Customs, Excise and Gold Tribunal - Delhi
Rakesh Kumar Bhagat vs Commissioner Of Customs, New Delhi on 27 March, 2002
Equivalent citations: 2002(82)ECC803, 2002ECR584(TRI.-DELHI), 2002(144)ELT468(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. Shri Rakesh Kumar Bhagat has filed this appeal against the Adjudication Order No. 36/2000, dated 2-8-2000 passed by the Commissioner of Customs (General) New Delhi.
2. Briefly stated the facts are that Friendly Video Vision, proprietorship concern of Shri Rakesh Kumar Bhagat, a hundred per cent Export-Oriented Undertaking, imported a consignment of Videopan-cake from Singapore and filed Bill of Entry dated 9-10-1997. The consignment was put in the bonded warehouse of the appellant. The appellant despatched a consignment of video magnetic spools for export to Intexcon Pte. Ltd., Singapore under the supervision of Central Excise Officers. However, Customs Officers at Mumbai did not allow the consignment to be loaded on the vessel. The officers from New Delhi visited Mumbai and examined the consignment on 30-9-98. The tapes were found to be old and used and the length of tape was found to be 850 feet approximately. The officers drew samples from 12 Cartons. Subsequently the residential premises of the appellant, office-cum-business premises of Friendly Video Vision and the business premises of Bhagat Video (Pvt.) Ltd., all at Delhi, were searched on 5-10-98. Statements of Shri Bhagat were recorded on 5-10-98 & 6-10-98. A show cause notice dated 19-3-1999 was issued to the appellant by the Commissioner of Customs (General) for confiscation of the Video Magnetic tapes seized from the container at Mumbai Docks, for demanding Customs duty in respect of goods imported by the appellant and for imposition of penalty under Section 112(a) & 112(b) and Section 114 of the Customs Act. The Commissioner, under the impugned Order, confirmed the demand of customs duty of Rs. 19,83,883 under Sections 28 and 25(1) of the Customs Act; imposed a penalty of Rs. 10 lakhs under Section 112(a), a further penalty of Rs. 10 lakhs under Section 112(b) and Ors. penalty of Rs. 50 lakhs under Section 114 of the Customs Act besides confiscating the goods valued at Rs. 43,70,436/- under Section 113(d) & (i) of the Customs Act.
3.1 Shri A.K. Jain, learned Advocate, submitted that the entire proceedings suffer from lack of jurisdiction; that when both the import as well as export took place through the I.C.D. Tughlakabad (TKD), New Delhi, with CCE, New Delhi, the show cause notice could only be issued and the adjudication could only be done by the Commissioner of Customs. ICD, TKD. and not by the Commissioner of Customs (General), New Delhi; that in the case of Informatika Software (P) Ltd. v. C.C. (P), Calcutta - 1997 (73) E.C.R. 348 (T), the Appellate Tribunal held that the adjudication done by C.C. (P) was without jurisdiction as "law confers no powers on the C.C. (P) or the officers working under him to snatch a case from officers of C.C., Calcutta." Reliance was also placed on the decision in the case of Madras Electro Castings (P) Ltd. v. Collector of Customs, Madras, 2001 (135) E.L.T. 896 (T) = 2001 (44) R.L.T. 188 (CEGAT) wherein it was held that in respect of goods imported through Madras Port, C.C.E., Madras is not empowered to adjudicate the seizure of the goods after their clearance from Madras Port.
3.2 The learned Advocate, further, submitted that the Adjudicating Authority had supported his jurisdiction by an Office Order dated 2-11-1998 of the Chief Commissioner; that under the provisions of the Customs Act, Chief Commissioner cannot shift and confer jurisdiction on another Commissioner because under Section 6 he has been given the power of a Commissioner and not that of Central Board of Excise & Customs (CBEC) or of the Central Government; that no notification under Section 4 of the Customs Act has been issued empowering the Chief Commissioner to appoint Commissioner. He relied upon the decision in the case of Marathwada University v. Seshrao Balwant Rao Chavan, (1989) 3 S.C.C., 132 wherein it was held that "when the Act prescribes a particular body to exercise a power, it must be exercised only by that body. It cannot be exercised by others unless it is delegated. The law must also provide for such delegation." The learned Advocate also contended that the copy of the said Office Order was not given to the appellant at the time of the personal hearing; that further the said Order relates to preventive work and is not in respect of issuance of show cause notice and adjudication or taking away such powers of the Commissioner of Customs, TKD and giving the same to the Adjudicating Authority.
3.3 The learned Advocate also mentioned that since the seizure of the goods was made at Mumbai and the seized goods continued to lie there, the jurisdiction, even as per Commissioner's own view in Adjudication Order dated 10-3-1999 in the case of G.M. Overseas Ltd., lay with the Commissioner of Customs, Mumbai, particularly when as per the Department there is no nexus between the imported and exported goods. Reliance has been placed on the decision in the case of Ram Nath Jayant v. Commissioner of Customs, New Delhi, 2000 (119) E.L.T. 312 (T).
3.4 He further contended that since the bonds for fulfilling the post import conditions were executed with the CCE/ Delhi and the export goods were exported from the 100% E.O.U. of the appellant under the supervision and seal of Delhi Central Excise Officers, the jurisdiction would lie with the C.C.E., Delhi-I. In support, he referred to Board's Circular No. 27/96, dated 10-5-1996 according to which the administrative work of 100% E.O.U. would be handled by the Commissioner of Central Excise. Reliance was also placed on the decision of the Larger Bench in the case of Ferro Alloys Corporation. Ltd. v. Collector of Customs (Appeals), Bhubneswar, 1995 (77) E.L.T. 310 (T) wherein it was held that the jurisdiction for raising demand for short-levy will be with the proper officer having jurisdiction over the Export-Oriented Unit and not the Customs House where the goods were assessed on an into bond bill of entry for the purpose of being warehoused.
3.5 He continued his submission by saying that since the Department did not obtain any clearance from the Development Commissioner before raising demand etc. on the appellant, the entire proceedings are barred by jurisdiction in terms of Board's Circular Nos. 21/95-Cus., dated 10-3-95 and 122/95-Cus., dated 20-11-1995. He also relied upon the decision in ABN Granites Ltd. v. C.C., Cochin, 2001 (133) E.L.T. 483 (T) = 2001 (45) RLT 1020 (CEGAT) wherein it was held that show cause notice can be adjudicated in respect of removal of goods without payment of duty only after referring the matter to Board of Approval/Development Commissioner. Reliance was also placed on the following decisions :
(i) EON Polymers Ltd. v. C.C.E., Jaipur, 2001 (135) E.L.T. 1316 (T) = 2001 (44) RLT 243 (T).
(ii) Kuntal Granites (P) Ltd, v. C.C.E., Belgaum, 2001 (132) E.L.T. 214 (T) 3.6 The other argument of the learned Advocate was that for confirming any demand under proviso to Section 28(1) of the Customs Act, issuance of separate notice under that section is a mandatory requirement; that notice issued under Section 125 of the Act is insufficient; that since no show cause notice was ever issued to the appellant, the demand is bad in law. He relied upon the decisions in Ashok Leyland Ltd. v. C.C.E., Coimbatore, 2001 (135) E.L.T. 439 (T) = 2000 (93) E.C.R. 247 (T) wherein it was held that no demand of duty can be confirmed without issue of show cause notice under Section 11A of the Central Excise Act. Reliance was also placed on the decisions in Tibro Plast Corporation v. C.C., Nhava Sheva, 2001 (131) E.L.T. 446 (T).
3.7 The learned Advocate also mentioned that when the entire import as well as export documentation was in the name of the Friendly Video Vision and not in the name of the appellant, show cause notice cannot be issued in the name of the appellant; that similarly the Adjudicating Authority cannot demand duty, confiscate the seized goods and impose penalty on the appellant; that they are different and further the show cause notice treated them as two different personalities; that the expression 'person' in Sections 113 and 114 would mean Friendly Video Vision and not the appellant. He referred to decision in Hindustan Foam Industry v. C.C.E., 1990 (48) E.L.T. 33 (T) wherein the show cause notice served on partners instead of partnership firm was held to be non est in law.
3.8 He also contended that once 'Let Export' Order has been passed on a Shipping Bill by the Proper Officer, the 'only way to proceed against the export goods is to resort to Section 129D of the Customs Act. Reliance is placed on the decision in the case of Rotoflex Industries v. Collector of Customs, Calcutta, 1996 (64) ECR 585 (T) wherein it was held that when once goods have been released in terms of Section 47, there cannot be confiscation of the same goods without taking recourse to Review Proceedings under Section 129D(1) of the Act. He relied upon the following decisions also -
(i) Ajay Exports v. Collector of Customs, Madras ~ 1986 (26) E.L.T. 873 (T) = 1989 (9) ECR 623 (T)
(ii) Parker Leather Export v. Collector of Customs, Madras - 1987 (29) E.L.T. 53 (T) The learned Advocate further submitted that a mere statement in the impugned order that the goods are liable for confiscation under Section 113(d) and (e) does not mean an Order of Confiscation per se; that in Superintendent and Remembrance of Legal Affairs v. Abani Maity, (1979) 4 S.C.C. 85 it was held that the word "liable" has been held as not conveying the sense of an absolute obligation or penalty but merely importing a possibility of attracting such obligation or penalty, even where this word is used along with the words 'shall be'. He also contended that non-dutiable, non-prohibited and non-drawback goods are not confiscable under Section 113(d) or (e) of the Act. Reliance is placed on the decision in Sunehri International v. Commissioner of Customs (G), Mumbai, 2001 (129) E.L.T 480 (T) and J.G. Exports & Co. v. C.C., New Delhi, 2000 (121) E.L.T. 754 (T-LB) - 2000 (40) RLT 755 (LB). He also contended that the entire proceedings are barred by limitation by virtue of the Board's Circular No. 491/8/92-Cus. VI, dated 27-5-1972 and the decision of Kerala High Court in the case of Mohammed v. Collector of Customs & Central Excise, Cochin in O.P. No. 1873/74 decided on 25-3-1975 [1999 (110) E.L.T. 451 (Ker.)] inasmuch as the goods were detained and not allowed to be loaded on the vessel on 22-9-1998 and the show cause notice was served on 27-3-1999 which is beyond the period of six months. He further mentioned that the impugned Order is violative of the principles of natural justice as they were not allowed to cross-examine the Technical Expert and other persons such as investigating officers, panch witness, Central Excise Officers; that detailed reasons were mentioned by them for cross-examining these persons in their reply dated 19-4-1999; that it is settled law that when evidence of certain witnesses is relied upon, their cross-examination has to be allowed; that further as promised, the Adjudicating Authority instead of granting further hearing, passed the impugned Order; that Rakesh Bhagat had retracted his statement on 6-10-98, next day of recording his statement but there is no mention about the same in the impugned Order; that samples of the impugned goods were not taken in the presence of the appellant nor were samples given to him. He also mentioned that the Central Excise Officers had not only checked the goods by taking out eleven cartons from the container but escorted the sealed container to the I.C.D., TKD, New Delhi; that it is next to impossible that 1.26 lakh used and old unrecorded video tapes on spools could, at all, become available to the appellant for replacing the tapes made from the imported pan-cake; that further statutory register for taking out pan-cake from the warehouse and putting back manufactured, goods were mentioned and signed by the officers. He relied upon a number of decisions such as:
(i) Kalra Glue Factory v. Sales Tax Tribunal 1987 (66) STC 292 (S.C.)
(ii) Sawai Singh v. State of Rajasthdn, AIR 1986 S.C. 995
(iii) State of Kerala v. K.T. Shaduli, Grocery Dealer, AIR 1977 SC 1627
(iv) Collector of Customs, Chennai v. S.S. Leather Exports, 2001 (135) E.L.T. 338 (T) = 2000 (41) RLT 97 (CEGAT)
5. On merit, the learned Advocate submitted that the entire activities starting from the conversion of pan-cakes into spools till such spools get packed and stuffed in the container were solely under the supervision of Central Excise Officers, attending to this work on cost recovery basis and is also evident from the statutory records signed by them; that when his three premises were raided, no machineries were found which are necessarily required for de-recording the recorded video cassettes, and for de-unloading the tape from video cassettes; that further no old/new video cassettes, their empty plastic-part, no recorded tapes or labels of old films or old packing materials were found; that recorded video cassettes which contains tape of full 850 feet length is hardly available in the market; that no sample was drawn by the Customs Officers from the imported consignment of pan-cake at the time of importation. Finally he mentioned that the imposition of three penalties on the appellant is without jurisdiction and/or is not sustainable in law; that the export goods are not liable to confiscation under Section 113(d) and (i) and as such question of imposing penalty under Section 114 of the Act does not arise; that no penalty is leviable since export of video tape was not prohibited at material time; that in any case goods should have been ordered to be redeemed on payment of fine, particularly when these said goods are neither dutiable nor require any licence for their export.
6. Countering the arguments, Shri A.K. Jain, learned S.D.R., submitted that Notification No. 27/97-Cus. (N.T.), dated 7-7-1997 as amended issued under Section 4 of the Customs Act deals with the appointment of Commissioners of Customs and specifically defines the powers of the Commissioner of Customs, Delhi as Commissioner under the Customs Act at Serial No. 7 as Commissioner for Delhi, Haryana and NOIDA Export Processing Zone; that there is no mention of Commissioner, Airport or Tughlakabad in the said notification; that accordingly Commissioner has the entire jurisdiction conferred under the notification; that for the sake of administrative convenience, work has been distributed among the Commissioners which does not take away their rights; that thus the Adjudicating Authority has derived its authority from the notification issued under Section 4 of the Customs Act. The learned S.D.R., further, submitted that as both the import and export took place through the ICD, TKD, New Delhi, Commissioner of Customs (General), New Delhi was competent to adjudicate upon the matter; that the raw material was imported and cleared without payment of duty through I.C.D., T.K.D., New Delhi on the condition that goods made out of the imported raw material would be exported, that however, the importer contravened the provisions by selling the imported raw material in the Domestic Tariff Area and exported finished goods made out of old and used material; that the seizure made at Mumbai was in relation to goods having been customs cleared from ICD, TKD, New Delhi and hence the jurisdiction has been rightly exercised by the Commissioner of Customs, New Delhi; that in terms of Board's Telex F. No. 305/4/95-FTG, dated 5-7-96, only day to day work of customs relating to the 100% E.O.U. has been given over to the Commissioner, Central Excise, Delhi; that the said Telex has not taken away the jurisdiction of the Commissioner of Customs (General) to issue show cause notice over customs contravention committed at the time of import/export at I.C.D., TKD, New Delhi. Reliance was also placed on the decision in the case of Engee Industrial Service -1996 (87) E.L.T. 152 (T) = 1997 (71) ECR887(T).
The learned S.D.R. also mentioned that Board's Circular Nos. 21/95-Cus., dated 10-3-95 and 122/95-Cus., dated 20-11-95 have been withdrawn by the Board; that under Circular No. 307/5/97 FTT, dated 6-8-97 no approval of Development Commissioner is required; that further the Circular referred to demand of duty on account of debonding etc. and not in respect of seizure case; that in cases of fraud, circular is not applicable.
7. The learned SDR also mentioned that as the customs duty had already been deposited voluntarily by the appellant at the time of detection of case, there was no need for invoking the extended period under Section 28(1) of the Customs Act; that he has also not paid the duty under protest or on provisional basis; that retraction letter given by the appellant is not supported by any Medical report of any injury; that once a confession is made, it is routine to give retraction; that no F.I.R. has also been filed by the appellant if he was injured or beaten; that in any case as per record of the Commission-erate, no retraction was received and the postal receipt does not indicate anything that retraction was sent. The learned SDR relied upon the decision in the case of Abha Impex v. Collector of Customs, Bombay, 1999 (109) E.L.T. 876 (T) wherein it was held that retraction of statement is not justified when "no proof of any coercion had been established." Reliance has also been placed on the decision in Deputy Director of Enforcement v. A.M. Ceaser, 1999 (113) E.L.T. 804 (Mad.) wherein Madras High Court has held that unless threat and coercion appears to be true, the Courts are not bound to accept that explanation offered by the accused. The learned SDR further submitted that the show cause notice is within time-limit as the Panchnama was drawn on 30-9-98 and the show cause notice was issued on 19-3-1999. He also contended that it is not mandatory in each case that cross-examination is allowed; that the Commissioner has recorded his clear findings in the impugned Order to the effect that the statement of the proprietor was of a voluntary nature owning the omissions and commissions; the documentary evidences and the facts speak for themselves; that the opinion of Station Engineer Doordarshan is unassailable; that the opinion of Paras Magnetic Tapes Ltd., given by the appellant, is a very general opinion and not at all supports his case.
8. In reply the learned Advocate mentioned that Section 4 of the Act empowers only the Central Government and Board to appoint officers of Customs; that earlier Notifications were 250/83 and 251/83 which was the subject matter in the case of Informatika Software (P) Ltd., supra; that the Telex does not pertain only to Mofussil Town; that Circular issued in 1997 does not refer to Circular No. 122/95; that it refers to demand of duty and does not talk of confiscation; that the Notification No. 53/97 under which the impugned goods were cleared was not referred to in the circular; that in the case of Engee Industrial Services it was not held that any of the officer can decide the matter. He also mentioned that in reply that 19-4-1999 it was mentioned that statements of Shri R.K. Bhagat were signed under pressure of threats and coercion and were subsequently retracted as well; that no medical report can point out the slaps given to the appellant by the Officers; that the impugned consignment was under detention which is apparent from letter dated 28-9-98 written by Appraiser of Customs and addressed to Assistant Dock Manager, Mumbai. He further mentioned that in the case of Abha Impex, retraction was made after expiry of seven days; that Doordarshan expert only gave an opinion and no test was conducted by him. Finally he relied upon the decision in the case of Godrej Soaps Ltd. v. C.C.E., Mumbai - 2000 (115) E.L.T. 473 (T) wherein it was held that charge of suppression is not sustainable when export has taken place under supervision of Central Excise officers.
9. We have considered the submissions of both the sides. In the present matter, the appellant imported Pan-cakes through ICD, Tughlakabad; New Delhi and the impugned goods were also exported through the same LCD., following the ratio of the decision in the case of Madras Electro Castings (P) Ltd. - 2001 (135) E.L.T. 896 (T) = 2001 (44) RLT 188 the jurisdiction to decide the matter rests with the Commissioner of Customs, New Delhi and not with the Commissioner of Customs; Mumbai or Commissioner of Central Excise Delhi. The appellants had availed of the benefit of Notification No. 53/97-Cus., dated 3-6-1997 at the time of import of the raw material. The said notification provides exemption from payment of customs duty in respect of raw materials imported into India for the purpose of manufacturing of articles for export out of India by 100% E.O.U. subject to the condition that the importer exports articles manufactured from the imported goods. The charges levelled against the appellant pertains to violation of the conditions of the notification, in view of this also the jurisdiction to decide the present matter lies with the Commissioner of Customs, New Delhi. The learned Advocate has contended that the matter should have been adjudicated upon by the Commissioner of Customs, ICD, TKD, New Delhi and not Commissioner of Customs (General), New Delhi. The Revenue on the other hand has submitted, and in our opinion rightly, that the Central Government, in exercise of the powers conferred by Sub-section (1) of Section 4 of the Customs Act has issued Notification No. 27/97 appointing officers of Customs for the areas mentioned in the corresponding entry in Column (2) of the Table appended to the notification. It is apparent from Serial No. 7 of the notification that for Delhi, the Central Government has appointed Commissioner, Joint Commissioner, Deputy Commissioner or Assistant Commissioner as the officers of the customs without any distribution of work or area among the Commissioners and other officers, in view of this the Commissioner of Customs (General) being Commissioner of Customs appointed, for Delhi under the notification is competent to adjudicate the present matter. The ratio of the decision in Informatika Software is not applicable as the facts are different. In the said case, the imported goods were cleared after presenting the documents, consulting experts in the trade, past record of valuation and after enhancing value. Subsequently the officers of Collector of Customs (Preventive) detained the consignment on the allegation that even the enhanced value was less. In view of these facts, the Tribunal held that the action of the Collector of Customs (Preventive) was invalid because that action ousted a valid exercise of jurisdiction by the officers under the control of C.C. (Calcutta). In the present matter the facts are entirely different as the action has been initiated for not complying with the post importation conditions, in view of this, the Telex F. No. 305/4/95-FTT, dated 5-7-1996 also does not affect the jurisdiction of the present Adjudicating Authority. The said Telex relates to the exercise of control over 100% E.O.Us and not about the action to be initiated under the provisions of Customs Act for violation of the provisions of Customs Act and for not complying with the post importation conditions.
10. We also do not find any substance in the submission of the learned Advocate that prior clearance from the Development Commissioner was required before raising demand and imposing penalties. As per Board's Circular No. 122/95-Cus., dated 20-11-1995, on issue like the fulfilment of export obligations action has to be initiated in consultation with the Development Commissioner. But prompt action has to be taken for issuance of show cause notice against units indulging in gross violation of law like, illicit removal, non-accountal disappearance of goods and the like. Such is the situation involved in the present matter as per Revenue. In EON Polymers Ltd. v. C.C.E., Jaipur, 2001 (135) E.L.T. 1316 (T) - 2001 (44) RLT 243 (CEGAT) action was initiated by the Department for confiscation of capital machinery obtained duty free and demand of duty thereon. The goods had been bonded for a period of 5 years and the export obligation was for a period of 10 years and the Customs Authorities had seized the goods and confiscated the machinery within a short period of commencement of production. In view of these facts, the Tribunal observed that the decision regarding wind up of an E.O.U. was primarily a decision to be taken up by the Development Commissioner. The facts in the matter before us are entirely different and the decision depends on the facts of each and every case. We also do not agree with the submission of appellant that entire proceedings were barred by limitation. As per the learned Advocate's submission the goods were detained on 28-9-98 and the show cause notice had been received by the appellant on 27-3-99 which is within six months of detention. Six months period is not to be counted from 22-9-98 as claimed by the learned Advocate but from the date the goods were placed under detention. In M. Mohammed v. C.C.E., Cochin, supra, Kerala High Court also held that six months should be reckoned from the date of detention. There is also no substance in the contention that duty cannot be demanded from Rakesh Kumar Bhagat as the entire import and export was in the name of Friendly Video Vision. A perusal of the show cause notice reveals that the proceedings were initiated against Rakesh Kumar Bhagat, proprietor, Friendly Video Vision. Even the appellant, in reply dated 19-4-99 had mentioned that "as per the settled law, the both the sole proprietor as well as the proprietary concern cannot be issued show cause notice simultaneously." Now he cannot claim that how could the SCN as well as the Adjudicating Authority demand duty, confiscate the seized goods and impose penalties on the appellant. The ratio in the case of Hindustan Foam Industry, supra, is not applicable as therein the party involved was a partnership firm and not a proprietary concern.
11. Coming to the merits of the case, we observe that the Revenue has relied upon the opinion obtained from Station Engineer, Doordarshan Kendra, New Delhi, the Revenue should have allowed his cross-examination by the appellant in accordance with the principles of natural justice. We, therefore, remand the matter to the Adjudicating Authority for a fresh adjudication, after allowing the cross-examination of Station Engineer, Doordarshan Kendra, New Delhi who tendered the opinion about the tapes and after affording a reasonable opportunity of hearing to the appellant.
The appeal is disposed of in the above terms.