Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri N.S. Patel, Adv on 12 December, 2012
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad COURT-II Appeal No.C/481/06 Arising out of OIO No.KDL/COMMR/01/2006, dt.08.12.05 Passed by Commissioner of Customs, Kandla For approval and signature : Hon'ble Mr. M.V. Ravindran, Member (Judicial) Hon'ble Mr. B.S.V. Murthy, Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Appellant (s) : M/s. Palmon Exports Represented by : Shri N.S. Patel, Adv Respondent (s) : CC Kandla
Represented by : Shri K. Sivakumar, A.R. CORAM :
Hon'ble Mr. M.V. Ravindran, Member (Judicial) Hon'ble Mr. B.S.V. Murthy, Member (Technical) Date of Hearing : 12.12.12 Date of Decision :
ORDER No. _____________ /WZB/AHD/2012 Per : Mr. B.S.V. Murthy;
M/s. Palmon Exports (hereinafter referred to as PAL) is a unit in Kandla, Special Economic Zone (KSEZ). PAL was importing seconds and defective metal sheets and clearing them to domestic tariff area according to Revenue. On the basis of intelligence that PAL was mis-declaring such metal sheets imported by them and diverting them to Mini Tin Syndicate (MTS) and M/s. Home Enterprise Adiput investigation was initiated. On 21.03.05 premises of PAL was searched and a consignment weighing 136.218 MT of metal sheet was found in the premises. The goods were found to have been imported vide bills of entry No.5089 and 5090 both dated 17.02.05 through Mundra Port. The description of the goods was declared as tin plate sheets and cutting waste and classification was indicated as CTH 80040090 of the schedule to the Customs Tariff Act, 1985.
2. Representative samples were drawn and on testing it was reported that the sample is steel plate quoted with tin. The item as found by chemical test was required to be classified under CTH 72.10 and not chapter 80 as declared by the PAL. On finding that according to import licensing note No.4 to chapter 72 of Customs Tariff Act, the import of such items was permitted only through the ports of Mumbai, Chennai and Kolkata; they were to be accompanied by a pre-shipment certificate, the same were seized and proceedings were initiated which has resulted in confiscation of the consignment found in the premises of PAL and release of the same subject to payment of fine in lieu of confiscation of Rs.3 lakhs. Further 135 Kgs of goods found in the premises of MTS was also confiscated and allowed to be redeemed on fine. A penalty of Rs.1,00,000/- has been imposed on PAL and hence the appeal.
3. It was submitted by the ld. counsel that appellant is a unit located in SEZ and the normal import restrictions are not at all applicable to units located in SEZ in view of regulation 4 of special economic zone (Customs Procedure Regulations, 2003). Further, he submits that goods were not prohibited or restricted goods and could be imported free of duty. Therefore he submits that the confiscation itself was without the authority of law. Further he also submits that the finding of the Commissioner that according to DGFT, port restriction applies to SEZ units is also not correct. Further he submits that appellants cannot be imposed penalty since there was no mis-declaration on their part at all. Appellants had filed the bills of entry on the basis of invoice and other documents sent to them by the exporters and the goods were sold to them because the original importer namely V-3 Exim could not get the goods cleared and appellant purchased it because of the failure of the importer to clear the goods. Therefore it cannot be said that they had mis-declared the goods. In view of the above submissions, it was submitted that both confiscation and imposition of penalty are without authority and have to be set aside.
4. Ld. A.R. would submit that there was mis-declaration on the part of the appellant and goods have been rightly confiscated. Further, he points out that the seizure of 135 KGs in the premises of MTS supports the case of the Revenue that goods were being diverted by mis-declaring the same so that the prohibitions and restrictions applicable to goods of chapter 72 are avoided when they sell the goods do domestic tariff area. He submits that appellant had deliberately mis-declared the goods at the time of import so that they can divert the same to DTA on payment of duty and avoid prohibitions and restrictions applicable for the same. He submits that the restrictions such as specified port, pre-shipment certificate and floor price for import could be avoided by mis-declaration.
5. We have considered the submissions made by both the sides. It is the submission of the appellant that according to regulation 4 of the special economic zone (Customs Procedures Regulation, 2003), the appellants import any goods import of which is not prohibited. Unfortunately this claim has not been examined at all by the original adjudicating authority. The regulation 4 is reproduced below:
4.
Import of goods by the zone unit.- (1) The zone unit may import goods required for carrying its authorised operations or for the purposes of setting up the unit, through-
(a) ports or airports;
(b) land customs stations;
(c) inland container depots;
(d) foreign post offices;
(e) authorised courier;(2)
The goods may also be procured from public bonded warehouse or private bonded warehouse or international exhibition held in India.
(3)In case of software, imports shall also be allowed through data communication link, internet, e-mail or any other electronic mode.
(4)For clearance of imported goods at all ports, airports, land customs stations, inland container depots, the zone unit or developer, as the case may be, shall be required to follow the procedures, namely:-
(i) the zone unit or developer, as the case may be, shall file a bill of entry for home consumption in quintuplicate giving therein, complete description, model, make, specifications, purpose of import of goods such as trading, manufacturing, nature of goods such as capital goods, raw materials, spares, consumables, with specially stamped endorsement as special economic zone cargo alongwith bill of lading or airway bill, a invoice, packing list and purchase order or contract for noting of the bill of Entry in the zone;
(ii) the bill of entry shall be assessed by the Custom officers in the zone;
(iii) the assessed bill of entry shall be submitted to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, (hereinafter referred to as proper officer ) at the place of import such as port, airport, land customs station, inland container depot, and the same shall be treated as permission for transfer of goods to the zone;
(iv) in case of sealed full container load ( FCL) container, the goods shall be transferred to the zone on the basis of assessed bill of entry after verification of the seal, without customs escorts;
(v) in case of other cargo, the goods shall be allowed to be transferred to the zone on the basis of assessed bill of entry either under customs escort or under transshipment procedure, depending on the option made by the zone unit; and for such transshipment, no separate documents shall be required to be filed and the transshipment permission shall be stamped on the fifth copy of the bill of entry;
(vi) on arrival of the goods in the zone, the goods shall be subjected to verification of seal in case of full container load container or verification of marks and numbers of packages in other case and after such verification, if in order, such goods received shall be allowed admission in the zone;
(vii) the zone unit shall submit fifth copy of bill of entry bearing endorsement of the Customs officers in the zone that the goods have been received in the zone, to the proper officer in charge of the airport, port, inland container deport, land customs station, post office, public or private bonded warehouse, as the case may be, within a period of forty-five days from the date of clearance of goods from such airport, port, inland container deport, land customs station, post office, public or private bonded warehouse, as the case may be, failing which the proper officer in charge of such airport, port, inland container deport, land customs station, post office, public or private bonded warehouse, as the case may be, shall write to the proper officer having jurisdiction over the zone for raising demand of duty from the zone unit;
(viii) the zone unit shall be required to obtain notional out of charge of goods from the proper officer of the zone on the same day if the goods are brought during the working hours or immediately on the next working day in case goods are brought beyond working hours;
(ix) where goods are imported by the zone unit or developer through courier, customs officer in the zone shall assess the goods as per the Courier Import and Export (Clearance) Regulations, 1998.
6. From the above it can be seen that a bill of entry is required to be filed in the SEZ and after assessment a copy has to be produced in the port and the Assistant Commissioner is required to grant permission and allow clearance without examination of the goods and only on verification of the seal. The government places full trust in the units of SEZ and therefore neither there is customs escort nor there is examination of goods and based on the declaration goods are allowed to be taken to SEZ. In this case the bills of entry were filed by the appellant on 17.02.05 in the SEZ whereas the search of the appellants premises took place on 21.03.05. Appellant being in the business of manufacture/trading in these products only, he should be able to distinguish between a steel sheet quoted with tin and seconds/defective sheet falling under chapter 80. It is strange that after opening the container for one month, the appellant did not chose to intimate either SEZ or customs port about the goods found which were not according to declaration. Further one of the customers to whom the goods were sold from where 135 KGs of material was seized, has clearly admitted that he was aware that goods have to be classified under Chapter 80 and stated that he did not know why the supplier did not do so. This is a strange situation. The buyer who is receiving goods knows what are the goods and their classification but the seller/importer/manufacturer does not know.
7. Nevertheless the issue of jurisdiction i.e. to say whether Commissioner had the power to confiscate or initiate proceedings against the appellant has to be considered. Moreover even though submissions made by the appellants that in terms of regulations the restrictions did not apply has also not been considered. As submitted by the appellants, the reliance of the Commissioner on the letter of foreign trade development officer of DGFT of February 2005 relates to goods supplied from their SEZ to DTA unit and not imports to SEZ. Therefore Commissioners conclusion that the restrictions regarding port applies to SEZ based on this letter also requires reconsideration. Once in terms of law if the restrictions cannot be applied to SEZ unit, the confiscation and penalty cannot be sustained. Since this most important aspect has not been considered by the Commissioner and the procedure prescribed in the regulations and the effect thereof have also not been considered, the matter has to be remanded. We are conscious of the fact that our observations regarding bills of entry assessment and mis-declaration have come out of the consideration of legal provisions and the regulations while considering the issue and while considering the submission about regulations but the appellant did not have the opportunity to consider this aspect and make submissions and it would be a totally new legal observation which we feel would be unjustified to rely upon to come to a conclusion. Under these circumstances, we consider it appropriate that the matter is to be remanded to the original adjudicating authority with a direction that all the issues are kept open and he should decide the issue afresh without taking our observations made hereinabove as final or binding on him.
8. The impugned order is set aside and matter is remanded to original adjudicating authority for fresh adjudication. Since the matter is very old, the original adjudicating authority is requested to adjudicate the matter quickly preferably within three months if the appellants extend their cooperation in full.
(Pronounced in the Court on ____________)
(M.V. Ravindran) (B.S.V. Murthy)
Member (Judicial) Member (Technical
.JK
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