Customs, Excise and Gold Tribunal - Delhi
Bhrigu Alloys And Steels Pvt. Ltd. vs Cc on 1 March, 2006
Equivalent citations: 2006(108)ECC633, 2006(109)ECC633, 2006ECR633(TRI.-DELHI), 2006(203)ELT57(TRI-DEL)
ORDER M.V. Ravindran, Member (J)
1. This appeal is directed against order in original dated 11.03.2005 wherein the Commissioner of Customs, ICD, Tughlakabad absolutely confiscated 2.340 M.T. of used rusted empty shells under Section 111(d) of the Customs Act and also confiscated the entire consignment of HMS scarp under Section 119 of the Customs Act with an option to redeem the same on payment of fine and also impose penalty on the appellants under Section 112(a) of the Customs Act. The issue involved in this case is that the appellants purchased on high sea sales basis HMS scrap from M/s. Sun Metal Casting, UAE. The total HMS scrap weighing 183.760 M.T. was contained in 10 containers. The sale of this consignment was done under invoice-dated 05.12.2004 wherein packing list was shown to contain 10 containers. There is also a "no war material certificate" issued by the seller in respect of 10 containers. When the goods landed in India, they were opened and examined by the Customs Officers and they found that out of 10 containers, in 4 containers there were empty used, rusted, broken shells and mixed with the HMS scrap. The total quantity of the said used rusted, broken shells and cartridges in all the 4 containers were found 2.340 M.T. The authorities by on the spot panchnama seized 2.340 M.T. of used shells and also the balance heavy melting scrap imported. The appellants waived the right to receive show cause notice and attended the personal hearing. The adjudicating authority on the basis of finding that the appellants should have been careful in getting the certificate from an accredited certifying agency that the goods were containing war materials had violated the provisions of para 2.32 of the Import of Export Policy. Consequently, goods i.e. 2.340 M.T. of used rusted/broken shells are liable for absolute confiscation, and balance HSM scrap were liable for confiscation under Section 119 of the Customs Act.
2. The learned Advocate appearing for the appellants submits that the consignment contains 183.760 M.T. of heavy melting scrap, the authority found only 2.340 M.T. of used shells, which is almost 1.25 % of the imports. It is his submission that they had purchased the goods on high sea sales basis, relying on the documents, which were given and the documents which were given contained a certificate from the seller that the consignment did not have any war material and pre-inspection certificate from one of the recognized certifying authority i.e. M/s. Moody International, Iran, which also certify the that there were no war material in the said consignment. Relying on these documents, he had applied for clearance of these goods hence he cannot be found responsible importing these goods. He also submits this has been admitted by the authorities as Commissioner has confiscated HM scrap under Section 119 of the Customs Act for concealing and not under any other section. It is his submission that Section 119 of the Customs Act is not applicable in the case, hence confiscation is liable to be set aside. Consequently, the penalty is imposed under Section 112 is also liable to be set aside. He submits that in respect of 2.340 M.T. of the used war materials which were found, it is an error or mistake on the part of the supplier but he is admitting that they are to be absolutely confiscated, penalty, if any, is to be imposed that may be under the provisions of Section 112 strictly. He relies upon the decision of the Tribunal in the case of ITC Global Holding v. CC, Mumbai reported at 2002 (149) ELT 1144 (Tri.-Mumbai) and Tower Steels (India) Limited v. CC, Madurai reported at 2004 (178) ELT 1004(Tri.-Chennai).
3. The learned DR submits that the appellants have not met both the conditions that were required to be met by him under para 2.32 of the Import & Export Policy. First he should have produced the certificate or the contract from the supplier to show that there were no war materials, consequently, he should have produced the pre-shipment certificate from the agency which were listed at appendix VIA of the Exim policy. It is his submission that M/s. Moody International, Iran, is not authorized as certifying agent for the consignment. It is his submission that the quantity of 2.340 M.T. of used, rusted, shell etc. war materials, cannot be considered a small quantity because even this quantity is enough to create panic. As regards application of Section 119 for confiscation of heavy melting scrap, it was submitted by him that the goods i.e. heavy melting scrap were used to conceal 2.340 M.T., though may not be literally, but were used to mix in such a way that they could not be identified and they were identified only when the examination of the containers took place. Hence it is the submission that there is no reason to take a lenient view in this case.
4. Considered the submissions made both the sides and perused the records. I find from the order in original that empty used rusted shells were recovered from 3 containers and as per order in original, they were found mixed with the heavy melting scrap. The question of concealing of these goods could arise there was only intention to conceal. In this case, the appellants purchased the HMS on high sea sales basis from M/s. Sun Metal Casting, UAE while purchasing these goods, the appellants have taken care at least to ask for documents which were consigned with the consignment and after satisfying that there were certificates stating there is no war materials, they entered into purchase contract. To my mind by any stretch of imagination, the appellants could not have been considered to have willfully imported HMS for concealing the said 2.340 M.T. of empty used rusted shells. I find that the Hon'ble Tribunal in the case of ITC Global Holding (supra), in an identical issue observed as under:
The confiscation of the goods has been ordered under Sections 118 and 119 of the Act. Section 119 provides that confiscation of any goods used for concealing smuggled goods and concealment of smuggled goods both require conscious intention. It is possible that a person may smuggle the goods in the sense that the term is used in the Act as liable to confiscation, without being aware that they are smuggled. That however cannot be said of concealment. Goods cannot be concealed by accident or chance. Concealment has to be necessarily to be born out of the desire to conceal the goods and has to be given effect to by using some material in which, or with which to conceal them.
4. Further, the question of concealment of goods with the help of heavy melting scrap was also dealt with by the Division Bench of the Tribunal in the case of Tower Steels (I) Ltd. (supra) wherein at para 4 its decision held as under:
We have carefully considered the submissions. We find that a quantity of 49.201 M.Ts. of scrap contained in the imported consignment has been accepted as scrap by the adjudicating authority. Its classification under Heading 72.04 claimed by the importer, has not been disputed in the impugned order. Thus the department's charge of misdeclaration stands rejected in respect of this part of the consignment. Yet this quantity of scrap has also been confiscated by the Commissioner under Section 119 of the Customs Act. This confiscation is based on the finding of the scrap having been used for concealing the other materials in the consignment. On a close perusal of the impugned order, we find that Id. Commissioner has not categorically found that the 49.201 M.Ts. of scrap were used for physically concealing the remaining goods. The concealment found by the Commissioner appears to be in a sense other than physical. But Section 119 of the Customs Act requires physical concealment to be established before imposition of penalty. This requirement is not met in this case. Apart from this, we find from the magazar that the scrap was contained only in one container, along with circles. There was no scrap in any of the remaining six containers. Hence no part of the scrap imported by the appellants could have concealed the material contained in the said six containers.
5. From the above to my mind the confiscation of the heavy melting scraps of 183.760 M.T. under Section 119 of the Customs Act does not arise. The order of confiscation of the goods under Section 119 is set aside.
6. In respect of the penalty imposed on the appellant under Section 112 of the Customs Act, I find that Section 112 of the Customs Act imposes penalty for improper importation and it is read as under:
Section 112. Penalty for improper importation of goods, etc.-any person, -
(a) xxxx xxx xxx xxxxxxxx xxx
(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 with he knows or has reason to believe are liable to confiscation under Section 111, shall be liable, -
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding five times the value of the goods or one thousand rupees, whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding five times the duty sought to be evaded on such goods or one thousand rupees, whichever is the greater;
(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made Section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding five times the difference between the declared value and the value thereof or one thousand rupees, whichever is the greater;
(iv) in the case of goods falling both under Clauses (i) and (iii), to a penalty not exceeding five times the value of the goods or five times the difference between the declared value and the value thereof or one thousand rupees, whichever is the highest;
(v) in the case of goods falling both under Clauses (ii) and (iii), to penalty not exceeds five times the duty sought to be evaded on such goods or five times the difference between the declared value and the value thereof or one thousand rupees, whichever is the highest.
7. From the above, it is very clear that the penalty imposed on the appellants under Section 112 for the goods confiscated under Section 111 would be correct whilst in respect of penalty imposed under Section 112 for the confiscation of the goods of heavy melting scrap under Section 119 is liable to be set aside.
8. I also find that absolute confiscation of 2.340 M.T. of war materials, which were found by the authority, was right and it is upheld. Since they are confiscated under Section 111(d) of the Customs Act and the penalty imposable on the appellants would be equivalent to the value of the goods. The penalty imposable on the appellants would be Rs. 28,400/- which is the value of the absolutely confiscated goods.
9. The appeal is allowed subject to the above modification of the order in original.
(Pronounced in the court)