Customs, Excise and Gold Tribunal - Delhi
Bombay Pharma Products vs Collector Of Customs on 5 December, 1994
Equivalent citations: 1995ECR692(TRI.-DELHI), 1995(75)ELT781(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from the order-in-appeal passed by the Collector (Appeals), Madras. By this order the Collector (Appeals) has confirmed the order-in-original passed by the Assistant Collector, who had confirmed the demand of Rs. 5,76,049/- (Rupees Five Lakhs Seventy Six Thousand Forty Nine only) under Sub-section (2) of Section 28 of the Customs Act, 1962.
2. The appellants had imported a consignment of Polyvinyl Pyrilidone K30 (Iodine) and claimed clearance under Heading 29.42 of CTA at the rate of duty of 60% + 50% + CVD 5% + 5%. The Bill of Entry was assessed and the goods were cleared on 3-2-1992. However, the department felt that the correct classification of the product is under Chapter Heading 39.05 as the product is a Vinyl Polymer and it is also supported by Harmonised Commodity Description and Coding System (Explanatory Notes). A show cause notice was issued to the appellants on 30-7-1992 under the instructions of the Assistant Collector, as is evident from the case records produced by the departmental representative. This show cause notice was also received by the Customs Agent on 30-7-1992 namely, M/s. Jeena & Co., Madras, said to be on behalf of the appellant, as can be seen from the records produced for inspection during the hearing by the ld. SDR. The ld. Consultant denied the appellant or the Agent having received the notice within the 6 months from the date of issue. However, the Managing Partner of the appellant's company by his affidavit dated 4-11-1993 filed before the Assistant Collector has admitted having received the show cause notice on 10-8-1992 at Indore in his office. In the affidavit he has stated:
"Date of receipt of the said notice based on the memory and which is to be taken as correct."
The appellant had not produced any supporting evidence with regard to the receipt of the show cause notice on 10-8-1992 except this affidavit and in which the Managing Director is basing the date on his memory. The postal-cover is also not produced. The appellants have also not produced any inward register to show the entry of the receipt date of the letter in their office on the said date. They have also not produced any postal endorsement from the post office of the delivery on this date. They have appeared before the Assistant Collector for personal hearing along with the Customs House Agent, on whom, the department is said to have served the notice on 30-7-1992. The appellants did not raise the question of validity of issue of notice by an officer other than the Assistant Collector. They had merely contended that the product was used in the manufacture of Povidine Iodine USP 21 and therefore, justified the classification under Chapter 29.42. However, before the Collector they raised the question of the show cause notice having been issued by the officer other than the proper officer and also that the demands were time barred, as the notice had been received by them on 10-8-1992, after the expiry of 6 months. It was also pleaded by them that the assessment made by an Assistant Collector cannot be reviewed by any other Assistant Collector and also justified the assessment under Heading 29.49 of Customs Tariff Act. The ld. Collector, however, disagreed with the Appellant's contentions. The ld. Collector has held that the notice has been issued within the stipulated statutary limit by service on the clearing agent on 30-7-1992. He has, further, held that Section 147 of the Customs Act, 1962, lays down that where an act requires anything to be done by the owner, importer or exporter of any goods, it may be done on his behalf by his agent. Any such thing done by an Agent of the owner, importer or exporter of any goods shall, unless the contrary is proved, be deemed to have been done with the knowledge and consent of such owner, importer or exporter, so that in any proceedings under this Act, the owner, importer or exporter of the goods shall be liable as if the thing had been done by himself. Therefore, on the basis of reading of this section the ld. Collector has held that the demand has been served on the Customs House Agent of the importer and it is to be treated as service on the importer himself, since the appellants had not produced anything to show that the said Customs House Agent was not authorised to receive the notice in relation to the imports made by them. In that event, the ld. Collector held that the demand notice had been served on the importer within the time limit envisaged under the Act. On merits the ld. Collector has confirmed the order of the Assistant Collector in terms of the reading of the Explanatory Notes.
3. The Learned Consultant argued on the grounds taken up before the lower appellate authority and placed before us several citations in support of his contentions. He submitted that the demand notice not having been signed by the proper officer is not sustainable. In this context, he has relied on the rulings rendered in the case of Gujarat State Fertiliser Co. Ltd. and Anr. v. Union of India and Ors. as reported in 1988 (34) E.L.T. 442 and that of Alcobex Metals Pvt. Ltd. v. Collector of Central Excise as reported in 1992 (58) E.L.T. 108. As regards the service on CHA being not a service on the importer, he has relied on the rulings rendered in the case of Collector of Customs v. Trivandrum Rubber Works Ltd. as reported in 1992 (62) E.L.T. 360 (Tribunal) and that of Collector of Customs v. Hubs Thermometers India Ltd. as reported in 1989 (42) E.L.T. 55 (Tribunal). On his plea that 'the unauthorised officer, who has signed the demand notice has no authority or jurisdiction to review, recall or revise the order of the clearance passed by the Assistant Collector of Customs, he has relied on the following rulings :
i. Agrasen Engineering Works v. Collector of Central Excise - 1990 (47) E.L.T. 90 ii. Indian Telephone Industries Ltd. v. Collector of Central Excise, Bombay -1989 (41) E.L.T. 462 iii. Collector of Central Excise v. Presto Works, Jallandhar -1987 (28) E.L.T. 469 iv. Collector of Customs v. Trivandrum Rubber Works - 1992 (62) E.L.T. 360 v. D. Sen Gupta v. Collector of Central Excise and Ors. - 1987 (31) E.L.T. 30
4. The Learned SDR submitted that the appellants had retained the CHA for the purpose of defending them before the original authorities and that the said CHA had appeared before the Assistant Collector and, therefore, it follows that the CHA is deemed to have been authorised to receive the show cause notice on their behalf. This inference is clear from the contention of the party and also the party not having raised the question of the show cause notice issued to the agent, as not being a proper service in the first instance itself. So, therefore, the ld. SDR submits that on this point the importer is deemed to have conceded that the agent had been authorised to receive the notice on their behalf. Pointing out to the affidavit which had been filed before the original authority, the ld. SDR pointed out that the date of receipt shown by the Managing Director is based on his memory, which is clearly an afterthought. He has not produced any evidence in the form of postal cover, letter from the post office or inward register to show that the show cause notice was received by them on 10-8-1992. He submitted that as per the General Clauses Act, the presumption is that the letter containing the show cause notice is deemed to have been delivered in the normal course within a reasonable time. In this case the show cause notice having been sent on 30-7-1992, it must have been received by the appellants before 2nd August, and therefore, the notice is deemed to be within time. He produced the case records to show that the proper officer i.e. the Assistant Collector had authorised his Officer to issue the show cause notice and, therefore, the show cause notice signed by another Gazetted Officer is deemed to be on behalf of the Assistant Collector, as duly authorised. He submitted that this is a case of short levy and hence, the issue of show cause notice for recovery of short levy is proper in law and it is not a case, wherein the Bill of Entry had been finalised and that the Section 28 is inapplicable, as contended by the consultant. He further submitted that the appellants had not questioned the order passed on merits and hence, the question of rendering any decision on classification does not arise. The ld. SDR relied on the following rulings in his support :-
i. Almelo Laboratories Pvt. Ltd. v. Collector of Customs -1989 (41) E.L.T. 319 ii. Chandrakant Seth v. Collector of Customs -1993 (68) E.L.T. 289
5. We have carefully considered the submissions made by both the sides and have perused the records. The following questions have been raised by the ld. Consultant :-
i. that the CHA had not been authorised to receive the show cause notice and the service on the said CHA is not a service on the appellants, ii. that the show cause notice has been received by the appellants after the expiry of the 6 months and hence, the demands are time-barred, iii. that the show cause notice had not been signed by the proper officer and hence, it is invalid, and iv. that the Assistant Collector had already assessed the Bill of Entry and had cleared the goods and, therefore, reassessment under Section 28 on a different classification does not arise as it is not a case of short levy or a case of suppression.
6. Our findings on the above questions (i) & (ii) raised by the ld. Consultant, are as follows :
It is seen from the original file produced before us that the show cause notice has been received by the CHA in duplicate on 30-7-1992 with the following endorsement :-
"received two copies one for CHA and another for importer will be sent by courier service."
The appellant has not raised the question of improper service on the CHA, and the ground that CHA had been retained for clearing the goods only and that CHA had not been empowered to receive the show clause cause on their behalf. Instead, they had taken the said agent along with them before the Assistant Collector for pleading their case. Therefore, a presumption arises that the CHA had been retained by them to receive the show cause notice and also to contest their case. This is evident from the facts of the case. Therefore, the citations on this point are clearly distinguishable.
7. The view taken by the Tribunal in the case of Almelo Lab. (P) Ltd. v. Collector of Customs is applicable to the facts of this case. The Tribunal had also followed the Kerala High Court's judgment rendered in the case of Chellapan v. Additional Collector of Customs, as reported in 1978 (2) E.L.T. (J 547), which had examined the scope of Section 153 of Customs Act, 1962. The Tribunal has also noticed that in D. Sen Gupta's case, the Hon'ble Calcutta High Court had no occasion to deal with Section 147 of Customs Act, which is a specific provision with regard to recovery of the short levy from the Customs House Agent under certain circumstances and that the Hon'ble High Court was only dealing with the show cause notice in an offence case pertaining to [seizure] of goods under Section 124 of the Customs Act. The Tribunal has also distinguished the case rendered by the Special Bench in the case of Collector of Central Excise v. Presto Works -1987 (28) E.L.T. 469. The Tribunal has also noted the observations of the Madras High Court rendered in the case of KM. Mohamed Ghouse & Co. v. Additional Collector of Central Excise as reported in 1979 (4) E.L.T. (J 683) to the effect that the primary liability to pay the duty is on the importer under Section 28 but that liability can be sustained on the clearing agent CHA as a result of special provisions contained in Section 147. It also noted further observations of the High Court that in the first instance, the department should put [in] efforts to recover the amount due from the importer and only on their failure to recover from them, the customs department can proceed for recovery from clearing agent under Section 147(3) proviso. The Tribunal has, further, held that from the beginning the notice for recovery, as well as [actual order] confirming the short levy of differential levy had not [sic] been above on the importers, but on the other hand the Customs House had confirmed the demand on the Customs House Agent and they had drawn his attention to the bar for recovery of sums due to Government in terms of Section 142 of the Customs Act, on the importer's failure to pay the same. The Tribunal has also noted the obligation of the Customs House Agent (CHA) as laid down in the regulation 14D of CHA Licensing Regulations, 1984 as being relevant. According to which, CHA shall advise his client to comply with the provisions of the Act and in the case of non-compliance with the provisions, he shall bring the matter to the notice of the Assistant Collector of the Customs. The Tribunal has further held that the Act casts an obligation on the CHA to comply with the provision of the Act and in this context has held that the service of short levy demand on the CHA would assume validity. In that event of the matter, the Tribunal dismissed the case of Almelo Laboratories Pvt. Ltd.
8. In case of Trivandrum Rubber Works Ltd. the Tribunal did not follow the abovenoted case, but followed the rulings rendered in the case of Presto Works and that of D. Sen Gupta's case. The Tribunal has noted that the Hon'ble High Court of Calcutta was dealing with the show cause notice issued under Section 124 of the Act and there was no cause to deal with the provisions of the Section 147 of the Customs Act. The Tribunal has noted that the fact remains that the proviso to Sub-section 3 of Section 147 applies only when it is a case of the Revenue, that the amount of duty, which had been levied or short levied cannot be recovered from the owner. The Tribunal has not agreed with the distinction drawn by the single member in the case of Almelo Lab. Pvt. Ltd., with regard to the case of D. Sen Gupta.
9. As can be seen from the D. Sen Gupta's case, as rightly pointed out by the single member in the case of Almelo Lab. Pvt. Ltd., the Hon'ble Calcutta High Court had not examined the case in the context of Section 147 of the Customs Act, 1962.
10. In the case of Presto Works, the Tribunal has held in para 22 as follows :-
"22. In the light of the above discussions, and in the light of the judgments cited before us and for the reasons discussed in detail, we hold that, to begin with, there is no proof that the Customs House Agent is an agent of the importer even after clearance of the goods. Further, it is not established that either by law or by an agreement, he has been authorised or empowered to receive notice on behalf of the importer. The various judgments cited, show overwhelmingly that the amount due from the importer can be recovered from the agent only if, according to the proviso to Section 147(3) of the Customs Act, 1962, it is the opinion of the Assistant Collector of Customs that the amount due cannot be recovered from the owner/importer or exporter. In the matter before us, there is no record of such a finding by the Assistant Collector. The majority of the decisions cited by both the sides support the view that, in this case, the importer, to whom the notice was issued beyond the period of six months, cannot be made to pay the duty under Customs Law merely because a copy of the notice was sent to the clearing agent in time."
As can be seen from the above paragraph the Tribunal proceeded on the footing that the service of notice had not been established before them and further held that CHA had not been authorised or empowered to receive the notice on behalf of the importer. Therefore, in that event of the matter, the Tribunal held that the notice issued to the CHA is not a proper service on the importer.
11. As can be noticed from the case of KM. Mohamed Ghouse, the Hon'ble Madras High Court was dealing with the short recovery from the clearing agent and the High Court has made an observation that the liability can be fastened on the clearing agent, as a result of the Special provision contained in Section 147 and has further held that unless the condition of Section 147 is specified, the clearing agent will not be liable for the duty. It had been noticed that the proviso to Section 147(3) had specifically laid down that the differential duty payable by the importer shall not be recovered from the agent, unless in the opinion of the Assistant Collector, the same cannot be recovered from the owner, importer or exporter. The High Court had noticed that the demand made on petitioner on 30-5-1977 indicated that the amount has not been collected from the importer. The same is sought to be recovered from the agent. The High Court noticed that this stand, however, had been given up later and that the department had taken a stand that the importer had been served notice by post. Therefore, the Hon'ble High Court held that even assuming that the amount had not been actually collected from the importer or that the importer cannot be contacted by post; even those circumstances are not sufficient to attract the proviso to Section 147(3). The Court had held that the proviso seems to suggest that the liability of the importer can be passed on to his agent only, if in the opinion of the Assistant Collector of Customs, the same cannot be recovered from the owner. As can be seen from the facts of the Hon'ble Madras High Court's case, the department had proceeded to recover the duty from the agent. Thus, we notice the fine distinctions in each of these cases. Therefore, the Tribunal has not laid down in any of the cases noted above that the notice cannot be issued on the agent at all. What has been stated is that the department had not established, either in law or by an agreement that the agent had been authorised or empowered to receive notice on behalf of the importer. Therefore, what falls from these citations is that the question of service of notice on the duly authorised agent will not be valid, unless it is shown that the agent had been empowered to receive the same. In this case, the agent has volunteered to serve the notice on the importer and has accepted two copies for sending to importer through courier. He has appeared on behalf of the agent before the Assistant Collector and the importer had not taken a stand that the agent had not been authorised to receive the notice. In this view of the matter, the ruling rendered in the case of Almelo Lab. Pvt. Ltd. (supra) is clearly applicable to the facts of the present case and the law has been correctly stated. The case of Trivandrum Rubber Works is clearly distinguishable.
12. This matter can also be viewed from another angle. The Section 147 reads as follows :-
"147. Liability of Principal and agent - (1) Where this Act requires anything to be done by the owner, importer or exporter of any goods, it may be done on this behalf by his agent.
(2) Any such thing done by an agent of the owner, importer or exporter of any goods shall, unless the contrary is proved, be deemed to have been done with the knowledge and consent of such owner, importer or exporter, so that in any proceedings under this Act, the owner, importer or exporter of the goods shall also be liable as if the thing had been done by himself.
(3) When any person is expressly or impliedly authorized by the owner, importer or exporter of any goods to be his agent in respect of such goods for all or any of the purposes of this Act, such person shall, without prejudice to the liability of the owner, importer or exporter, be deemed to be the owner, importer or exporter of such goods for such purposes :
Provided that where any duty is not levied or is short-levied or erroneously refunded on account of any reason other than any wilful act, negligence or default of the agent, such duty shall not be recovered from the agent unless in the opinion of Assistant Collector of Customs the same cannot be recovered from the owner, importer, or exporter."
As can be seen from the above Section the Hon'ble Madras High Court in the case of KM. Mohamed Ghouse and Co. was dealing with regard to the recovery of the duty from the agent under Section 147(3). In this case we are not dealing with the recovery of the dues, from the agent but the question is with regard to the service of notice on the agent and whether it can be deemed to have been served on the importer. In the case of Presto Works, the Tribunal clearly indicated that there has to be a proof with regard to the agent having been empowered to receive the notice on behalf of the importer. As can be seen from the facts of this case, Section 147(3) is not applicable, but Section 147(1) and (2) are applicable. Section 147(1) and (2) clearly states that anything to be done by the owner, importer or exporter of any goods, it may be done on their behalf by his agent. As per Section 147(2), the burden is on the owner, importer or exporter to show to the contrary that they had not empowered the agent to do such an act and that the act had been done by the agent without their knowledge or consent. As can be seen from this case, the importer has not taken a defence before the lower authorities, that the agent had done this act, of receiving the show cause notice, without their consent and knowledge and that that action does not bind them. Instead they have appeared along with the agent and the agent had represented their case. Therefore, we have to hold that the act of the agent in receiving the show cause notice is with the consent and knowledge of the importer and the service on the agent is a service. Besides, we notice that the show cause notice had been served on the agent on 30-7-1992. This must have reached within three days i.e. well before the date of the expiry i.e. 3-8-1992. The importer had not produced the postal cover showing the seal of delivery or a letter from the postal authorities to confirm the date of service on 10-8-1992 or an inward register. They are basing this date, on the basis of their memory, without due proof, to establish their case. They have also not produced any affidavit of their agent to show that the notice through him was also not sent to them, and also to show that the agent had been retained only upto the clearance of the goods. Thus,, they have not discharged their burden as required under Section 147(2). Therefore, we have to presume that the notice must have been received by them well within the date of expiry.
13. As regards the third question raised by the ld. Consultant before us, we have perused the case records and notice that the Assistant Collector has authorised his immediate officer for issuing the show cause notice on 17-6-1992 with the following grounds :-
"Demand notice may be issued to the amount for the differential duty between 100% + 50% + 40% + 5% and 60% + 50% + 5% + 5%. The amount of duty short collected is Rs. 5,76,049.40 and D/N may be issued to that amount. A reply to IAD-CRA will be given later. Working sheet placed on RHS for reference."
On 30-7-1992 the approved notice was put up for signature to the Assistant Collector. The same has been perused by the Assistant Collector and he has initialled the same. This show cause notice has been issued only after the draft was perused and signed by the Assistant Collector. Therefore, there is no infirmity in the issue of this show cause notice by other gazetted authorised officer. The show cause notice is deemed to have been issued by the proper officer. As he had signed the draft and the draft was prepared under his instruction and authorisation and later signed in the file.
14. The ld. Consultant has relied on the case of Gujarat State Fertilizer Co. Ltd. This case is clearly distinguishable, as this case deals with the issue of notice under Section 11A of the Central Excises and Salt Act, 1944. This Section clearly lays down that the show cause notice for extended period is required to be issued by the Collector only. However, we notice that the Hon'ble Supreme Court in the case of Safari Industries v. Collector of Central Excise, Baroda as reported in 1993 (64) E.L.T. A197 has held that the show cause notice issued by the Superintendent will be valid. This view has also been confirmed by the Karnataka High Court in the case of Raletronics Ltd. v. Assistant Collector of Central Excise as reported in 1992 (60) E.L.T. 388. However, we have to clarify that we are not dealing with this situation at all. Therefore,, these citations are not relevant, as the question before us is totally different.
15. The last question raised before us is with regard to the lack of jurisdiction of Assistant Collector to initiate the proceedings, as the Bill of Entry had been fully assessed and goods cleared from Customs control. The appellant has pleaded that reassessment cannot be opened before the same officer and the Revenue has to file a proper appeal under Section 128.
16. The learned SDR had pointed out that this is a settled issue as per the rulings of the Hon'ble Supreme Court of India as in the case of Jai Shree Engineering Co. (P) Ltd. v. Collector of Central Excise 1989 (40) E.L.T. 214; Tata Iron & Steel Co. Ltd. v. Union of India and Ors. 1988 (35) E.L.T. 605 and Elson Machines (P) Ltd. v. Collector of Central Excise -1988 (38) E.L.T. 571, wherein it has been held that an approved classification list can be re-opened under Section 11A for recovery of short levy of duty for 6 months by issue of show cause notice under Rule 173B(4)(c) of Central Excise Rules and demands due under Rule 9(2). He pointed out that the Section [11 A] is pari materia and analogous to Section 28 of the Customs Act and that these rulings would apply to the facts of the case.
17. We have carefully considered these pleas made by both the sides and we are not impressed with the arguments raised by the ld. Consultant on this ground. As submitted by the ld. SDR, this issue is settled by a number of judgments rendered by the Hon'ble Supreme Court as noted above. It is also clear that the Section 28 of Customs Act is analogous and pari materia to Section 11 of Central Excises and Salt Act, 1944. Therefore, taking note of these rulings, we reject the contentions raised by the ld. Consultant.
18. In view of the findings given in all the issues in the negative there is no merit in this appeal and same is rejected.
19. [Assent per : S.K. Bhatnagar, Vice President]. -I find that a show cause notice was issued in this case with the approval of the A.C. as detailed by the Hon'ble Member (J) in paragraph 13 and therefore I agree with him that the notice had been duly issued under orders of the proper officer and was therefore a valid notice.
20. It is also important to note in this connection that the matter was subsequently adjudicated by A.C. and the demand was confirmed accordingly. Since a demand becomes realisable only after such confirmation and the same has been done by a competent officer there is no infirmity on that score.
21. In so far as time bar is concerned the notice was apparently, served on the Clearing Agent as well as the appellants themselves. The copy served on the Clearing Agent was within the prescribed time as evident from the case records. That the Clearing Agent continued to be the duly authorised representative for the purpose of even this matter is evident from the fact that the appellant had taken him along with him and both had appeared together and pleaded before the Assistant Collector in these proceedings. The case law cited by the Ld. Counsel is distinguishable and does not help their cause. In the circumstances, we hold that the appellants have not succeeded in showing that the notice was time barred.
22. There is of course yet another point as to whether the Assistant Collector was competent to adjudicate the matter. In this connection the appellants have not been able to show as to at which level the assessment had been initially finalised. Therefore, their contention remains unsubstantiated.
23. The case of Chanvim Engg. Pvt. Ltd. 1994 (74) E.L.T. 189 cited by the Ld. Counsel is not relevant as it relates to the Central Excise cases and not the Customs cases with which we are concerned.
24. The appellants have not challenged the A.C.'s order on merits.
25. I, therefore, agree with the conclusion of Hon'ble Member (J) that the appeal is liable to be rejected.
26. It is ordered accordingly.