable, will not be regarded as "dutiable goods." It is only if the payment of duty is outstanding or leviable those goods will be regarded as dutiable goods. It said further ".....if no customs duty is chargeable either by reason of tariff not providing for it or because of the exemption notification, those goods will not be regarded as dutiable goods on which duty has not been paid. It therefore held that the drawing and designs which had been brought in by an employee of Toshiba were not liable to duty.
6. We are not able to endorse the Commissioner's failure to follow the ratio of the judgment on the ground that the facts were different in that case. In that case also the goods had not been declared and were imported clandestinely.
7. We do not think that it is possible to infer from the content of paragraph 67 of the Court's judgment that in that case the goods had been declared on their import. In point of fact, the Tribunal in its order (reported in 2000 (117) ELT 241), after considering the claim that misdeclaration or suppression of value was only that of the person who imported the goods i.e. the carrier and Kato in the case of Videocon and not of the appellant, declined to accept the same. This is a clear admission made by the appellant and that the goods had not been declared. In fact we do not see anything which turns upon it. Clearly, the Supreme Court has not said that the benefit of the exemption would not be available in case the goods are not declared. The exemption contained in this case is unconditionally providing that rough diamonds when imported into India are exempted from duty. It does not contain any condition of a declaration being made on arrival of the goods. We have not examined the departmental representative's claim that the provisions of the Baggage Rules may not apply to the goods. We are not concerned here with whether goods could or cold nto have been rightly imported under the Baggage Rules. We are only concerned with whether the exemption available in the notification should be extended or not. There is nothing in the law prohibiting the applicability of the exemption. It has therefore to be concluded that the exemption would be available to the goods.
8. In its judgment in Montana Valves & Compressors (Pvt.) Ltd. v. CCE 2002 (145) ELT A 164 the Supreme Court has dismissed the appeal filed by Montana Valves & Compressors (Pvt.) Ltd. by observing that the appellant has admittedly played a fraud on the revenue and declined to interfere. We however fail to see how that judgment can justiry the Commissioner's refusing to accept the claim in a proceedings which he was carrying out on the orders of the Supreme Court.
9. The appeal is accordingly allowed and the impugned order set aside.