Customs, Excise and Gold Tribunal - Mumbai
S.K.S. Trading Co. Ltd. vs Collector Of Customs on 17 December, 1992
Equivalent citations: 1994(71)ELT972(TRI-MUMBAI)
ORDER T.P. Nambiar, Member (J)
1. Appeal No. C/288/92 is against the order in original No. S/14-4-119/91 dated 11-2-1991 while the appeal No. 289/92 is against the order No. S/14-4-95/91 /AIU dated 21-2-1992. Since both the appeals involve in consideration of the same issues (though facts regarding import are different), and pertain to the same appellants, they were heard together and hence proposed to be disposed of by this common order. In the case of appeal No. 288/92, the goods involved are integrated circuits and capacitors - 10 containers - totally valued at Rs. 14,65,000/- c.i.f. brought by flight SQ 412 of 1-9-1991. In the case of Appeal No. 289/92, the goods involved are electronic components and integrated circuits totally valued at Rs. 13,30,900/- c.i.f. Both the consignments are purportedly shipped by the appellants M/s. SKS Trading Co. Ltd. Hong Kong to M/s. Uni Impex Corporation covered by two different Airway Bills. Air Customs officers received a tip-off informing them that electronic components are being imported from Hongkong and they were to be smuggled into country and the import is made in the name of certain fictitious persons. In the case of one of the consignments covered by appeal No. 288/92, the manifest indicated that the consignments were in the name of M/s. Uni Impex Corporation and M/s. Dad's Finance and Trading Co. On a reference made to M/s. Uni Impex Corporation, - the importer shown in the Airway Bill and in the manifest, it was revealed by them that they have not imported any consignment from outside India nor they have placed any order for any import from outside parties. They also indicated that they strongly feel that some unscrupulous elements imported the consignments by misusing their name. The Proprietor of M/s. Uni Impex Corporation also gave his statement to this effect. A statement of the Director of M/s. Dad's Finance and Trading Co., in whose name the consignment was subsequently transferred, was also recorded. He has indicated that his company had not imported any consignment under the Airway bill and the foreign supplier informed them that they have transferred one consignment, which was shipped to M/s. Uni Impex Corporation but they had never placed any order for this consignment and they had no interest in claiming the same. It was also revealed by them that there was no request from the proprietor of M/s. Uni Impex Corporation to transfer the consignment in their name. In short, even M/s. Dad's Finance & Trading Co. were not inclined to accept the transfer made by the appellants (Supplier) and indicated that they have nothing to do with this consignment. In view of the aforesaid position, the consignments covered by both the appeals were seized and in the adjudication proceedings held by the Addl. Collector of Customs, they were found to be dutiable and restricted goods and since no one indicated in the manifest as well as in the airway bill laid any claim over the goods, they were ordered absolute confiscation. No penalty was imposed on anyone. The present appellants, who claimed to be the exporter of the goods from Hongkong, has filed the appeals against the aforesaid orders.
2. Shri Alimchandani, representing the appellants, has pleaded as below :
(i) The goods have been shipped by the appellants on the basis of oral contract. He admits that this oral contract is not confirmed by any written confirmation. However, he would plead that based on trust, the goods were shipped to M/s. Uni Impex Corporation and in one case, it was subsequently transferred to M/s. Dad's Finance & Trading Co. M/s. Dad's Finance Trading Co. no doubt, admits that they are getting goods from the appellants, but they have denied placing the order for the said goods and they have not agreed for their transfer. For reasons best known to M/s. Uni Impex Corporation they have disowned placing any order. In any case, since the goods have not been claimed by the parties, who have imported the goods from the appellants and the amounts for the goods have not been paid by them, the property vests with the appellants, being the foreign supplier. Hence, the goods should be allowed to be re-shipped to the appellants;
(ii) No show cause notice has been issued to the appellants who is indicated as the supplier even in the airway bill and their full address is given. Hence, a notice ought to have been issued to the appellants before adjudication, which has not been done. Even otherwise, before adjudication, the appellants have written a letter on 20-12-1991, which ought to have been considered by the adjudicating authority before treating the goods as abandoned. This letter is also followed up by a reminder, which is dated 16-4-1992;
(iii) He took us through the copies of the relevant letters dated 20-12-1991 and 16-4-1992 and also the copies of the two invoices and airway bills covering the consignments. He pleaded that based on these documents, the ownership of the goods is established and a claim has also been lodged with the adjudicating authority, which was, however, not considered by the said authority, before ordering absolute confiscation of the goods;
(iv) On a query by this Bench, as to whether, any L/C was opened in this case, he replied in the negative. On a further query by this Bench, as to whether, in the absence of L/C, they have sent the documents through the Bank for retirement to realise the value of the goods, he stated that based on trust and to save bank commission, they did not send the documents for retirement through bank channel. However, he is silent as to how the money involved could be repatriated by them in the absence of valid contract;
(v) He sought to rely heavily on the decision of the Supreme Court in the case of Civil Appeal No. 223(MM)/92 filed by Union of India against Sampat Raj Dugar & Anr. [1992 (58) E.L.T. 163]. A copy of the judgment was also produced during the hearing. He contended that in terms of this judgment, reshipment of the goods ought to be allowed to the appellants being the foreign supplier of the goods and also the owner of the goods.
3. Shri Ravinder Jain, the ld. JDR, on the other hand, contended as below:
The undisputed factual position is that the appellant has not taken any precautions to verify whether the importers in whose names the goods have been shipped are actually in need of the goods and the importers can validly import these goods into the country. The existence of oral contract is to be established by the person affirming the existence of the same. In this case, the other party to the so-called verbal contract has clearly indicated that they had never ordered for these goods and the goods have been imported by some unscrupulous elements using their name. In the circumstances, even the appellants can be exposed to penal liability for abetting the smuggling of goods into the country. The Department has acted on an information that highly sensitive electronic items are sought to be smuggled through air consignments imported in fictitious names. The appellants admit that they had not taken any care to verify whether the shipments valued over Rs. 27 lakhs are actually needed by the consignees and they can validly import them into the country. This itself goes to indicate that they are privy to the attempted smuggling possibly by the appellants' agents in India. The appellants cannot plead bona fides, especially in the context of the admitted position that they have not taken any care to transact the business in a manner which any exporter in the course of international trade, would be prudent enough to follow. Hence, even if the appellants' claim is considered, the liability of the goods to confiscation has to be upheld.
4. Shri Jain, also submitted that the show cause notice has been displayed on the notice board as per the requirement of Section 153 of the Customs Act, inviting representations against the proposed confiscation of the goods from anyone claiming ownership or concern with the goods. The appellants' letter dated 20-12-1991 has not been received by the Addl. Collector. The appellants have not produced any evidence of its despatch or acknowledgement from the authorities. Moreover, the address given in the letter is "The Additional Collector of Customs, Bombay India". Such an address cannot ensure delivery of the letter to the Addl. Collector of Customs, Air Cargo, Sahar Airport, Bombay. Hence, the goods have been rightly held as not claimed and they, being restricted and dutiable goods have been ordered absolute confiscation because they were sought to be smuggled into the country.
5. We have considered the arguments advanced by both the sides carefully. The crucial question to be decided in this case is whether the confiscation of the goods which were imported into India in the abovesaid cases is in accordance with law.
6. The ld. Counsel, Shri Alimchandani, contended that the principles of natural justice are violated in this case, in view of the fact that the letter of the appellants dated 20-12-1991 was not considered by the adjudicating authority. The appellants had produced a letter dated December 20th 1991 addressed "The Addl. Collector of Customs, Bombay, India". No evidence was produced before us to show that the same was sent by registered post or by certificate of posting. There is no endorsement on the letter to show that it was received by the Addl. Collector of Customs, Air Cargo, Sahar Air Port, Bombay. Even the address mentioned in the letter was very vague that it could have gone to anyone of the Addl. Collectors in Bombay. The ld. JDR, Shri Ravinder Jain after verification of the records of the Department had stated before us that no such letter was received by the Addl. Collector, Airport, as contended by the appellants. The appellants also failed to substantiate this contention. In that view of the matter, it cannot be said that the principles of natural justice are violated on account of the fact that the adjudicating authority had failed to take into consideration the letter cited above.
7. It was contended by the ld. Counsel that the goods had been imported under proper Airway Bills and on the strength of the Airway bills, a show cause notice should have been issued to the appellants. We are unable to agree with this argument of the ld. Counsel. It is no doubt that there were Airway Bills produced in this case to show that the goods were imported by M/s. Uni Impex Corporation, Ghatkopar, Bombay. The Department had made verification of this import with M/s. Uni Impex Corporation. They also verified the same with M/s. Dad's Finance & Trading Company. Both the above-said firms have stated before the Customs authorities, that they have not placed any orders for any import from the appellants. They also indicated that they strongly feel that some unscrupulous elements imported the consignments by misusing their names.
8. It was contended before us that the importers failed to claim goods in question. But there is no proof to show that the importers had entered into any contract for the import of goods in question. Shri Alimchandani contended that the contract was an oral contract. But the best evidence available to prove the oral contract will be the evidence of the importers themselves. Both the abovesaid firms have denied the import. There are no documents produced by the appellants to show that the above-said firms entered into any verbal contract with them for the import of the goods in question. A mere averment by the appellants that it was sent under a verbal contract is not sufficient to prove the same, and more particularly in view of the fact that both the above-said firms denied such a contract.
9. In coming to this conclusion, we had also taken into account the alleged letter written by the appellants dated 20-12-1991. In that letter, it was merely mentioned by the appellants that they had requested their air Agents in Hongkong to ask their agents in Bombay, D. Wamadeo & Co. to re-ship back to Hongkong the shipment in question and they had given their undertaking that they will be responsible for demurrage and return freight charges. It was also mentioned in that letter that the above-said cargo be allowed to return to Hongkong and they will pay all the charges in this connection and they will settle all charges with their agents in Hongkong upon arrival of the goods. There is no whisper in that letter that there was a verbal contract entered into between the appellants and the above-said firms for the export of the goods. This is a circumstance which goes against the theory of verbal contract pleaded by the appellants. This clearly goes to show that the verbal contract pleaded by the appellants is only a falsity. There was no reason as to why the firms concerned should deny any such contract. The appellants also did not attribute any motive to these firms for denying such contract. In the ordinary course of events the appellants could not have sent these goods without any valid documents to secure the payment of value of the abovesaid goods. The argument that on a trust the same was sent cannot be accepted in the facts and circumstances of the case. There was no L/C opened in this case. The appellants have not sent any documents through the bank for retirement to realise the value of the goods. The plea of sending the same on a mere trust and to save bank commission is totally unacceptable in view of the clear denial by both the above-said firms in respect of the contract in question. Hence, we hold that the plea of oral contract entered into by the appellants with the above-said firm is not substantiated in this case. However, it was vehemently contended before us that since the goods are abandoned, the ownership of the goods still vests with the appellants. Shri Alimchandani, the ld. Counsel placed strong reliance on the decision of the Supreme Court in the case of Union of India and Anr. v. Sampat Raj Dugar & Anr. in Civil Appeal No. 223(NM) of 1992, dated 21-1-1992 [reported in 1992 (58) E.L.T. 163 (SC)]. Relying on the above-said decision, it was contended that since the appellant is the owner, he should be allowed to re-export the goods in question.
10. In order to appreciate the contention of Shri Alimchandani, it is necessary for us to look into the facts of that case. In that particular case before their Lordship of the Supreme Court, the second respondent Ms. Renu Pahilaj was doing business at Delhi. The first respondent before their Lordship was an Indian national resident abroad doing business at Hongkong in the name and style of Unisilk. The second respondent obtained an advance import licence on 20-5-1985 for importing raw silk valid for a period of 18 months from the date of its issue. The import licence was granted subject to the condition that raw silk imported should be utilised for manufacturing garments which ought to be exported by her. In that particular case, sometime prior to October 1985, the second respondent received three consignments but did not fulfil the aforesaid condition. During October-November 1985, the first respondent exported certain quantities of raw silk to the second respondent. The requisite documents were sent to the first respondent's bankers with instructions to deliver the same to the second respondent on receiving the payment. When the consignment arrived at Bombay, the second respondent appeared before the Customs authorities and claimed the right to take delivery of the goods. But by that time, it was in the knowledge of the Customs authorities that she had failed to fulfil the above-said condition and by misrepresentation the advance import licence was obtained. Thereafter, proceedings were initiated against her and two other persons. In those proceedings, the first respondent, on his own, appeared and he was heard. The above facts narrated go to show that the second respondent claimed the goods. In those circumstances, their Lordship held that for the fault of the second respondent in not fulfilling the condition of licence, the first respondent cannot be made to suffer. In the facts and circumstances of that case, their Lordship held that the ownership of the goods had not vested with the second respondent. It was also held that the first respondent was the owner of the goods and there was no fault committed by him. It was in those circumstances, re-export was granted.
11. The facts in this case are not at all similar to the facts in the abovecited case. In this case, both the alleged importers stated that they did not enter into any contract with the appellants for the import of the goods. There was no valid licence for the import of the goods in question. The appellants also could not establish the valid contract in between the appellants and the above-said firms. So the facts of this case are completely distinguishable from the facts of the case cited supra, with which their Lordship of the Supreme Court were dealing.
12. In this case, the goods are confiscated under Section lll(d) of the Customs Act. Under Section lll(d) of the Customs Act, any goods which are imported or attempted to be imported or are brought within the Indian Customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force is liable for confiscation. In the present case before us, the goods are imported contrary to the law in view of the fact that there was no valid licence obtained to import the same. In the decision relied on by the ld. Counsel, the Hon'ble Supreme Court held as follows :
"In our opinion none of these clauses are attracted in the present case. Clause (d) contemplates an import which is contrary to any prohibition imposed either by the Customs Act or any other law for the time being in force. No such prohibition can be pleaded in this case since on the date of the import the said goods were covered by a valid import licence. The subsequent cancellation of licence is of no relevance nor does it retrospectively render the import illegal."
13. A perusal of this decision clearly goes to show that any import of the goods without a valid licence is contrary to law and such goods are liable to confiscation under Section lll(d) of the Customs Act. In this case, the ld. Counsel for the appellants merely pleaded that the goods are capable of being cleared on REP licence. The goods may be capable of being cleared on REP licence, but in order to make the import in accordance with law before importing them, they should have been covered by a valid import licence. Since the goods in question are not covered by a valid import licence, there is a contravention of the Imports & Exports (Control) Act, 1947 read with Imports (Control) Order, 1955.
14. In the above-cited decision, their Lordship of the Supreme Court held that the rule-making authority (Central Government) which issued the order, must be presumed to be aware of the fact that in many cases, the importer is not the owner of the goods imported at the time of their import and that he becomes their owner only at a later stage i.e. when he pays for and obtains the relevant documents. Their Lordship also held that the object underlying condition (ii) in Clause 5(3) of the Imports (Control) Order is to ensure a proper implementation of the Imports & Exports (Control) Act, 1947. The idea is to hold the licensee responsible for anything and everything that happens from the time of import till they are cleared through Customs. In all such cases, the exporter is outside the country and the licensee is in India. It is at the instance of the licensee the goods are imported into the country. When there is no such licensee who holds the valid licence for the import of the goods, then the contravention of law has taken place and the goods are liable for confiscation under Section lll(d) of the Customs Act. As held by their Lordship, the Imports Control Order creates a fiction that the licensee shall be deemed to be the owner of the goods from the time of their import till they are cleared through Customs. This fiction is created for the proper and effective implementation of the said order and the Imports and Exports (Control) Act. In this case, since there is no such importer and since there is no valid licence covering the import, there is a clear violation of the Imports (Control) Order and the goods are liable to be confiscated.
15. In this connection, we may observe that the proceedings for confiscation of contraband goods are proceedings in rem and the penalty of confiscation is enforced against the goods irrespective of whether the offender is known or unknown. But imposition of the penalty under Section 112 of the Customs Act is one in personam. Such a penalty can be levied only on the person concerned in any offence described under Section 112(a) & (b) of the Customs Act of 1962. Once the goods are found to be imported into the country without a valid licence, then the provisions of Imports (Control) Order are violated and the goods are liable for confiscation even without proceeding against any person and even without ascertaining who is its real owner or who was actually concerned in the illicit import.
16. These principles are laid down by the Supreme Court in the case of Collector of Customs, Madras v. D. Bhoormll under paras 22 & 23 [1983 (13) E.L.T. 1546 (SC)
17. Therefore, even if the appellants are the owner of the goods in question, the goods are liable for confiscation. They can even be confiscated without ascertaining the ownership.
18. The decision relied on by the ld. Counsel, Shri Alimchandani is clearly distinguishable from the facts of the present case. That decision was rendered by their Lordship in the facts and circumstances of that particular case. In that judgment, their Lordship held as follows :
"We can well imagine situations where for one or other reason, an importer chooses or fails to pay for and take delivery of the imported goods. He just abandons them. (We may reiterate that we are speaking of a case where the import is not contrary to law). It is only with such situation that we are concerned in this case and our decision is also confined only to such a situation."
(emphasis supplied by us)
19. It is, thus crystal clear that their Lordships were dealing with a case where the import was not contrary to law. That case was confined only to such a situation where the import was not contrary to law. But in this case, as already discussed by us, the import itself is contrary to law and since the goods in question came into the Territory of India contravening the provisions of the Import Control Order, the goods are liable for confiscation. Accordingly, the adjudicating authority has rightly confiscated the goods. In the facts and circumstances of the case, we find no reason to interfere with the order of absolute confiscation of the goods. No re-export of the goods is permissible in such circumstances. In view of the conduct of the appellants and also the fact that the goods were not covered by a valid licence and since they were cleared in the name of two firms who never made any such contract with the appellants, the absolute confiscation of the goods is justified. The question of giving option to the appellants for redeeming the same also does not arise in the facts and circumstances of the case as already narrated by us.
20. In the result, we are of the opinion that the appeals are devoid of any merits and accordingly the appeals are liable to be dismissed. We order accordingly.