Customs, Excise and Gold Tribunal - Mumbai
Ajay Industrial Corporation vs Commissioner Of Customs (Export ... on 29 March, 2006
ORDER S.S. Sekhon, Member (T)
1. The appellants had imported mild steel sheets/plates against four Impressed Licence (Advance Licences for Deemed Exports as shown below:
Details of ADVANCE LICENCE INVOLVED:
Sl. AL Date of Date of Quantity Value No. No. Issue Validity (M.Tons) (US$) 1 2156188 10.01.1997 31.07.1999 157.500 29259.40 2 2156187 09.01.1997 31.07.1999 134.820 25046.00 3 0087515 24.12.1997 30.01.2000 080.655 14983.61 4 2156163 09.01.1997 31.07.1999 034.765 6458.46
2. They discharged the export obligation in full and had therefore claimed exemption from customs duty in terms of Notification No. 36/97-Cus dated 11.4.97 on the strength of above four advance licences.
3. The Customs department raised a dispute that the imports were not within the validity period of the license. They had since paid the customs duty on the goods imported by them and cleared the same. In the appeal now filed, they are not pressing for the benefit of exemption notification so ordered, in view of the provisions of unjust enrichment.
4. The order confiscating the goods in question and imposing penalty are however being contested.
5. No material has been found in the show cause or in the impugned order that the description of the goods as given in the bill of entry is not correct. It is also not disputed that the marks and number, number of packages, weight in MT, value etc., indicated in the bill of entry are true and correct. In other words, there is no mis-declaration as to the description of the goods given in the Bill of Entry or of other particulars pertaining to the goods.
6. In this view of the matter, there is force found in the submission of the importer that the order of confiscation arrived at under Section 111(m) of the Customs Act, 1962 for the reason that the Bills of Lading should be of 17.9.1999 or thereabouts, while Bill of Lading filed along with the Bill of Entry bear the date of 31st July, 1999. In the Bill of Entry, against the column relating to bill of lading, date thereof was shown as 31.7.1999. The department's contention that Section 111(m) is attracted, is not legally valid due to following:
(i) Section 111(m) of the Customs Act, 1962 reads as under:
11. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscation:
(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof, or in the case of goods under transshipment, with the declaration for transshipment referred to in the proviso to Sub section (1) of Section 54;
(ii) There is also no dispute about the value declared by the appellants in the present case. Therefore, Section 111(m) will apply in the present case only when the goods do not correspond in respect of any particulars with the bill of entry. The emphasis in the Section relates to goods not corresponding to the particulars mentioned in the Bill of Entry. Section 111(m) being penal in nature, has to be strictly construed.
(iii) Incorrect mention of date of Bill of Lading will not be covered by the expression "goods not corresponding with the particulars mentioned in the Bill of Entry".
(iv) In Paharpur Cooling Towers Ltd. v. CC . vide Para 12, CESTAT has held as under:
12. Section 111(m) of the Customs Act has been invoked by the Additional Collector, This section provides for confiscation of any goods which do not correspond in respect of value or in any other particular with the entry made under this Act. Looking at the language employed, it prima facie appears that the particulars envisaged are in respect of the goods, that is to say particulars such as value, description, quantity etc., and not particulars of the Bill of Lading or the date of shipment but in view of our finding that the goods have been shipped within the period of validity of the revalidated licence, the discrepancy between the dates of the two Bills of Lading and the actual date of loading which has been held by the Additional Collector to be 10-3-1985 loses all its significance in so far as the present case is concerned. We do not, therefore, wish to express any definite opinion on this point.
(emphasis supplied)
(v) Even prima facie it was obvious to the Bench that Section 111(m) does not apply for not mentioning the correct particulars of bills of lading or date of shipment.
(vi) Section 111(m) as it stood prior to amendment by Act 36 of 1973 read as under:
Any dutiable or prohibited goods which do not correspond in any material particular with the entry made under this act or in the case of baggage with the declaration made under Section 77 in respect thereof.
(vii) In Rib Tapes (India) Pvt. Ltd. v. Union of India , the Supreme Court was concerned with the question whether Section 111(m) would apply where the value declared in the Bill of Entry is not the correct value of the goods. The Supreme Court held as under:
8. ...
In this view of the matter it appears that before the amendment in 1973, Section 111(m) did not contemplate any difference in material particulars in respect of value but it referred matters other than the value.
9. It is not disputed that penalty under Section 111(m) has been imposed solely on the ground that the price shown by the appellant in the declaration was much less than what was ultimately found by the Department to be the price of imported goods and in respect of this difference of price, it was held that there is a difference in material particulars which brought the matter within the mischief of Section 111(m) of the Act. But in view of the fact that the term 'value' was not in Section 111(m) before the amendment of 1973 this difference on the basis of value could not be said to be a difference in material particulars within the meaning of the language of Section 111(m) and in this view of the matter, the view taken by the authorities could not be maintained.
10. The High Court in its judgment releasing this difficult observed that this amendment where the term 'value' has now been inserted is merely explanatory and that was what was also contended by learned Counsel for the respondents.
11. It is not in dispute that a penal provision has to be strictly construed and reading Section 111(m) before the amendment is not possible to draw an inference that any difference in material particulars may be referable to 'value'. This argument therefore cannot be accepted. The scheme of Section 111(m) as it stood then nowhere referred to the difference of value as one of the ingredients which may attract this provision. In such a situation therefore if it was not the specific intention of the provision, a difference in respect of value therefore could not be said to attract this provision and on that basis no penalty could be imposed.
The above judgment concludes the position that when the goods do not correspond to the value mentioned in the Bill of Entry, the said violation would not be covered by the expression "goods not corresponding in any material particulars with the Bill of Entry" employed in unamended Section 111(m).
(vii) If the correct interpretation were to be that any and every incorrect particulars in the Bill of Entry were to attract Section 111(m), the Supreme Court in Rib Tapes case would have certainly held that incorrect declaration of value would be covered by the expression "goods not corresponding in any material particulars in the Bill of. Entry" employed in unamended Section 111(m). The Supreme Court did not hold so, but held exactly to the contrary.
(viii) The amendment to Section 111(m) in 1973 took care of the lacuna about declaration of value. That aspect of the matter is not relevant in the present case.
(ix) For the parity of reasoning which weighed with the Supreme Court to hold that incorrect declaration of value in the bill of entry would not be covered by the expression "goods which do not correspond to material particulars with the entry made under this act" employed in unamended Section 111(m) as it stood pre 1973, incorrect mention of particulars relating to the date of Bill of Lading would also not be covered by the expression "goods which do not correspond in any other particular with the entry made under this act" employed in amended Section 111(m) as it stood after 1973.
7. The order of confiscation under Section 111(m) of the Customs Act, 1962 as arrived at therefore cannot be upheld.
8. The Commissioner has come to the conclusion that the Bill of Lading should have been dated on or around 17.9.1999 based on the following factors:
a) the vessel was delivered into time charter on 2.9.1999:
b) the vessel arrived at Odessa port in April 1999 and sailed from there on 9.9.1999; it arrived at Illychvvsk on 9.9.1999 and sailed therefrom on 17.9.1999;
c) the loading of the goods commenced on 10.9.1999 and completed on 19.9.1999;
d) mate receipt for the bill of lading in question is dated 16.9.1999 and 17.9.1999;
e) fax dated 17.9.1999 from the supplier to the steamer agent requested whether the steamer agent would be able to back date the bill of lading to 31st July, 1999.
9. Even if it is assumed that the vessels set sail on 17.10.1999 or thereabouts and the goods were put on the board between 10.9.99 and 19.9.99 as recorded by the Commissioner in the impugned order, that aspect is not relevant in the absence of any express finding that the material was not handed over to the shipper or to the agents by 31st July, 1999. No such finding has been recorded in the impugned order.
10. Indian Carriage of Goods Act, 1925 - was enacted to give effect to the Convention on the rules relating to bills of lading, as agreed by the parties to the International Conference on Maritime Law held at Brussels. The Schedule to the Indian Carriage of Goods Act contains Rules relating to Bills of Lading, Article 3 provides that the master or agent of the carrier shall on demand of the shipper, issue to the shipper a bill of lading for receiving the goods into his charge. Article 7 provides that if the goods are loaded, the bill of lading is to be issued to the carrier, master or agent, to the shipper shall, if the shipper so demands, be a "shipped" bill of lading.
11. The ld. Commissioner has rejected the above submission on the ground that the Indian Carriage of Goods by Sea applies to goods leaving the Indian ports. This is incorrect. The Schedule to the Act containing the rules relating to bills of lading are rules of common law and based on the convention on international trade of universal application. This is evident of the Statement of Objects and Reasons set out. This is also evidenced by the position that identical provision are set out in Halsbury's Laws of England, 4th Edition, pages 532 to 535, relevant paras being paras 769 and 774.
12. Para 15.14 of the Handbook of Procedures, Vol.1, states that date of shipment / despatch for the purposes of imports will be reckoned, for imports by Sea, the date affixed on the bill of lading. The said para does not say that bill of lading has to be "shipped on board bill of lading". It can be through Bill of Lading also. On the other hand, for the purposes of exports, para 15.15 of the Handbook refers to date of bill of lading or date of mate receipt whichever is later for bulk cargo. For the purposes of containerized cargo, the date of shipment will be reckoned with reference to "on board bill of lading" or "received for shipment bill of lading". In the absence of any reference to the type of a Bill of Lading, in para 15.14 of the Policy, even a Bill of Lading issued, by shipper for receipt of the goods will be covered by the para 15.14. In other words, the bill of lading referred to in para 15.14 of the Handbook will not be restricted to "Onboard bill of lading" only. The decision of Delhi High Court in Ahmed Ocmerbhoy (Exports) Pvt. Ltd. v. U.O.I. also support the above view. In the absence of any finding that the goods were not handed over to the steamer agent on or before 31st July, 1999, the conclusion that the date of shipment is only 17.9.199 or thereabouts is irrelevant to the matter. Therefore, Section 111(m) of the Customs Act, 1962 will not apply.
13. When the appellants had declared the date of bill of lading as 31st July 1999 based on the Bill of Lading, received by them, it cannot be treated to be a violation attracting Section 111(m) or & 111(d). This is more so when the finding in the impugned order is that the supplier had anti-dated the date of bill of lading.
14. The Commissioner has held that since the four advance licences in question had the validity upto 31st July, 1999 and since the Bills of Lading are to be correctly treated as dated 17.9.1999, the advance licences are not valid to cover these imports.
15. Consequently, Section 111(d) will also not applicable, since the validity of licence can not be computed with reference to actual date of sailing of the vessel or put on board the cargo.
16. Notification dated 10.12.98 of the DGFT fixing floor price on the imported goods expired when the order of confiscation was passed. In view of the decision of Supreme Court in Kolhapur Cane Sugars, the reliance on the expired Notification without a saving clause & order confiscation is not a valid order. Consequently order of penalty is also not valid.
17. The goods imported are of cold rolled sheets falling under Heading 72.08. The value of the goods imported is less than the minimum price of 232 US $ per MT stipulated in Notification No. 34(RE98)/97-02 dated 10 December 1998 issued by the DGFT under Section 5 of the FTDR Act.
18. According to impugned order, the restriction imposed by Notification No. 34 dated 10th December 1998 issued by the DGFT is violated and hence Section 111(d) is attracted.
19. Notification No. 34 dated 10th December, 1998 introducing license Note was amended by Notification No. 31 (RE-99)/92-02 dated 1.11.1999 revising the minimum CIF value stipulated in the Notification dated 10th December, 1998 and stipulating 31.12.1999 as date of expiry of the Notification The relevant portion of the Notification dated 1.11.99 is reproduced below:
In exercise of powers conferred under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 1.3 and 4.1 of the Export and Import Policy, 1997- 2002, the Central Government hereby makes the following amendment in the Policy, 1997-2002 (incorporating amendment made upto 31.3.99) and ITC(HS) Classification of Export and Import item, 1997-2002 published on 31st March, 1997 and as amended from time to time.
1. Minimum c.i.f. value of Sr. No. 1 to 7 of Import Licensing Notes 3, appearing in Chapter 72 of the said ITC(HS) Classifications of Export and Import Items 1997-2002, after amendment shall read as under:
xxx xxx xxx
2. Minimum c.i.f. value of Sr. No. 1 to 7 of Import Licensing Notes 4, appearing in Chapter 72 of the said ITC(HS) Classifications of Export and Import Items 1997-2002, after amendment, shall read as under:
xxx xxx xxx
3. The minimum cif value of import as stipulated in licensing note No. 4 above shall be effective for a period of two months from the date of issue of this Notification, and the minimum import prices as indicated above in the said licensing note shall be treated as withdrawn after the said period of two months.
In other words, the restriction introduced was purely temporary for the period from 10.12.1998 to 31.12.1999 after which it expired without any saving clause. The Notifications in question are notification imposing a prohibition, in terms of Section 5 of the FTDR Act, 1992. Notification dated 1.11.1999 did not have any saving clause of its own.
20. Notification dated 1.11.99 being a subordinate legislation, therefore, provisions of Section 6 of General Clauses Act will not apply, as held by the Constitution Bench of the Supreme Court in Kohlapur Cane Sugar Co. Ltd. v. Union of India wherein the Court held that Section 6 of the General Clauses Act only applies to a Central Act and do not apply to rules or notification.
21. In addition, the Notification dated 10th December, 1998, as amended by Notification dated 1.11.1999 expired on its own by efflux of time on 31.12.1999. Therefore, it cannot be considered as repeal. Therefore, Section 6 of the General Clauses Act do not apply for this reason as well. Therefore, on expiry of the notification it is as if the notification was never enacted except in respect of transactions past and closed
22. In the present case, the show cause notice has been issued on 3.12.1999. However, the order adjudging the violation of the Notification has been passed only on 28.4.2000 when the Notification was not in force. After the expiry of the notification on 31.12.1999, no order can be passed holding a person liable for penalty for contravention of the Notification dated 10.12.1998 as amended on 1.11.1999 even though the imports were made in October/November 1999 The Supreme Court has held in Kolhapur Cane Sugar Co. as under:
35. ...It is relevant to note here that in the present case the question of divesting the Revenue of a vested right does not arise since no order directing refund of the amount had been passed on the date when Rule 10 was omitted.
23. The impugned order confiscating the goods under Section 111(d) is not valid.
24. In this view of the matter, we cannot find any reason to arrive at the findings that the material was handed over to the steamer agent for shipment on or about 31.7.1999 as held by the Commissioner. In this view of the matter, we cannot hold the goods to be unauthorisedly imported impugned as per ITC Policy applicable at the time of import of HR sheets being restricted to a value when the value was less than 317 PMT, on a reading of the ITC Policy as arrived at by the Commissioner to uphold the confiscation under Section 111(d) of the Customs Act, 1062.
25. The order of confiscation under Section 111(d) and 111(m) of the Customs Act, 1962 is not being upheld, we cannot arrive at any reason for imposing a penalty on the importer appellant. The penalty as imposed is also required to be set aside.
26. In view of our finding holding that redemption fine and penalty are not sustainable and are set aside, since the question duty liability as arrived at is not being contested, we are not arriving at any findings on the same.
27. The appeal is disposed of in above terms.
(Pronounced in Court on 29/03/2000)