Customs, Excise and Gold Tribunal - Delhi
Gita Times vs Commissioner Of Customs on 24 February, 2000
Equivalent citations: 2000ECR814(TRI.-DELHI), 2000(119)ELT305(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. This Reference Application has been filed by the applicants against the Final Order No. A/99/98 NB dated 3-3-1998 by which a penalty of Rs. 50,0000/- was confirmed against the present applicants under Section 112 (a) of the Customs Act, 1962.
2. Applicant has formulated the following question of law for reference to the Hon'ble High Court: "Can provisions of Section 112 (a) of the Customs Act, 1962 be invoked on an importer who even prior to import, has relinquished his title to the goods in terms of Section 23 (2) ibid?".
3. Ld. Counsel for the applicants briefly narrated the facts of the case as under : Applicant had in January, 1995 placed an order for 600 cartons of dry battery cells on a company in Hongkong. Such items were freely importable under the Advance Import Licences under the DEEC Scheme and were transferable under para 127 of Import Export Policy 1992-97. Since they could not arrange for the said licence in time, they had cancelled the order subsequently in February, 1995 but the goods had already been shipped on 29-1-1995. On receipt of the cancellation of order, the foreign supplier informed the Shipping company on 27-2-1995 to divert the container containing the said consignment of dry cells to Moscow to some other buyer after amending the documents. Due to the failure of the Shipping agents to take timely action, the consignment reached Indian Port at Kandla where it was seized on 28-6-1995. The investigation did not disprove the fact that the assessee had relinquished his title to the goods even before the consignment had arrived at Kandla. In the adjudication proceedings under Section 111 (d) and Section 112 (a) of the Customs Act, the adjudicating authority directed confiscation of the goods and imposed a penalty of Rs. 2 lakhs each on the assessee firm and also its proprietor. In appeal the Tribunal had modified the Order-in-Original by reducing the penalty to Rs. 50,000/- but had confirmed the penal liability on the assessee firm. In the Final Order, the Tribunal had relied on the Supreme Court decision in the case of UOI v. Sampat Raj Dugar 1992 (58) E.L.T. 163 (S.C.) and Savitri Electronics v. Collector of Customs 1992 (62) E.L.T. 395 and held that the scope and purport of Clause 5 (3)(ii) of the Import (Control) Order providing that the goods for import of which a licence is granted shall be the property of licencee at the time of import and thereafter upto the time of clearance through customs was to hold the licencee responsible for anything and everything that happened to the goods from the time of import till they were cleared through customs. Ld. Counsel submitted that the Apex Court itself had entered a caution while interpretting the provisions of Import (Control) Order by saying that the said legal fiction should not be carried beyond the provisions of that order and it cannot go to the extent of extinguishing the title of the exporter of the goods when the exporter has not received payment. He submitted that the fiction that was created was relatable to the licencee at the time of import. In the instant case though the applicant had applied for a licence, the same had not been granted to him and even before the goods were imported, he had cancelled the order placed with the foreign supplier and had made all efforts to see that the goods were sent to another buyer after amending the documents. There was therefore, no action taken by the applicant to make the goods liable to confiscation under Section 111 or to penalty under Section 112 (a) of the Customs Act. Inasmuch the Tribunal had imposed a penalty under Section 112 (a) in the above circumstances, a question of law had arisen which may be referred to the Hon'ble High Court.
4. Opposing the Reference application, Ld. JDR Shri Ravinder Babu submitted that according to Section 111 (d) any goods which were imported or attempted to be imported or brought within the Indian Customs waters for the purpose of being imported, contrary to any prohibition imposed by Indian Customs Act or any law for the time in force is liable for confiscation and the importer liable to penalty. He submitted that the Tribunal had extensively discussed the legal position with reference to the Apex Court decision in Sampat Raj Dugar case and Savitri Electricals case and had given a finding that the goods were liable to confiscation under Section 111(d). In the two Apex Court decisions referred to above, the order of confiscation was agitated in appeal by the foreign supplier in one case and in the second, by the consignee in whose favour the foreign supplier intended to transfer the goods. It was in these circumstances that the order of confiscation was set aside. In the case before the Tribunal, there was no claim to the ownership of the goods either by the foreign supplier or by a consignee of the foreign supplier. The said decisions were therefore, distinguished in the Final Order. On the other hand the Apex Court had, on the basis of detailed analysis of the scope and purport of Clause 5(3)(ii) of the Import (Control) Order held that the goods for which the licence was granted shall be the property of the licencee at the time of import and thereafter. The Apex Court had further held that the idea was to hold the licencee responsible for anything and everything that happened to the goods from the time of import till they were cleared from customs. The Apex Court had observed "whether or not he is the owner of such goods in law, the Import (Control) order created a fiction that he shall be the owner of the goods from their time of import till they are cleared from Customs." The Apex Court has further observed that the object underlying the provision was to ensure the proper implementation of the Import (Control) Order and the Import and Export (Control) Act, 1947. The caution that was entered by the Apex Court was to the effect that the fiction cannot be extended to extinguish the title of the exporter of the goods when the exporter had not received the payment. Ld. JDR therefore, submitted that since the finding in the Final Order was based on a ruling of the Apex Court, no point of law arose for reference to the High Court.
5. We have considered the submissions and have perused the record. We find that the decisions in Sampat Raj Dugar case and Savitri Electricals case, had only gone to the extent of saying that any order of confiscation of the imported goods under Section 111(d) will be subject to the claim for ownership of the goods by the foreign exporter or the consignee named by him. It does not go to the extent of saying that goods imported or attempted to be imported or brought within the Indian Customs waters for being imported contrary to any prohibition imposed by the Customs Act or any other law for the time being in force cannot be confiscated for the reason that a noticee who had placed the order for the supply of the goods from a foreign supplier could not obtain the necessary licence before the arrival of the goods, will not be liable to penalty. On the other hand, the observations made by the Apex Court in Sampat Raj Duggar case relating to interpretation of Clause 5(3)(ii) of the Import (Control) Order and relied on by the Tribunal clearly supports the view taken in the Final Order that the purport of the said clause was to create a legal fiction that the importer shall be the owner of the goods from the time of their import till they were cleared through Customs. The underlying object was to ensure proper implementation of the Import (Control) Order issued under the Import and Export (Control) Act, 1947. Caution entered by the Apex Court in construing the said fiction was only to the extent of not extinguishing the title of the exporter when he has not received the payment. We find that the view taken by the Tribunal in holding the present applicant liable to penalty under Section 112 (b) is in consonance with the Apex Court's observation in Sampat Raj Dugar case. We therefore find no question of law which requires reference to the High Court arising from the impugned Final Order.
6. The Reference Application is accordingly rejected.