Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Phoenix Overseas (P) Ltd. on 18 May, 1992
Equivalent citations: 1992(62)ELT366(TRI-DEL)
ORDER N.K. Bajpai, Member (T)
1. The appeal has been filed by the Collector of Customs, New Delhi against the order of the Additional Collector of Customs (Import Cargo), New Delhi under the direction of the Central Board of Excise & Customs (the Board, for short) under Section 129D(1) of the Customs Act, 1962 (the Act, for short). The cross objection contesting the appeal has been filed by the respondents.
2. Briefly stated, the facts are that the respondents had imported a consignment of integrated circuits and filed a bill of entry for its clearance in June, 1988 under OGL Appendix 6 (List 8) para 1, Sl. No. 821 (57) of the Import Policy for 1988-91. On finding that the respondent's Provisional Registration Certificate issued by the Director of Industries was valid only upto 31-3-1988, they did not qualify for being considered as Actual User (Industrial) on the date of importation of the subject goods, under the conditions prescribed under the OGL, the Additional Collector ordered confiscation of the goods under Section 111(d) of the Act, imposed a penalty and ordered release on payment of fine in lieu of confiscation. On appeal, the Tribunal set aside the order and remanded the case to the Additional Collector for fresh adjudication with a direction to take into consideration letter No. 31(345)-P(88)-Elect, dated 28-9-1988 from the Development Commissioner (Small Scale Industries) to the Director of Industries, Delhi extending the validity of the letter of approval for the manufacture of mini computers/micro processor based systems by the respondents upto 31-3-1989. By his order dated 1-11-1989, the Additional Collector adjudicated the case afresh and accepted the respondent's plea that, in view of the extension of the validity of their letter of approval by the Development Commissioner, they should be treated as Actual User (Industrial) on the date of import of the subject goods. Consequently, he allowed clearance of the goods under the O.G.L. as originally claimed.
3. On examination of the records of the proceedings leading to the impugned order by the Additional Collector of Customs, the Board passed the following orders under Section 129D(1) of the Act :-
"The Board, on going through the records of the case, has observed that Collector had taken only the post facto validity of registration certificate into account but ignored the "Re-export" aspect. Party had re-exported the goods in the same form in which it were imported without carrying out any manufacturing activity. Party did not possess adequate infrastructure to carry out any manufacturing activity on the imported goods. In view of this, the party could not be called Actual User (Industrial) and goods should not have been released under OGL.
The Board, is therefore, satisfied that the order of the Collector is not proper for the above stated reasons.
The Board, therefore, under the powers vested on it under Section 129D(1) of the Act directs the Collector to apply to the Customs, Excise & Gold (Control) Appellate Tribunal for correct determination of the above mentioned point and imposition of suitable fine and penalty.
SD/-
(H.M. Singh) Member, Central Board of Excise & Customs.
To:
(1) The Collector of Customs, Custom House, Delhi. The relevant case files are returned herewith. Case File VIII(1)20/1020/89 & VIII/12/ACU/W/582/88. (2) Guard File.
Sd/-
(Suman Nayar) Senior Technical Officer
4. In pursuance of the direction of the Board, the Collector of Customs, New Delhi has filed the present appeal on the following ground :
"That the Additional Collector had taken only the post facto validity of registration certificate into account but ignored the "Re-export" aspect. The importers had re-exported the goods in the same form in which these were imported without carrying out any manufacturing activity. This fact is borne out on going through the shipping bill No. 026956 dated 28-7-1988, the invoice No. PHX-1/88-89 dated 26-7-1988 and the relevant packing list under which the goods were re-exported. These documents clearly indicate that the integrated circuits which were re-exported by the importers were the same which were imported by them without carrying out any manufacturing activity. In the import documents, namely, bill of entry No. 234288 dt. 15-6-1988, invoice and examination report it is clear that certain types of ICs, numbers of which are clearly indicated in the examination report, were imported by the importers. In the aforementioned shipping bills, packing list, and invoice it is indicated that the same ICs bearing the same Nos. were re-exported.
The importers had taken the plea that they had done testing and re-packing in their manufacturing premises. This plea of the importers appears to be incorrect as the goods under import were manufactured by reputed manufacturers of the world in the supervision of experts and the item is sold only after complete testing. Further, re-packing of the goods or testing of certain items cannot be considered as manufacture and conducting of testing (if any) and re-packing within the premises of the importers would not entitle them to any benefit as actual users under the Import and Export Policy, 1988-91."
5. The prayers made in the appeal are that the impugned order may be set aside, the respondents may be held as not Actual User (Industrial) and the goods imported by them be denied release under the OGL, suitable fine and penalty be imposed on the respondents and such other order/direction may be passed as the Tribunal may deem fit.
6. In their cross-objection, the respondents have disputed the contention that the goods were re-exported without carrying out any manufacturing activity. They claim that a close scrutiny of invoice No. PHX-1/88-89 dated 26-7-1988 of the goods which were exported vide Shipping Bill No. 0269566 dated 28th July, 1988 shows that alongwith the integrated chips they had also exported 1000 printed circuit boards which were mounted PCBs which had connectors on which integrated chips could be mounted.
7. Several other grounds have been taken in the Cross Objection the important among which are that the goods having been exported were not available and the Board without seeing them is conjecturing that manufacture had not taken place and that they did not possess adequate infrastructure to carry out any manufacturing activity. Among the legal grounds taken, one is that the Board have no authority to exercise their power of review of orders passed by the Additional Collector on the analogy of the decision in the case of Punalur Paper Mills Ltd. v. Assistant Collector of Central Excise -1989 (39) E.L.T. 11 (Kerala) in which it was held by the High Court that an order passed by an Assistant Collector pursuant to remand by the Appellate [Authority] cannot be subjected to revision by Collector resorting to suo motu revision. It is submitted that the decision in this case squarely covers the present case also where a similar revision of the order of the Additional Collector is sought to be done by the Board which will amount to a revision of the order of the Tribunal and is bad in law.
8. The other legal point is that the appeal has been filed by an officer not authorised to do so. Board's Order dated 23-7-1990 refers to the Additional Collector of Customs, IGI Airport, Delhi as the 'Collector'. While the direction has been made in the order dated 23-7-1990 to the Collector to apply to the Tribunal, the Collector mentioned in para 4 of the order read with para 1 thereof can only mean the Additional Collector of Customs, IGI Airport, Delhi, the appeal has actually been filed by the Collector of Customs, Delhi and is not maintainable ab initio.
9. It is also stated that it is a settled law that after remand, lower authorities jurisdiction is confined to the direction of the remand. The Tribunal in its remand order had directed the Additional Collector to only look into the letter dated 29th Sept., 1988. Having done that, the Additional Collector has complied with the direction of the Tribunal and such an order cannot be questioned by the Board.
10. Another point taken in the Cross Objection filed by the respondents is that under Section 129D(1) of the Act, the Board can deal only with the points "arising out of the order" of the Additional Collector. A point not raised before the Additional Collector and not considered by the Additional Collector cannot be sought to be raised out of the order of the Additional Collector. This is a settled position in law. The point now taken by the Board in their order dated 23-7-1990 that the respondents do not have necessary infrastructure is not a point either raised in the show cause notice or anywhere else during the entire proceedings before the Additional Collector. Hence the said point cannot be raised by the Board at this stage.
11. Yet another point taken is that in terms of Section 129D(1) the Board is entitled only to look into the record of the adjudicating authority. It cannot look into extraneous material. It cannot travel beyond the record of the adjudicating authority. In the present case the records do not contain any material or averment to show that the respondents did not possess infrastructure for carrying out the manufacturing activity on the imported goods. In the circumstances, this ground cannot at all even be raised by the department in the present appeal.
12. Arguing for the respondents, Shri V. Sridharan, the Ld. Counsel, stated that the post facto validation of the registration certificate not being a point at issue in the department's appeal, the department cannot take the ground that the respondents should not be held to be Actual User (Industrial) after the Registration Certificate had been revalidated. He cited the decision of the Tribunal in the case of Usha Micro Process Control Ltd. v. Collector of Customs -1990 (46) E.L.T. 508 . Their only ground is that the Additional Collector had not taken into account the re-export aspect. He submitted that in doing so the Board had looked into matters outside the record of the proceedings which they were not empowered to do in terms of the authority vested under Section 129D(1) of the Act. The Shipping Bill and the invoice of the goods exported were not a part of the record before the Additional Collector on which he had passed the impugned order. He cited the following decisions in support of his contention :-
(a) State of Gujarat v. Chelabhai Bhanabhai Prajapati - 1974 (33) STC 147 at page 151 .
This was a case under the Bombay Sales Tax Act, 1963 in which, based on certain searches by the Enforcement Branch, the Dy. Commissioner, Sales Tax took up the matter in suo moto revision and issued notice to the dealer asking him to show cause why the order of the Assistant Commissioner, who had determined the liability of the assessee from a certain date, should not be raised. When this order was challenged, it did not find favour with the Dy. Commissioner, who fixed the liability and consequently made certain additions to the turn over of the sales as well as of purchases. When the matter went before the Gujarat Sales Tax Tribunal, a contention was raised that the revising authority had no jurisdiction to initiate the revision proceedings on the materials which did not form part of the record in existence before the taxing authority. The matter went up in reference to the High Court who observed as under :
"In the case before us, it has been found by the Tribunal that the Deputy Commissioner initiated revisional proceedings after he received a letter from the Assistant Commissioner, forwarding the report of the Sales Tax Officer, Enforcement Branch, who had seized the account books, etc. of the opponent-company, after the Appellate Commissioner passed an order-in-appeal, reversing the order of the Sales Tax Officer and holding the opponent to be liable from 1st April, 1960. The Tribunal was, therefore, right when it opined that the Deputy Commissioner has, for purposes of initiating revisional proceedings, relied on materials which were not part of the matter before the taxing authority. The Dy. Commissioner, in other words, did not restrict himself to the record of the proceedings before invoking revisional powers ...
...The Tribunal was, therefore, justified in holding that the Dy. Commissioner had acted beyond his jurisdiction in initiating revisional proceedings on certain materials which were not part of the record of the Assistant Commissioner of Sales Tax."
(b) Deputy Commissioner of Agricultural Income-Tax & Sales Tax, Quilon v. Dhamalakshmi Vdas Cashew Co .;
State of Kerala v. Vijaya Produce Agency - 1969 (24) STC 491 SC .
This was a case under the Kerala General Sales Tax Act in which the Supreme Court held that, in exercising revisional jurisdiction the Deputy Commissioner, Sales Tax would be restricted to the examination of the record for determination whether the order of assessment was according to law. Rule 33, which confers power to assess escaped turnover, is normally to be exercised in matters de hors the record of assessment proceedings.
(c) Sri Balaganesh Textiles v. Commercial Tax Officer, Tirupati -1978 (41) STC 445 It was held in this case by the A.P. High Court that under Section 20 of the Andhra Pradesh General Sales Tax Act, 1957, a revisional authority can only examine the record of the order passed by the subordinate authority and it cannot go beyond that.
(d) Ganga Properties v. Income-tax Officer -1979 ITR 118 (Cal.) It was held by the Calcutta High Court in this case that under Section 263(1) of the Income-Tax Act, 1961, the Commissioner may call for and examine the record of the proceeding in order to consider in his revisional jurisdiction whether the order passed by the ITO "is erroneous".... Therefore, the materials which were not in existence at the time the assessment was made and came into existence later cannot form part of the record of proceedings of the ITO at the time he passed the order and cannot be taken into consideration by the Commissioner for the purpose of invoking his jurisdiction under Section 263(1), he is not acting as an Appellate authority but exercises only a revisional jurisdiction.
13. Sh. Sridharan, Ld. Counsel, submitted that although none of these cases related to the Customs Act, provisions regarding the powers of the revisionary authority being based on the record of the case, the ratio of the cases cited by him would be fully applicable to the present case. He added that in view of these decisions, the law, as regards the jurisdiction of the revisionary authority is concerned, was confined to the record of proceedings and, since the documents relating to the export of the goods did not form part of the record of proceedings before the Additional Collector, the Board was not empowered under Section 129D(1) of the Customs Act, to direct the Collector to file an appeal to the Tribunal which would cover the re-export aspect of the matter.
14. The Ld. Counsel also submitted that the point now raised does not arise out of the order of the Additional Collector and was, therefore, outside the purview of the proceedings initiated under Section 129D(1). He went on to say that the point not raised and not considered by the Additional Collector cannot be taken up in these proceedings. He cited two decisions of the Supreme Court in the case of Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. - AIR 1961 SC 1633 at page 1645 , and in the case of R.K. Palshikar (HUF) v. The Commissioner of Income-tax - AIR 1988 SC 1305 at page 1305 , in both of which it was held that if a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the finding given by it.
15. Shri Sridharan took the next argument that non-satisfaction of the Actual User condition being, in any case, a post-importation condition, the Customs authorities were not concerned with it. He cited the decision of the Tribunal in the case of Audio Vision Electronics v. Collector of Customs, Madras [1987 (31) E.L.T. 796] and read out from para 6 as under :
"Imported goods cannot be confiscated on the assumption that the Actual User importer would most likely sell them in the market. If he does sell them in the market, there are provisions in the Imports and Exports (Control) Act and the jurisdiction to do so vests in the Chief Controller of Imports and Exports, it being a post importation violation, and not with the customs."
16. Shri Sridharan, thereafter, referred to the contention that the goods not being available for confiscation, the Board's direction is incapable of implementation, and no proceedings can take place. He referred to the decision of the Tribunal in the case of Graver & Weil (India) Ltd., Vapi v. Collector of Central Excise - 1986 (25) E.L.T. 338 , and Kamataka Trading Co. v. Collector of Customs (Prev.) -1990 (47) E.L.T. 568 .
17. On the question that being a matter of remand, the scope of the order of the Additional Collector was itself limited, the Ld. Counsel placed reliance on the decision of the Kerala High Court in the case of Punalur Paper Mills (supra) and submitted that under Section 129D(1) the Board cannot review an order passed in pursuance of the direction given by the Tribunal while remanding the case to the Additional Collector.
18. Refuting the contention that the respondents had not carried out any manufacturing activity before re-exporting the goods, Shri Sridharan referred to the decision of the Tribunal in the case of M.J. Exports Pvt. Ltd. v. Collector of Customs, Bombay -1986 (10) ECC T217 , in which it was held that in a case in which the appellants were allowed by the licence to import components of fishing rods, assembly of component parts into fishing rods would be sufficient compliance on the appellant's part. He submitted that this was not a case in which the question of manufacture in terms of Section 2(f) of the Central Excises and Salt Act was applicable for the purpose of determining whether the compliance of the export obligation had been made.
19. Shri G. Bhushan, the Ld. S.D.R. submitted that the definition of "Collector" in Section 2 of the Customs Act includes an Additional Collector of Customs and, therefore, the direction of the Board to the Collector of Customs to file the appeal would also include the Additional Collector. The two terms were inter-changeable and there was no illegality in the Collector of Customs, New Delhi filing the appeal in the place of the Additional Collector of Customs, IGI Airport, New Delhi.
20. On the question that since the goods were not available for confiscation, the direction of the Board to file the appeal to the Tribunal for determining the fine and penalty to be imposed was not capable of being implemented, he cited the decision of the Tribunal in the case of R.K. Industries v. Collector of Customs & Central Excise -1989 (39) E.L.T. 316 (Tri.) , in which it was held that an order passed under Section 47 of the Customs Act does not oust the jurisdiction of the customs authorities to confiscate such goods if later on it is found that the conditions under which goods were permitted to be imported were not complied with. He submitted that there was one more decision on this point and this was the decision of the Supreme Court in the case of Jacsons Thevara v. Collector of Customs & Central Excise - (1991) 32 ECC 89 (S.C.) , in which also it was held that goods were liable for confiscation under Section 111(o) and penalty was also leviable after clearance of the goods. In this view of the matter, argued Shri Bhushan, action could be initiated under the law even when the goods were not available for confiscation because of having been exported out of India.
21. As far the contention of the Ld. Counsel that the case having been remanded by the Tribunal for fresh adjudication, the Board did not have any jurisdiction for issuing a direction under Section 129D(1), Shri Bhushan submitted that such a view was not correct because the order of remand was not conditional and it was a case of open remand for fresh adjudication.
22. Arguing further on the question of confining the direction under Section 129D(1) to the record of the case, Shri Bhushan submitted that the absence of the date of export, etc. in the order of the Additional Collector could not take away the substantive power of the Board to deal with the matter. Import under the OGL was linked with the corresponding obligation of export and it was not correct to take a narrow view of the matter.
23. We have carefully considered the appeal of the Department, the Cross-Objection filed by the respondents and the submissions made at the hearings. Section 129D(1) of the Act under which this appeal has been filed is as under:
"129D. Powers of Board or Collector of Customs to pass certain orders. - (1) The Board may, of its own motion, call for and examine the record of any proceeding in which a Collector of Customs as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Collector to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Board in its order."
24. It will appear from the above that, for the purpose of satisfying itself as to the legality or propriety of any order passed by the Collector of Customs, the Board may call for and examine the record of any proceeding and direct such Collector to apply to the Appellate Tribunal for determination of such points arising out of the order as may be specified by the Board in its order. Therefore, the first requirement is that the Board has to confine itself to the record of proceedings and the second is to confine its decision to the points arising out of the order. The Ld. Counsel of the respondents, has rightly stressed on these points and has also cited numerous decisions, (though the decisions are not on the Customs Act) to show that the revisionary authority has to confine itself to the record of proceedings and cannot travel beyond it. He has also explained to us how the question of re-export of the goods was not a point at issue before the Additional Collector and how the Board had committed an error in directing the Collector to file an appeal to the Tribunal for determination of this question. That this question also does not arise out of the proceedings before the Additional Collector, who passed the impugned order, is also quite clear. Thus, on both these points, it is evident that in directing the Collector to file an appeal to the Tribunal, the Board had gone beyond the jurisdiction vested on it under Section 129D(1). On this short point alone, the appeal is ab initio beyond jurisdiction and is liable to be rejected.
25. The Ld. S.D.R.'s point that the import and export were linked may be true, so far as the conditions of the OGL against which the goods were imported is concerned. But the Additional Collector had initiated proceedings only in relation to the import part of the total obligation and had not gone into the question whether the conditions of export had been complied with. If he had initiated proceedings on both counts, his record would have covered the other part too and, in that case, the Board would have been competent to proceed with the matter on the basis of that record in the absence of any order on the export obligation by the adjudicating authority. For non-fulfilment of the export obligation, the Board cannot, in exercise of its revisionary powers under Section 129D(1), travel beyond the record and sit in judgment on a matter on which no proceedings, whatsoever, have been initiated by the Additional Collector. Looking at the matter from this angle too, it is not permissible for the Board to direct proceedings being instituted on the re-export aspect.
26. In view of these findings, we do not consider it necessary for us to go into various other contentions raised by Shri Sridharan and reject the appeal as not maintainable. The Cross-Objection is allowed.