Customs, Excise and Gold Tribunal - Tamil Nadu
Almelo Laboratories Pvt. Ltd. vs Collector Of Customs on 7 November, 1988
Equivalent citations: 1989(22)ECR284(TRI.-CHENNAI), 1989(41)ELT319(TRI-CHENNAI)
ORDER K.S. Venkataramani, Member (T)
1. These three appeals are directed against the order dated 14.3.88 passed by the Collector of Customs (Appeals), Madras by which he had confirmed the demand for differential duty raised against the appellants by the Assistant Collector of Customs, Madras in his orders dated 13.7.87 and 13.7.87/14.8.87. Three separate demands have been confirmed by the orders of the As- sistant Collector, each for Rs.12,919/- on the consignments of Ethyl Hydrazine imported by the appellants and cleared by them on 3.1.86. The demand for differential duty arose due to the fact that while calculating the assessable value of the goods in Indian curren- cy the Customs House adopted wrong exchange rate of the foreign currency resulting in the short collection of duty which was paid at the time of original assessment on 3.1.86. Demand for differential duty under Section 28(1) of the Customs Act, 1962 with the two copies of each of the notice, one copy for the importer and the other for the Clearing Agent, were handed over to the Clearing Agent on 2.7.86 after obtaining his acknowledgement. Subsequently orders confirming the said demand were issued to the importer by the Assistant Collector. The appeals against the orders were rejected by the present impugned order of the Collector (Appeals).
2. Shri C.N. Viswanatham, the learned Consultant for the Appellants contended that in this case the demand for differential duty is time-barred because the demand notice under Section 28(1) of the Customs Act, 1962 was not served on the appellants within six months from the date of payment of duty. It was further contended that service of demand notice on the Clearing Agent cannot be taken as serving of the notice on the importer. He further contended that the Customs House Agent cannot be treated as Agent of the importer after the goods have been cleared for the purpose of Section 28(1) of the Act. In putting forth this contention he placed reliance upon the decision of the Special Bench, CEGAT, New Delhi in the case of Collector of Customs, Bombay v. Presto Works Jallandhar reported in 1987 (28) ELT 469. In that case, the learned Consultant submitted that, the notice under Section 28(1) of the Act was served on the Customs House Agent before the expiry of the six months period, but the notice was served on the importer beyond the period of six months. The Tribunal held that Customs House Agent is not an agent of the importer after the clearance of the goods unless otherwise authorised by agreement and that short levy is not payable if demand notice was served on the importer beyond six months. The learned Consultant further cited the decision of the Calcutta High Court in the case of D. Sengupta v. Collector of Customs, Calcutta reported in 1987 (31) ELT 30 wherein also the Hon'ble High Court held that after the goods have been cleared from the Customs, the Clearing Agent is not a person within the meaning of Section 124 of the Act for the purpose of service of the Show cause notice. Therefore, the learned Consultant urged that demand for differential duty is time-barred and the appellants are not liable to pay differential duty.
3. Shri K.K. Bhatia, the learned SDR appearing for the Department contended that the provision of Section 147(3) of the Act clearly brings out the liability of the Clearing Agent to pay the differential duty even after the goods have been cleared. He further referred to the provisions of Section 153 of the Act relating to the service of notice according to which a notice served on an Agent is a valid notice. Therefore, there was no need for interfering with the orders passed by the Collector (Appeals).
4. The submissions made by the learned Consultant and the learned S.D.R. have been carefully considered. The question herein is whether service of demand notice on the Clearing Agent can be taken as service of notice on the appellant importer for the purpose of Section 28(1) of the Customs Act, 1962. Section 147 of the Act authorises the agent to do any act on behalf of the principal which the Act requires the owner or importer to do. Sub-Section (3) of Section 147 provides that when any person is expressly or impliedly authorised by the owner, importer or exporter of any goods to be his agent in respect of such goods for all or any of the purpose of this Act, such person shall be deemed to be owner, importer or exporter of such goods. According to the proviso to this Section, where a duty is not levied for any reason other than wilful act, negligence or default of the agent, such duty shall not be recovered from the agent unless in the opinion of the Assistant Collector of Customs, the same cannot be recovered from the owner, importer or exporter. According to this Section, in the case of non-levy of duty, the duty shall not be recovered from the agent unless the Collector is satisfied that it cannot be recovered from the owner or exporter or importer. The fa7cts in this case are that the Customs House had issued demand notice made but for the importer with copy of it to the Clearing Agent of the Customs House within six months period. The appellants' plea is that they have not received the notice at all. Their contention that because the appellants had not actually received the notice, which was admittedly served on the Clearing Agent through whom the consignments were cleared within the six months period under Section 28(1), they are not liable to pay the differential duty, is not acceptable. This is for the reasons that Section 153 of the Customs Act has a clear provision which lays down that "Any order or decision passed or any summons or notice issued under this Act, shall be served - (a) by tendering the order, decision, summons or notice or sending it by registered post to the person for whom it is intended or to his agent". The Customs House has in this case admittedly served the notice on the Clearing Agent of the appellants and had obtained an acknowledgement thereof within six months period. The notice was addressed to the appellants. Therefore, the notice can be said to have been served on the appellants if it has been served on their agent within the time limit. In this context the observations of the Hon'ble High Court of Kerala in the case of Chellappan v. Additional Collector of Customs -1978 ELT J 547 are relevant regarding the scope of Section 153 of the Customs Act, 1962. The Court observed "We think the methods indicated in Section 153(a) are alternative methods any one of which could be attempted in the first instance. The different modes of service provided by the rule also support the view; either tendering to the person (apparently when it is feasible) or attempting to serve on his age.nt (apparently when one is available) or by sending by registered post. To say that an attempt to tender notice must be made in cases where it is not feasible or even possible or that' an attempt should be made to serve on an agent when there is no agent or none is known to exist would be to make the section unworkable". It has been argued in this connection by the appellants that they had not authorised the Clearing Agent to receive the notice on their behalf. However, this is a mere say on their part, and no documentary evidence by way of any specific authorisation given by them to their Clearing Agent has been produced at any stage in support of this contention. On the other hand in the case of Presto Works, Jallandhar, relied upon by the appellants, the Tribunal had found it as an undisputed fact that the Clearing Agent in that case was not authorised by the importer to receive the notice on his behalf. This is not the case herein as no documentary evidence has been produced by the appellants in support of their submission that no such authorisation was given by them. Surely such authorisation must be available. In fact under Regulation 14 of the Customs House Licensing Regulations, 1984, a Customs House Agent shall obtain an authorisation from each of the Companies, firms or individuals by whom he is for the time being employed as Customs House Agent and produce such authorisation whenever required. Therefore, if it is the plea of the appellants that they have not authorised the Clearing Agent, they should have produced material evidence to prove their stand. They have failed to do so. Quite apart from that, it is settled that differential duty can arise only after the goods have been cleared after completion of the assessment, and the proviso to Section 147 (3) of the Customs Act, 1962 clearly provides for recovery of any such short levy from the Customs House Agent if the Assistant Collector is satisfied that a short levy cannot be recovered from the importer. In fact the Hon'ble High Court of Madras in their decision in the case of KM Mohamed Ghouse and Co. v. Assistant Collector of Central Excise, IDO, Nagapattinam reported in 1979 ELT (J 683) have observed that "Admittedly the primary liability to pay the differential duty is on the importer under Section 28. But that liability can be fastened on the Clearing Agent as a result of the Special provision contained in Section 147". In that case the Court was dealing with a petition from the Clearing Agent challenging the Department's attempt to recover the differential duty from him, and the Court held that unless it is shown that the Department was unable in its attempt to recover the differential duty from the importer, they cannot fasten the liability on the Clearing Agent under Section 147 of the Customs Act, 1962. In the Sengupta case decided by the Calcutta High Court, it is seen that the Hon'ble High Court did not have occasion to deal with the provisions of Section 147 of the Customs Act, which lays down specific provision with regard to recovery of the short levy from the Customs House Agent under certain circumstances. On the other hand, it was dealing with the Show Cause Notice in an offence case following seizure of goods under Section 124 of the Customs Act. Also contained in the decision of the Special Bench, CEGAT, New Delhi relied upon by the appellants is a reference to the Madras HighCourt decision in the case of Pilmen Agents Pvt. Ltd. v. Collector of Customs, Madras wherein while considering the provisions of Sections 28 and 147 (3) it was held that the time limit for the demand under Section 28 for recovery of short levy is paramount. In that case the differential duty had become admittedly time-barred and notice was issued to the importer asking him to pay the duty, even though time-barred, and when the importer refused to pay, the Customs House proceeded against the Clearing Agent for recovery of the same. The Court held that when the notice is itself time barred, there is no question of recovery of the duty from the Clearing Agent in terms of Section 147 of the Customs Act. It is, therefore, clear that in both the cases - K.M. Mohamed Ghouse and Pilmen Agents (P) Ltd. the Courts were dealing with petitions filed by the Clearing Agents who challenged the recovery of short levy from them as laid down under Section 147 of the Act, wherein the High Court held that in the first instance the Department should show efforts made to recover the amount due from the importer. Only on failure of such attempt, according to the Courts, the Customs can proceed against the Clearing Agent for such recovery under Section 147(3) proviso. In this case, however, from the beginning the notice for recovery, as well as actual order confirming the short levy of differential duty, was addressed to the appellants who are importers. On the other hand, the Customs House had in the endorsement of the order confirming the demand given to the Customs House agent only drawn their attention to the powers for recovery of sums due to Govt. in terms of Section 142 of the Customs Act if the importer fails to pay up the same. In this context, the obligation of the Customs House Agent as laid down in Regulation 14(d) of the Customs House Agents Licensing Regulations, 1984 is also relevant, according to which the Customs House Agent shall advise his client to comply with the provisions of the Act and in case of non-compliance of any provision, he shall bring the matter to the notice of the Assistant Collector of Customs. The Act casts an obligation on the Customs House Agent for ensuring compliance by the importer with the provisions of the Act and in this context also the service of the notice demanding short levy in time on the Customs House Agent would assume validity. Therefore, in this view of the matter, there is no infirmity in the order passed by the Collector (Appeals), and the appeals are accordingly rejected.