Customs, Excise and Gold Tribunal - Calcutta
Tanya Diagnostic Centre vs Commissioner Of Cus. (Port) on 19 July, 2002
Equivalent citations: 2002ECR631(TRI.KOLKATA), 2002(146)ELT198(TRI-KOLKATA)
ORDER Archana Wadhwa, Member (J)
1. All the appeals are being disposed of by a common order as they arise out of the same impugned order of Commissioner of Customs (Port), Calcutta. Vide the said order Commissioner has confiscated two numbers of second-hand CT Scan machines imported by the first appellant M/s. Tanya Diagnostic Centre Pvt. Ltd. with an option to them to redeem the same on payment of redemption fine of Rs. 5,00,000/- (Rupees five lakhs). In addition, demand of duty of Rs. 8,35,632/- (Rupees eight lakhs thirty-five thousand six hundred thirty-two) has also been confirmed against the said appellant under the provisions of Section 28(2) of the Customs Act, 1962. Penalty of equivalent amount has been imposed upon M/s. Tanya Diagnostic Centre under the provisions of Section 114A of the Customs Act. In addition personal penalty of Rs. 5,00,000/- (Rupees five lakhs) has been imposed upon Dr. Kamal Kr. Dutta, Director of M/s. Tanya Diagnostic Centre under Section 112(b) of the Customs Act, 1962. Penalty of Rs. 10,000/- (Rupees ten thousand) has been imposed on Shri Arun Saini, another Director of M/s. Tanya Diagnostic Centre and Penalty of Rs. 20,000/- (Rupees twenty thousand) on Smt. Manjusha Dutta, Director of M/s. Tanya Diagnostic Centre. Penalties of Rs. 10,000/- (Rupees ten thousand) each has been imposed upon the rest of the appellants.
2.1 Briefly stated the facts of the case are as under :-
2.2 M/s. Tanya Diagnostic Centre Pvt. Ltd. (hereinafter referred as Tanya) is a Pvt. Ltd. Co. and Dr. Kamal Kr. Dutta is its Director. The said appellant imported one Philips Tomoscan CX Head Scanner (1987 Model) as per the actual user condition contained in Import-Export Policy, paragraph 5.4 regarding import of second-hand capital goods. The said goods arrived at the port of Calcutta in the month of October/November, 1998. M/s. Tanya filed a bill of entry on 12-11-98 for release of Philips Tomoscan CX Scan machines. Another bill of entry was filed by them on 24-12-98 for clearance of another second-hand Mammography machine. The said Tomoscan CX Head Scanner was assessed by the customs authorities under sub-heading 9022.14 of the Customs Tariff Act read with Notfn. No. 23/98-Cus., dt. 2-6-98. The appellant paid the duty accordingly.
2.3 Subsequently on the basis of information that the said CT Scan machine imported by the appellant from USA was not installed at the destination address, but was installed at M/s. Maa Durga Diagnostic and Research Institute (hereinafter referred to as Maa Durga) and at M/s. Manisha Imaging (hereinafter referred to as Manisha), thus violating actual user condition, the officers of special investigation branch of the Customs House, Calcutta started making investigations. During the course of investigations premises of Maa Durga and Manisha were searched and it was found that the CT scan machine imported by Tanya for its actual use was installed at Maa Durga. Similarly another Philips Tomoscan CX machine was found to be installed at the premises of Manisha. The officers also recovered the original copy of the agreement between Tanya and Maa Durga and between Tanya and Manisha. Inasmuch as the actual user condition was violated by the importer, the machines were put under seizure.
2.4 During the course of post-seizure investigations, statements of various persons involved with the importation of the machines and their installation at Maa Durga and Manisha were recorded. The result of such investigations conducted by the officers revealed that M/s. Tanya had imported CT Scan Machine in disguise of huge X-ray machine and also two machines were imported by them as against their declaration of one machine in the bill of entry. Valuation of the machine was also doubted by the officers.
2.5 Based upon the evidences collected by the Revenue during the course of investigations, show cause notice was issued to various persons calling upon them as to why the differential duty short-levied based upon the fact that the machine in question is properly classifiable under Heading 9022.12 instead of 9022.14 should not be confirmed against them; as to why the commercial invoice produced by M/s. Tanya should not be rejected and the value should be enhanced based upon another bill of entry; as to why the goods should not be confiscated inasmuch as the same were installed at two different clinics at Calcutta and as to why the penalties should not be imposed upon various persons. The said show cause notice culminated into the impugned order passed by the Commissioner.
3. We have heard Shri P.K. Dutta, ld. adv. Along with Shri Biswajit Mukherjee, Id. adv. appearing for M/s. Tanya. The other appellants have been represented by different advs. as indicated in the preamble of this order. Shri V.K. Chaturvedi, Id. SDK represented the Revenue.
4. It is the contention of Shri P.K. Dutta, Id. adv. appearing for M/s. Tanya that there was no misdeclaration on the part of the importer. The machine was described in the bill of entry as follows :-
Medical Equipments (Head Scanner Philips Tomoscan with Accessories) -Philips Tomoscan Head Scanner High Power X-ray (Year of Manufacture -1987) Used Medical X-ray Apparatus of Power more than 50 KW.
He submits that the description given by them in their bill of entry fully tallied with the description in the commercial invoice. A certificate was also produced from the chartered engineer issued by American Health Care Technologies, Inc. dt. 7-9-98 and the description of the impugned machine agreed with the description of the machine given in the aforesaid certificate. He submits that they had classified the machine under Heading 9022.14 and paid the duty accordingly. The notice issued to them called upon them to show cause against the differential duty by classifying the goods under Heading 9022.12 instead of 9022.14, without disclosing any reasons as to how the classification has been changed by the customs unilaterally. Though he agrees that the said point was taken before the adjudicating authority, who agreed that the show cause notice merely states that the machine would be classifiable under Heading 9022.12, without giving the notice a reasonable opportunity for explaining as to why the said classification should not be adopted and the Commissioner had also given them an opportunity of show cause notice against the proposed classification, but that does not cure the inherent defect in the show cause notice. Elaborating on his arguments Shri Dutta submits that they had classified the goods under Heading 9022.14 and in view of the list 14 SI. No. 1 of General Exemption No. 121 as appearing in Notfh. No. 23/93-Cus., dt. 2-6-98, duty was paid by them at the rate of 10% basic + 5% special + CV Nil + 4% SED. He submits that after they had filed bill of entry, there was detailed discussions with the concerned Asstt. Commissioner of the group, who wrote a detailed note to determine the category of the machine as to whether the same is high powered X-ray machine as stated in American chartered engineer's certificate and invoice or not. The attention of Deputy Commissioner was also drawn to the matter. The machine was re-checked taking into consideration the available documents and then the goods were assessed to duty after accepting the classification, but enhancing the value from US Dollars 20,400 to US Dollars 31,500. If the Revenue intended to change the classification, they should have done it at the relevant time and assessed the machine under sub-heading 9022.12 instead of sub-heading 9022.14. It is the contention of the Id. adv. that assessment once finalised, should not be re-opened, especially when there is no misdeclaration on behalf of the importer and no appeal having been filed by the Revenue against such assessment.
5. As regards the valuation aspect Shri Dutta submits that the same has been dropped by the Id. adjudicating authority.
6. Shri Dutta further submits that the findings of the Commissioner that they had imported two machines, he submits that the second machine, which was found at the premises of Manisha was incomplete inasmuch as one ADC card was missing and the other was defective out of the 10 ADC cards required for the machine. Inasmuch as the machine was incomplete, the same was not declared by them.
7. As regards the installation of the machines at the premises of Maa Durga and Manisha, he submits that the same were imported by them for installation at Bihar, where M/s. Tanya intended to open a diagnostic centre. However, it was subsequently discovered by them that three phase electricity line was not in existence at the Dhanbad site. The machines were installed at the premises of M/s. Maa Durga to keep the same functional. He submits that from the agreement entered into with Maa Durga it is clear that the said agreement was a temporary arrangement without parting away with the rights of ownerhsip. The machine found at Manisha was not even installed inasmuch as some vital parts of the same were missing. In these circumstances he submits that there has been no violation of the actual user condition and the confiscation of the machines on this ground was unjustified. He also submits that imposition of personal penalty upon Dr. Dutta and the other directors of M/s. Tanya was not justified.
8. Shri Chaturvedi submits that there is ample evidence on record in the shape of various persons' statement reflecting upon the fact that M/s. Tanya had imported two machines in the garb of one machine and there was misdeclaration on the part of the importer inasmuch as the CT scanner has been declared as X-ray machine and duty paid on the same by classifying it under a Heading which attract exemption. He also submits that M/s. Tanya is also not denying that the said machines were installed at Maa Durga premises and were kept at the premises of M/s. Manisha. He submits that explanation given by the appellant that there was no three phase electric connection at Dhanbad, where the machines were to be installed, is not justified inasmuch as it does not take time for making arrangement for three phase electricity line. The mala fides of M/s. Tanya are apparent and Dr. Kamal Kr. Dutta is the brain behind the entire arrangement. As such Shri Chaturvedi defends the impugned order.
9. We have given our careful consideration to the submissions made from both the sides and have gone through the impugned order of the Commissioner. Based upon the search and seizure and the post seizure investigations made by the Revenue show cause notice was issued to the appellants on 15-12-99 alleging misdeclaration of the description of the goods, the number of the goods and the value of the goods as also violation of ITC. The allegations as regards under-valuation of the goods have been dropped by the adjudicating authority vide his impugned order while upholding the other charges. As such the issues required to be decided by the Tribunal are as to whether there was misdeclaration of the goods justifying the Revenue's stand for change in classification from sub-heading 9022.14 to 9022.12 and as to whether there was misdeclaration as regards the number of the goods and as to whether the actual user condition for importation has been violated by the appellants.
10. As regards the first issue i.e. the classification the appellants have strongly contended that they had correctly described the goods in their bill of entry, which description tallied with the description given by the foreign supplier in their commercial invoice as also as given in the chartered engineer's certificate. They had claimed the classification under Heading 9022.14. The goods were examined and re-examined by the customs authorities before assessing the same under the sub-heading. If the Revenue authorities were not satisfied with the classification claimed by the appellant, they could have changed the classification at the time of assessment of the machine. Inasmuch as the bill of entry has been finally assessed and duty paid by the appellant, the change in classification based upon the misdeclaration about the description of the goods is not justified inasmuch as there was in effect no misdeclaration.
11. It is seen that if the goods are classifiable under Heading 9022.14, they are entitled to lower rate of duty. Whereas such exemption is not available to the goods if the same are held to be classifiable under Heading 9022.12. We have already produced in the preceding paragraphs the declaration given by the appellant in their bill of entry. There is no denying the fact that the description given by the appellant in their bill of entry is tallying with the description of the machine given in the certificate dt. 7-9-98 of the chartered engineer of American Health Care Technologies Inc. The same is also in accordance with the description in the commercial invoice. The machine was also examined by the Asstt. Commissioner, Docks and re-examined under the directions of the Deputy Commissioner as regards the power of the machine. The appellants had claimed the machine to be X-ray machine of 100 KW. Based upon the examination and re-examination the same was assessed under Heading 9022.14 with the benefit of exemption Notfn. No. 23/98. The Commissioner in the impugned order has held the goods to be classifiable under Heading 9022.12 on the ground that the same specifically covers computed tomography apparatus and from the literature submitted by the appellant it is seen that Philips Tomoscan CX is nothing but a general purpose CT used not only for head scanning but also for whole body scan and rightly classifiable under Heading 9022.12.
12. The question which arises is as to when the machine has been finally assessed by the customs authorities at the time of importation and no appeal has been filed by the Revenue against such assessment, whether the Revenue, in subsequent proceedings, can change the classification. We are not suggesting that such change in classification and the consequent short-levy or non-levy cannot be confirmed against the importer, but the same can be done only within a period of limitation as provided under the law. Of course this period of limitation of six months can be extended to five years when there is misdeclaration as regards the description of the goods. However, in the present case we find that the Commissioner has nowhere given a finding that the appellants have misdeclared the goods. We are in agreement with the arguments of Id. adv. appearing for M/s. Tanya that if the classification claimed by them was not correct, it was for the Revenue authorities to assess the goods under the proper heading. The customs authorities, in their wisdom, having accepted the classification under Heading 9022.14, at the time of importation, cannot now after a period of about one year, re-classify the goods under a different heading, when there was no misdeclaration as regards the description of the goods by the appellant. As such without giving any finding on the correct classification of the machine, we hold that its re-classification by the Commissioner in subsequent proceedings without filing any appeal against the assessment order was not justified.
13. As regards the mis-description about the number of machines the appellants' contention is that the second machine installed in the premises by M/s. Manisha Imaging was not a complete machine inasmuch as one ADC card was missing and one ADC card was not functioning. We do not agree with the above submissions of the appellant. The Commissioner by referring to the rules of interpretation has concluded that the appellants have imported two machines by misdeclaring the same as one number high power X-ray machine. Rule 2A of General Rules for the interpretation of the Schedule of the Customs Tariff Act, 1975 is to the effect that any reference in a Heading to an article shall be taken to include a reference to that article incomplete or un-finished, provided that as presented, the incomplete or unfinished article has the essential character of the complete and finished article. The appellants have not disputed that the machine in question was having more than 90% of its essential parts. Missing of one ADC card would not make the machine as incomplete. There is also no denial by the appellant that the said machine was not imported by them. As such we uphold the findings of the adjudicating authority that M/s. Tanya had imported two machines, but sought clearance by misdeclaring the same as one machine. As such the appellants are liable to pay duty on the second machine, which would be quantified by the adjudicating authority after deciding the correct classification of the same. We make it clear here that our observations as regards the classification of the machine duly declared by the appellant will not come as an obstacle in deciding the classification of the second machine inasmuch as the second machine was never declared by the appellant and as such the Revenue can classify the same in accordance with law and demand duty on the same.
14. As regards the violation of ITC provisions we find that the machines in qeustion were imported by M/s. Tanya on the condition of actual user in terms of Para 5.4 of the policy. The appellants have declared that the second-hand capital goods would be installed at Hirapur, Dhanbad, whereas the same have been found to be installed in Calcutta at the premises of M/s. Maa Durga and M/s. Manisha. The statements of the various persons recorded by the Revenue to this effect show that the actual user condition has been violated intentionally by the appellants by not installing the machines at the declared premises. The reasons advanced by M/s. Tanya that the same were installed at Calcutta inasmuch as there was no three phase electricity connection at Dhanbad, do not advance their case. Installation of the machines at the other functioning and operational hospitals and clinics clearly show the violation of the actual user condition. The appellants' contention that the ownership of the machines was not parted with is of no avail to them inasmuch the same is not one of the criteria for the actual user condition. We draw support for the above observation for the recent decision of the Hon'ble Supreme Court in the case of CC (Import), Mumbai v. Jagdish Cancer & Research Centre - 2001 (132) E.L.T. 257 (S.C.) = 2001 (46) RLT 121 (SC). In Para 13 of their judgment, it has been observed by their Lordships that the arrangements with another hospital in the proximity which is a sister concern of the centre, with whom the centre had entered into an agreement for reserving 10% beds, will not satisfy the conditions of the notification involved in that case, which require reservation of 10% of beds for the same hospital where the equipment is installed. As such we find that M/s. Tanya have violated the provisions of Para 5.4 of ITC policy, making the goods liable for confiscation and the appellant liable for penal action under the provisions of the Customs Act, 1962. Accordingly, we uphold the confiscation of the machines with an option to the appellant to redeem the same on payment of redemption fine of Rs. 5,00,000/- (Rupees five lakhs), as ordered by the Commissioner.
15. As regards the personal penalty upon M/s. Tanya, we have already observed that the same is imposable for importation of extra machine without declaration and without payment of duty and in violation of the actual user condition. However, inamsuch as their appeal succeeds on the first issue of classification, the Commissioner will decide the quantum of penalty afresh after quantifying the demand on the second machine.
16. As regards personal penalty of Rs. 5,00,000/- (Rupees five lakhs) on Dr. Kamal Kr. Dutta, Director of M/s. Tanya Diagnostic Centre Pvt. Ltd., it is seen that he was the active Director fully involved in the importation of two numbers of second-hand machines and gave necessary instructions to the various persons. His involvement has surfaced on record based upon the various statements recorded by the Revenue during the course of investigation. The Commissioner in his impugned order has discussed in detail the role played by Dr. Dutta, basing his observations on the statements of various persons. As such we hold that the said appellant is made himself liable to penalty. However, keeping in view the fact that the appeal of M/s. Tanya on the point of classification and the duty involvement would come down considerably, we reduce the personal penalty of Rs. 5,00,000/- (Rupees five lakhs) imposed upon Dr. Dutta to Rs. 3,00,000/- (Rupees three lakhs). But for the above modification in the quantum of personal penalty his appeal is otherwise rejected.
17. As regards the imposition of personal penalty of Rs. 10,000/-(Rupees ten thousand) on Shri Arun Saini and Rs. 20,000/- (Rupees twenty thousand) on Smt. Manjusha Dutta, directors of M/s. Tanya Diagnostic Centre Pvt. Ltd., it is seen that he has denied his involvement with the violations committed by Dr. Dutta. Mere non-appearance in response to summons cannot be taken as ground for arriving at the finding of guilt of the said appellants. The said appellants' direct involvement is not borne out from the evidences on record. Smt. Dutta is also not looking after day to day affairs of M/s. Tanya and it is only on the basis of signing of the two agreements with M/s. Maa Durga and M/s. Manisha penalties have been imposed upon them. She has signed these documents as director and at the behest of Dr. Dutta. In the absence of any evidences on record, we extend the benefit of doubt to the said appellants and set aside the personal penalties imposed upon them.
18. The appellant Shri Himanshu Bhusan Paul is a chartered accountant who was appointed by Dr. Dutta to inspect and value the machines. From the reasoning adopted by the adjudicating authority for imposing penalty of Rs. 10,000/- (Rupees ten thousand) upon him, we find that the said appellant acted in routine discharge of his duties as a chartered accountant and it cannot be said that he was involved in the wrongful importation of the machines and the violations of actual user condition by Dr. Dutta. As such we do not find any justifiable reason for imposition of penalties upon him and allow his appeal by setting aside the same.
19. Personal penalty of Rs. 10,000/- (Rupees ten thousand) has also been imposed on Shri Pratik Kr. Sen, Director of M/s. GYPTPAK (I) Pvt. Ltd. It is the contention of the appellant that he acted only as a consultant and there was no role played by him for the wrongful importation. After going through the discussions of the adjudicating authority, we find that the Id. Commissioner has placed heavy reliance upon the fact that the said appellant's clearing agency licence was cancelled in the past on account of manipulations of documents and he has vast knowledge of customs clearance and had given guidance to Dr. Dutta to plan fraudulent activities with ulterior motive. However, we find that there is no direct evidence on record against the said appellant and as such we set aside the personal penalty imposed upon him.
20. For the similar reasons we set aside the imposition of personal penalty of Rs. 10,000/- (rupees ten thousand) imposed upon Shri Pinto Rose, who has extended a helping hand to Dr. Dutta.
21. All the appeals are disposed of in the above terms.
22. Before parting we would like to dispose of the miscellaneous application filed by M/s. Manisha Imaging praying for a direction to customs authorities to remove the CT Scan machine from their premises, inasmuch as they are finding it difficult to install another CT scan machines at their premises. We direct M/s. Manisha Imaging to approach the customs authorities with their request.
Sd/-
(Archana Wadhwa) Member (J) C.N.B. Nair, Member (T)
23. I have carefully perused the Order recorded by learned Member (Judicial). With regard to liability of the second-hand machines to confiscation under Customs Act for violation of ITC Policy and penalty, I see the case differently for the reasons stated hereunder.
24. With regard to the ITC Policy, the allegation is that the importers have violated Para 5.4 of ITC Policy for the relevant period (the import being of 1998, policy for the period from 1st April, 1997 to 31st March, 2002). Para 5.4 reads as under :-
"Import of second-hand 5.4 capital goods All second-hand capital goods, having a minimum residual life of 5 Years, may be imported by actual user without a li-cence, subject to actual user condition and in accordance with the procedure given in Handbook (Vol. I)"
The para makes it clear that import is "without a licence, subject to actual user condition and in accordance with the procedure given the Handbook of Procedures (Vol. I)". The handbook has the following to say under Para 5.4:-
"Import of secondhand capital goods 5.4 The actual user shall furnish to the Customs at the time of clearance of goods, (i) a self-declaration to the effect that the second-hand capital goods being imported has a mini-mum residual life of 5 years, and (ii) a decla-ration to the effect that he is an actual user, in the form given in Appendix-9. In addition to the above, a certificate certifying the re-sidual life of the capital goods and reason-ability of the certification agencies, including their branches as given in Appendix-32A, where the CIF value of the capital goods being imported is Rs. one crore and above. The second-hand capital goods shall not be transferred, sold or otherwise disposed of within a period of five years from the date of import, except with the prior permission of the Director General of Foreign Trade."
24. There is no allegation that the imports did not satisfy the above policy provisions. There is no complaint that at the time of clearance of the goods the appellants satisfied the requirement for the import. The only allegation is that importers alienated the machines before the expiry of the stipulated period of five years. Paragraph 5.4 of Handbook of Procedures makes it clear that that alienation can be permitted by the Director General of Foreign Trade.
25. From the above legal provisions, it is clear that issues relating to alienation of imported second-hand capital goods under actual user condition relating to import policy fell within the purview of Director General of Foreign Trade. For that reason, it is clear that customs jurisdiction ended at the time of clearance of the goods, at which point the jurisdiction of the Director General of Foreign Trade began. I am afraid that the Apex Court's judgment in the case of Jagdish Career & Research Centre would not apply to this case, as the judgment was in respect of violation of conditions of Customs exemption and not ITC Policy.
26. In view of the ITC provisions discussed above, I am of the view that the actions taken by the Customs for ITC violation are required to be set aside, for want of authority.
27. The dispute that survives now, is regarding importation of two machines in the guise of one machine. As pointed out by the learned Member (Judicial), the amount of duty evaded on that score, is required to be determined afresh by the adjudicating authority. Penalty depends upon the duty evaded. Therefore, I feel that determination regarding penalty on M/s.
Tanya Diagnostic and Dr. Dutta for the import of the second-hand machine is also more appropriately required to be left to be determined by the adjudicating authority in a fresh proceeding. I agree with the learned Member (Judicial) on other issues, including that remaining appeals at Serial Nos. 3 to 7 are required to be allowed.
Sd/-
(C.N.B. Nair) Member (T) DIFFERENCE OF OPINION
1. Whether confiscation of the machines for violation of ITC conditions is required to be sustained?
2. Whether penalty on Dr. Dutta is to be reduced or that issue also is required to be remanded?
Sd/- Sd/- (C.N.B. Nair) (Archana Wadhwa) Member (T) Member (J) THIRD MEMBER DECISION V.K. Agrawal, Member (T)
28. I have heard Shri P.K. Dutta, Id. Advocate along with Shri Biswajit Mukherjee, Id. Advocate, for the appellants and Shri A.K: Pandit, Id. JDR on difference of opinion referred for my consideration.
29. Ld. Advocate, Shri Dutta submitted that M/s. Tanya Diagnostic Centre Pvt. Ltd. had imported one Philips Tomoscan CX Head Scanner (1987 Model); that Para 5.4 on ITC Policy for the relevant period allowed import of second-hand capital goods having a minimum residual life of five years by actual user without a licence, subject to actual user condition and in accordance with the provisions given in Handbook (Vol. I), that Handbook provides that the actual user shall furnish to the Customs at the time of clearance of goods, (i) a self-declaration to the effect that the second-hand capital goods being imported has a minimum residual life of 5 years, and (ii) a declaration to the effect that he is an actual user, in the form given in Appendix-9; that in addition a certificate certifying the residual life of the capital goods and rea-sonability of the certification agencies where the CIF value of the capital goods being imported is more than Rs. 1 crore. The Handbook also provides that the second-hand capital goods will not be transferred, sold or otherwise disposed of within a period of five years from the date of import except with the prior permission of the Director General of Foreign Trade. Ld. Advocate further submitted that at the time of import of the impugned goods they have complied with all the conditions contained in Para 5.4 of the ITC Policy read with Handbook; that the impugned goods cannot be confiscated on the ground that they have alienated the impugned goods before the expiry of the stipulated period of five years; that alienation in terms of Handbook can be permitted by the Director General of Foreign Trade (DGFT); that on account of such legal position, Id. Member (Technical) has given his findings that "alienation of imported second-hand capital goods under actual user condition relating to import policy fell within the purview of Director General of Foreign Trade. For that reason, it is clear that Customs jurisdiction ended at the time of clearance of the goods, at which point the jurisdiction of the Director General of Foreign Trade began." Ld. Advocate also submitted that the decision in the case of Commissioner of Customs (Import), Mumbai v. Jagdish Cancer & Research Centre - 2001 (132) E.L.T. 257 (S.C.) = 2001 (46) RLT 121 (S.C.) is not applicable to the facts of the present matter inasmuch as in the said judgment, the condition of the Notification issued under the Customs Act were involved and there was no mention of violation of the ITC condition at all in the said matter. He further mentioned that on the other hand, the decision in the case of Vinod Gupta v. Collector of Customs -1988 (37) E.L.T. 44 (Cal.) is squarely applicable to the facts of the present matter wherein it was held that "whether or not after the release of the goods, the petitioner will be able to sell the goods in view of the restrictions imposed by the Essential Commodities Act is a matter for the State Government to decide. But this cannot be a ground for holding that the importation is unauthorised or withholding the release of the goods." The Id. Advocate thus contend that the Customs authorities cannot confiscate the impugned goods for the violation of the provisions of ITC Policy after the goods have been imported lawfully. Reliance has also been placed by the Id. Advocate in the case of Biocon India (Pvt.) Ltd. v. Additional Collector of Customs, Muzaffarpur -1994 (70) E.L.T. 688 (Tribunal). The Id. Advocate also mentioned that the ratio of the decision in Jagdish Cancer & Research Centre is not applicable as it did not decide the matter relating to contravention of ITC provisions; that a decision is an authority for what it decides and not what can logically be deducted therefrom as held by the Hon'ble Calcutta High Court in the case of }aya Sen v. Sujit Kumar Sarkar - AIR 1998 Calcutta 288. Reliance has also been placed on the decision in the case of Mittal Engineering Works (P) Ltd. v. Collector of Central Excise, Meerut - 1996 (88) E.L.T. 622 (S.C.) = (1997) 1 Supreme Court Cases 203 wherein it was held that "a decision cannot be relied upon in support of a proposition that it did not decide."
30. Ld. Advocate further submitted that the adjudicating authority had imposed a penalty of Rs. 5 lakhs on Dr. Kamal Kumar Dutta, Appellant Number II, which has been reduced by the Id. Member 0udicial) to Rs. 3 lakhs whereas the Id. Member (Technical) has held that as the amount of duty evaded on the importation of second-hand machine is required to be determined afresh by the adjudicating authority and penalty depends upon the duty evaded, the determination regarding penalty on Dr. Dutta for the import of second-hand machine is also more appropriately required to be left to be determined by the adjudicating authority in a fresh proceeding. He, therefore, requested that the determination of penalty on Dr. Dutta may also be remanded to the adjudicating authority as the Id. Member (Judicial) has remanded the question of penalty to be imposed on M/s Tanya Diagnostic Centre to the adjudicating authority after determination of demand of duty leviable on the second-hand machine.
31. I have considered the submissions of both the sides. Section 111(d) of the Customs Act provides that any goods which are imported or attempted to be imported or are brought within Indian Customs Waters for the purposes of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force are liable for confiscation. It is not in dispute that the impugned goods could be imported only on fulfilment of the conditions mentioned in Para 5.4 of ITC Policy for the relevant period read with Handbook. The conditions imposed were that the second-hand capital goods should have minimum residual life of five years and are imported by actual user who would furnish declaration about the capital goods having a minimum residual life of five years and he would not transfer, sale or otherwise dispose of the second-hand capital goods within a period of five years from the date of import except with the permission of DGFT. It is not in dispute that no prior permission of the DGFT had been obtained by the appellants before alienating the impugned goods. The importation of the impugned goods was subject to the condition and any contravention of the condition whether prior to the importation or after importation would make the goods liable for confiscation under the provisions of Customs Act. Once the goods became liable for confiscation under the Customs Act, the proper authority to confiscate the same and to redeem the same on payment of fine, is Customs Officer as designated under the Customs Act. In Jagdish Cancer & Research Centre case, the Honl)le Supreme Court no doubt has considered the contravention of the condition specified in a notification issued under the Customs Act. But the fact remains that these conditions were contravened after the importation of the goods and not before the importation of the goods. It is thus legally settled by the Highest Court that the Customs Authorities can legally hold goods liable for confiscation even after the goods have been imported and put to use. The ratio of the decision in the case of Vinod Gupta, relied upon by the Id. Advocate, is not applicable to the facts of the present matter as the facts are entirely different in both the cases. The issue involved in Vinod Gupta case was whether the petitioner could have imported rapeseed oil on the strength of REP licences. The import of rapeseed oil was not made under the provisions of the Essential Commodities Act nor there was a condition contained under the Customs Act or any other law which was in force at the relevant time which required the import of rapeseed subject to distribution of rapeseed oil according to the provisions of Essential Commodities Act. In the light of these facts, the Hon'ble Calcutta High Court held that whether the petitioner would be able to sell rapeseed in view of restrictions imposed by the Essential Commodities Act cannot be a ground for holding that the importation is unauthorised or withholding the release of the goods. The ratio of the decision in the case of Biocon India (Pvt.) Ltd. is not at all relevant for deciding the present matter as it was held therein that the Customs authorities are not empowered to take a cognizance of violation of Central Excise Act and Rules. I am, therefore, of the view that the adjudicating authority was competent to order for confiscation of the machines for violation of the ITC conditions. I answer the question accordingly.
32. Regarding imposition of penalty on Dr. Dutta, I observe that the Id. Member (Judicial), while holding that the personal penalty is imposable for importation of extra machines without declaration and without payment of duty on M/s. Tanya Diagnostic Centre, has remanded the matter to the Commissioner for deciding the quantum of penalty afresh after quantifying the duty payable on the second-hand machines. As the quantum of penalty is to be determined in respect of Appellant Number I afresh, I find it reasonable and in the interest of justice that the determination of quantum of penalty in respect of Dr. Dutta should also be left to the Commissioner in de novo proceeding for all the violations. I, therefore, agree with the views expressed by the Id. Member (Technical) that the issue regarding imposition of penalty on Dr. Dutta is required to be remanded to the adjudicating authority.
33. The papers may now be put up to the Bench for further action.
Sd/-
(V.K. Agrawal) Member (T) FINAL ORDER In view of the Majority Opinion, the appeals are disposed of as under:
(i) The confiscation of Philips Tomoscan CX Head Scanner (1987 Model) is upheld for violation of ITC Policy with an option to the appellant to redeem the same on payment of redemption fine of Rs. 5,00,000/- (Rupees five lakhs only);
(ii) The short-levy on account of change in classification from subheading 9022.14 to 9022.12 is set aside;
(iii) The charge of misdeclaration as regards the number of machines imported by M/s. Tanya Diagnostic Centre is upheld. The matter is remanded to the original adjudicating authority for quantification of payment of duty on the said machines after deciding the classification;
(iv) The issue of deciding the quantum of personal penalty liable to be imposed upon M/s. Tanya Diagnostic Centre and Dr. Kamal Kr. Dutta is remanded to the Commissioner.
(v) The appeals of Shri Arun Saini, Smt. Manjusha Dutta, Shri Pratik Kr. Sen, Shri Himanshu Bhusan Paul, Shri Pinto Bose, are allowed by setting aside the personal penalties imposed upon them.
Sd/- Sd/- (C.N.B. Nair) (Archana Wadhwa) Member (T) Member (J)