Customs, Excise and Gold Tribunal - Bangalore
Gauri Enterprises vs Commissioner Of Customs on 15 March, 2002
Equivalent citations: 2002(81)ECC501, 2002(145)ELT706(TRI-BANG)
ORDER S.S. Sekhon, Member (T)
1. (a) The appellants, having their office at 104, 1st Floor, Geneva House, Cunningham Road, Bangalore - 560001, are registered with the Directorate of Industries and Commerce, Government of Karnataka and a Certificate was issued to this effect by the authorities on 18-5-2001 to engage in the repair and assembly of Diesel Generators. They imported 133 Diesel Engines, CFS-Pune, for assembling them into D.G. Sets, after procuring alternators from the local market and filed two Bills of Entry, viz., B.E. No. 75, dated 19-5-2001 for 75 pcs of old and used Diesel Engines and B.E. No. 82, dated 24-5-2001 for 58 pcs of old and used Diesel Engines. The appellants claim of import under OGL as second hand capital goods was not entertained. A show cause notice asking the appellants to show cause as to why the goods should not be confiscated under Sections 111(d) and 111(o) of the Customs Act, 1962 read with Section 3(3) of the Foreign Trade (Development & Regulation) Act, 1992 on the ground that the import of old and used diesel engines fall under the restricted category of imports in terms of Para 5.3 of the EXIM Policy 2001-2002 AM, and requires specific licence for such imports. After hearing them on 6-8-2001, the ld. Commissioner, vide impugned Order-in-Original ordered absolute confiscation of the impugned goods covered by the two Bills of Entry, and imposed a penalty of Rs. 3.00 lakhs in respect of B.E. No. 82, dtd. 24-5-2001 and Rs. 4.00 lakhs in respect of B.E. No. 75, dtd. 19-5-2001.
(b) The issues involved herein : - (i) Whether the impugned goods viz., old and used diesel engines imported by the appellants are liable for absolute confiscation under the provisions of Sections 111(d) of the Customs Act, 1962 read with Sections 3(2) and 3(3) of the Foreign Trade (Development & Regulation) Act, 1992; (ii) Whether the Commissioner of Customs, Pune was correct in absolutely confiscating the impugned goods when admittedly 37 such consignments of used Diesel Engines imported by various other importers through C.F.S., Pune, alone were released on payment of Redemption Fine.
2(a). (i) The Commissioner in the impugned order relies upon the case of Shehla Enterprises [1995 (80) E.L.T. 360 (T)] where Tribunal has upheld absolute confiscation of Diesel engines.
(ii) Reliance was also placed on the decision of the Hon'ble Supreme Court in the case of Sheikh Mohammed Omar reported in 1983 (13) E.L.T. 1439 (S.C.) to arrive at the conclusion that any restriction on imports should be treated as a 'prohibition'.
(iii) During the period 1998-99 alone, at least 37 consignments of used Diesel Engines have been imported by various importers through CFS, Pune in contravention, of the Import-Export Policy and since imposition of redemption fine has not deterred the unauthorised imports of second hand diesel engines without obtaining specific import licence, the impugned goods covered by both the show cause notices would have to be confiscated absolutely under Section 111(d) of the Customs Act.
2(b) The appellants submit: - (i) The impugned order has traversed beyond the show cause notice inasmuch as no where in the show cause notice reference has been made to the import of 37 such consignments nor any suggestion has been made that in view of the above it is proposed to take deterrent action against the present appellant, though it was his first import. On this ground alone the impugned order is liable to be quashed. (ii) The appellants are registered as a Small Scale Unit vide Registration Certificate dated 18-5-2001, issued by the Directorate of Industries and Commerce, Karnataka. In that capacity and as actual users they imported old and used Diesel Engines for being used along with alternators to be procured locally, for the assembly of DG Sets, in terms of Para 5.3 of the EXIM Policy. The appellants submit that the impugned goods were imported in their capacity as actual users, and this was not disputed in the impugned order. However, the Commissioner in the cryptic findings disputes the fact whether the said goods can be considered as capital goods. The DGFT has given import licences to similar importers for the import of old and re-conditioned Diesel Engines with or without gear box as actual users. This plea was also taken by the appellants in their reply dated 17-7-2001 to both the show cause notices. However, the ld. Commissioner has not given any finding on this submission in the impugned order. (iii) There was no mis-declaration by the appellants with reference to quantity or the value of the Diesel Engines and this is an admitted position and clearly mentioned vide Para 3 of the show cause notice which cites the Report dated 26-5-2001 of the Chartered Engineer. Therefore, the case of Shehla Enterprise - 1995 (80) E.L.T. 360 is not applicable. (iv) In similar cases where old and used engines were imported at CFS, Pune, the ld. Commissioner in his capacity as Commissioner (Appeals) has permitted clearance of the said goods on payment of redemption fine though there was mis-declaration of value, which was enhanced by the original authority. In that case he did not treat the said goods as prohibited goods nor he cited the decision of the Honlble Supreme Court in the case of Sheikh Mohammed Omar. (v) After issue of the impugned order on 6-9-2001, the ld. Commissioner passed a common order-in-original disposing of nine show cause notices, involving the import of 9 consignments of "Poppy Seeds", which admittedly is a restricted item under the
EXIM Policy. It is seen from the said Order dated 17-10-2001, that apart from the fact that the import of the said nine consignments of "Poppy Seeds" are restricted, there was mis-declaration of value of the "Poppy Seeds". In this case the ld. Commissioner holds that the nine consignments are liable for confiscation and further he re-determines and raises the assessable value in respect of the nine consignments by almost 100%. However, he ignored the Supreme Court's decision in the case of Sheikh Mohammed Omar, and allowed the nine consignments to be cleared on payment of Redemption fine.
(vi) The ld. Commissioner also ignored the directions given in the Appraising Manual quoting the Circular issued by the Ministry of Finance, Department of Revenue vide F. No. 5/35/64-Cus. VI, dated 16-3-1965, which clearly states as follows :
"The Government of India accordingly desire that while imposing fines in lieu of confiscation, the provisions of Section 125 ibid, should be borne in mind and the market value of each individual item of the offending goods should be ascertained before deciding a case and the ascertained market value should be kept on record, for the assistance of the adjudicating officer and also for reference and scrutiny at the Appeal/Revision Petition stage. No detailed enquiries of course may be necessary where the fine to be imposed is 100% of the value of less as market value is normally bound to be more than the CIF value of the goods plus duty."
(vii) The decision of the Hon'ble Supreme Court in the case of Sheikh Mohammed Omar and exercise of discretion to give Redemption fine is required to be appreciated, keeping in mind the objects, and reasons for which the Imports and Exports (Control) Act, 1947 was enacted and the objects and reasons for which the Foreign Trade (Development & Regulation) Act, 1992, was enacted. The Imports and Exports (Control) Act 1947, reads :
"An Act to prohibit or control imports and exports whereas it is expedient to prohibit, restrict or otherwise control imports and exports."
In contrast, the Foreign Trade (Development & Regulation) Act 1992, reads:
"Act or provide for the development and regulation of foreign trade by facilitating imports into and augmenting exports from India and for matters connected therewith or incidental thereto. Be it enacted by Parliament in the Forty third year of the Republic of India."
(viii) The appellants submit that the Order passed by the ld. Commissioner absolutely confiscating the goods is contrary to the decisions of the Hon'ble Supreme Court as well as the Hon'ble Tribunal. Further the same is also not maintainable in law as it traverses beyond the show cause notice and also shows non-application of mind and visible bias singularly against the appellants. Keeping in mind the delay in clearance of the impugned goods and the demurrages and losses suffered by the appellants, the R.F. may kindly be determined.
2(c). Misc. application No. 93/02 by Revenue reiterates the submissions as regards the non-availability of appellants firm/factory in Bangalore as in Misc. application No. 60/02 dealt vide Order 53-54/02, dtd. 6-2-2002.
3. We have heard both sides and considered the matter and find :-
(a) After considering the plea of the importers that diesel engines are not prohibited items under the Import Policy 1992-97 by specific mention therein as they were in the nature of consumer goods it was held that they were not liable for absolute confiscation, the Customs authorities had been allowing release of the second hand diesel engines all along on varying amounts of redemption fine. After averting to a reference to seven such cases, it was appreciated by the South Regional Bench at Madras in the case of Care International v. CC, Madras [1994 (69) E.L.T. 74 (T), that the absolute confiscation, order made by the Customs authority was not upheld. Even though in that case, there was a misdeclaration of value also, besides the requirements of a licence. In the case before us we find that there is no allegation and finding of misdeclaration of quantity, quality and value. The dispute is only regarding the eligibility as capital goods or not i.e. on import licence requirement. Therefore, following this decision of the Tribunal, which we are bound, the absolute confiscation should be set aside.
(b) The Learned Commissioner has relied upon the case of Shehla Enterprises v. Collector of Customs, Calcutta [1995 (80) E.L.T. 360 (T)] to justify his absolute confiscation as in that case absolute confiscation of diesel engines were upheld. The learned Advocate for the appellants has taken us through this decision. It was pointed out that in the case of Shehla, there was not only misdeclaration of valuations but even the description of the goods was given as 'spares for Trawlers' instead of used Diesel engines as found, there was also mis-declaration of country of origin, besides the licence requirement angle. While in the case before us there is no charge of 111(m) violation. The show cause notices itself certify the declared values to be correct. Therefore the case of Shehla cannot be relied in the facts of this case.
(c) In the case of M/s. Preet International relied upon by the appellants, the same adjudicator, as in this case, as Commissioner (Appeals), in March 2001, around the time the imports impugned herein were contemplated/effected, has in case of imports of Diesel engines, while approving the higher values, fixed by the assessing officer, upheld the value mis-declarations and the redemption fine but reduced the redemption fine to about Rs. 3 lakhs on a value of Rs. 8.52 lakhs. This order was relied upon by the appellants before the adjudicator. It has not been considered and has been disposed of by the learned adjudicator, in the present case as Commissioner, in Para 4(b) of the impugned order before us, with the recorded remarks as "During the course of hearing, I informed the Advocate that the Department has not accepted the order of the Commissioner (Appeals) and appeal has been filed against that order". During the hearing before us the learned DR has submitted that Commissioner (Appeals) could not have enhanced the penalty in the case of M/s Preet International in appeal. We have considered the submissions on this issue by both sides. In the case of M/s Preet International, the very same goods, had not been treated as prohibited goods nor the decision of Sheikh Md. Omer (SC) or Shehla Enterprises was applied, by the very same adjudicator, even though, there was a finding of mis-
declaration of value arrived by him. We find, the same adjudicator, had the knowledge of these cases i.e., in the case of Sheikh Md. Omar & Shehla Enterprises (where undervalued diesel engines were absolutely confiscated) he could have applied those case law, in his knowledge, to the case M/s. Preet International before him. Since, as Commissioner (Appeals), he could have exercised the statutory power given to him under first proviso to Section 128A(1), by putting the appellants in M/s. Preet International case to a notice. This was not done. The learned DRs defence, therefore does not and cannot shield, the present order from the consequences, of what the Advocate here in this case submitted before us as regards the conduct of the Commissioner, "A mala fide bias against us". Be that as it may. The mere fact that an order has been challenged in Appeal, as it is not accepted by the Department, cannot be a cause to have obliterated the effect of that order, especially when it is not stayed. We therefore do find that the adjudicator is being selective in his approach to the import of similar goods.
(d) Examining the plea of established practice and precedent treatment to imports of such goods, we find : -
(i) PB Mukherjee in the case of Mercantile Express Co. Ltd. reported at - 1978 (E.L.T.) J552 had held : -
"8. The Customs now say that they are not bound by their previous decisions whether the doctrine of precedents applies in its full rigor to Administrative Agencies and officers, and whether a reasonable latitude should be given to them or administrative tribunals to correct or modify their previous decisions may still remain a debatable controversy in the world of law; nevertheless I am clearly of the opinion that neither the Appraiser nor the Collector of Customs can change his mind from time to time in respect of the same article by assessing them in the case of one importer under one section and the assessing item for another custom to do so will lead to utter confusion in the very basis and principles of taxations and grave uncertainty in business and foreign trade. Its more serious result will be the most unfair discrimination of taxes in respect of the same goods with regard to different importers. That cannot be permitted by the Constitution which insists on the equality of law as one of its fundamental guarantees. I am therefore inclined to hold that the Customs are bound by their own precedents in administration taxing statutes involving the very basis of taxation in respect of a particular article and not leave it to them to modify their own previous decisions but to leave it to them to apply to Courts or Parliament or Legislatures as the case may be to put the law beyond doubt...........".
This view of binding effect of precedent treatment of their own precedents in administration of Taxing Statutes has been approved in subsequent decisions.
(ii) In the case of S.S. Kothari [1987 (30) E.L.T. 156] the Calcutta High Court while examining the conduct of the Commissioner as Adjudicating, and ordering absolute confiscation, of a Motor Car imported without a licence, when the practice was to allow the import of similar cars on Redemption fine, upheld the view of the Calcutta High Court in Para 8 (extracted herein, above) in the case of Mercantile Express Co. (supra) by holding: -
"15. No doubt the Court was concerned with the interpretation of the tariff item, but the principles laid down therein are equally applicable in the case like this. The issue involved here relates to the taxing statute or the fiscal enactments and the Customs Authorities are bound by their previous decisions. If the authorities have on previous occasions allowed the importer to release the imported car upon payment of the fine in lieu of confiscation, they cannot unless there are compelling reasons, depart from the previous decisions..........."
(iii) This view of binding nature of Administrative Precedent Treatment of imports, has been considered by the Division Bench of Calcutta High Court in the case of C.C., Calcutta v. Uday Engineering Enterprises and Ors. [1987 (27) E.L.T. 234 (Cal.)] upheld the decision-in the case of Mercantile Express Co. (supra) and distinguished it by holding 'this decision is clearly distinguishable for the simple reason that, in that case unlike the present one there was no dispute about the nature of goods/ and upheld that 'a factual error could always be corrected.' In the case before us there is no factual dispute brought on record, regarding the nature of goods under import herein and in the earlier 37 consignments during 1998-99 allowed clearance on redemption fine at CFS, Pune. No contrary decision has come to our notice. Therefore, being bound by the Calcutta High Court decisions, we cannot approve the following finding/ground arrived at by the learned Adjudicator to order absolute confiscation: -
"11. I observe that during the period 1998-99 alone, at least 37 consignments of used diesel engines have been imported by various importers through CFS, Pune alone in contravention of the import policy of the Government, and that imposition of redemption fine has not deterred the unauthorised imports of second hand diesel engines without obtaining specific import licence. Such engines continue to be imported in deliberate contravention of the Import Policy of Government of India and the importers cannot be allowed to have the impression that they can get away with such contravention in a routine manner by paying redemption fine and getting the offending goods redeemed."
(e) The learned Advocate took us through the case of Pioneer International [1999 (107) E.L.T. 476] and Nanak Trading [1998 (98) E.L.T. 381 (T) = 1998 (24) RLT 792] and submitted that the 'Reasonable Expectation' of the present first time SSI importers, could not be frustrated by the 'Absolute Confiscation' ordered. Considering the same, we find the principle of legitimate expectation as laid down in Halisburry Law of England 4th Edition Vol. I (1) Para 81 has been relied upon by the Madras High Court and referred to as : -
".........A person may have a legitimate expectation of being treated in a certain way by an administrative authority though he has no legal right in private law to receive such treatment the legitimate expectation arises either from a representation or promise made by the authority including and implied representation or from consistent past practice."
(undertaking supplied) Ref. Sunshine International & Another v. Collector of Customs, Madras [1993 (42) ECC 282 (Mad.)].
The Hon'ble Court held in this case, has also held : -
"..........The Customs authority cannot take a different view, in my view, at different times, with regard, to imports of same goods as to whether to confiscate completely or pass an order of confiscation giving an option to the Bill (SIC) by paying a fine. It is true that it is the discretion of the authority under Section 125 of the Customs Act. But that discretion is to be applied fairly. There is no doubt that, with regard to cassia, orders were passed by the department earlier only ordering release on payment of redemption fine or penalty only, in lieu of confiscation. It has to be followed in these cases also."
We therefore would order, on the same lines, as regards the treatment to be meted to imports of Diesel engines herein. Since admittedly there have been a practice at CFS, Pune, to release such goods on fine and from the perusal of the other case law cited and reported, the same practice continues unabated even today all over India. Such redemption fine releases/ are not considered to be improper or illegal, as required by law, by the authorities competent to review such orders. Even the same Commissioner had held the same view, when he had donned the judicial robes of an appellate authority and decided the appeal of M/s. Preet International "No Absolute Confiscation ordered" is not the reason disclosed by the Adjudicator as regards non acceptance by the department of that order passed by him as Commissioner (Appeals) in the case of M/s. Preet International. We would therefore find the discretion to be exercised, therefore, under the first limb of Section 125 of the Customs Act, as regards 'prohibited' goods, has not been exercised by the adjudicator fairly and as required under the law and practice followed. Such unfair exercises of discretion are required to be set aside. "The reasonable expectations" of the first time importers had to be taken due note and legal decisions were required to be followed.
(f) We find the Tribunal in the case of Shah Tools and Bearing Co. v. Collector of Customs [1992 (62) E.L.T. 815] after considering the law laid down by the Hon'ble High Court of Calcutta in the case of Uday Engineering Enterprises and Ors. (supra) found and held : -
"8. It was also held that if erroneously such releases were made at an earlier stage, they cannot penalize such importation at a later stage until the error is found and notified to the importers......."
And since in that case no 'Public Notice' was issued by the Customs Authorities stating that the previous releases were erroneous impressions and no such future releases would be allowed, the 'bona fide belief' on part of importers was upheld. In the present case before us, show cause notice place no reliance on the 37 other clearances made during 1998-99, on redemption fines at CFS, Pune. Nor was any 'Public Notice' having been issued by CFS, Pune authorities cautioning and regarding, the so called deliberate contravention of the Import Policy being indulged by the importers of Diesel Engines, who were getting away and the need to purge such activity was produced. There is therefore much force in the Advocates plea before us, that the Commissioner has travelled beyond the show cause notice, therefore the order of confiscation be set aside. We would consider that to be so in this count.
The plea made, of importers herein having made due enquiries and learning of the procedure at CFS, Pune and no Public notice having been issued, induce us to follow Shah Tools Bearing Co. case (supra) where such requirement is mandated to set aside this order of Absolute Confiscation.
(g) The appellants have relied upon Order-in-Original passed by the same Commissioner, Pune in the case of "Poppy Seeds" an item, import of which is prohibited subject to clearance from the Narcotics Control Authorities of Country of Shipment and Country of Imports. In that case, the goods imported under 9 BEs by the same importer were allowed to be cleared provisionally, presumably as per Board's instructions on expeditious clearance of imported cargo; they were found to be misdeclared in value and had impugned the provision of 111(d) of the Customs Act also, by the very same adjudicator, yet he has ordered the release of the same 9 consignments of the same importer on redemption fine. The Sheikh Omar case of the Apex Court which was extensively relied upon in the present case before us, was overlooked in the case of 'Poppy Seeds' order passed almost one month after the present order. If this is not selective amnesia, which surely it is not, then it could be the dawn of the realization; that 'absolute confiscations' are not the appropriate exercise of discretion under Section 125 of the Custom's Act especially the first limb of the provisions therein. We cannot therefore uphold the selective absolute confiscation in this case on the grounds of certain consignments allowed to be cleared by other importers up to 1999 for the first time, SSI importer of the goods in the year of 2001 to be adequate as the reasons arrived at by the adjudicator.
(h) A perusal of Hon'ble Supreme Court decision in the case of Sheikh Mohammed Omar [1983 (13) E.L.T. 1439 (S.C)] indicates that the Apex Court has held therein : -
(i) "Jury Maid" the mare under import could not be considered a pet animal, where import was permissible under and as personnel baggage of the importer.
(ii) The amplitude of the word "any prohibition" in Section 111(d) of the Customs Act, 1962 could not be cut down and restriction is a type of prohibition.
(iii) Under Import Control Order, 1955, import of living animals of all sorts is prohibited.
This decision, does not in any manner word give rise to an interpretation, arrived at by the learned Commissioner in Para 10 of the impugned Order, "it is not mandatory on my part to give an option to redeem the confiscated goods on payment of fine in lieu of confiscation." While there can be no doubt as regards the liability to confiscation of restricted items as per policy, they being prohibited, the first limb of Section 125, uses the word 'may' in the case of prohibited goods and that should be read in the facts of this case, as to indicate the grant of redemption fine and not withholding of the same, as is being interpreted.
(i) The Central Board of Excise & Customs vide Circular No. 495/5/92-Cus. VI, dated 10-5-93, examining the EXIM Policy 1992-97 observed that gold does not figure in the List of "prohibited item" in Part-I of Negative List of Imports, clarified that the word "prohibited goods" occurring in the Customs Act 1962 would include all the parts of the Negative List of EXIM Policy unless the conditions mentioned for such imports have been complied. Since gold figured at S. No. 4 of the Negative List it was considered to be prohibited item liable for action under Section 125. However, by subsequent instructions later on, considering the import liberalization policies, directions were issued, not to order absolute confiscations of Gold, in cases where the passengers had even cleared the "Green Channel", but were otherwise eligible for the import and had enough foreign exchange to cover the duty. The approach in the two Acts viz, "Imports and Exports (Control) Act, 1947" and Foreign Trade (Development & Regulation) Act, 1992 have vastly chariged 'objects and reasons'. There is a declared, sea charge in approach to and in Import Control Laws. Considering these objects and reasons in the later 1992 Act vis-a-vis the earlier 1947 Act resort to 'Absolute Confiscation' should be an exception. It could be resorted, only in case of Negative List of imports and not where interpretation of "Capital goods" and the scope and the applicability of the definition thereto is in a contest. We would consider the resort to the change in the object and reason of the two Acts to consider that the decision of Sheikh Md. Omar of the SC delivered in 1963, under the erstwhile 1947 Import law could though not be founded fault with, as far as 'restrictions' being a "prohibition", but it could not be an authority to arrive at a finding, that "offer of redemption fine is not mandatory" in the case of restricted goods. Since the offer of redemption fine under Section 125 is a discretion, non-offer of a redemption fine in exercise of such discretion, would be in conflict with the objects and reasons of the 1992 Act. We rely on Paras 75 & 76 of the Constitutional Bench, decision in the case of Mafatlal Industries [1997 (89) E.L.T. 247 (S.C.) ] and borrow a phrase from the same, ascribed to. Thomas Jefferson as far back as 1816, "laws and institutions must go hand in hand with the process of the human mind.... as manners and opinions change with the change of circumstances," to find that when catacalysmic change in circumstances have occurred, due to the change in objects and reasons of 1992 Act then to resort to absolute confiscation should be an exception and not the rule when imports under the 1992 Act are to be adjudicated.
(j) EXIM Policy, Para 8, Chapter V, Vol. I reads as: -
"8. Exports and imports may be done freely except to the extent they are regulated by the provisions of this policy or any other law for the time being in force. The policy shall be as stated in column 3 to 5 of the book titled ITC(HS) Classification of Export and Import items "published and notified by the Director General of Foreign Trade and as amended from time to time."
When the policy, shall be as stated in ITC (HS) Classification Book, i.e. Vol. III; a perusal of the same, shows that 'diesel engines', falling under Chapter 84.08, are shown thereunder as 'FREE', and it is only under Paras of Vol. II import of second hand item mentioned therein are allowed without a licence and the same Vol. II, also provides for import of second hand capital goods licence free; then it was, therefore imperative for the Commissioner to have come to a clear finding as to how the goods claimed as 'Actual User' in this case were "restricted" by the policy. The findings in the impugned order are :-
"4. I have carefully gone through the records of the case and the oral as well as written submissions of the importer. The impugned goods are old and used diesel engines which are prime movers and are not covered by the definition of "capital goods" as given in sub-para 3.10 read with sub-para 3.2 of the EXIM Policy, 1997-2002. As per the definition, the term "capital goods" means any "plant, machinery, equipment, or accessory required for manufacture or production, either directly or indirectly, of goods or for rendering services..........". The definition then goes on to give certain illustrations which include, inter alia, 'power generation sets' but not 'diesel engines'. It is not the, claim of the importer that the imported diesel engines are required for manufacture or production, either directly or indirectly, of any goods or for rendering any services. Rather, contention of the importer is that engines will be assembled into DG sets. Therefore, these will not be covered by the definition of "capital goods" and will not be allowed to be imported in terms of para 5.4 of the EXIM Policy." .
These findings have not considered. The plea of the importers, as is evident from their letter dated 16-5-2001 to the Deputy Commissioner intimating:
"5. We are also enclosing the copy of a letter issued by the DGFT, Delhi dated 22-8-98 wherein the same policy is in force that diesel engines covered under heading 8408.20 imported as capital goods in second hand condition are freely importable as per para 5.4 of the Policy."
In the same letter, they had informed the department :-
"1. We are registered as a SSI Unit with the Directorate of Industries and Commerce, Government of Karnataka for manufacture/process of DG Sets. We intend to import these engines and procure the Alternator from the market and assemble and make a complete DG set and provide service to the companies that don't have or are insufficient in power"
These pleas have been ignored, even in the show cause notice. No findings, on these essential pleas made, have been arrived at. They have been conveniently overlooked by the Commissioner for reasons best known. From the same it appears, that the Commissioner had a closed mind and was bent upon to adjudicate and confiscate the goods in a particular manner. We cannot approve orders emanating from such an approach:
(k) Since the findings on capital goods is incomplete we are not in a position to consider the finding thereon. Material has been produced by Revenue before us, which was not before the lower authority; this material casts aspersions on the 'actual user' status and questions the existence of the same. Therefore the first prayer in this appeal i.e., to treat the second hand capital goods to be freely importable in terms of EXIM Policy is not being considered.
(l) When we find that resort to absolute confiscation is not called for, for the reasons arrived herein above, we would consider the alternative prayer of permitting clearance on redemption fine should be granted. This Bench has in a case decided in October 2001, in the case of M/s. Orion Business Systems (P) Ltd, Bangalore, relying upon the decision of Shree Ram Enterprises [1998 (103) E.L.T. 184 (Tribunal)], upheld the redemption fine of 98% (i.e., around 100% and penalty of Rs. 1 lakh) on value of Rs. 8,92,935/- imposed on Diesel Engines to be appropriate. The adjudicating authority is therefore required to take cognizance of the Board's instructions M.F. (D.R.) F. No. 5/35/64-Cus. VI, dtd. 16-3-1965 existing in the Central Appraising Manual of Customs House, stipulating that no market value determinations are called for, when redemption fine of 100% or less are considered appropriate. The adjudicator should grant a hearing to the party to redetermine the redemption fine and the penalty. After hearing them he should pass the orders as per law as expeditious as possible, preferably within 2 months from the date of receipt of this order.
The appeal is allowed as above, Misc. application 93/02 stands disposed.