Customs, Excise and Gold Tribunal - Mumbai
Metro Palace Hotel Pvt. Ltd. vs Commissioner Of Customs (Imports) on 16 January, 2006
ORDER T. Anjaneyulu, Member (J)
1. Heard both sides.
2. This is an appeal against an Order-in-original dated 28.10.2005 passed by the Commissioner of Customs, Jawahar Custom House, Nhava Sheva, Dist.Raigad.
3. The appellants have imported a vehicle BMW 735 ILA RHD Chassis No. WBAGH62040 DU 25390, Engine No. 517 22573 under EPCG Licence No. 0330001318 dated 30.08.2001 vide Bill of Entry No. 545360 dated 24.04.2002. The declared value of vehicle was Rs. 22,81,151/- (Rupees Twenty Two Lakhs Eighty One Thousand One Hundred Fifty one only). A Bond and Bank Guarantee had been furnished by the importer at the time of import of the vehicle to pay on demand and without any demur the Customs duty saved with interest in the event of them not fulfilling any conditions of the Customs Notification No. 49/2000. The Bank Guarantee was given by the Development Credit Bank Ltd., Bandra, Mumbai for Rs. 26,21,157/- (Rupees Twenty Six Lakhs Twenty Seven Thousand One Hundred Fifty Seven only) which is valid till 30.04.2011. Another Bond dated 27.04.2002 also given for fulfilling of Rules 126, 122 and 138 of the CMVR 1989.
4. As the conditions were not fulfilled even after 6 months, a Show-Cause-Notice dated 30.06.2003 was issued inter-alia requiring importer to show cause as to why the vehicle imported should not be confiscated under Section 111(d) and (o) of the Customs Act, 1962, why no penalty can be imposed and as to why the Bond and Bank Guarantee can not be enforced.
5. The Commissioner of Customs (Imports), JNCH, Nhava Sheva, Dist. Raigad, has passed the impugned order confiscating the vehicle under Section 111(d) of the Customs Act, 1962 with an option to redeem on payment of fine of Rs. 5,50,000/- (Rupees Five Lakhs Fifty Thousand only) and imposed the penalty of Rs. 50,000/- (Rupees Fifty Thousand only) on the importer under Section 112(a). The total amount of Rs. 6.00 Lakhs (Rupees Six Lakhs only) to be realized by enforcing Bank Guarantee, hence this appeal. The following contentions have been raised by the appellants -
(i) The said car was imported under a valid EPCG Licence. Even if the car is held as restricted goods under ITC(HS) in view of the Notification No. 4(RE-2001)/1997-2002 dated 31.03.2001, the import of the car would have to be governed by Para 2.7 of the EXIM Policy read with the EPCG Licence issued to the appellants.
(ii) In the light of the decision of the CESTAT, Mumbai in the matter of Althaf Shoes Pvt. Ltd. v. CC (Import), Nhava Sheva reported in 2005 (71) RLT 481, non-production of Homologation Certificate by importer can not be held to be a violation and that the liability to produce the Homologation Certificate and the liability to fulfill the conditions of CMVR were on the dealer and not on the importer.
(iii) A redemption certificate was granted by the office of the Jt. DGFT, Mumbai to the appellants for redeeming the Bank Guarantee imposed in the Licence.
(iv) Bank Guarantee should be enforced only in case of non-fulfillment of export obligation or for the violation of the provisions of Notification 49/2000-Cus dated 27.04.2000 or by reason of any breach of any terms and conditions of the Bond dated 27.04.2002
(v) Till the expiry of appeal period and thereafter till the disposal of the stay application no coercive action for recovery of fine and penalty can be taken by the department.
6. The ld. DR contended that the Licence can not violate the conditions stipulated by other laws of the land since the Licence was issued for admissibility of the EPCG Scheme.
7. I have gone through the records and also considered the submissions made by both sides. The first point that arise for consideration is the scope and ambit of the Licence issued to the appellants by the DGFT. It is not in dispute that the appellants furnished a copy of the proforma invoice supplied by the manufacturer of car to the Licencing Authority and specific licence for the import of the particular model car was issued. There is any amount of force in the submissions made by the appellants that the Licence was issued for import of car and restrictions of the EXIM Policy are not supposed to be enforced for import of the car on the said licence. It is no doubt true that the DGFT can not act as an omnipotent authority to sway away stipulations of the other laws of the land. At the same time one should not ignore of the powers vested of the DGFT to issue licence even after the "Restricted Item" in case of EPGC Scheme. A plain reading of the EXIM Policy would reveal that DGFT has been vested with the powers to waive any conditions of the import and export prescribed by any other statute governing the Import and export. The powers exercised in such direction by the DGFT authorities in the public interest can not be challenged by the Customs Authorities. Any further, condition, if necessary would have been and ought to have been incorporated in the licence itself by the issuing authority. The Customs authorities should not venture to fill the gap in absence of any condition. The contentions raised by the appellants gain further strength from the fact that such a waiver of homologation condition, that too on post-fact basis, has been granted by the DGFT in the case of import by one Shri. Mihir J. Doshi for a similar car. Hence, I found that the Licence issued by DGFT for import of car exempts from the provisions of the Notification No. 4(RE-2001)/1977-2002 dated 31.03.2001 and the same can not be questioned by the Customs authorities.
8. It is pertinent to take note of another development, namely, the exemption of the homologation condition for cars vide DGFT Notification No. 34/(RE-2003)/2002-2007 dated 06.02.2004 by which the conditions of Import Licence Notes (2) (II) (c) of the Public Notice No. 4(RE-2001)/97-02 dated 31.03.2001 were made inapplicable for import of new vehicles having an FOB value of US $ 40,000 (US Dollars Forty Thousand only) or more by (a) individuals, (b) companies and firms importing under the EPCG Scheme. This notification indicates the paradigm shift of the policy makers in permitting the cars of high valued without insisting for homologation. This later relaxation in the Policy is finding a reference in the Order-in-Original at Para 7 but the Ld. Commissioner brushed it aside with observation that at the relevant time of import viz. April 2002, the condition of the exemption of vehicles valued at above US $ 4C,000 was not available. The treatment to be meted out to past cases where at a later stage the rigor of the policy is relaxed is covered by the doctrine of the rule of beneficial construction. It would suffice if I paraphrase from the order of the Hon'ble Supreme Court handed out in the matter of Basheer @ N.P. Basheer v. State of Kerala 2004 (060) RLT 843 (SC) where reference was made to two sentences from the order T. Barai v. Henry Ah Hoe and Anr. was cited as: "The rule of beneficial construction requires that even ex-post fact law of such a type should be applied to mitigate the rigor of the law. The principle is based both on sound reason and common sense."
9. Perusal of the impugned Order-in-Original reveals that the scheme devised for enforcement with criss-cross references made in the EXIM Policy to the CMVR and the set of parameters stipulated for various categories have not been understood in the right perspective by the Ld. Commissioner of Customs, Para 6(1)(c) of the Notification No. 4 (RE-2001)/97-02 dated 31.03.2001 stipulates three conditions and also mentions the consequences of failure to meet the conditions in the last sentence as: "In case of failure to do so, no further import of new vehicle of that model shall be allowed thereafter". This clearly spells out the intention of the legislature. Rule 126 of CMVR also talks of the testing of the prototype of a vehicle and not every vehicle imported. The case law cited by the appellants, namely, Althaf Shoes Pvt. v. CC (Import), Nhava Sheva reported in 2005 (71) RLT 481 (CESTAT-Mum) squarely applies in the present case and the homologation certificate can not be insisted from this appellants.
10. The Show-Cause-Notice dated 30.06.2003 does not state that the assessment was provisional nor supplies any information regarding the previous imports of the cars of the same model. During the material time import of new vehicles were only through three ports including Nhava Sheva. If was expected of the customs authorities to keep a track of the imports of various models and to ensure that the first import of a specific model conforms to the provisions of CMVR by getting the proof of compliance of CMVR within six months and not to allow further imports of the same model till the compliance was proved. In such an arrangement, the importer, when not insisted upon to furnish a specific undertaking after being informed that his was the first vehicle of the particular model being imported into India has every right to presume that the prototype of the vehicle had already passed the necessary tests. Having failed in their duty to monitor the imports, customs authorities cannot try to cover up their mistakes by loading the onus on the importer, that too when the importer happens to the end user and is neither a manufacturer of cars nor a dealer in cars.
11. Perusal of the bond and the bank guarantee executed by the appellants at the time of the import reveals that the two instruments were executed for the sole purpose of fulfillment of the conditions stipulated under Notification 49/2000 Cus. Dated 27.04.2000, Clause 5 of the bond referring to the provisions stipulated in the Export-Import Policy 1997-2000 or in the Handbook of Procedures can not be stretched to include such conditions which ought to have been imposed at the time of import by the customs authorities after satisfying themselves that no earlier import of the same model had been imported and that the importer was expected to fulfill the conditions. Especially the bank guarantee, a commercial instrument having been executed by the bank as part of its business transaction clearly spells out that the said guarantee was being executed to cover the terms of the Notification No. 49/2000 Cus. Dated 27.04.2000 and to guarantee the performance of the export obligations of the importer concerned. In these circumstances, the ld. Commissioner of Customs ought to have refrained from venturing to enforce the bank guarantee. I find there is force in the argument put forth by the appellants that the attempt to enforce the bank guarantee by way of an adjudication order is directly in contravention of the instructions of the Central Board of Excise & Customs contained in their Circular No. 788/21/2004-CX dated 25.05.2004) Needless to say that such instructions of the CBEC are binding on all the lower authorities.
12. In the light of aforesaid discussions, the impugned order of ld. Commissioner of the Customs, JNCH, Nhava Sheva, is hereby set aside. The confiscation of the vehicle, the redemption fine and also penalty imposed on the appellants is also set aside. In view of fulfilling of export obligations by the appellants and the redemption certificate dated 06.07.05 issued by DGFT authorities, certifying that the export obligation has been met in full and that the BG/LUT condition imposed in the licence has been redeemed, the Bank Guarantee and Bond shall be released and discharged forthwith. Order accordingly.
(Pronounced in court on 14.2.2006)