NON-FILING OF BILL OF ENTRY AND RELEVANCE OF SECTION 111 OF CUSTOMS ACT, 1962

[jayaprakash gopinathan]

This paper is a case study of order in Bhavana PTE Ltd. V Commr. Of Customs, Chennai [2011(266) ELT 040 (Tri. Chennai)].

Section 2(39) of Customs Act, 1962 defines “Smuggling” in relation to any goods, means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113 of Customs Act, 1962.

Section 111 (f) – “any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned”.

Section 111 (g) – “any dutiable or prohibited goods which are unloaded from a conveyance in contravention of the provisions of Section 32, other than goods inadvertently unloaded but included in the record kept under sub-section (2) of Section 45”.  

Section 32 – Imported goods not to be unloaded unless mentioned in import manifest or import report – No imported goods required to be mentioned under the regulations in an import manifest or import report shall, except with the permission of the proper officer, be unloaded at any customs station unless they are specified in such manifest or report for being unloaded at that customs station.

Chapter VII of Customs Act, 1962 deals with clearance of imported goods and export goods and this Chapter, as per Section 44, not to apply to baggage and postal articles.

Section 45(2) -  Restriction on custody and removal of imported goods - The person having custody of any imported goods in a  customs area, whether under the provisions of sub-section (1) or under any law for the time being in force, –

(a) shall keep a record of such goods and send a copy thereof to the proper officer;

(b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer.

Section 46- Entry of goods on importation – (1) The importer of any goods, other than goods intended for transit or transshipment, shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form …

The above definitions relating to goods imported into India were re read after reading the brief case law in the above cited case. The appellant, M/s Bhavane PTE Ltd. in this case, as per order cited, have supplied Cosmetics which were seized as per Section 111 of Customs Act and ordered re-export on payment of redemption fine of Rs.3 lakhs. The cause of action reported for seizure is non-filing of Bill of Entry within the stipulated period. The eleven line order of the Hon’ble CESTAT Chennai is bereft of details. These goods were imported not by the appellants but by another entity, i.e. M/s Raders & Co.. How these goods were taken out of Customs area is not revealed in the order. There is no dispute to the fact that these goods were brought into India from another country. The definition cited above clearly stipulate certain actions for the licit import of goods to India and actions for violations of provisions stipulated for illicit import.

Goods can either be imported through baggage or by following the provisions prescribed by Section 32 of Customs Act, 1962. In as much as seizure appears to have been effected from those received goods supplied by the appellant, it indicates that goods were removed from Customs area, and the allegation is that the removal was without observing the legal formality of filing a Bill of Entry and payment of duty. Goods of foreign origin can be seized by the Customs officers on the reasonable belief that these goods were liable for confiscation as provided under Section 111 of Customs Act, 1962. Section 111(f) read with Section 111(g) and Section 44 inform us that when goods are brought into India from outside the country a bill of entry is required to be filed subject to provision of Section 111(g) and Section 44. When goods of foreign origin are found in possession and on investigation it is found that the goods were brought into India by the importer without filing the Bill of Entry / complying with the provisions of Customs Act, 1962, it is liable for confiscation. What else the enforcing agencies are expected to do?

Time and again, at every opportunity, the Apex Court and High Courts appears to have reiterated the necessity of a reasoned order by Tribunals and other appellate authorities. Some case laws on the subject is reproduced below:-

1. SHAPOORJI PALLONJI & CO. LTD. Versus COMMISSIONER OF C. EX., PUNE-I [2010 -TMI - 202796 - BOMBAY HIGH COURT],

Order of Appellate Tribunal - Non-reasoned order -  Non-application of mind by Tribunal - Order passed by Tribunal not stating any reasons for view taken - Difficult to assume that Tribunal properly applied its mind before passing order directing pre-deposit - Non-application of mind by order making authority is one of the form of arbitrariness in making order - Every order passed by judicial/quasi-judicial authority must disclose due & proper application of mind - Application of mind be evident from order itself or the record contemporaneously maintained by authority - Absence of reasons clearly suggestive of order being arbitrary and in breach of principles of natural justice hence illegal and unsustainable - Matter remanded to Tribunal to consider it afresh by reasoned order. [paras 4, 5, 6]

2. SANT LAL GUPTA Versus MODERN CO-OPERATIVE GROUP HOUSING SOCIETY LTD. [2010 -TMI - 202974 - SUPREME COURT OF INDIA]

Order - Reasoned order - Not only administrative but also judicial orders must be supported by reasons recorded in it - Court bound to give reasons for conclusion while deciding an issue - Duty and obligation of Court to record reasons while disposing case - Reason always insisted as one of the fundamentals of sound administration of justice delivery system to show proper and due application of mind - Reason is heartbeat of every conclusion and it introduces clarity in order - Reasons substitute subjectivity with objectivity - Recording reasons is principle of natural justice and it ensures transparency and fairness in decision making. [para 28]

3. COMMISSIONER OF C. EX. & CUS RAJKOT Versus AMUL INDUSTRIES P. LTD.[S.C] [2010 -TMI - 201939 - SUPREME COURT OF INDIA]

Order - Non-speaking and non-reasoned order of Gujarat High Court - High Court order referring to statutory provisions and quoting a portion of Tribunal order without any discussion - Entire appeal disposed by recording one sentence as conclusion - Impugned High Court order indicating no discussion on issues involved and devoid of reasons - High Court expected to discuss issues involved in appeal threadbare while disposing an appeal - Findings required to be recorded after such discussion and only thereafter conclusions could have been recorded - Appeal not properly disposed - High Court failed to discharge responsibility of recording reasons before recording conclusions - Impugned order set aside - Matter remitted to High Court for fresh decision after considering all issues raised and by giving reasons for decision - Opinion on merits not expressed - Section 35G of Central Excise Act, 1944. [paras 5, 6, 7, 8, 9]

Order - Speaking order - High Court expected to discuss issues threadbare while disposing appeal - Findings to be recorded after such discussion and only thereafter conclusions to be recorded - Section 35G of Central Excise Act, 1944. [para 6]

The CESTAT order taken up for study does not appear to have discussed the facts that lead to the seizure and merely dismissed a case alleged to be one of smuggling goods to the country. The order informs that the goods are not attracting provisions of section 111 of Customs Act, 1962, but how and why is not detailed for a reader to understand the licit importation of goods in commercial quantity without filing a Bill of Entry.