Karnataka High Court
Commissioner Of Customs vs Sri Vikram Jain S/O Sri Bheemraj Jain on 30 September, 2009
Bench: D.V.Shylendra Kumar, Aravind Kumar
IN THE HIGH COURT OF KARNATAKA, DATED THIS THE 30m DAY OF SEPFELQ-§E'R,' PRES ENT THE I-IONBLE MR. JUSTICE AND'---. 1 .. THE HONBLE MR. JUSTICE ARAV1 C.S.'I'.A No.31 OE 2005 ' BETWEEN V' V' « Commissioner of ' C.R.Bui1ding, Qu§:ens"'Ro-aid, " Bangai0re--580fQQI. Appellant [By Sféihtiing counsel) AND: 1.. ' V % V % 1. sr:.V1kfanj Jain, *_ S / Q Sri~. Bheemra} Jain, ' - 'Pt'D15.Ivi;/s"DTexw019fh' 'International. » _N0_.V1€~, Piilapgja Lane, 'JDunL11fa~.DM3,sji;ii Road Cross, "Bazigaiolifi--5.60 002. 2. uS:i.;}'..s1hiDk Kumar Shroff, Es/o srguma Shankar Shroff. * VPr'op.M/s Prachi Siiks, I /3, Sanjeeva Naik Lane, Avenue Road Cross, ~ ---Bangalore-560 002. 3. Sri.La1it Jain, S/ o Sri.Bheemraj jain, Director, M/ s Pate1Angadia Co(P] L'I'D., No.60, Jumma Masjid Road, Bangalore 560 002. 4. Sri.Bheemraj jajn, S/ o Sri.Da1chandji Jain, Managing Director, M/ s Patel Angadia Cot?) Lrtdg' :4 No.16, Pillappa Lane}. _ Jumma Masjid Road Cross, 1 " " Bangalore 5606002. " S/o subba Rae», _ Trucks: rl\/Eovemémt .._ir1~._Ch_arge-,--. . . M/s 3De1uXeR_.oadhfne.s'Pvt Lt--d., No.79; «cram Cvross;'~NR React 6 Bar1gaIore?560»OO-2'.-- 5. Sfi.S.Mur21ici.fjs_r," , 6. S11. ~IV)uh'arrr1.éis}1.:i, S/o'«:.Sr_i§Kushaichand D Shah, " .EA>si"e:r:1,i't.i:'\»'e6'D1f_rector, ' M"/Vs_De1u§<eAVRoadlines Pvt Ltd., 4".F%_Cross, NR Road, Bsu'1ga1o.reA%_560 002. Respondents
16-6 3-5 by Sri.G.Sampath, Sri.M.G.Varadarajan, Sri. '?S.R'aghu and Smt.Vijaya Prakash, Advocates. R~2 by " __Sri.§vI.P. Chidananda Urs, Advocate] This Appeal is filed under Section l30[1I'--l:of:g.The Customs Act, 1962, praying to allow the appealQand;__se.t aside the order dated 29-8-2003 passed by =tl"ieVC_t1stoIiis,l'r 4_ Excise & Service Tax Appellate Tribuna1--,-.. .Zonal.. Bench, Bangalore in Appeal No-;C/4'0, 48,, 5'7; 66/2002 and confirm the order A. I passed *b'3r__ athe Commissioner of Customs in Order«.in"~Qrigin'al No.85-,_/2.0l0~1u dated 5-12-2001.
This Appeal having heard' reserved on 27-7-2009 coming on for pror1ou1i.e;ernte.nt of judgment, this day, ARAVINI) KUMAR . ,_ Adlelixijered the' following:
gonlsmeirr .0 3 ' The _ preferred this appeal 29-8-2003 passed by the Culstoins, Tax Appellate Tribunal. South Zonlai.4B_a1igalore in Appeal N'o.C/40, 48, 49, and 2002....whereunder the Tribunal has allowed by the appellants and has set aside the ordeprhofltlie-'clAdjudicating Authority dated 5-12-2001 ' passed"iri':.Order-in-Original No.35 / 2001 and remanded the back for adjudication by the competent jpvurisdictional authority after due investigation of the facts W by holding that Adjudicating Authority at no jurisdiction. Further, the order of authority passed by invoking th:eMbow'e.rsi_gofA the Customs Act, 1962 has_.a_lso set A' It°';is'*th:is, order which is under challelfige"before>th'isl':Court by the 1'€V€I1l1€.
2. This rnatter on 28-2-2007.
Following of' law are framed for consideration ':ie.ci's.ionl of this Court:
(i)l*--._ has committed an error "in" _hlolding ,:'I:hat the Department cannot confis_cate ' the smuggled goods Without elstablishihg the point Where the customs " ' barrier is breached?
A=-.__[ii) 'wlaether the Tribunal has committed an error " V in holding that the order of confiscation is not W, an "action--in--rem"'?
were silk yarn and he had delivered some of the sill: bales. The said statement was also endorsed by anotlieif-d'eel.i\zery Clerk by name Sri.Neelappa Gowda. Departrnenteissued':
show--eause notice dated 24-1 1~20CV()"as_t'o_ _
1) the seized 1569.40 Kgs. of'raw._silk/,si1Ié<;' * y yarn contained in 25"'-b.alesd'v-valued.
Rs.23,54,100/~ should "n.ot»be coi1fis'ea-tedj' under Section 11 (d] of _.the__C1istom's.Act,,' 1962, u~.
ii] the packing 1nateri'al_ n{amely~., the gunny bags andithe sloth' - Vwhieh the seized goods-'v.reite "pa"Cke'd_ should not be confiscatedi.»under..___"Seetion 118 of the . ~
111) customs dutyeevofy'Re,21.'58,122/-- along with
- interest due;__i:t7,ar1.y,' payable on 17 bales ;{l()67.19» ' of smuggled silk yarn .';°<seized_ should---«'not be demanded from 'ShfiAHknnn Jan] under semmnl 28H) 2 of the Customs Act, 1962, duty of Rs.2, 15,584/-- along with interest due, if any, payable on 8 bales (502.20 Kgs.) of smuggled si1k yarn seized " 4_ should not be demanded from Shri.Ashok _:1.Kumar Shroff under Section 28(1) read with Section 28 A B of the Customs Act, 1962, y , 17
(a) in the case of any import made by.u'any__e '5 individual for his personal use. Government or by any educational, research or charitable lI',i,S"o't'll':.'.lul§J;Ol'1__.'O.I""~V"--- hospital, within one year; "
(b) in any other case,"1yithin l from the relevantéldateg se.r\fe~.no,tiee on the person Chargeable_I'With the-.y"_'d1}1t_y or interest which has -not been levied or Charged 0iflW.hiel;i has".be.enXshQrt}levied or part paid forlytol'-wlhom4_'the' refiind has erroneoLis.1y"~.been ".rn._ade_, requiring him to ShOWVCVa1;iSV€§V wh.y«.he.'should§ not pay the ajfnount'eipeeified'in*the notice:
PRC)X[IDiED'-that' any duty has not been levied orha-._s been short--levied or the interest has not been charged or has been A_ lpalftypaid or theduty or interest has been lllerroneoiisly * refunded by reason of
- " eollu_sioii1..y_o'r any wilful rnis--statement or . "-l'__suppressio'n of facts by the importer or he the exporter or the agent or employee of ether'-importer or exporter, the provisions of this sub--seetion shall have effect as if for as .-the "Words "one year" and "six months", . _ the words "five years" were substituted:
(pl
112. Penalty for improper it goods, etc. 21 any notified goods in relation to which any provisions of Chapter IVA or of any .V rule made under this Act for carrying ou.t._'_» V the purposes of that Chapter have be con.travened.} '' Any person, --
(a) who, in relationgto any goods_. does'-or..V' omits to do 'any aLct.virh.ich"«.gact or omission would render siiich _g'o_od.s' liable to confiscation 1:n'c_ier'.secti'on '1i.1-- or abets the.:doing;_'orgo1:1is4s'i~on._ of 'stlch an act, or ' 1 ' Q = who ac'qt1i.res.,possession of or is in any Way' 4conceriied»_in._ cariying, removing, depositing',-. harbouring, keeping, conce'a1i1'1gV, selling" or purchasing, or in ; any otherwmanner dealing with any °<.goods_ which"--he'knows or has reason to be}iev_e"..are Iiable to confiscation under 'b*secfionci1i.
Sh (:1 all be --
" in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty [not exceeding the value of the goods or five We {ii} Ii?) ..
22 thousand rupees], whichever is the greater;
in the case of dutiable goods, _.oth.e1~', than prohibited goodsgto penalty-V {not exceeding the duty=,sougb7t Atoebe V' evaded on such goods or five'-thousand » 2 V rupees], whicheveristhe greater; in the case of goods"-in-.._V_restj'e«ct:v.of which the value stated-. in "the entry"
made under this Act in'-the'i£:ase of baggage, in the _ deciar.atioé:i~, __'_made under _"section""'T'~7T eith.e3? case hereafteevin thisi section' referred to as th_c*'de.c1a_re.d"val_ue} is higher than the va}ue--::_ 't_hereof,'"5fto:'V-ea "gpenalty {not
-« eXce'edin"g;, the V difference' between the deciaredygv ajueuand the value thereof or lflfive 'thousraridee'=1ju'p.ees], whichever is the greater;'- _ in case of geods failing both under ,_rc1auses'"[i} .... and (iii), to penalty [not exceeding the value of the goods or the difference between the deciared value A and the value thereof or five thousand v_ru§é.ees], whichever is the highest;
" _ in the case of goods falling both under " clauses (ii) and [iii], to a penalty {not exceeding the duty sought to be evaded on such goods or the difference between the deciared value and the /F"
23
value thereof or five thousand rupees], whichever is the highest]
122. Adjudication of confiscation penalties p In every case under this C_haptei*. p which anything is liableV.atQ_ confisciationfor, ' p any person is liable to -.,a"~V..pena1ty,' confiscation or penalty may 'adjud'ged',g-- -'
(a) without limit, a -[Ceinmislsioner A Customs] or a ldoirit'uC'oi'n:rn1ss1o1i.er of Customs];__ fb) whereythe goods-wliable to confiscat,ion- " 'd_oes_}not. V exce_'ed_ ' [two lakhl rupees, "by, an Likssistarit Commissioner of" (;ust"orns 'gar Deputy '"Co1"nm1ss1oner of Cu stoni i' .. M C (C) where the va1ue~.zo?f the goods liable to ;'confiscation" does not exceed [ten tl:1ousand]"'r1_.1pees, by a Gazetted Officer it of Customs lower in rank than an ' ,Assistant_Commissioner of Customs. .' A ['122iA.i§;djiid1cat1on Procedure (1) adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an " opportunity of being heard to a party in a proceeding, if the party so desires. W, 24 (2) The adjudicating authority may, _..if_ sufficient cause is shown at any stage of proceeding referred to in subsection "(!V],' grant time, from time to__ti1_ne, to parties or any of them and adj'ou'rn'1tl'1»e hearing for reasons to be recorded 'in A ~ writing: V' ' PROVIDED that no adjoiJr.n'ri1ent:':§ shall be granted rnore than»v._three tirnes_to,r' a party during the ~p_roc«eeding.V}._"~-.
123. Burden of proo£_i2i."_cef:rt=étiv1l1' 'éfasfes (1) Where 'ai3y"goo.ds€ to which ' this section applies air_e.';seiz.ed:'u.nd.er-« this Act in the reasonable belief g_ that; V they are V Srlrlulggled-I goods , the 'b-urcien of proving thattrthey are riot._sInugg1ed goods shall . g
(a) inlagcase Whf:re~~-such seizure is made 'W from the possession of any person, Ti) the person from whose " _ 'possession the goods were -seized;
"'{':i.i) if any person, other than the person " V "1-from whose possession the goods were seized, claims to be the owner thereof, also on such other person; \ 28 Act has not so far been undertaken. SeVera_Vl"'--V provisions of the Act have become *' Difficulties have also been experienced-ii3ai:the*C~:: . implementation of certain The trade has been pressin__g»:'--__fAor C' changes and facilitie:s~;..V_A SmeuCggling',"' consequent to controll_eii-Leeononiyfliv: hafis presented new .A T_o._i'meet these requirements, it has to revise the it V C C it
11.The w'a_sA___brou.gi£t about not only to check the smu_gg1ingA3,V'but"fa1s'ovi._to---,_er1sure that the goods that is imported iiltol the' India to which the Customs Tariff§2Xct~are apblicable suffers the duty in the hands of th 'iyriporterb . __ C' . H of, and exemption from customs duties is Cetraceablegtov chapter V of Customs Act, 1962sSection 12 ":ofCustoIns Act provides for levy of Customs duty at rates as may be specified under the Customs Tariff Wu.
31 4% SAD and a cess of 0.05% and is classifiable under EXIM code 5002.00 and it was a restricted item. pl'L]_i's..also to be noticed that during April 1997 to said goods were not freely irnportable. 'it. required an SIL for import and in»._the~a.bsence of tii.:er..__sa:ne it was a prohibited item. Search and .. seizu1*e"o.f they ggoodsf sample of goods have been____iforwarded' to Vv.l'3C'1"RI for verification on 21-62000. lforpffbe'ing:'examined by the Deputy Director_:of__ Bangalore for ascertaining navture:V'of.Vth.e goods seized. The said office has opined that seized was of Chinese origin. It is {oil this xprerriise the show--cause notice dated 2441- be issued to the respondents demanding as to why the confiscation should not be . done; du:ty'vshould not be demanded and penalty should 0' imposed. A personal hearing also seems to have beerrgiven to the respondents and on consideration of their reply adjudicating authorities have come to the 0 V 34 improperly imported goods etc.' The contingencies are the circumstances undefrg' whichi goods could be confiscated are enuinerated_;inV"ciau'se's (a) T V to [p]. In the instance case show cause notioetwasv i.ssued under clause [d] of Section and reads as follows:
"(CB Any goods imported or attempted to 'be Rift?' brought within the Indian ie.1i':-jtonis__:'w_atersV_'for the purpose of being any prohibition imposed'tvby_aot,und'et_ this Act or any other law fot' -the time »fo.1-"'ce:"
and by inVoVk1n.g' -this jafovision the goods came to be 'levied under Section 28(1) and penalty "Section 112 of the Act. The said show- cause no_ticelV_came to be adjudicated and confirmed as per ordeti-dated 5-12-2001 which came to be reversed by g4"ttkgA1e_y_".If'i'iiouna1 by hoiding that the goods in question were notified goods and the authorities were cast With the V"
39
with the matter. During the course of investigatiofnand in the statement recorded under Section 108~--.of Act, the first respondent admits-to 'have'.. Md/'s[Déi-uxe Roadlines for clandestine deciaration of goods also consignees addi*es"sesrby".ninéeiiiousiyv"setting up the bills without which all led to the irrefntabfie':eonc11ii__sio»n:~of not having suffered the » :
:21.= which requires to bennoticed by us is .respoi:.d'ents 1 and 2 herein were detained in coiiteiéosa \}idc....D.etention Orders No.673/54/2000-Cus '.2,'VH1.ppdate¢i«vi.A:'i9--9-2000 and No.6-73/55/2000--Cus VIII respectively, passed by the Joint Secretary to the of india, Ministry of Finance and were Iodged in 'fcentral Prison, Bangalore, as detenue No.i410 and 1 respectively. V 41 admittedly has been done in the instant case namely by issuance of the show«~cause notice dated 24- by the Additional Director General, DRI to Commissioner of Customs, CR Building, Bangalore which is in consona_nce..Witl:, thle--n'otifications -~ issued under Section 4 of the___Custo_1ns hjlasbbeen succinctly examined and eiiplained "by: ladjudicating authority at paragrafih .'2;:3EiV--'wof _adjudication order.
Hence, we do not accept» the u.conten'ti.o'n that the action initiated "the _a;ntlio,rit'ies_at Bangalore would be contrary to the Apijovisions theTCi;1storns Act, particularly Section 111;." "
_ E5'e::th.at as it may, yet another contention which resnonclents contend is, that Section lll(d] conternplates that action to be initiated is at the place of and that admittedly the breach had occurred at it Calcutta. This facturn of averment regarding the breach at /)3» Directorate, Revenue Intelligence, Mumbai to verify and ascertain about the authenticity and genuineness'»s of the corisignor which was found by them to Hence, in such a situation it cannot thatv"'thé".,__ adjudication proceedings itself ..:.guch""-- visualisation ought not to be-eschewed since' t;hVe_g_scheme:o»f the Customs Act when on"th_e: touchstone of coiiection of Custom 'duty and checking the evasion' of levyvof Ctistorfia thity is. examined it becomes faliacyv conciusion.
yythisjdiact_u-affnatrix when we examine the contentionu oi'-.Vth'e"' respondent that adjudication has to fail noniocation of the actual breach of customs th'e.':'authorities, we find that only CO1'1Ch1SiO1'i that can-he drawn in all such situation is that the eoinsignor/recipient of the goods himself/itseif could have 'booked the goods as consignor in fictitious names in order evade payment of Customs duty and hence it cannot be /3*' 45 held even in a situation as we are faced with the authorities to first ascertain the place of breach barrier and only thereafter the authorities f)_j1joceed'.; This would result in driving leadto a incongruous propel?
to interpret Section asa itsltrueviperspective and in such a mannelrl of Revenue and in suchfa' the in holding that the from whom the goods have claims to be the owner of thevxigoods the goods which have been seized ijiadldsiifufered or that it was not a dutiable goods of valid documents which are all matter A is fully justified.
26. is brought to our notice by the learned counsel that the decision of the Hon'b1e Supreme Court in the case ' Union of India Vs.Rarn Narain Bishwanath reported in d it ""l997(96) E.L.T.224(SC), to contend that the order of the W 46 Tribunal in remanding the matter to the adjndicating authority at Calcutta is just and proper and has drawn our attention to paragraph (1Mof"ti*ie'v'Ju_dgra_erit_ which reads as follows:
"It seems to us,~.._I'i~a,ving"regard-._to._'t'i1e facts set out above,t'i'c3.ear that itiwasgfor the Customs.' authorities"'~-at Paradip" to initiate Proeeeciingg ~ V.gigainst the respondents on the groujnd"' -that the goods ,_had b.ee1_'I=. imported en fictitious licenses"-. and _, "foe the Customs authorities .ir;. West Bengaito' do so."
The said'i'j«11CigI11e:tat-- is-.disting"ttis'hab1e on facts inasmuch as thatpwas Va.cas'eVWhere"the licence Which Werefictitious in naturet"'wer'e. Vproduiced as importation and cleared at Port [Cxirissay State} which came to be seized and Customs authorities in West Bengal. facts of the said case _ as held by their Lordsilijps it was in the facts set out therein the Hon'b1e Stipreme Court directed the authorities at Paradip to = ....iriitiate proceedings as it was known as a fact that the Wet "t[% ; s5b/9 50 on this touchstone and the scheme of the fact situation will have to be scrutinised K
28. Hence, the questionee0f'_'''1e.:bv4''a.te'as " "
f0l10Ws:--~ V t % t V V Question Nofi): Affi1'A1:}{.1atiV€3 _..4.tiu' » Question No.(ii): Afvfiigihzztitev % V Question the matter is remandedi. at Bangalore Question. :::;3 int '%)art.
and and parties are directed to bear; their own edstts. ' sd./-
JUDGE'-
Sd/-' I UDG15: