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(d) The allegation of misdeclaration of goods at the time of import is misplaced. There was no misdeclaration whatsoever. Larger period of limitation cannot be therefore invoked in respect of the goods cleared under Bill of Entry No. 63;
(e) Duty is not demandable when goods are absolutely confiscated.

10. On behalf of the other appellants from whose possession PSF was absolutely confiscated along with a quantity of polyester yarn, it was argued :-

(a) The goods are not liable to confiscation as no nexus has been shown between the goods confiscated and the ones imported by M/s. LDT. The evidence adduced by the Department is not enough to connect the goods with the imported goods.

27. A similar question arose in the case of Reliance Industries Limited v. Union of India - . M/s. RIL cleared goods under Project Import Regulations, which were assessed provisionally. Without finalizing the Bills of Entry a show cause notice was issued alleging misdeclaration and demanding differential duty. This was challenged before the Hon'ble Bombay High Court. It was argued before the court that once the goods were cleared under Section 47 of the Customs Act, there is no scope to issue a show cause notice as such a step would amount to reviewing an order without going through the procedure laid down in Section 130 of the Customs Act. The Court rejected this contention after referring to the decisions in the Jain Sudh Vanaspati , Popular Dye Chem etc. stating "these decisions have no application to a provisional assessment and clearance, as in the present one, which has been granted under the Project Contract Regulation. By the very nature such assessments of goods are provisional". The Hon'ble High Court therefore held that a show cause notice can be issued under Section 124 even without finalizing the assessment. This Single Judge decision was upheld by the Division Bench which observed that clearances made under Project Import Regulations are under Section 143 of the Customs Act. Continuity Bonds have been executed by the importers at the time of clearances. The situation in the present case is similar if not identical. The allegations in the show cause notice are two fold. The appellants misdeclared the goods at the time of import and secondly the appellants have not observed the conditions of the Notification under which duty free clearance was accorded thereby rendering the goods liable to confiscation. The appellants executed a bond at the time of clearance as in the case of RIL cited supra. If a show cause notice in the case of RIL can be held to have been rightly issued there is no reason as to why in the present case it should not be held to be so.

39. We examined the rival contentions.

40. The appellants imported goods under Advance Licence scheme claiming duty free clearance under Notification 117/78 as amended. Any claim for duty free import under this Notification is valid only when DEEC (certificate) is produced. The particulars given by the importer in part 'D' of the said certificate also form part of declaration made in the Bill of Entry. This is because exemption under Notification 117/78 as amended, can be granted only when DEEC is granted by the licensing authority. The appellants were aware, as they themselves admit, that they imported polyester fibre. However, in part D of the certificate submitted along with the B/E the appellant claimed the benefit of Notification 215/80 which is meant for viscose fibre. Thus what was imported was PSP but what was indicated in Part D was VSP. The appellants even indicated the duty involved on the imported goods as if the goods concerned were viscose staple fibre. They paid duty as indicated in Part 'D' when they failed to fulfil the export obligation. In a diabolic scheme the importers all along exhibited cunning and mischief. Giving an incomplete description in the Bill of entry and complete one in the DEEC Part 'D' and presenting both the documents at the time of import was not exactly funny. It is done with an intention to evade payment of full duty in case the importer failed to fulfil the export obligation. The conduct of the importers tantamounts to misdeclaration and suppression.

47. It is hotly contested that the Collector erred in ordering absolute confiscation and demanding duty on the same quantity under Section 28 and Section 143A (the latter section has no legal standing). In a recent decision in the case of Union of India v. Shri Harkishandas Narottam Hospital (W.P. No. 388 of 2005), dated 13-4-2005 the DB of Hon'ble High Court of judicature at Bombay ruled thus "If the appellant were not interested in redeeming the goods, then, the Customs Act does not create liability to pay the Customs duty". If that were to be the legal position in regard to goods not redeemed it is equally so in respect of goods absolutely confiscated. We apply the ratio laid down by the Hon'ble High Court to the facts of the present case. What the Hon'ble High Court has laid down is that he who possess the goods shall bear the liability to duty. In other words, if the goods are absolutely confiscated it is the Central Government who would possess the goods. Liability to pay duty on absolutely confiscated goods does not shift to the person who either imported the goods or to the person from whose possession the goods were seized. The demand for duty on 4536 bales weighing 1169.575 needs to be set aside. Their confiscation under Sections 111(m) and (o) has to be upheld as the goods in question were misdeclared and the conditions under which the goods were imported were violated. We have already discussed as to how the goods were misdeclared in regard to PSF imported under Bill of Entry No. 63. In regard to the goods cleared under Bills of Entry Nos. 22 and 23 we observe that while declaring the imported goods as MMF the appellants claimed the benefit applicable without mentioning the notification number in the same manner. The appellants imported admittedly PSF but by claiming the benefit of Notification 215/80 as amended they made the officers believe that the imported goods were VSF. This constitutes misdeclaration and suppression. Another significant feature in regard to clearances under Bills of Entry 22 and 23 is that in DEEC Part 'D' the importers have not indicated the notification applicable to VSF even though they mentioned the duty applicable to VSF. The modus operandi was the same. In case the appellant failed to fulfil the export obligation they would pay duty applicable to VSF even when they imported PSF. The declaration made in the Bill of Entry read with the ones in the DEEC book would constitute misdeclaration with intent to evade duty. The goods are therefore liable to confiscation.