Custom, Excise & Service Tax Tribunal
Kundan Care Products Ltd vs Commissioner Of Customs-New Delhi Acc ... on 31 July, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. I
CUSTOMS APPEAL No. 50021 OF 2024
(Arising out of Order-in-Original No. 02/SB/COMMR./ACE/2023 dated 17.08.2023
passed by the Commissioner of Customs, Air Cargo Complex (Export), New Delhi)
M/s. Kundan Care Products Ltd. ...Appellant
Plot No. E-22, Industrial Area, Bahadrabad,
Haridwar, Uttarakhand
versus
Commissioner of Customs, ...Respondent
Air Cargo Complex (Export)
New Customs house, near IGI Airport,
New Delhi-110037
APPEARANCE:
Shri Arjun Raghvendra M., Advocate for the Appellant
Shri Munshi Ram Dhania, Authorised Representative for the Respondent
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
Date of Hearing: 14.03.2024
Date of Decision: 31.07.2024
FINAL ORDER NO. 56198/2024
JUSTICE DILIP GUPTA:
The order dated 17.08.2023 passed by the Commissioner of
Customs Air Cargo Complex (Export) 1 cancelling the Special Bonded
Warehouse License2 dated 11.01.2023 of the appellant under section
58B of the Customs Act 19623 and imposing a penalty of Rs. 4 lakhs
upon the appellant under section 117 of the Customs Act has been
assailed in this appeal filed by M/s. Kundan Care Products Limited4.
1. the Commissioner
2. the License
3. the Customs Act
4. the appellant
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2. The appellant had submitted an application dated 17.12.2022
for issuance of a License under section 58A of the Customs Act along
with a self-declaration and undertaking, as contemplated in the CBIC
Circular dated 09.06.2016.
3. The undertaking submitted by the Director of the appellant is
reproduced below:
"UNDERTAKING
I, Sanjay Bhargava, S/o. Hanuman Prasad Bhargava,
Resident of House no.-J-33, R.B. Enclave, Paschim
Vihar, West Delhi, Delhi-110063, is working in the
capacity of Director at M/s. Kundan Care Products
Limited located at E-22, Industrial Area, Bhadrabad,
Haridwar, Uttarakhand-249403 has been authorized to
furnish this Declaration vide Board‟s Resolution dated
17/Dec/22.
I on behalf of M/s. Kundan Care Products Limited do
hereby undertake that I and M/s. Kundan Care Products
Limited:
(a) has not been declared an insolvent or bankrupt by
a Court of Tribunal.
(b) has not been convicted for an offence under any
law for the time being in force.
(c) has not been penalized for an offence under the
Act, the Central Excise Act, 1944 (1 of 1944) or
Chapter V of the Finance Act, 1994 (32 of 1994).
(d) has not been of unsound mind and stands so
declared by a competent Court."
4. The declaration submitted by the Director of the appellant is
reproduced below:
"DECLARATION
I, Sanjay Bhanrgava, S/o.- Hanuman Prasad, Resident
of House No. - J-33 RBI Enclave Paschim Vihar, New
Delhi - 110063, is working in the capacity of Director,
at M/s. I on behalf of M/s. Kundan Care Products Ltd.
Located at Haridwar Uttrakhand-249403, has been
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authorized to furnish this declaration vide Board‟s
Resolution dated - 17/December/2022.
I on behalf of M/s. Kundan Care Products Ltd., do
hereby declare that M/s. I on behalf of M/s. Kundan
Care Products Ltd.
I. Has not been declared an insolvent or bankrupt
by a Court of Tribunal.
II. Has not been convicted for an offence under any
law for the time being in force.
III. Has not been penalized for an offence under the
Act, the Central Excise Act, 1944 (1 of 1944) or
Chapter V of Finance Act, 1994 (32 of 1994).
IV. Has not been declared of unsound mind by a
competent Court."
5. The appellant was granted a License on 11.01.2023, and a
letter was sent to the Directorate of Revenue Intelligence for
verification of the antecedents of the appellant.
6. The Deputy Director, Commercial Intelligence in the Directorate
of Revenue Intelligence addressed a letter dated 08.02.2023 to the
Commissioner of Customs Export and informed him that two cases
were pending against the appellant at the stage of show cause notice
and in two cases closure reports had been filed. The relevant portion
of the said letter dated 08.02.2023 is reproduced below:
"To,
The Commissioner of Customs (Export),
Air Cargo Export,
New Custom House,
New Delhi-110037
Ma‟am/Sir
Sub: Antecedent Verification for granting a new
license for Public/Private/Special Bonded
Warehouse under section 57/58/58A and
permission for manufacturing & other operations
under section 65 of Customs Act, 1962 - reg.
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xxxxxxxxxxx
4. In this context, it is informed that as per offence
database of this Directorate, the Zonal Units of DRI and
field formations have booked case against the following
firms/companies under the provisions of Customs Act,
1962, the details of which are as follows:
Sr. Name of Zonal Unit Particulars Status
No. Applicants (DRI) Field
formation
(ix) M/s. Kundan DRI Chennai DRI/CZU/VIII/26/33N/ Show
Care Products Zonal Unit 2018 dated Cause
Ltd. & its 21.08.2018 Notice
Directors Issued
DRI DRI/BZU/S-IV/ENQ- Show
Bangalore 27/(INT-NIL)/2019 Cause
Zonal Unit DATED 09.10.2019 Notice
Issued
Delhi Air VIII/SIIB/CUS/ACC Closure
Cargo IMPORT/Kundan Report
(Import) Care/78/2018 dated Filed
21.05.2018
VIII/SIIB/CUS/ACC Closure
IMPORT/KUNDAN Report
CARE/78/18 dated filed
02.06.2020
7. The appellant wrote a letter to the authorities seeking copies of
the documents and the appellant also informed that show cause
notices had not been issued in the two cases of Delhi Air Cargo
(Import), in which the closure reports were said to have been filed.
8. Thereafter, a show cause notice dated 17.04.2023 was issued
to the appellant to show cause as to why the License issued to the
appellant on 11.01.2023 may not cancelled under section 58B of the
Customs Act; why penalty under section 114AA of the Customs Act
may not be imposed upon the appellant for wilful mis-statement and
declaration; and why penalty should not be imposed upon the
appellant under section 117 of the Customs Act. The show cause
notice makes mention of the earlier show cause notice dated
21.08.2018 issued to the appellant by the Chennai Zonal Unit as also
the show cause notice dated 09.10.2019 issued by the DRI Bangalore
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Zonal Unit and also to the order dated 24.01.2022 passed by the
Additional Commissioner of Customs holding that the appellant had
contravened/violated the provisions of section 46 of the Customs Act
read with rule 11 of the Foreign Trade (Regulation) Rules, 19935. The
show cause notice then concludes:
"11. Thus, from the above, it is seen that M/s.
Kundan Care is already penalized under Section
112 of the Customs Act, 1962 as mentioned in
Para 10 above and has already been show caused
for penal action as mentioned in Para 9 above and
also show caused for holding goods imported vide four
Bes dated 18.10.2017 and 26.10.2017 liable for
confiscation as mentioned in Para 8 above. All these
facts appear to have been suppressed by M/s. Kundan
Care while filing application for obtaining special
bonded warehouse under section 58A of the Customs
Act, 1962. He has given undertaking of having
never been penalized under the Act with the sole
purpose of obtaining the said license
fraudulently."
(emphasis supplied)
9. The appellant filed a detailed reply dated 15.05.2023 to the
aforesaid show cause notice dated 17.04.2023. The appellant pointed
out that in terms of regulation (3)(2)(c) of the Public Warehouse
Licensing Regulations, 20166, the License of the appellant could be
cancelled if the appellant had been penalized for an offence under the
Customs Act, the Central Excise, 1944 or Chapter V of the Finance
Act 1994 7 , but as „offence‟ and „contravention/violation of the
provisions‟ are different and the appellant had not been penalized for
an offence either under the Customs Act or the Central Excise or
Chapter V of the Finance Act, the License cannot be cancelled. The
5. the 1993 Foreign Trade Rules
6. the 2016 Regulations
7. the Finance Act
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appellant also pointed out the order dated 24.01.2022, only imposes
a penalty of Rs. 1.5 lacs on the appellant under section 112 of the
Customs Act for contravention of the provisions of section 46 of the
Customs Act read with rule 11 of the 1993 Foreign Trade Rules.
10. The reply submitted by the appellant did not find favour of the
Commissioner, who by order dated 17.08.2023 cancelled the License
issued to the appellant. The relevant portion of the said order is
reproduced below:
"6.2.1.3. xxxxxxxx. The licensee has
laboriously tried to differentiate between
'offence' and 'contravention' with the help of
dictionary where 'offence' has been defined as a
crime or misdemeanour, a breach of criminal laws
whereas 'contravention' is defined to be an act
which violates the law etc. The licensee has
conveniently taken the meaning of offence only related
to breach of criminal laws disregarding the first
meaning of offence as misdemeanours which includes
any contravention of any law. Penalisation for a offence
could be either in monetary terms or both in monetary
and prison sentence or only prison sentence. Thus, I
find that the said definition does not come to the rescue
of the licensee as though the fact was that he had
been penalised under section 112 of Customs Act
for an offence under the provisions of Customs
Act, however he chose to give a declaration that
he had not been penalised for any offence under
the Customs Act, thus suppressing the vital
information regarding the said penalisation under
the Customs Act.
6.2.1.4. Another argument which has been
taken by the licensee while arguing that penalty
under Section 112(a) of the Customs Act does not
pertain to an offence under the act is usage of
both words 'offence' or 'contravention' under
Section 1 of the Customs Act, 1962. I find that
this is a very weak argument as Section 1 defines
the applicability and area of operation of the
Customs Act, 1962. With Finance Act 2018, the
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applicability of the Customs Act was extended to any
offence or contravention there under committed even
outside India by any person. This is purely to define the
jurisdiction and to avoid any ambiguity with any
international law that both the words, which may be
having the same meaning have been used in the same
sentence with conjunction 'or' to avoid any
misrepresentation of the sort which the licensee is now
also trying to use. In any case this is not a definition
section of the Customs Act defining the meaning of
offence or contravention of Customs Act and hence this
section cannot come to the rescue of the
licensee.
xxxxxxxxxxx
6.2.1.6. Though there are two other Show
Cause Notices which had been issued by DRI but
as the same are yet to be adjudicated hence,
penalising or not for violation of Customs Act is
yet to be decided in these two cases.
xxxxxxxxxxx. It would have been even better that
even these two Show Cause Notices had been brought
to the notice of the licensing authority for taking a
comprehensive view though they may not have been
required to do so going strictly by the wordings of
SWLR, 2016. However, as SCNs are yet to be decided,
hence I find that this does not fall foul with the
declaration given by the applicant to obtain the
license."
(emphasis supplied)
11. It is this order that has been assailed in this appeal.
12. Shri Arjun Raghvendra M., learned counsel for the appellant
submitted that the appellant had not been penalised for any
offence under the Customs Act and, therefore, the License could not
have been cancelled. According to the learned counsel, the terms
„contravention‟ and „offence‟ as used in the Customs Act are not
synonymous. Learned counsel, therefore, submitted that as the
appellant had not made any mis-declaration either in the „declaration‟
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or the „undertaking‟, there would be no violation of the 2016
Regulations and, therefore, neither the License could be cancelled nor
penalty could be imposed upon the appellant under section 117 of the
Customs Act.
13. Shri Munshi Ram Dhania, learned authorised representative
appearing for the department, however, supported the impugned
order and submitted that the appellant is not justified in attempting
to draw a distinction between „offence‟ and „contravention‟. Learned
authorised representative also pointed out that under section 58A of
the Customs Act, it is the discretion of the Commissioner to issue or
not to issue the License. Learned authorised representative pointed
out that any act or omission made punishable under the Customs Act
is an offence and in support of this contention learned authorised
representative placed reliance upon the judgment of the Allahabad
High Court in State vs. Padma Kant Malviya and Anr.8. Learned
authorised representative, therefore, submitted that as the appellant
had made a wrong declaration, there is no error in the impugned
order which may call for any interference in this appeal.
14. The submissions advanced by the learned counsel for the
appellant and the learned authorised representative appearing for the
department have been considered.
15. Section 58A of the Customs Act deals with licensing of special
warehouses and section 58B of the Customs Act deals with
cancellation of license. The two sections are reproduced below:
"58A. Licensing of special warehouses.-
(1) The Principal Commissioner of Customs or
Commissioner of Customs may, subject to such
conditions as may be prescribed, licence a special
8. AIR 1954 ALL 523
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warehouse wherein dutiable goods may be deposited
and such warehouse shall be caused to be locked by
the proper officer and no person shall enter the
warehouse or remove any goods therefrom without the
permission of the proper officer.
(2) The Board may, by notification in the Official
Gazette, specify the class of goods which shall be
deposited in the special warehouse licensed under sub-
section (1).
58B. Cancellation of licence -
(1) Where a licensee contravenes any of the provisions
of this Act or the rules or regulations made thereunder
or breaches any of the conditions of the licence, the
Principal Commissioner of Customs or Commissioner of
Customs may cancel the licence granted under section
57 or section 58 or section 58A:
PROVIDED that before any licence is cancelled, the
licensee shall be given a reasonable opportunity of
being heard.
(2) The Principal Commissioner of Customs or
Commissioner of Customs may, without prejudice to
any other action that may be taken against the licensee
and the goods under this Act or any other law for the
time being in force, suspend operation of the
warehouse during the pendency of an enquiry under
sub-section (1).
(3) Where the operation of a warehouse is
suspended under sub-section (2), no goods shall be
deposited in such warehouse during the period of
suspension:
PROVIDED that the provisions of this Chapter shall
continue to apply to the goods already deposited in the
warehouse.
(4) Where the licence issued under section 57 or
section 58 or section 58A is cancelled, the goods
warehoused shall, within seven days from the date on
which order of such cancellation is served on the
licensee or within such extended period as the proper
officer may allow, be removed from such warehouse to
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another warehouse or be cleared for home consumption
or export:
PROVIDED that the provisions of this Chapter shall
continue to apply to the goods already deposited in the
warehouse till they are removed to another warehouse
or cleared for home consumption or for export, during
such period."
16. In the present case, the appellant had submitted an application
dated 17.12.2022 for issuance of a License under section 58A of the
Customs Act. This application was accompanied by an „undertaking‟
and a „declaration‟ by the Director of the appellant. In the
„undertaking‟ and the „declaration‟, it was stated that the appellant
had not been penalised for any offence under the Customs Act or the
Central Excise Act or Chapter V of the Finance Act.
17. According to the department, an order dated 24.01.2022 had
been passed by the Additional Commissioner of Customs imposing
penalty of Rs. 1.5 lacs upon the appellant under section 112(a) of the
Customs Act for the reason that the appellant had violated/
contravened the provisions of section 46 of the Customs Act read
with rule 11 of the 1993 Foreign Trade Rules, but there is no mention
of the order dated 24.01.2022 by the appellant in the „undertaking‟ or
the „declaration‟ accompanying the application that was filed on
17.12.2022 for grant of a License under section 58A of the Customs
Act. The department, therefore, believed that as the appellant had
not disclosed that it had been penalised for an offence under the
Customs Act, the License issued to the appellant was required to be
cancelled.
18. Regulation 3(2)(c) of the 2016 Regulations provides that the
Principal Commissioner of Customs or the Commissioner of Customs
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shall not issue a License to an applicant if he has been penalised for
an offence under the Customs Act, the Central Excise Act or Chapter
V of the Finance Act. This regulation 3(2)(c) of the 2016 Regulations
is reproduced below:
"(2) The Principal Commissioner of Customs or
Commissioner of Customs, as the case may be, shall
not issue a licence to an applicant if, -
(a) he has been declared an insolvent or bankrupt
by a Court or Tribunal;
(b) he has been convicted for an offence under any
law for the time being in force;
(c) he has been penalised for an offence under
the Act, the Central Excise Act, 1944 (1 of 1944)
or Chapter V of the Finance Act, 1994 (32 of
1994);
(d) he is of unsound mind and stands so declared
by a competent Court; or
(e) the Principal Commissioner of Customs or the
Commissioner of Customs, as the case may be, is
satisfied that-
(i) the site or building of the proposed
public warehouse is not suitable for
secure storage of dutiable goods;
(ii) the site or building of the proposed
public warehouse is not suitable for
general supervision by officers of
customs;
(iii) bankruptcy proceedings are pending
against the applicant ; or
(iv) criminal proceedings are pending
against the applicant and the offences
involved are of such nature that he is
not a fit person for grant of licence."
(emphasis supplied)
19. The issue that arises for consideration in this appeal is as to
whether the „undertaking‟ and the „declaration‟ given by the appellant
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that he had not been penalised for an offence under the Customs
Act or the Central Excise Act or Chapter V of the Finance Act is
correct or not. This is for the reason that the order dated 17.08.2023
cancels the License issued to the appellant only for the reason that
the appellant had been penalised for an offence under the Customs
Act as penalty had been imposed on the appellant under section 112
of the Customs Act.
20. The order dated 24.01.2022 imposes a penalty of Rs. 1.5 lacs
upon the appellant under 112(a) of the Customs Act for the reason
that the appellant had violated/contravened the provisions of section
46 of the Customs Act. The relevant portion of the order dated
24.01.2022 is reproduced below:
"9. From the foregoing it is evident that the
importer, while filing the aforementioned bill of entry
with the comments mentioned that Under Section 74
shows that the intension of importer is very much
clear to re-export the goods, and not to use the
said goods for actual user purpose. Thus, the
importer has not complied with the statutory
provisions contained under section 46 of the
Customs act, 1962 read with Rule 11 of the
Foreign Trade (Regulations) Rules, 1993. It will
not be out of place to mention that the Bill of Entry is
a legal document required to be correctly filed at the
time of importation of the goods. Therefore, I find
that the importer violated/ contravened the
provisions of Section 46 of the Customs Act,
1962 read with Rule 11 of the Foreign Trade
(Regulations) Rules, 1993 in as much as actual
use condition was not fulfilled. I find that the
goods are already re-exported and not available for
confiscation under Section 111(d) of the Customs Act,
1962. However are liable for penal action under
section 112(a) of the Customs Act, 1962.
10. I, accordingly, pass the following order:
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ORDER
I. As the goods imported vide BE no.
4487371 dated 11.08.2019 are liable for
confiscation but said goods are already re-
exported and not available for confiscation thus no question of confiscation arise in this present situation. Therefore, I impose a penalty of Rs. 150000/- (Rupees One Lakh Fifty Thousand Only) on the importer under Section 112(a) of the Customs Act, 1962."
(emphasis supplied)
21. Section 46 of the Customs Act deals with entry of goods on importation. It provides that the importer of any goods shall make entry thereof by presenting electronically on the customs automated system to the proper officer a Bill of Entry for home consumption or warehousing in such from and manner as may be prescribed. It, further, provides that the importer who presents a Bill of Entry shall ensure the following namely: (a) the accuracy and completeness of the information given therein; (b) the authenticity and validity of any document supporting it; and (c) compliance with the restriction or prohibition, if any, relating to the goods under the Customs Act or under any other law for the time being in force.
22. Section 112(a) of the Customs Act provides that any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, 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 the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than 14 C/50021/2024 prohibited goods, subject the provisions of section 114A, to a penalty not exceeding ten percent of the duty sought to be evaded or five thousand rupees, whichever is higher.
23. Learned counsel for the appellant submitted that as the appellant had not been penalised for any offence under the Customs Act, the cancellation of the License of the appellant cannot be sustained. According to the learned counsel, the terms „contravention‟ and „offence‟, as occurring in the Customs Act, are not synonymous.
24. Chapter XIV of the Customs Act deals with „confiscation of goods and conveyances and imposition of penalties‟, while Chapter XVI deals with „offences and prosecutions‟.
25. It would be pertinent to note that sections 42(2)(f), 59(1)(c), 72(1)(a), 73A(3), 109A, 111, 113, 117, 143(2), 156(1)(g) and 158(2)(ii) relate to „contravention‟ of the provisions of the Customs Act or „contravention‟ of any law.
26. On the other hand, sections 23(2), 26A(1)(d)(iii), 68(c), 104(1), 109A, 127B(1)(b), 127H(1)(3), 127L(1)(ii), 135(1)(d)(i), 135A, 135B, 136(2)(b), 137(1),(2)(a)(b), (3)(a)(b) & (d), 138, 138A, 140 and 140A deal with committing an „offence‟ or prosecution of an offence under the Customs Act.
27. This apart, section 1(2) of the Customs Act that extends the Customs Act to the whole of India and, save as otherwise provided in the Customs Act, it applies also to an „offence‟ or „contravention‟ thereunder committed outside India by any person. The same sub- section (1) uses both the words „offence‟ and „contravention‟. It is, therefore, clear that the meaning assigned to these two words in the Customs Act is different.
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28. In this connection, it would be appropriate to refer to the judgment of Bombay High Court in Devidayal Electronics & Wires Ltd. and another vs. Union of India and another9. The Bombay High Court held that since the Notification used the word „factory‟ and also the word „industrial unit‟ in the same Notification, it has to be assumed that the said two words were intended to bear different meanings. The Court, therefore, held that the words „industrial unit‟ must mean something other than „factory‟.
29. This judgment of the Bombay High Court in Devidayal Electronics was approved by the Supreme Court in Collector of Central Excise vs. Himalayan Co-op. Milk Product Union Limited10.
30. It would also be pertinent to refer to the decision of the Supreme Court in Commissioner of Trade Tax, U.P. vs. S.S. Ayodhya Distillery 11 . The issue that arose before the Supreme Court was whether „paddy husk‟ can be treated as „rice husk‟. The Supreme Court held that when two expressions have been used in the same Notification, two different meanings should be assigned thereto. The observations are as follows :
11. As paddy and rice are considered to be the separate commodities, paddy husk cannot be treated to be rice husk.
Not only in the notification dated 7-9-1981 but also in the notification dated 5-6-1985 paddy husk is not mentioned. By reason of notification dated 6-6-1996 „paddy husk‟ was inserted. Even then, the rice husk was not deleted. No explanation was offered therefor. Both rice husk and paddy husk, thus, found place in the notification. Indisputably, therefore, paddy husk was
9. 1984 (16) E.L.T. 30 (Bom.)
10. 2000 (122) E.L.T. 327 (S.C.)
11. 2009 (233) E.L.T. 146 (S.C.) 16 C/50021/2024 subjected to for the first time by reason of the said notification dated 6-6-1996. Yet again, while giving a purported new look to the entry in the notification dated 15-1-2000, the words „rice husk‟ and „paddy husk‟ have respectively been mentioned. Even then no attempt was made to issue any clarification. Two expressions having been used ordinarily two different meanings should be assigned thereto. If by reason of a notification, taxes are sought to be imposed upon a new commodity applying Heydon‟s Rules (3 Co. Rep: 7a; 76 E.R. 637), it must be held that the mischief was sought to be remedied thereby.
It is, therefore, difficult to agree with Mr. Gupta that rice husk and paddy husk denote the same commodity."
31. The Supreme Court made the same observations in Union of India vs. Kumho Petrochemicals Company Limited 12 and the relevant paragraph is reproduced below :
"32. ................. The Learned Counsel for respondent rightfully pointed out that the legislature has consciously used the expression „may‟ and „shall‟ at different places in the same Section, i.e., Section 9A of the Act. In such a scenario, it has to be presumed that different expressions were consciously chosen by the Legislature to be used, and it clearly understood the implications thereof. Therefore, when the word „may‟ is used in the same Section in contradistinction to the word „shall‟ at other places in that very Section, it is difficult to interpret the word „may‟ as „shall‟. Therefore, it is difficult to read the word „may‟ as „shall‟."
32. The Andhra Pradesh High Court in Madhucon Projects Limited vs. Cus., Ex. & S.T. Sett. Comm., Chennai13 also observed that two different expressions in a statute must be construed to carry different meanings and the observations are as follows :
12. 2017 (351) E.L.T. 65 (S.C.)
13. 2016 (44) S.T.R. 321 (A.P.) 17 C/50021/2024 "IX. Two Different expressions in a statute must be construed to carry different meanings :
49. As Parliament has used two different expressions in the Explanation to two distinct provisions, this Court cannot presume the effect of both the Explanations to be the same. If both the Explanations were meant to have the same effect, and to have retrospective application, it was unnecessary for Parliament to use two different expressions in the Explanations to Section 32K(1) and Section 32-O(1)(i) of the Act, as use of the same words would have sufficed. When two different expressions are used by the same statute, one has to construe these different expressions as carrying different meanings."
33. Section 112 of the Customs Act, under which the penalty of Rs. 1.5 lacs was imposed upon the appellant by order dated 24.01.2022, is contained in Chapter XIV of the Customs Act. The order dated 24.01.2021 records a finding that the appellant had violated/ contravened the provisions of section 46 of the Customs Act.
34. There is a marked difference between a penalty imposed for „contravention‟ of the provisions of the Customs Act and punishment imposed for committing an „offence‟. Chapter XVI of the Customs Act deals with „offences‟ and „prosecutions‟. Section 132 provides that a person who makes a false declaration or files a false document shall be punishable with imprisonment for a term which may extend to two years or with fine or with both. Section 133 also provides that any person intentionally obstructs any officer of customs in exercise of any powers conferred under Customs Act shall be punishable with imprisonment for a term which may extend to two years or with fine, or with both. Likewise, other sections like section 134 and 135 also deal with punishment of imprisonment or with fine or both. Section 104 of the Customs Act deals with power to arrest. It provides that if 18 C/50021/2024 an officer of customs has reason to believe that any person has committed an offence punishable under section 132 or section 133 or section 135 or section 135A or section 136, he may arrest such person and every person arrested shall without unnecessary delay, be taken to a magistrate. On the other hand, provisions for „contravention‟ of the provisions of the Customs Act generally impose a penalty in terms of money. It cannot, therefore, generally be said that any „contravention‟ would amount to an „offence‟ under the Customs Act.
35. Regulation 3(2)(c) of the 2016 Regulations provides that the Principal Commissioner of Customs shall not issue a licence to an applicant if he has been penalised for an offence under the Customs Act. The declaration that was given by the appellant with the application for seeking a licence stated that the appellant has not been penalised for an offence under the Customs Act. Regulation 3(2)(c) does not state that the license shall not be issued if penalty has been imposed for „contravention‟ of the provisions of the Customs Act.
36. The appellant had not been penalised for an „offence‟ under the Customs Act. It cannot, therefore, be urged that by not making reference to the order dated 24.01.2022 passed by the Additional Commissioner of Customs imposing a penalty upon the appellant under section 112(a) of the Customs Act for contravention of the provisions of section 46 of the Customs Act, the appellant had withheld vital information from the department or had made a false statement.
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37. At this stage, it would be pertinent to refer to the decision of the Supreme Court in M/s. Prakash Roadlines (Pvt.) Ltd. vs. Union of India and Another14.
38. Sections 463 and 464 of the Delhi Municipal Corporation Act 1947 came up for consideration before the Supreme Court. Both the sections fall in the Chapter "Offences and penalties". It was sought to be contended on behalf of the appellant that the punishment provided in section 463 and the penalty or fine provided in section 464 could only be imposed by a Magistrate after a proper trial. This contention was not accepted by the Supreme Court and to arrive at this conclusion, the Supreme Court examined the provisions of sections 463 and 464 of the Delhi Municipal Corporation Act. These two sections are reproduced below:
"463. Punishment for offences relating to terminal tax. - Whoever brings within the Union Territory of Delhi any goods liable to terminal tax without the payment of such tax shall, on conviction, be punishable with imprisonment for a term which may extend to six months or with the fine which may extend to one thousand rupees or with both, and the court trying an offence under this section may, on such conviction, also confiscate the goods in respect of which the offence has been committed.
464. Penalty for evasion of terminal tax. - Where any goods imported into Delhi are liable to the payment of terminal tax, any person, with the intention of evading payment of the tax introduces or attempts to introduce or causes or abets introduction of any such goods within the Union Territory of Delhi, upon which payment of terminal tax due on such introduction, has neither been made nor tendered, shall be punishable with fine which may extend to ten times the amount of such terminal tax."
14. AIR 1989 SC 1962 equivalent to (1989) 4 SCC 15 20 C/50021/2024
39. The Supreme Court observed that the Chapter deals with two categories of matter. One relates to 'offences' and the other to 'penalties'. The Scheme of the Chapter indicates that so far as the 'offences' are concerned, they could only be tried by a competent criminal court, whereas 'penalties' could be imposed by the taxing authority itself. The Supreme Court, therefore, drew a clear distinction between 'offences' and 'penalties'. The relevant portion of the judgment of the Supreme Court is reproduced below:
"4. xxxxx Learned counsel for the respondent on the other hand contended that the language used at the heading of the Chapter which starts with Section 461 itself indicates that this Chapter deals with two types of matters (i) where offences are alleged to have been committed and
(ii) where only penalties could be imposed and the scheme of this Chapter indicates that wherever the offences are alleged to have been committed it has been provided that they will be tried by a competent magistrate and the punishment could only be inflicted by the competent magistrate on conviction of the person for the offences alleged against him. Whereas wherever penalties are provided it has been provided that where the facts attract the relevant provisions pertaining to penalty the tax plus penalty could be imposed and these penalty provisions neither talk of any offence nor talk of conviction before a competent court of a Magistrate. It was contended that on the basis of this distinction, if the two sections 463 and 464 which are relevant are examined it is clear that Section 464 do not pertain to any offence and therefore the penalty thus imposed under this Section is not a punishment which could only be inflicted under Section 463 after conviction and therefore for imposition of penalty under Section 464 the prosecution of the appellant before a competent magistrate is not at all necessary. Learned counsel also contended that even reading the provisions of Section 470 or 469 do not indicate contrary.21
C/50021/2024 xxxxxxxxx
6. The only question which arises in this appeal is as to whether penalty as provided in Section 464 of the Act could be imposed by the terminal tax authority or it could not be imposed unless the appellant is convicted and found guilty by a competent Magistrate as is contemplated in Section 463 of the Act. xxxxxxxxx.
It is significant that in Sections 463 and 464 the language used is that "a person who brings the goods into the Union Territory of Delhi liable to terminal tax without the payment of tax shall on conviction be punishable." Whereas in Section 464 the Section talks of bringing the goods into the Union Territory on which terminal tax is due and is not tendered or paid a fine which may extend to ten times the amount of terminal tax could be levied.
7. This different phraseology used in the two sections clearly go to show that where the ingredients of Section 463 are not in doubt it is open to the corporation authorities to launch a prosecution against the person who introduces the goods without payment of terminal tax and in this event the person on conviction only can be punished but the punishment is also imprisonment but the highest limit of fine is limited to Rs. 1,000 whereas under Section 464 neither there is any reference to a conviction nor any reference to the Court of a Magistrate and the only penalty provided is monetary which may extend to ten times. It is therefore clear that Section 463 refers to a criminal offence if committed, could only be tried by a competent criminal court and on conviction alone the punishment could be imposed but Section 464 is in the nature of a revenue provision where non-payment of tax could be remedied by imposition of penalty and the limit of penalty has been prescribed at ten times of the tax which is payable. In view of different language used in the two sections and also the language used in the marginal note it is clear that the two cannot be said to be same or similar.
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8. Even the heading of the Chapter talks of "Offences and Penalties". It therefore clearly appears that this chapter deals with two categories of matters; (i) 'offences' and the other 'penalties' and the scheme of this Chapter indicates that so far as offences are concerned they could only be tried by a competent criminal court and punishment could only be awarded after conviction whereas so far as penalties are concerned they could be imposed by the taxing authority itself. Even the language or Sections 470 or 469 does not help the appellant in any manner."
(Emphasis Supplied)
40. It, therefore, clearly transpires from the aforesaid decision of the Supreme Court in Prakash Roadlines that there is a clear distinction between 'offences' and 'penalties'. This position has also been highlighted in the earlier paragraphs of this order.
41. The contention of learned authorised representative appearing for the department is that the Customs Act is a „law‟ and, therefore, any act or omission made punishable under the Customs Act is an „offence‟. In this connection learned authorised representative placed reliance to the decision of the Allahabad High Court in Padma Kant Malviya.
42. Reliance placed by the learned authorised representative on the decision of the Allahabad High Court in Padma Kant Malviya is misplaced. The High court answered the questions referred in the following manner:
"79. Our answer to the questions referred to us for opinion is as follows:
"(1)(a) Contempt of court is not an offence within the meaning of Section 5(2) of Criminal Procedure; (b) In view of our answer to the previous question this question does not arise.23
C/50021/2024 (2) The alleged contemner is not an accused person within the meaning of Section 5 of the Indian Oaths Act, 1873.
(3) An, alleged contemner is not a person accused of an offence within the meaning of Article 20(3) of the Constitution & if he has voluntarily filed an affidavit, he can be cross-examined on it."
43. Thus, what was required to be examined was whether contempt of court would be an offence within the meaning of section 5(2) of the Code of Criminal Procedure.
44. In view of the aforesaid, it can safely be concluded that the order dated 24.01.2022 passed by the Additional Commissioner, that alone has been made the basis for cancelling the License issued to the appellant, does not penalise the appellant for an 'offence' under the provisions of the Customs Act. Only a penalty has been imposed upon the appellant for 'contravention' of the provisions of section 46 of the Customs Act. The order dated 17.08.2023 passed by the Commissioner, therefore, cannot be sustained.
45. The impugned order dated 17.08.2023 passed by the Commissioner is, therefore, set aside and the appeal is allowed.
(Order Pronounced on 31.07.2024) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Jyoti