2009 (8) TMI 477 - HC - Customs

EXIM- empty oxygen gas cylinders imported under licence for import of spares for artificial respiratory system. Department contending that import of seamless steel cylinders made without licence. Artificial respiratory system covered under S.No. 90.18 of import (control) order 1950. oxygen cylinders bought and sold in market as separate apparatus and equipment. Held that- petition against order holding imports as not legal dismissed. Bank guarantee encashable. penalty imposed and Exports (Control) Act 1947 assailed as without jurisdiction as goods cleared by Customs. Imposition of penalty or punishment under Custom Act 1962 not absolve default under the imports and exports control Act 1947. held that- penalty under Customs Act 1962 not prevents authorities under any other law from imposition penalty for violation of Act by some person. Jurisdiction not lacking for imposing penalty under the act. penalty under section 4(j) of Import and Export Control Act 1947 is civil liability and not punishable by a criminal Court Means rea not required for penalty under section 4(i) of the Act.

Summary

Issues Involved:
1. Jurisdiction to impose penalty under the Imports and Exports (Control) Act, 1947.
2. Requirement of mens rea for imposing penalty.
3. Validity of import of empty seamless steel cylinders under the Import Policy 1981-82.

Issue-wise Detailed Analysis:

1. Jurisdiction to Impose Penalty:

The petitioner argued that only Customs Authorities had jurisdiction to impose penalties after goods were imported, citing paragraphs 323 and 324 of the Exports and Import Handbook of Procedure for 1981-82. Paragraph 323 states that unauthorized imports without a valid license are punishable under the Customs Act, 1962, without prejudice to any action under the Imports and Exports (Control) Act, 1947. Paragraph 324 clarifies that Customs Authorities have the final jurisdiction on the conformity of imported goods with the license. The court interpreted these paragraphs harmoniously, concluding that actions under the Customs Act and the Imports and Exports (Control) Act operate independently and concurrently. Section 127 of the Customs Act, 1962, and Section 4(j) of the Imports and Exports (Control) Act, 1947, were cited to support the view that penalties under one Act do not preclude penalties under another. Therefore, the respondents had jurisdiction to impose penalties under the Imports and Exports (Control) Act, 1947, even after Customs clearance.

2. Requirement of Mens Rea:

The petitioner contended that the penalty could not be imposed without finding mens rea, relying on the Division Bench judgment in Dencap Electronics (P) Limited and the Supreme Court's decision in M/s. Hindustan Steel Limited v. State of Orissa. However, the court referred to the Supreme Court's subsequent decisions in Union of India v. Dharamendra Textile Processors and Chairman, SEBI v. Shriram Mutual Fund, which held that penalties for statutory breaches are civil obligations not requiring mens rea unless explicitly stated. Section 4(i) of the Imports and Exports (Control) Act, 1947, under which the penalty was imposed, does not mention mens rea. Therefore, the court concluded that the presence of mens rea was not necessary for imposing penalties under this section, and the petitioner's second contention was rejected.

3. Validity of Import:

The petitioner imported 2721 empty seamless steel cylinders, claiming they were spares for artificial respiratory systems under paragraph 186(8) and Chapter 90.18 of the Import Policy 1981-82. The respondents argued that these imports fell under paragraph 115, which required a specific license for medical gas cylinders. Paragraph 115(4) allows the import of medical gas cylinders to meet the full requirements of actual users. The court found merit in the respondents' argument, noting that oxygen cylinders are considered separate apparatus and equipment, distinct from artificial respiratory systems and their spare parts. Therefore, the import of empty seamless steel cylinders was not covered under paragraph 186(8) but under paragraph 115, for which the petitioners did not have a valid license.

Conclusion:

The court dismissed the petition, upholding the penalty imposed under the Imports and Exports (Control) Act, 1947. The bank guarantee furnished by the petitioners was to be encashed, and the respondents were entitled to recover the balance penalty amount in accordance with the law. No costs were awarded.