Custom, Excise & Service Tax Tribunal
Shri Pravinchandra Babubhai Shah vs Commissioner Of Customs Preventive, ... on 29 March, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. C/86734/2015 (Arising out of Order-in-Appeal No. MUM-CUSTM/PRV-APP-72/15-16 dt.2.6.2015 passed by Commissioner of Customs (Appeals) Mumbai Zone-III) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
======================================================
Shri Pravinchandra Babubhai Shah
:
Appellant
VS
Commissioner of Customs Preventive, Mumbai
:
Respondent
Appearance
Shri Mayur Shroff, Advocate for Appellant
Shri Kamal Puggal, Asstt.Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 29/03/2016
Date of pronouncement: 27/04/2016
ORDER NO.
Per : Ramesh Nair
The appeal is directed against Order-in-Appeal No. MUM-CUSTM/PRV-APP-72/15-16 dt.2.6.2015 passed by Commissioner of Customs (Appeals) Mumbai Zone-III, whereby the Ld. Commissioner (Appeals)upheld the penalty of Rs. 4 lakhs imposed under Section 112 of the Customs Act, 1962 in the Order-in-Original No. 135/92 dt. 4.8.1992.
2. The fact of the case is that a show cause notice dt. 28.8.1991 was issued to M/s. Orient Arts and Crafts, wherein the appellant, among others, was also one of the noticees. The charge in the show cause notice was that M/s. Orient Art and Crafts in collusion with the present appellant imported duty free goods under Import Passbook Scheme and diverted the same to local market thus defrauding the Government of its legitimate revenue of Customs duty to the tune of Rs.39,99,930/- and conspires by preparing bogus transport documents to show dispatch to factory at Bhadohi, but in fact were sold in the local market by the appellant Shri Pravinchandra B. Shah with the assistance of Shri Kushabhau B.Bangar of M/s. New Bright Services and M/s. Super Roadlines, in contravention of the provisions of Import Export Policy 1988-91 and also in violation of provisions of Customs Act, 1962. The show cause notice was adjudicated vide Order-in-Original No. 135/92 dt. 4.8.1992 whereby the goods were confiscated, demand confirmed and penalty of Rs. 4 lakhs was imposed on the appellant apart from the penalties imposed on the other noticees. The appellant preferred an appeal before the Collector (Appeals), who rejected the appeal vide Order-in-Appeal No. 87/93-BP dt. 14.5.1993 for want of pre-deposit. Aggrieved by this, appellant filed an appeal with CESTAT which was decided vide Order No. 2204/07/93/WRB dt. 28.10.1993 directing for pre-deposit of Rs. 2 lakhs. Consequent to the payment of pre-deposit of Rs. 2 lakhs. The Collector (Appeals) vide Order-in-Appeal No. 74/95-BP dt. 28.12.1995 while rejecting his appeal did not find any reason to interfere with the Order-in-Original for imposition of penalty and upheld the order of the lower authority. The Order-in-Appeal was challenged before the CESTAT and the case was remanded back to the adjudicating authority vide Order No. A/74/WZB/05 C-I (CSTB) dt.18.8.2005 by stating that the appeal of M/s. Orient Arts & Crafts has already been allowed by way of remand as seen from 2003 (155) ELT 168 (Tri.-Mumbai) we set aside the impugned order in so far relates to the present appellant and remand this case also to the adjudicating authority. In the remand proceeding the Additional Commissioner of Customs (Prev.) vide Order-in-Original No. ADL (P)/SP/ADJ/M &P/01/2012 dt. 28.9.2012 passed the order enhancing the penalty to Rs.6lakhs on the appellant and aggrieved by the order dt. 28.9.2012, the appellant filed appeal before the Commissioner. The Ld. Commissioner (Appeal) in the impugned order reduced the penalty from Rs. 6 lakhs to Rs. 4 lakhs under Section 112 of Customs Act, 1962. Aggrieved by the impugned order, the appellant is before me.
3. Shri Mayur Shroff, Ld. Counsel appearing for the appellant submits that as per the present status of the overall case the impugned order is not sustainable even without going into the facts of the case. He submits that the appellant was one of the notice in the show cause notice dt. 28.8.1991 only for the penalty under Section 112 of the Customs Act, 1962. He submits that against the show cause notice dt. 28.8.1991 in respect of other noticees the matter was decided by the Collector of Customs (Appeals), wherein this Tribunal quashed the show cause notice dt.28.8.1991 and the department was given liberty to issue fresh show cause notice if otherwise permissible under the law thereafter a fresh show cause notice dt. 4.4.1994 was issued to other ntoicee i.e. M/s. Orient Arts and Crafts. However, no fresh show cause notice was issued to the present appellant. It is his submission that even though in the proceedings of M/s. Orient Arts and Crafts the same show cause notice was quashed and department was given liberty to issue fresh show cause notice therefore show cause notice dt. 28.8.1991 became nonest. Hence, on this ground the appeal deserves to be allowed. Alternatively, he submits that even in the second show cause notice dt. 4.4.1994 issued by the department to M/s. Orient Arts and Crafts the proceeding was concluded by this Tribunal order in the case of M/s. Orient Arts and Crafts Vs. Commissioner of Customs (P) Mumbai 2003 (155) ELT 168 (Tri.-Mumbai) wherein the entire duty penalty and confiscation was dropped. This decision of the Tribunal was upheld by the Honble Bomaby High Court by dismissing the Revenues appeal as reported in 2012 (282) ELT A108 (Bom). The entire demand of duty, penalty and confiscation has been dropped against the main party i.e. M/s. Orient Arts & Crafts . The present appellant on whom only penalty under Section 112 of the Act was imposed as a consequential to the case of demand of duty. In such case when the demand was not sustained the consequential penalty on the appellant will also not survive. For this reason also the penalty imposed on the appellant is liable to be set aside. The Ld. Counsel further submits that the present show cause notice was issued by the Assistant Collector who was not the proper officer to issue the show cause notice as per the prevailing old Section 28 of the Act. According to which, it was the Collector of Customs (Appeals), who was competent to issue the show cause notice and not the term proper officer was their in Section 28 of the Act. Therefore even the retrospective amendment made under Section 28, as per the enactment of Finance Bill 2011, which was received the assent on 16.9.2011, the position in the present case will not change and the show cause notice is without jurisdiction. He submits that the same show cause notice was held without jurisdiction by this Tribunal therefore the penalty will not survive. In this support he placed reliance on the following judgments:
(i) Collector of Central Excise Vs. HMM Ltd.
1995 (76) ELT 497 (S.C.)
(ii) Godrej Soaps Vs. Commissioner of Central Excise, Mumbai 2004 (174) ELT 25 (Tri.LB)
(iii) Commissioner of Customs Vs. Sayed Ali 2011 (265) ELT 17 (SC).
4. On the other hand, Shri Kamal Puggal, Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.
5. I have carefully considered the submissions made by both the sides. From the sequence of the case and the facts and circumstances and before going through the issue of jurisdiction. I find that the show cause notice in the present case, though in respect of other appellants, it was were held without jurisdiction by the Commissioner (Appeals) and had given liberty for issuance of fresh show cause notice and the other noticees were issued fresh show cause notice wherein the Tribunal in the case of M/s. Orient Arts and Crafts (supra) dropped the demand of duty, penalty and confiscation of the goods, this decision of the Tribunal was upheld by the Honble High Court. The relevant portion of the order is reproduced below:
2.After hearing? both the sides and considering the submissions, we find that -
(a)?The Collector of Customs (Appeals) while setting aside the order of the Additional Collector of Customs (Preventive), Mumbai had upheld as under :-
I find that in the show cause notice, the demand has been raised under Section 28 of the Customs Act, 1962. Although Section 28 is not mentioned in show cause notice. The fact remains that duty demanded under Customs Act, 1962, and under Customs Act there is Section 28 only to demand duty. Section 28 pertains to issue of notice for demand of duties not levied, short-levied, or erroneously refunded. State in brief, the position prior to 14th May, 1992 was that the show cause notice itself for the extended period the period more than six months can be issued only by the proper officer and the proper officer in view of the clear wording of Section 28 was the Collector of Customs. In the instant case, the show cause notice has been issued by the Asstt. Collector. The proper officer to issue the show cause notice during the relevant period was the Collector of Customs and not the Asstt. Collector. The Asstt. Collector could have issued the show cause notice if the short-levy or non-levy was within six months. In the instant case the show cause notice has been issued after six months of the relevant date. As the show cause notice is issued after six months after the Order of clearance of goods given by the proper Officer. Although not specifically stated, it appears that the totality of the show cause notice indicates that there is clear suppression and mis-statement for availing Notfn. No. 117/88-Cus., dated 30th March, 1988. That being the case, the show cause notice should have been issued by the Collector of Customs. In view of this clear legal position and also in view of the order of the CEGAT which is applicable in this case referred to above, I decide that in view of undisputed position that alleged evasion of duty is consequent to diverting the imported raw material and the demand has been issued after six months, the show cause notice issued by the Asstt. Collector is not legally valid. During the material time, the Asstt. Collector had no jurisdiction to issue such a show cause notice to invoke the extended period on allegation of duty evasion. In view of the above matter, the Order of Adjudication No. 135/92 is set aside. The Department shall however have the liberty to readjudicate the case by issuing a proper show cause notice, if otherwise permissible under the law. (Emphasis???????????????????????? supplied) The present proceedings were initiated pursuant to the show cause notice dated 4-4-94 which was issued by Collector of Customs (Preventive), Mumbai. The perusal of the show cause notice issued in the earlier proceedings namely show cause notice dated 28-8-91 issued by the Assistant Collector of Customs (Prev.) Marine and Preventive Wing, Mumbai and the present show cause notice resulting the present impugned order, indicates on facts, there is no new material in the second show cause notice issued by the Collector of Customs (Preventive) for the same period and only the extended period for and a demand under Section 28 of the Customs Act is invoked, on account of wilful misstatement and suppression of facts by them i.e. M/s. Orient Arts and Crafts in collusion with other notices; while first show cause notice was for the normal period without invoking the extended period as it appears in the findings of the Collector of Customs (Appeals), Mumbai (supra). Since a second show cause notice, on identical facts only invoking the extended period was not held to be valid by the Tribunal in the case of Delux Carpet Co. & Ors. v. CC (Prev.), Mumbai reported in 2002 (146) E.L.T. 80 (T) = 2002 (52) RLT 234 (CEGAT-Mum.), we do not hold the same, following the said decision. A proceeding continued on basis of an invalid notice is bad ab initio.
(b)?The appellants have taken the plea questing the jurisdiction of Collector of Customs (Preventive), Mumbai to issue demands as proper officer and to determine the assessments on the Bills of Entry, which have been filed and for the consignments covered by the same were pending clearance in Docks but which were seized by Officers of the Marine and Preventive Wing of the Collector of Customs (Preventive), Mumbai. They have relied on the following case laws :
(i) Manohar Bros. (CACITORS) v. Collector of Customs-II, Bombay [1998 (98) E.L.T. 821]
(ii) Sharad Himatlal Daftary v. Collector of Customs [1988 (36) E.L.T. 468 (Cal.)]
(iii) Informatika Software v. CC (P), Calcutta [1997 (73) ECR 348 (Tribunal)]
(iv) Ramnarain Biswanath v. UOI [1988 (34) E.L.T. 202 (S.C.)]
(v) Canepo Textiles Pvt. Ltd. v. State of Haryana [1992 (84) STC 88]
(vi) Grand Slam International v. Collector of Customs [1992 (57) E.L.T. 161 (Tribunal)]
(vii) CCE v. Poona Rollers [1997 (89) E.L.T. 604]
(viii) Shri Balaji Rice Mills Co. v. Commissioner of Taxes [1984 (55) STC 292 Andhra Pradesh]
(ix) UOI v. Ram Narain Biswanath [1997 (96) E.L.T. 224 (S.C.)] We find there is substantial force in the arguments on jurisdiction as made by the learned C.A. for the appellants. The demands of duty under Section 28 of the Customs Act, 1962 have to be made by the proper officer and not by any Officer of Customs, since proper officer of Customs was designated by law. Interpretation on jurisdiction, as arrived at by the learned Adjudicator to assume the jurisdiction in this case, as per his findings are as under -
It is not disputed by M/s. Orient Arts and Crafts that by virtue of Notification No. 250/83, the Commissioner of Customs (Prev.), Mumbai is appointed as Commissioner of Customs, Mumbai in the areas comprising the districts of Mumbai, Thane and Kolaba. Thus it is evident that a concurrent jurisdiction is vested with the Commissioner in respect of Mumbai Port situated in Mumbai district. In the Customs Act, 1962, smuggling is defined as any act or omission which renders the goods liable to confiscation under the provisions of the Act. In his case, M/s. Orient Arts and Crafts have been charged with trafficking of the goods imported and cleared free of duty in violation of the provisions of exemption Notification No. 117/88, dated 30-3-1988 and fabrication of documents to show receipt and consumption in their premises. These acts and omissions thus rendered the goods liable for confiscation under the provisions of the Customs Act, 1962 and the Customs (Preventive) Commissionerate created for the purpose of prevention of smuggling and detection of cases of smuggling including commercial frauds is thus competent to investigate and adjudicate the case. The order No. 87/95-A in the case of M/s. M.D. International pertained to a case decided by the Commissioner of Customs (Preventive), Mumbai and the jurisdiction of this Commissionerate was upheld by the Honble Tribunal. In the light of charges against M/s. Orient Art and Crafts it cannot be said that import having been caused against passbook, the offence could not be investigated or adjudicated by the Preventive Commissionerate. In the light of above position that the charges against M/s. Orient Arts and Crafts amount to smuggling, the judgment in the case of Sharad Himatlal Daftri v. Commissioner of Customs, Calcutta, 1988 (36) E.L.T. 468 is inapplicable to the present case. Shri K Srinivasan, Consultant has also cited the cases of M/s. Metro Exports, 1988 (14) ECR 169, M/s. M.K. Fisheries, 1989 (41) E.L.T. 408, M/s. Ramnarayan Vishwanath, 1988 (34) E.L.T. 202, I find that the issue decided by the Honble Tribunal in those cases is clearly distinguishable with the factual position in this case. While those cases involved issues where the cases were sought to be decided by Commissioners other than the Commissioner in whose jurisdiction the goods were cleared in the present case the Commissioner (Prev.) is specially vested. These catene of decisions relied upon by the appellants lead us to conclude that determination of demand of duty under Section 28 of the Customs Act, 1962 is not made by the proper officer as per law, same therefore is not upheld. We also rely on the decision in the case of Pune Rollers as reported in 1997 (89) E.L.T. 604 and M/s. Bakemans Home Products Pvt. Ltd. v. CC as reported in 1997 (95) E.L.T. 278 to hold the demands to be not determined by the proper officer for the goods cleared and also for the goods under clearance covered by the Bills of Entry, which were yet to be assessed.
(c)?The theory of committee of courts postulates that when there are two or more courts having parallel jurisdiction over the same matter, as in the present case, i.e. the Commissioner of Customs in whose jurisdiction, the Bills of Entry were filed, assessed and cleared and the Commissioner of Customs (Prev.), Mumbai who derived his concurrent parallel jurisdiction by virtue of an appointment vide Notification No. 250/83 to exercise the powers of a Customs Officer then in such case the jurisdiction of the second and any other authority are deemed to be ousted, when any one of the authorities having a concurrent parallel jurisdiction has taken cognizance of a particular issue. In this case, the Officers of Customs of Customs House, Mumbai had taken cognizance of the imports and had passed orders of assessment. They, therefore were the proper officers to determine, whether the conditions under which they allowed the earlier clearances were complied with or not and thereafter take suitable action of liability under Section 111(o) and duty demands under Section 125 of the Customs Act, 1962. They were also the proper officers for the assessment of consignment for which the Bills of Entry were filed, which were pending clearance in the Mumbai Customs Port House Docks area on which orders under Section 47 were yet to be passed. While we have no hesitation to uphold the view that the Collector of Customs (Prev.), Mumbai and officers have jurisdiction to investigate into the matter of smuggling, the question of determination of liabilities under Section 111(o) and consequent demands and orders for original assessment of the goods required to be made on the Bills of Entry, cannot be usurped by them. In this connection, it is found, that a Division Bench of the High Court of Punjab and Haryana at Chandigarh in the case of Kenapo Textiles Pvt. Ltd. & Another v. State of Haryana & Others [1992 (84) STC 88] has upheld this concept of community of court. In this case, the Excise and Taxation Officer, Faridabad was the assessing authority, who had taken up the case for assessment of Sales Tax in respect of the two petitioners, while such proceedings were pending before the aforesaid officer, one Excise and Taxation Officer was designated as Excise and Taxation Officer-cum-Assessing Authority (Anti-Evasion Squad) for entire State of Haryana, including Faridabad. This Anti-Evasion Squad Officer, issued notice to the petitioners to finalise the assessment against them. The jurisdiction of this Anti-Evasion Squad Officer was challenged. The Punjab and Haryana High Court, while upholding the authority of the Notification granting concurrent parallel jurisdiction to Anti-Evasion Squad to make assessments, recorded the following propositions of the law -
Under the Act, the District E?1.xcise and Taxation Officer-cum-Assessing Authority would have jurisdiction to make the assessment.
In case the State Government issues a?2. notification in exercise of the powers conferred by section 3 and clause (a) of section 2 of the Act, the officer so appointed shall also have the jurisdiction to frame the assessment.
?3.In case any one of the aforesaid two officers starts the assessment proceedings, the other officer shall not be entitled to start the same and the moment the officer who started the proceedings; later on get the information that the proceedings have already been started by the other officer, he will have to stay his hands. However, the authority named in Rule 7 will have the jurisdiction to transfer the pending proceedings to the other officer and until such an order is passed, the officer who started the proceedings first will continue to have jurisdiction to frame the assessment and the other officer will not have the jurisdiction to do so. If this rule is not followed, there is likelihood of conflict of opinion between officers of co-ordinate jurisdiction and in law such a course would be avoided as far as possible. (Emphasis supplied) The Tribunal in the case of Ramnarain Biswanath - 1988 (34) E.L.T. 202, which has been upheld by the Apex Court, had held -
80......In fact if one Collector starts disregarding the action taken by another, chaotic conditions will prevail and a citizen would never be at rest. This could not be the intention of the legislature or the Government or even the Department of Revenue itself for that matter. and in that case did not uphold the jurisdiction of Collector of Customs, Calcutta to charge duty on goods assessed and cleared through Paradeep Port, when goods were seized in Calcutta Collectors jurisdiction after clearance from Paradeep Port. No submission or case law was made or relied before us, by the Departmental Representative. Bound by the law as laid down by the Supreme Court and following these binding decisions, it has to be concluded that the Commissioner of Customs (Prev.) cannot derive authority to take over the goods covered by Bills of Entry and to make assessment thereon when they were pending before the proper officer of the Commissionerate of Customs of Mumbai Customs House, without taking recourse to the transfer of the such cases to the Commissioner of Customs (Prev.) on the orders of the Central Board and Excise of the Customs. No such transfer order was produced. In this view of the matter, when the Commissioner of Customs (Prev.) had no jurisdiction in this case to order of the assessment of pending Bills of Entry, we cannot uphold the liability of confiscation arrived at under Section 111(o) or 111(b) of the Customs Act, 1962.
(d)?Since we find the second show cause notice issued is not valid for demanding the duty and it is not upheld, the demand is set aside. Consequent orders for confiscation cannot be upheld. They are required to be set aside. The Bills of Entry which have not been assessed by a proper officer shall have to be remitted to such proper officer, for passing an order of assessment on the pending Bills of Entry. In the proceedings of the assessment on the pending Bills of Entry, the proper officer of Customs under the Collector of Customs, Mumbai can take such material as would be relevant, to assess those imports. The liability for penalty and orders for confiscation of the goods imported as covered by these Bills of Entry are required to be set aside. The appellants will similarly be free to make such submissions before the proper officer of Commissionerate of Customs, Mumbai where the Bills of Entry have been filed and who is to assess them.
?3.In view of our above findings, duty demands and penalty set aside. Bills of Entry pending assessment to be assessed by the proper officer. Appeal is disposed of in the above terms.
From the above decision, it can be seen that even after issuance of the second show cause notice, the show cause notice was held invalid accordingly demand of duty, penalty and confiscation was set aside. Since in the present proceedings, the only issue is of penalty under Section 112 of the Customs Act, 1962 which can be imposed only for confiscation of goods and dealing with goods which are liable for confiscation, that means the penalty is consequential to demand of duty and confiscation of goods. In the present case, the proceeding of demand of duty and confiscation was made against the main party M/s. Orient Arts & Crafts, wherein finally the demand of duty and confiscation was dropped, accordingly the present appellant is also not liable for penalty under Section 112 of the Customs Act, 1962. In view of above undisputed fact, I am of the view that the appellant is not liable for penalty under Section 112 of the Customs Act, 1962. Since the penalty is being set aside on the above factual aspects, I do not feel to address the legal issue of jurisdiction. The impugned order is set aside and appeal is allowed.
(Pronounced in court on 27/04/2016) (Ramesh Nair) Member (Judicial) SM.
11Appeal No. C/86734/2015