Customs, Excise and Gold Tribunal - Delhi
Dass Photo Electronics vs Collector Of Customs on 30 June, 1987
Equivalent citations: 1988ECR179(TRI.-DELHI), 1987(30)ELT988(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. Brief facts of the case are as follows:-
On 5-12-1984, Preventive Officer of Collectorate of Customs, Delhi checked the notified goods, stock of the appellant firm, a registered notified goods dealer in the presence of Ram Chand Dass, partner of the appellant firm and two independent witnesses. As a result of checking with the register, 14 still cameras were found short for which the said Shri Dass could not produce any documentary evidence for their removal or absence from the said premises. In addition to the above, in respect of 28 cameras Shri Dass could not produce any evidence documentary or otherwise for the lawful import/purchase of the said cameras which were all entered in the notified goods register maintained by him as required under Chapter IV-A of the Customs Act. Those cameras valued at Rs. 1,61,200/- were, therefore, seized under Section 110 of the Customs Act on the reasonable belief that the same had been smuggled into India in violation of the restrictions imposed on the import thereof and were liable to confiscation under the provisions of the said Act. The notified goods register was also taken into possession.
2. Shri Dass was summoned to the office on 6-12-1984. His statement was recorded under Section 108 of the Customs Act. Shri Dass gave a detailed and long explanation regarding shortage of 14 still cameras along with the evidence of purchase/import of 28 cameras seized by the Customs Officers. Further investigation was undertaken by the authorities consequent to the statement given by Shri Dass. Thereafter, a show cause notice dated 3-6-1985 was issued to the appellant firm as well as Shri R.C. Dass alleging contravention of (i) Clause 3(i) of the Import Trade (Control) Order, 1955 issued under Sections 3 and 4A of the Imports and Exports (Control) Act, 1944 (ii) provisions of Chapter IV-A of the Customs Act, 1962 and the Rules made thereunder, (iii) Baggage (Condition of Exemption) Rules, 1975 and (iv) ITC Public Notice No. 27/80 dated 15-7-1980 regarding the seized goods liable to confiscation under Section 111(d), (p) and (o).
3. It was also alleged that Shri R.C. Dass of M/s Dass Photo Electronics by not maintaining a true and complete account of books mentioned in Annexure 'B', as specified under the Rules had contravened the provisions of Section HE of the Customs Act, 1962 rendering the 14 cameras which were found short, liable to confiscation under Section l11(p) of the Customs Act.
4. It was also alleged that both the notices by their acts of omission and commission acquired possession of goods under seizure and are the persons concerned in knowingly, acquiring, possessing, keeping, purchasing, selling, storing and dealing with the goods which they knew or had reasons to believe were liable to confiscation under Section 111 of the Act ibid and are thus liable to penal action under Section 112 of the Act ibid.
5. The noticee (appellant) in his reply to the show cause notice denied the charges and stated, inter alia, that all the goods had been duly accounted for in the register maintained by him as required under the provisions of Chapter IV-A of the Customs Act, 1962 and all the relevant documents in support of the lawful acquisition/possession of the goods seized, were duly produced at the time of seizure; that he was forced to sign the panchnama; that there was no shortage in the stock as alleged, as the goods found short had either been sent for repair or had been stolen for which photo copy of the FIR lodged with the police authorities was produced and that the Customs Officers have no jurisdiction to invoke the provisions other than the provisions of Chapter IV-A of the Customs Act, 1962; that the Customs Officer had a malafide intention in invoking the provisions of Section 110 of the Customs Act, 1962 and of Baggage (Condition of Exemption) Rules, 1975 by saying that they were not satisfied with the value of cameras shown in the purchase Bill/Voucher; that cameras are not covered by the provisions of Section 123 of the Customs Act, 1962 and the burden of proving that goods are of smuggled nature rests with the department and that the department has not discharged this obligation; that he is not responsible for any errors or omissions (if any) found in the receipts/bills as the persons from whom the cameras were purchased were not notified dealers and had no knowledge about the Customs law; that the goods cleared under the Baggage Rules, 1975 could be sold when its value had depreciated by 50% on account of use and since all the cameras purchased by him were duly covered under the above provisions of the Baggage Rules, he had not contravened any provisions of Customs law by purchasing the same. The appellant then goes on to give detailed explanation for each of the specific allegation in respect of specific cameras mentioned in the show cause notice.
6. After setting out the defence of the appellant, Collector of Customs, New Delhi, respondent herein, has set out his discussions and findings in para 25 of the impugned order. For a correct appreciation and the conclusions hereinafter to be given, it is reproduced below:-
"I have carefully gone through the case records and the submissions made in reply to show cause notice:
From the facts given above and the submissions made, it is obvious that M/s Dass Photo Electronics have been scouting around and purchasing cameras which have been brought in as baggage by the passengers. Sale of items cleared in baggage is prohibited unless the market value depreciates by 50 per cent. In almost all cases sale has been effected within the short time of item being imported into India as baggage. The offence of sale of baggage items is primarily on such passengers. However, the collusion of M/s Dass Photo Electronics cannot be overlooked inasmuch as they were notified dealers since 1973 and fully conversant with the law and their obligation as a notified dealer. Apart from not conforming to obligations enjoined on them by virtue of being a notified dealer inasmuch as not maintaining proper accounts and obtaining proper vouchers, their role is confined to collusion of obtaining goods which the passengers were not entitled to sell. Once the people concerned, as shown during the investigations, had accepted that they had got the items as part of the baggage with or without payment of duty, the primary offence for sale should have been made against such passengers. I find the same has not been done, which is a pity.
There was nothing to indicate that M/s Dass Photo Electronics have obtained the cameras in bulk or instigated its smuggling or undertaken to transact in smuggled items.
In the nature of the case, it would not be just and proper to order confiscation of the seized cameras. They are hereby released to M/s Dass Photo Electronics. However, for not maintaining the accounts properly and getting the proper voucher, which is their obligation under the Act, I impose a token penalty of Rs. 10,000/-(Rupees Ten thousand) on M/s Dass Photo Electronics under Section 112 of the Customs Act, 1962.
This order is being passed/issued without prejudice to any other action that may be taken against the person(s) whether mentioned here-in-above or not, under the Customs Act, 1962 or any other law for the time being in force."
7. Now the learned advocate appearing for the appellant has stated as under:-
Penalty of Rs. 10,000/- imposed by the Collector is contrary to the facts on record and contrary to his own findings and it is, therefore, illegal and bad in law.
Collector failed to consider that the appellants had been maintaining the notified goods registers and statutory accounts since 1973 and there was never any adverse remarks against the appellants by the Customs Officers of this nature on their previous visits/checkings. The goods ought not to have been seized in the first instance. The department has not been able to produce any evidence that the goods had been illegally acquired by the appellants. In fact, all documentary evidence, namely receipts and vouchers taken from the customers, registers and documents taken into possession by the Customs Officers were verified; vouchers were tallied with the enquiries from the customers. The Collector has not given any valid reasons or grounds for holding the appellants guilty for not maintaining the accounts properly and are not getting the proper vouchers. There was thus no ground for imposition of penalty under Section 112 of the Customs Act. Imposition of penalty on the appellants firm without a finding on their mensrea and guilty knowledge and malafide is improper and illegal. Penalty has been imposed by the learned adjudicating authority on mere technical violations, if any, merely to justify the checking made by his subordinates. At the most the warning would have been sufficient. For this proposition the learned advocate has relied upon Supreme Court's judgment in the case of Hindustan Steel v. State of Orissa (AIR 1970 SC 253) and Tribunal's decision in the case of R.S. Subramaniam v. Collector of Customs and Central Excise, Trichi [1987 (27) ELT 744-SRB] with the instructions in detail regarding the modalities of accounts etc. In any case the personal penalty imposed is highly excessive and extraordinary harsh considering the nature of violations alleged and found. Learned advocate Shri S.C. Puri for the appellants vehmently stressed that imposition of penalty under Section 112 is totally illegal in the absence of any finding regarding liability of confiscation of the goods because a plain reading of Section 112 indicates that the person concerned can be visited upon with a penalty if he concerns himself in any manner with a knowledge that the goods are liable to confiscation. In the Collector's order there is neither a finding of knowlege on the part of the appellant firm nor there is a finding that the goods were liable to confiscation. In the absence of these two findings a penalty under Section 112 is not warranted. On a query from the Bench that the Collector has found "collusion (of the appellant firm) in obtaining goods which the passengers were not entitled to sell", would this finding be not covered by provisions of Section 112(a) which speaks of abetment of doing or omitting to do an act in respect of goods rendering them liable to confiscation? To this query learned advocate for the appellant has replied that abetment has not been alleged in the show cause notice. Reading of sub-para (vii) of para 22, it was pointed out by the learned advocate, of the show cause notice would indicate that the allegations against the appellant in respect of penalty are (a) acquiring possession of goods by acts of omission and commission on the part of the appellant and (b) that the appellants are the persons concerned knowingly, acquiring, possessing etc. and in any other manner dealing with the goods which they knew or had reasons to believe were liable to confiscation under Section 111 of the Customs Act. On these two allegations, learned advocate points out that Section 112 has been invoked. He has further stated that acquiring possession of imported goods does not make such goods liable to confiscation under Section 111 of the Customs Act and therefore, provisions of Section 112(a) in view of the allegations made by the department in respect of penalty are ruled out. It is only the provisions of Section 112(b) [without specifically mentioning Clause (b)] which appear to have been invoked by the department in the show cause notice. Therefore, penalty imposed on the appellant must be within the four corners of the ingredients of the provisions of Section 112(b). If those ingredients are not found in the impugned order, the penalty imposed is liable to set aside.
8- Learned SDR appearing for the Revenue has reiterated the findings of the Collector in the impugned order. Learned SDR has also conceded that the department has not filed any cross-objections to the appeal filed by the appellant herein or cross-appeal against the impugned order.
9. I have carefully considered the pleas advanced on both sides. It is true that the learned adjudicating authority has not considered it just and proper to order confiscation of the seized cameras. Non-confiscation of the seized cameras however, cannot alone be a ground for setting aside the penalty imposed under Section 112 of the Customs Act as has been sought to be argued by the appellant's learned advocate. Section 112(a) imposes the liability of penalty on a person if such person does or omits to do an act rendering goods liable to confiscation under Section 111 or abets the doing or omission of such an act. No allegation of abetment of doing or omission of an act on the part of the appellant firm imposed upon with a penalty has been alleged in the show cause notice. What remains to be seen now is whether the appellant firm has done or omitted to do any act which renders the goods liable to confiscation. Under Section 112(b) of the Customs Act, a person can be imposed upon with a penalty if he acquires possession or is in any way concerned in knowingly, acquiring, possessing etc. or in any other manner dealing with the goods which the appellant knew or had reasons to believe were liable to confiscation under Section 111 of the Customs Act. It has been found by the learned Collector that the appellant has been purchasing cameras which have been brought in as a Baggage by the passengers. He has also found that almost in all cases sale has been effected within a short time of cameras being imported into India as a baggage. This finding follows a general observation citing as a legal provision that sale of items cleared in baggage is prohibited unless the market value depreciates by 50%. The learned Collector, therefore, appears to imply that by sale of the cameras within a short time of their importation into India as baggage does not lead to the fact that the value of those cameras had depreciated by 50%. It is to be noted here that the appellant has categorically stated that all the cameras purchased by him were duly covered by the provisions of 50% depreciation and therefore, he had not contravened any provisions of Customs law by purchasing the cameras. So I am faced with a finding of the Collector (which is not categorical but only implied) against an assertion of the appellant herein without any discussion of the evidence on record in connection with depreciation of value of the cameras purchased by the appellant.
The learned Collector has further found that the offence of sale of baggage items is primarily on passengers who brought such cameras. However, the collusion of the appellants cannot be overlooked inasmuch as they were notified dealers since 1973 and fully conversant with the law and their obligation enjoined on the appellants by virtue of being a notified dealer inasmuch as not maintaining proper accounts and obtaining proper vouchers. Role of the appellant is confined to collusion of obtaining goods which the passengers were not entitled to sell. Use of the expression 'collusion' by the learned Collector in defining the role of the appellants is a very strong expression and may well be covered by the provisions of Section 112 of the Customs Act as referred to above regarding the commission or omission of any action on the part of the appellant. The term 'collusion' by definition means a deceitful agreement ... between two or more persons... to some evil purpose such as to defraud a third of his right. Collusion may be either apparent and patent, or what is more common, secret and covered by an apparent show of honesty. In either case, collusion implies a community of purpose and intention between parties colluding." (Page 369 Law Lexicon Vol. I 1982 by T.P. Mukherjee)." But it is again to be noted here that the learned Collector has not discussed any evidence on record before making this finding against the appellants. Appellants' contention has been all through that persons of status and respectability with fixed addresses have sold their goods under proper letters of sale and this is what was required by the appellants in complying with the provisions of Chapter IV-A of the Customs Act; the appellants themselves have not been instrumental in importing the goods, acquisition of such goods on genuine and bonafide purchases could not be questioned under the provisions of the Customs Act. If there are some minor discrepancies in letters of sale given by the sellers, it is on account of ignorance of such sellers and the appellants could not be blamed for such minor discrepancies. In other words, the finding of the Collector is vague and without discussion of the evidence on record.
10. Afore aforesaid finding of the learned Collector regarding collusion of the appellants (assuming it to be correct) - a very strong finding against the appellants as mentioned earlier appears to be inconsistent with the learned Collector's refusal to confiscate the seized cameras because he did not consider it to be just and proper. It may be mentioned in passing here at this stage that the learned Collector's finding in not confiscating the seized cameras in the instant case despite a drastic finding of collusion against the appellants appears to be under a misconception of law. The learned Collector appears to base it on the ground that the primary offence for sale of such goods is on the passengers. While that may be so, if any goods are hit by the provisions of Baggage (Condition of Exemption) Rules, 1975 or ITC Public Notice 27/80 dated 15-7-1980 such goods become liable to confiscation under Section l11(o) of the Customs Act which was duly invoked in the show cause notice issued to the parties. It is a well settled law that confiscation of goods is a proceeding in rem and that a penalty of confiscation is enforced against the goods irrespective of the penalty to be imposed on a person. In this connection observations of the Hon'ble Supreme Court in Collector of Customs, Madras v. D. Bhoormul [1983 ELT 1456 (SC)] are very relevant which are reproduced below:-
"A reading of Section 167(8) and the related provisions indicates that proceedings for confiscation of contraband goods are proceedings in rem and the penalty of confiscation under the first part of the entry in column 3 of Clause (8) of the Schedule, is enforced against the goods irrespective of whether the offender is known or unknown. But, imposition of the other kind of penalty under the second part of the entry in column 3, is one in personam: such a penalty can be levied only on the "person concerned" in any offence described in column 1 of the clause."
If goods could be confiscated only if the appellants had obtained cameras in bulk or instigated their smuggling or undertaken to transact in smuggled items, as has been by the learned Collector in his findings, the provisions of Section 111(o) would be rendered nugatory. Be that as it may, this finding of the Collector regarding non-confiscation of the goods has become final in view of this finding having not been challenged by the department either in cross-objection to the appeal herein or by way of cross-appeal against the impugned order.
11. Learned Collector has imposed penalty on the ground that the appellants have not maintained the accounts properly and have not obtained the proper voucher which is their obligation under the Act. The Collector has not indicated that in respect of which cameras this lapse has occurred on the part of the appellants. He has also not found that this lapse occurs in respect of all such cameras where this allegation has been set out in the show casue notice despite the denial by the appellants in their defence. In other words, on this account too, finding of the Collector is too vague.
In view of the aforesaid discussion in respect of various findings of the Collector in para 25 of the impugned order, question whether the goods have been held liable to confiscation though not actually confiscated, gets shrouded in vagueness. Since the findings is vague in this regard and without discussion of the entire evidence on record for and against the appellants, I allow the appeal but direct the Collector to adjudicate it afresh on the aspect of penalty alone giving his definite findings after taking into account all the pleas of the appellants and discussing the entire evidence on record in the light of above observations.
12. Appeal is disposed of in above terms.