Customs, Excise and Gold Tribunal - Calcutta
Atherton Engg. Co. (Pvt.) Ltd. vs C.C. (Airport And Admn.) on 2 March, 2006
ORDER M.V. Ravindran, Member (J)
1. In this matter there was a difference of opinion between the Members and the following points arose for consideration of the Third Member.
Whether the duty is required to be confirmed against the appellants and the penalties reduced as held by the Learned Member (Technical), or the matter is required to be remanded to the Commissioner as held by the learned Member (Judicial).
2. The Hon'ble Third Member after hearing both sides and perusing the records at paras 24 and 25 held as follows:
24. In view of the above discussions, I am of the view that in the light of the aforesaid circumstances, the matter does not require any fresh consideration by the Commissioner and therefore, the matter is not required to be remanded to the Commissioner as held by Member (Judicial).
25. So far as the question of penalty is concerned, the matter is referred to me for limited purposes whether the duty is required to be confirmed against the appellants and the penalty reduced as held by Id. Member (Technical) or the matter is required to be remanded to the Commissioner as held by Ld. Member (Judicial). It has not been referred to me on point of penalty. Though, ld. Advocate for the appellants raises an arguments at length on the point of penalty. Ld. Member (Judicial) has also mentioned in her order that the matter is remanded by me to the Commissioner to consider the fact of imposition of personal penalties upon the appellants in the light of the outcome of his decision on the availability of the Notification in question and in the alternative, in the light of the observations made in the pre-ceeding paragraphs. The matter has been referred to me for limited purpose. So, I am not inclined to give my opinion on the question of penalty.
3. Before recording the final majority order, the Hon'ble Member (J) observed as follows:
• Before I record the final majority order, I would like to observe that in paragraph 19 of the order recorded by me, the matter was also remanded for deciding upon the imposition of personal penalties upon the appellant either based upon applicability of the notification or alternatively in the light of the observations made in the preceding paragraphs i.e. para 18. Learned third Member has concluded that the matter has not been referred to him on the point of penalty. However, I feel that the above observation is not correct in as much as remand order included remand on penalty point also, in which case Learned third Member was required to resolve the difference on this point also i.e. remand to decide on the imposition of penalties. However, as Learned third Member has concluded that the matter is not required to be remanded as held by Member (Judicial), we record the final order as under.
4. The Tribunal then passed the following majority final order:
In view of the majority order, the demand of duty is confirmed. Penalty on M/s. Atherton Engg. Co. (Pvt.) Ltd. is reduced to Rs. 25.00 Lakhs (Rupees Twenty Five Lakhs only). Penalty on Shri Vikram Jaitha and Shri R.B. Jaitha is reduced to Rs. 2.00 lakhs (Rupees two lakh) each. Appeals are disposed off accordingly.
5. Aggrieved by the said final order, the appellants moved the Hon'ble High Court at Calcutta in Writ Petition No. 2013 of 2005. The Hon'ble High Court while disposing the writ petition held as follows:
• It has been submitted on behalf of the petitioner that the learned Third Member did not consider the issue relating to the reduced penalties although the same was specifically mentioned in the difference of opinion recorded by the learned Members of the Customs, Excise & Service Tax Appellate Tribunal, East Zonal Bench in the order dated 30-1-2004. The difference of opinion between the Members of the aforesaid learned Tribunal is quoted hereunder:
Whether the duty is required to be confirmed against the appellants and the penalties reduced as held by the Learned Member (Technical), or the matter is required to be remanded to the Commissioner as held by the Learned Member (Judicial).
• On examination of the aforesaid difference of opinion between the learned Members it appears that the issue relating to the reduced penalties was required to be decided by the learned Third Member. Unfortunately learned Third Member did not decide the same specifically.
• In the aforesaid circumstances, the said learned Third Member is directed to decide the aforesaid point relating to the reduced penalties at an early date but positively within a period of four weeks from the date of communication of this order after giving reasonable opportunities of hearing to the petitioner herein.
• In view of the aforesaid direction, subsequent final order passed by the learned Tribunal on 22-9-2005 cannot be sustained. The same is accordingly quashed. The learned Tribunal is directed to pass final order after disposal of the issue by the learned Third Member in terms of this order.
With the aforesaid direction of this writ petition stands disposed of.
There will however be no order as to costs.
• Parties shall act on a signed Xerox copy of this Dictated order on the usual undertaking.
As can be seen from the above direction of the Hon'ble High Court that the final order dated 22-9-05 is set aside and matter is listed before me with specific directions.
6. The Learned Advocate appearing for the appellants submits that during the relevant period, all the imports were classifiable as declared by them based on a decision of the Commissioner (Appeal) in their favour and relying upon such decision they had filed a classification to the authorities under Chapter Heading No. 23.09. There is no mis-declaration on their part, in order, to evade any payment of duty. He, further, submits that the imposition of the penalty is the only question which has been referred back by the Hon'ble High Court and he concedes, he does not have a case on merits. He also concedes the fact that the benefit of Notification No. 163/94 is not available to them in this case. He submits that it is a well settled law that the imposition of penalty in this kind of cases is not required.
7. The ld. D.R. on the other hand submits that the direction of the Hon'ble High Court in this case is for deciding only the reduced penalties and nothing else. He submits that the appellants have willfully mis-declared the inputs in order to avail the benefit of exemption notification, which is not available to them and he also submits that appellants were aware that the classification of their goods were in dispute and hence they should have asked for provisional assessment.
8. Considered the submissions made by both sides and perused records. I find that the imports of "Artemia Cyst (Prime Shrinks Eggs) hereinafter referred as the "said goods" made by the appellants was during the period October, 1998 to February, 2001 and filed Bill of Entries classifying the same under Heading No. 2309.90, while the department wanted to classify the same under Chapter Heading No. 0511.99. The appellants justification for filing the Bill of Entries under Chapter Heading No. 2309.90 was based on the fact, that, in their own case the Commissioner (Appeals), Mumbai had held the classification under Chapter Heading No. 2309.90. The order of the Commissioner (Appeals) was taken up by the Department to CESTAT. The Tribunal vide its order No. 128/2001-WRB/C-II, dated-10-1-01 reported at 2001 (129) E.L.T. 502 (Tri.-Bombay) decided that the classification of the 'said products' merits classification under Chapter Heading No. 0511.99. An appeal against the said order by the appellant to Hon'ble Supreme Court was dismissed.
9. The appellant's dispute on the classification of the said products is now settled i.e. the said goods merits classification under Chapter Heading No. 0511.99. The ld. Member (J) in her separate order sought to remand the matter to the adjudicating authority to consider whether the appellant's 'said products' were eligible for exemption under Notification No. 163/94, dated 2-9-94 and reconsider the imposition of penalties on appellants.
10.I find that the Notification No. 163/94-Customs, dated 2-9-94 was rescinded/superceded vide Notification No. 47/96-Cus., dated 23rd July, 1996. The period of dispute in this case is from October 1998 to February, 2001. Since the exemption Notification No. 163/94-Cus., dated 2-9-94, was not available to the appellants, to my mind remanding the matter back to the adjudicating authority for deciding availability of exemption under Notification 163/94 would serve no purpose. Since it is not clear from the records of the case whether the rescinding/superceding Notification No. 47/96-Cus., dated 23rd July, 1996 was placed before Hon'ble Member (J) or not, to my mind had the said rescinding/superceding notification been produced before the Hon'ble Member (J), she would have come to a different conclusion.
11. In view of the above discussions, I am of the view that as the question of classification of the 'said products' has been settled against appellants and the benefit of Notification No. 163/94-Cusv dated 2-9-94 is not available to the appellants, the matter does not require any fresh consideration by the adjudicating authority.
12. So far as the penalty is concerned, the Hon'ble High Court had directed the third member to decide the issue relating to the reduced penalties. I now take up the issue of the imposition of the penalty. The Hon'ble High Court while disposing writ petition No. 2013/2005 directed the Tribunal as follows:
• In the aforesaid circumstances, the said learned Third Member is directed to decide the aforesaid point relating to the reduced penalties at an early date but positively within a period of four weeks from the date of communication of this order after giving reasonable opportunities of hearing to the petitioner herein.
13. It can be safely conceived that Hon'ble High Court directed the Tribunal third member to decide the issue relating to reduced penalties which is to decide whether penalty as imposed by Member (T) is correct or Non-imposition of penalty by Hon'ble Member (J) is correct.
14. If the arguments of the learned Departmental Representative are to be taken to logical conclusion, then it would amount that the Hon'ble High Court's direction is only to decide only imposition of reduced penalty has to be dealt by me. To my mind, this would be a wrong interpretation as the Hon'ble High Court while directing to decide point of reduced penalty, meant that I should come to a opinion whether the order of Learned Member (J) is correct on the point of penalty or Learned Member (T)'s order is correct. In this case the penalty is imposed on the appellants is under Section 114A of the Customs Act, 1962 and under Section 112(a) of the Customs Act, 1962 on other two appellants. The provisions of the Section 114A and 112(a) of Customs Act 1962 are as follows:
• Section 114A. "Penalty for short-levy or non-levy of duty in certain cases. - Where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful misstatement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under Sub-section (2) of Section 28 shall also be liable to pay a penalty equal to the duty or interest so determined" Provided....
Provided....
Provided....
Provided....
Provided....
• Section 112(a) : "who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such and act.
It is undisputed that the penalty can be imposed under the above sectons if the conditions as enumerated are satisfied for imposition of the penalty.
15. In this case, during the relevant period of imports, the appellants declared the said goods under Chapter Heading No. 2309.90, based on an order of the Commissioner (Appeals) in their own case and in respect of the very same 'said goods, imported at Mumbai. The order of the Commissioner (Appeals) in the appellants case at that time was based on the fact that other importers were also classifying the said products under Chapter Heading No. 23.09. As such, armed with the order of Commissioner (Appeal) in their favour, the appellant's classification of the said products under Chapter Heading No. 23.09 cannot be faulted with, as an act done, with mala fide intention to evade duty. To my mind, anyone would have done the same way. This act of classifying the said products under Chapter Heading 23.09 by the appellants is reflective of their bond fide impressions and cannot by any stretch of imagination, would attract penal provisions of Sections 112(a) and 114A of the Customs Act, 1962. Under the circumstances it cannot be held that there was mis-declaration of the said products on importation on the part of the appellants warranting imposition of penalties on them.
16. Hon'ble Tribunal in the case of Nishiland Park Ltd. v. Commr. of Customs as reported at had an occasion to decide on the imposition of penalty on an identical issue. The Hon'ble Tribunal held that:
• Redemption fine & PenaltyCustoms-Appellants under bond fide belief that goods classifiable under Heading No. 95.08 of Customs Tariff Act, 1975, previous import by another importer having been classified them under R.F. Reduced penalties imposed on appellants set aside
17. It can be seen that the Tribunal in that case set aside the penalties imposed based on the classification of other importers. In the case before me appellants are on a stronger footing in as much that the classification of the 'said products' was under Chapter Heading No. 23.09 was held in their own case during the relevant period.
18. In light of above discussions, I am of the view that the imposition of the penalty on the appellants under Section 114A of the Customs Act, 1962 and the personal penalties imposed under Section 112(a) of the Customs Act, 1962 is unwarranted and are liable to be set aside.
19. As I have already held that the benefit of Notification No. 163/94-Cus is not available to the appellants, remanding the matter to the adjudicating authority for fresh adjudication will not serve any purpose, in the same way to my mind remanding the matter for reconsideration for imposition of penalties will not also serve any purpose as I have already held that the penalty is not imposable on the appellants.
Registry is directed to place the matter before Hon'ble President, CESTAT, New Delhi for necessary orders.
(Pronounced on 13-1-06) Sd/-
(M.V. Ravindran) Member (Judicial) FINAL ORDER In view of the majority order, the demand of duty is confirmed. However, penalties imposed upon the appellants are set aside. All the appeals are disposed off in above terms.