Custom, Excise & Service Tax Tribunal
Sri Vijay Kumar Chaudhery vs Commr. Of Customs , Patna on 14 August, 2015
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Customs Appeal No. C/75747/2014
(Arising out of the Order-in-Appeal No. 665/Pat/Cus/Appeal/2014 dated-31/10/2014 passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, Patna)
For approval and signature of:
SHRI H.K. THAKUR, HONBLE TECHNICAL MEMBER
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1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not ?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
Sri Vijay Kumar Chaudhery
APPELLANT(S)
VERSUS
Commr. of Customs , Patna
RESPONDENT(S)
APPEARANCE
Sri K.P. Dey, Advocate
FOR APPELLANT(S)
Sri S.N. Mitra, A.C. (A.R)
FOR THE RESPONDENT(S)
CORAM:
SHRI H.K. THAKUR, HONBLE TECHNICAL MEMBER
DATE OF HEARING : 14/08/2015 Date of Pronouncement:
ORDER NO : FO/A/75452/2015
Per SHRI H.K. THAKUR
This appeal has been filed by the appellant against Order-in-Appeal No. 665/Pat/Cus/Appeal/2014 dated-31/10/2014 passed by Commissioner (Appeal), Patna as first appellate authority. Under this Order-in-Appeal dt. 31/03/2014 has upheld Order-in-Original No. 51-Cus/ADC/Hqrs./2013 dated-30/09/2013, passed by the Adjudicating authority, confiscating 3,437 number Chinese mobile phones under Section 111(d) & (i) of the Customs Act, 1962 and also imposed a penalty of Rs.4,00,000/- upon the appellant.
2. Sri K.P. Dey ( Advocate) appearing on behalf of the appellant argued that a consignment of 3,437 mobile phones of Chinese origin was seized by the Revenue on 20/09/12 from one SLR Van which was under lease contract of M/s. Shiv Shakti Carriers & Cargo under the Proprietorship of the appellant. That after detailed investigation, show cause notice dt. 28/02/2013 was issued, inter alia, to the appellant for confiscation of the seized goods & for imposition of penalty under Section 111 (d) of Section 112 of the Customs Act, 1962. That adjudicating authority confiscated seized goods under Section 111(d) & 111(i) of the Customs Act, 1962 when Section 111 (i) was not even invoked in the show cause notice. That a penalty of Rs.4.00 Lakh was imposed upon the appellant vide Section 112 (b) of the Customs Act, 1962. That an appeal filed by the appellant with Commissioner (Appeal) was rejected by the first appellate Authority. It was his case that Commissioner (Appeal) has wrongly decided that appellant cannot be given redemption as he is not the owner and strongly argued that as per the provisions of Section 125 of the Customs Act, 1962 the person from whose possession the goods are seized is also entitled to get redemption of goods. He relied upon the following case laws in support of his argument:
(i) T. Elavarasan Vs. C.C. (Airport), Chennai reported in 2011 (02) LC 0015.
(ii) Yakub I. Yusuf Vs. C.C. , Mumbai reported in 2010 (10) LCX 0124 2.1 Learned Advocate further argued that out of 3437 mobile phones only 388 pcs. were found to be not conforming to the condition of Notification No. 44 (RE-2000)/1997-2202 dated 24/11/2000 and that a transporter cannot be expected to have such knowledge. That once Department has sold the confiscated goods in E-auction, it is implied that statutory provision of Notification No. 44 (re-2000)/1997-2002 DATED-24/11/2000 was not absolute prohibition & redemption could be allowed under Section 125 of the Customs Act, 1962.
2.2 Regarding requirement of IMEI No. under Notification No. 14/2009-14 dated 14/10/2009 is concerned, Ld. Advocate argued that there was not a whisper of this prohibition in the show cause notice and adjudicating authority, without giving the appellant any opportunity to explain, held that importer has to declare valid IMEI No. of each mobile phone imported. That by doing this, the adjudicating authority and the first appellate authority has exceeded the scope of the show cause notice dated 28/02/2013.
2.3 Learned Advocate further argued that no duty liability arises in case of town seizures as held by the following case laws:
(i) Yakub I Yusuf Vs. C.C. Mumbai) (supra)
(ii) CCE, Surat-II Vs. Mahadev Enterprise reported in 2011 (301) ELT 150 (Tri-Ahmedabad) 2.4 Regarding imposition of penalty vide Section 112(b) it was argued that no penalty can be imposed on the appellant as he had no knowledge that goods were liable to confiscation.
3. Shri S.N. Mitra (A.R.) appearing on behalf of the Revenue argued that disposal of goods involved in this appeal was made by the department after intimating the Advocate of the appellant. It was his case that there was no specific direction from the Bench regarding non disposal of the confiscated goods. That appellant is not the importer of the goods and cannot claim the redemption of seized/confiscated goods of which he is not the owner. On the issue of requirement of IMEI No. on each mobile phone, as per Notification No. 14/2009-14 dated-14/10/2009, learned A.R. defended the orders passed by the lower authorities on the grounds that appellant has not discharged onus of non smuggled nature of the seized goods.
4. Heard both sides and perused the case records. Appellant is the transporter of the goods involved in these proceedings which were later confiscated without giving redemption option to the appellant when he was put to notice as to why the seized goods should not be confiscated. First para on page-5 of the show cause notice dated-28/02/2013 indicates that some of the persons whose names were appearing on the boxes of the seized goods did import Chinese mobile cells through Air Cargo Complex, Samshabad, Hyderabad from June 2011 to August, 2011. All the persons whose names were found on the boxes have either disowned the seized goods or were not found. In this regard Section 125(1) of the Customs Act, 1962 is relevant and is reproduced below:
Section 125 Option to pay fine in lieu of confiscation:- (1) Whenever confiscation of any goods is authorized by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit. 4.1 In view of the above provisions of Section 125(1), appellant had a claim to ask for redemption even if he is not the owner of the seized/confiscated goods and has also not imported the seized goods. This view is also fortified by the view earlier taken by CESTAT, Mumbai in the case of Yakub I. Yusuf Vs. C.C. Mumbai (supra) by passing following observations in para 5.6 of this order:
5.6 The Department has also contended that the appellant has never claimed the ownership of the gold. Therefore, gold cannot be redeemed to the appellant. In support, they have placed reliance on Honble Bombay High Courts decision in the case of Mohammed Aijaj Ahmed (supra). In mat case the owner of gold was known still the redemption was allowed to the carrier. In the instant case the five persons are not the owner of the gold as already discussed (supra). The Departments entire case is based on the statement of the appellant wherein he has deposed that he had brought the gold to earn profit and the profit is not to be shared with five persons. Therefore the above-cited case is not applicable to the facts of the case. The department has also placed reliance on Tribunals Order No. 1980 to 1995/ 09 (supra) which in turn relied upon above-cited decision of Honble Bombay High Court, hence the decision is not applicable to the case. The issue in the High Court of Madras in the case of Bansal Industries (supra) related to whether mens rea is required for imposition of punishment which is not in dispute in the instant case, hence the cited case by department is not also relevant. A plain reading of sub-section (2) of Section 125of CA, 1962, shows that an option has to be given to the owner of the goods or where the owner is not known, the person from whose possession or custody such goods have been seized. Undoubtedly, the gold has been seized from the possession of the appellant. Therefore, the aforesaid contention of the Department is not sustainable.
5. On the issue of violation of condition of Notification No. 14/2009-14 dated 14/10/2009, it is the case of the appellant that the same was not the subject matter of the show cause notice dated-28/02/2013. On perusal of the case records Bench finds it so. It is accordingly held that in para 5 of the Order-in-Appeal dated-31/03/2014 is beyond the scope of the show cause notice dt. 28/02/2013 and is set aside. Subsequent disposal of the goods through E-auction by the department also indicates that the restriction imposed was either curable or was not essential and could also have been complied by the appellant in case redemption option was allowed. However, it is admitted by the appellant that 388 pcs. of mobile phones were not conforming to the conditions specified vide Notification No. 44 (RE-2000)/1997-2002 dated-24/11/2001. 388 pcs. of such mobile phones were thus liable to confiscation. As the defect was curable, therefore, such violation cannot be considered as an absolute prohibition under Section 125 of the Customs Act, 1962. As the impugned goods have already been disposed off by the department, therefore, the sale proceeds with respect to 388 pcs. are ordered to be released to the appellant after imposing and adjusting suitable redemption fine to be calculated & imposed by the Adjudicating Authority after affording an opportunity of personal hearing to the appellant. Sale proceeds pertaining to the remaining mobile phones is also ordered to be released to the appellant.
5.1 So far as payment of duty on the confiscated goods is concerned, the case of the appellant is covered by the findings of co-ordinate Bench order in the case of C.C.E., Surat-II Vs. Mahadev Enterprises (supra), relied upon by the appellant where following observations in para 5 & 6 of this order are made as follows:
5. The main issue involved in this appeal filed by the Revenue is whether, at the time of granting an option for payment of fine in lieu of confiscation for seizures in an area other than the Customs area (normally called as Town Seizure), Customs duty is required to be paid by the owner of the goods. In the case of town seizures, the date on which the seized goods are brought into India, is not available. As per the provisions contained in the Customs Act, 1962, the relevant date for determining the rate of duty is the date when the Bill of Entry is filed. In the case of town seizures, such a date will not be available. Therefore, it will be impossible for the adjudicating officer at the time of allowing redemption to determine the rate of duty and accordingly the quantum of duty. As per the provisions of Section 125 of Customs Act, 1962, the quantum of redemption fine is restricted to the market price of the goods minus duty. Once the element of Customs duty payable on the confiscated goods is not ascertainable at the time of redemption, it is presumed that the entire duty payable on the confiscated goods stands included in the value of the confiscated goods and accordingly, no reduction on account of duty element can possibly be allowed by the adjudicating authority granting an option of payment of fine in lieu of confiscation. That is why, in the case of town seizures, the value/price of confiscated goods is always considered to include the duty element, if any, paid or payable with respect to the confiscated goods. In the present case, it is rightly held by Commissioner (Appeals) that the present respondent is not an importer of the goods. At this point, it will be relevant to glance through the definition of importer as given in Section 2 (26) of Customs Act, 1962 which reads as follows:
importer , in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer.
6. From the above definition of importer , it is evident that in relation to any goods only between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out of be the importer. So, the word importer has to be read in the context of the time between their importation and till they are cleared for home consumption, which is the time when the imported goods are in the Customs area. Accordingly, it is held that the Customs duty cannot be demanded in town seizures in addition to redemption fine from the person from whose possession the smuggled goods are seized because the value/price of the seized/confiscated goods is deemed to include the duty element levied/leviable with respect to such goods, and the officer adjudicating the case has considered the same while imposing redemption fine. In view of the above it is held that Customs duty cannot be demanded from the appellant as it is a case of town seizure and date/time of inspection is not known to determine the rate of duty, exchange rate and the value of the goods.
6. So far as imposition of penalty upon the appellant is concerned, it is observed that the same has been imposed under Section 112 (b) of the Customs Act, 1962. Section 112 (b) is reproduced below:
Section-112 Penalty for imposition of goods etc. Any person
(a) ---------
(b) ---- who acquires possession of or is in any way concerned in carrying , removing, depositing, harbouring, keeping , concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111.
Shall be liable, ------------------- 6.1 From the above provisions of Section 112 (b), penalty upon a person can be imposed if he knows or has reason to believe that the goods he is handling are liable to confiscation under Section 111 of the Customs Act, 1962. Appellant being a transporter cannot be expected to know all the and no such statement exists that he was aware of the smuggled nature of the seized goods. No other evidence has been brought on record by the department that appellant was aware of the prohibitions under Notification No. 44 (RE -2000)/997-2002 dated-24/11/2001. In view of the above observations, penalty imposed upon the appellant under Section 112 (b) of the Customs Act, 1962 is set aside.
7. Appeal filed by the appellant is allowed to the extent indicated hereinabove.
(Pronounced in the Court on 21/08/2015 ) ( H.K. THAKUR) MEMBER (TECHNICAL) k.b/-
Customs Appeal No. C/75747/2014 2