TMI Blog1998 (5) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... available. The department s basic contention in brief is that the prescribed terms and conditions were not fulfilled and therefore the goods were liable to confiscation and duty, and the persons concerned were liable to penalty. It was explained by ld. Counsel Sh. Nankani that as a matter of fact 69 consignments were received out of which 26 consignments were located at first and placed under seizure. Of these 13 consignments were adjudicated by Collector Sh. Gowri Shankar who did not pass any orders regarding penalty; And subsequently the Collector Sh. Bhardwaj adjudicated about the remaining consignment as also w.r.t. penalty aspect of 13 consignments already adjudicated by Sh. Gowri Shankar. In view of the above position, six appeals were heard as follows :- 1. M/s. Chaudhary International appeal against Sh. Gowri Shankar s order. 2. Audio Visual s appeal against Sh. Gowri Shankar s orders. 3. Department s appeal against Sh. Gowri Shankar s orders in Chaudhary s Intt. s case. 4. M/s. Chaudhary Intt. appeal against Sh. S.K. Bhardwaj s order. 5. Sh. Biren Shah s appeal against Sh. S.K. Bhardwaj s order. 6. Sh. M.C. Shrimanker s appeal against Sh. S.K. Bhardwaj s or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsignments which were the subject matter of the impugned order dated 30-4-1991 and therefore they had not filed any appeal in respect thereof. The 11 disclaimers letters written by the appellants are Exhibits E to O from pages 33 to 43 of the Memorandum of Appeal. There are no disclaimer letters in respect of these two consignments. 6. As far as these two consignments are concerned they have not at any stage whatsoever disclaimed the same. The appellants are the true and absolute owners thereof but these have been confiscated without issue of show cause notice or opportunity of personal hearing to them. The order of the Collector is therefore illegal and bad in law. 7. It is also wrong and improper inasmuch as the option to redeem the goods has not been given to them but to M/s. Audio Visual Devices. 8. It was therefore their prayer that the impugned order may be set aside to the extent of confiscation of these two consignments and the option of redeeming the same given to M/s Audio Visual Devices. 2. Audio Visual Devices Appeal Against Shri Gowri Shankar s Order 9. Ld. Counsel Sh. Gujral stated that the impugned order was an ex-parte order as no notice was issued to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, M/s. Chaudhary Intt. could not disclaim the goods once they were imported by them under their import export passbooks and allowed clearance by the customs against the same. It was their submission that there has been no violation of provisions of Section 111(d). 14. It was also his submission that from the various statements recorded and relied upon it could only be said that the appellants wanted to purchase some goods after their valid importation. Even if it is admitted that the appellants have placed orders for the goods to be imported against passbooks of M/s. Chaudhary Intt. it cannot automatically lead to the inference that the appellants had imported the goods. As the appellants were not the owner of the goods at that time they were under obligation to fulfil the terms and conditions of the import export passbook scheme. Therefore they could not be held responsible for the disposal of the goods in the market in contravention, if any, of para 281 of the Import Export Policy 1981-91. 15. The appellants had agreed to purchase the goods bona fidely believing that they were either freely available in the market or validly imported or allowed to be sold in the loc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redeemed on payment of lumpsum fine of Rs. 11 lacs without indicating the fine bill of entrywise or consignmentwise. There was no material evidence to show that all these various types of goods in different consignments would have fetched the same margin of profit meriting the imposition of fine at a uniform rate of about 50% of the C.I.F. value. Not only that whereas in case of Sr. No. 12 consignments of viscose rayon fabrics only 67 Cartons were seized (as against 74 imported) and in case of velvette fabrics Sr. No. 13 only 47 rolls were seized against 322 rolls) but the Collector of Customs has ordered confiscation of the entire quantity of 74 cartons and 322 rolls i.e. including even that part of the goods which were not available for confiscation. This shows total non-application of mind and similarly the fine has been imposed without bothering as to whether the goods were available for being allowed to be redeemed and therefore the action is unsustainable. The Collector has relied on the judgment of Supreme Court in Jayanti Lal Katakia v. Govindan Nair - [1983 (13) E.L.T. 1647 (S.C.)] to hold that the appellants were importer of the goods but his reliance is mis-placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. The Collector has not passed any order regarding penalty. It was the Department s contention that the order of the Collector was not legal or proper as : (1) The Collector has erred in giving the option to redeem the goods to M/s. Audio Visual Devices as the bills of entry were filed by M/s. Chaudhary Intt. and the goods had been imported against their passbook. (2) It is also their submission that the goods carried a high margin of profit (average MOP being 170%) whereas redemption fine imposed was only 50% approx. of CIF value and therefore the amount was grossly inadequate. 20. It was their submission that the Collector was required to keep in mind the definition of import indicated in Section 2 as also the fact that Bill of Lading was in the name of M/s. Chaudhary Intt. He was also required to keep in view that M/s. Audio Visual never held any title to the goods nor were there any documents in their name. 21. In view of the above position, the Collector should not have held M/s. Audio Visual Devices as the importer or owner of the goods and as such should not have given the option to redeem the goods to them. 22. The Collector has not given any reasons for imposin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other relevant aspects including reference to the quantities of the fabric which had not been sold but only talked about with Biren Shah and about which sales had not been finalised and in respect of which therefore Sh. Biren Shah or the Audio Visual Devices could not claim to be either owner or purchaser. Ld. Collector has also ignored that from the statement of Sh. Palaria it would appear that there was no sale of passbooks but only sale of goods which could be sold under the policy to the actual users. He has also not given weightage to the relevant aspects of the statements of Sh. M.C. Shrimanker who had cleared some of the consignments and various contradictions which were apparent. Ld. Counsel also stated that he would like to clarify in response to queries from the Bench that out of 11 consignments the respondents M/s. Chaudhary Intt. had filed Bills of Entry in respect of only 4 consignments and had not filed Bills of Entry in respect of balance 7 consignments and not made any payment to foreign suppliers and were not aware as to who filed the Bills of Entry regarding them but they were aware that the duty had been paid by M/s. Audio Visual Devices in respect of 11 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Bills of Lading were in the name of M/s. Chaudhary Intt. and assigned to them. 3. The import documents were in the name of M/s. Chaudhary Intt.; and 4. Goods were consigned to them. 5. Some Bills of Entries were filed by or (on behalf of) M/s. Chaudhary Intt. and some by or on behalf of Biren Shah/Audio Visual Devices. All the parties (including the department) have a grievance against the order of Sh. Gowri Shankar and have prayed that it may be set aside as it is incorrect or improper. 31. We observe that insofar as M/s. Chaudhary Intt. are concerned they have accepted the fact that the Bills of Lading and the documents were in their name and the goods were imported and clearance was sought with reference to the DEEC passbooks issued to them but have emphasised that they had filed disclaimer in respect of 11 out of 13 consignments. 32. A question has also been raised that since regarding the consignments in respect of which the orders were placed by Sh. Biren Shah/Audio Visual Devices and clearance was also ultimately taken by them (on being allowed to do so by the Collector) who is required to be held as the real importer and owner of the goods and on whom the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion it is also immaterial whether the order was placed by Sh. Biren Shah/M/s. Audio Visual Devices - whether directly or through M/s. Chaudhary Intt. or the clearance was sought with reference to DEEC passbook of M/s. Chaudhary Intt. for the purpose of determining who was the importer particularly when they did not held themselves out to be the importer of the goods before clearance. The fact that they had agreed to clear the goods and were willing to pay duty or fine was not relevant. Similarly purchase of the goods after importation was a different issue. As rightly pointed out before us even in the second part of Section 2 of Customs Act, 1962 the significant words are before the clearance of the goods and there is no evidence to the effect that they held themselves out to be the importer of the goods by filing any proof of being the real importer before clearance. Even at this stage they have merely stated that they had placed orders and also emphasised that they had not imported but simply purchased the goods and had taken clearance because it was allowed by the customs themselves. In view of the above facts and circumstances even if there was a violation of the customs or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t s dues. 36. This brings us to the question whether any offence was committed at all by any one of the persons concerned. In this respect also we find that the Collector has not dealt with the case thoroughly or properly and as seen above has made blunders and mis-directed himself regarding basic facts and issues; He has neither analysed the evidence properly nor taken relevant aspects into account. The department s contention is that in spite of a serious offence having been committed only a nominal or very little fine has been imposed but the question of imposition of fine whether less or more and the question as to how much was appropriate is linked with establishment of offence(s) in the first instance and fixation of liability on the right person and then demanding duty, fine or penalty etc., if any leviable, from the right person. The Collector has not bothered to do so and neither cared for the law nor the facts; And obviously the order is incorrect and improper and one which has given rise to grievances all around - to all the sides - including the department as well as others. In fact the Collector has passed an order which is vague and shows non-application of mind. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a party may give consent for a variety of reasons including expediency or pressure of circumstances or of the authorities or under mistaken belief or mistake of law or otherwise but that does not bind it for all time to come. Arguing forcefully he emphasised that the Supreme Court has also recognised the right of appeal as a substantive right vested by a statute as evident from case law in this regard and it was his contention that such a right once vested would not and could not be affected by consent. 41. It was his plea that in this case, on further consideration, it was found by the appellants that as a matter of fact no offence had been committed since they had complied with the export obligation and the goods had been imported against the DEEC passbooks and sold to actual users; And, further, not giving an intimation to the Customs authorities or CCIE was merely a technical lapse at best, as evident from the observations and findings of the Collector himself and in this connection he would like to draw attention to the operative portion of the Collector s order. 42. Insofar as merits are concerned he stated that in spite of it all the Collector has not merely confirmed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as their alternative submission that the Collector has himself stated that the breach was of a technical nature. In other words there was substantial compliance by the appellants and the benefit could not and should not be denied merely on account of a technical breach. And in view of the above position the demand was not required to be confirmed and seized goods were not liable to confiscation or fine and they were not liable to any penalty. In support of above contentions he cited the following case law :- 1. 1988 (34) E.L.T. 442 (Guj.) 2. 1989 (40) E.L.T. 180 3. 1990 (49) E.L.T. 147 4. 1992 (59) E.L.T. 69 5. 1993 (68) E.L.T. 514 (Cal.) 6. 1992 (61) E.L.T. 375 (Kar.) 7. 1994 (71) E.L.T. 98 8. 1988 (36) E.L.T. 468 9. 1992 (57) E.L.T. 161 10. 1992 (58) E.L.T. 163. 45. Ld. DR speaking for the department stated that insofar as the preliminary point about maintainability of the appeal of M/s. Chaudhary Intt. is concerned in view of the admitted position that it was a consent order, he would leave it to the Bench; and insofar as the merits are concerned he would like to draw attention towards the order of the Collector Sh. Bhardwaj and like to reiterate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se that this order is required to be seen w.r.t. the show cause notice, the facts as mentioned therein, the Sections which have been invoked and the findings of the Collector w.r.t. his clients. In this respect he will in particular draw attention to Collector s own observations and findings that penalty under Section 112 can be imposed only if a person is responsible for an act of omission which makes the goods liable to confiscation under Section 111 of the Customs Act. 50. The Collector has in this respect taken note of the fact that in respect of 13 consignment released to them by the order of the predecessor Collector, the orders were placed by Sh. Biren Shah with the foreign supplier and the show cause notice was waived by Sh. Biren Shah and Sh. Biren Shah had admitted that the goods belonged to him. However, what the Collector was required to see before proceeding further and holding Sh. Biren Shah liable to penalty was that whether the goods had become liable to confiscation, if at all, on account of any omission or commission on his part and therefore whether penalty could be imposed on him. It was his submission that since the department has not been able to prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DEEC passbook and advance import licence and if any post-importation conditions were to be discharged then it was for the importers to discharge whether under the Customs Act or the Import Export provisions and the DEEC Scheme. It was his submission that the fact that M/s. Chaudhary Intt. had already shown their willingness to make the payment of duty and virtually admitted their offence and the Collector had also imposed redemption fine and personal penalty on them, itself shows and implies that the department has also conceded this position. The Collector having so held, it is M/s. Chaudhary Intt. who were responsible for the obligation, not the appellant. Further there was no prohibition on importing the said goods and disposing them and the Collector himself has noted that under the present policy it was not necessary that the goods should be sold to the actual users only. In fact the Collector himself has stated that the breach committed by M/s. Chaudhary Intt. was more technical than substantive. 56. It was their contention that once admittedly there was only a technical contravention of the policy then the role played by all the concerned persons must also be viewed as tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardwaj to reopen that chapter or keep it in mind while deciding the cases before him. 63. It is also interesting to note that the date of the second show cause notice is 31st July, 1991 whereas the date of issue of order of first Collector Sh. Gowri Shankar is 25-2-1992 and it is in the context of these dates that the words used in the show cause notice (second para) to the following effect gain importance :- Document showed that 26 consignments were imported by M/s. Chaudhary Intt. under Import Export Passbook. Out of these M/s. Chaudhary Intt. disclaimed 13 consignments. The adjudication of these consignments are therefore being dealt with separately. That means the adjudication of the cases before Sh. Gowri Shankar was not really finally over by the time this (second) show cause notice was issued and the mystery deepens when it is seen that in the case of Sh. Gowri Shankar s order the date of order is shown as 30-4-1991 but the date of issue is shown as 25-2-1992 and the show cause notice dated 31st July, 1991, with reference to which Sh. Bhardwaj has passed the order, uses the aforesaid words and continuous tense of one being dealt with separately . 64. It was their su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder regarding penalty, if any, imposable in view of the facts and circumstance of the case on any of the persons allegedly concerned with the matter and had left that aspect in abeyance. This is clear from the sentence used by him I do not propose to pass orders regarding penalty at this stage . In this respect we consider that while it would have been desirable and more appropriate for Collector Sh. Gowri Shankar to have dealt with all the relevant aspects at the same time and he need not have kept the penalty imposition in abeyance when the persons were concerned were the same who had allegedly rendered the goods liable to confiscation. This action of the Collector Shri Gowri Shankar was, however, no bar for his successor to take on from where the predecessor had left particularly in the facts and circumstance of this case (relating to a series of consignments in which the same persons were said to be involved). If Sh. Gowri Shankar had given a verdict w.r.t. the question of liability to penalty it would have been a different matter. For then, the case would have stood concluded and a successor could not reopen it at his level. But since the penalty proceedings were left untouc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt agreed upon by both the sides (besides confiscation and consequentially the redemption fine), he imposed the same. 71. Now to come before the Tribunal against such an order claiming themselves to be aggrieved person is rather taking the matter too far. The very purpose of mutual consent and an order passed on the basis of such a consent would be defeated if the appellants were allowed to reopen the matter in the way they have urged. 72. There is another way of looking at it. The fact remains that the appellants were entitled to the benefits extended to them regarding duty free clearance under DEEC Scheme subject to fulfilment of the conditions enforced during the relevant period and one of the conditions was that the goods were intended to be utilised by the importers for manufacture of goods to be exported by them and it was also open to them to sell the same to actual users only so that the same purpose of utilisation for manufacture of goods to be exported is still served and a prior intimation to the authorities was required to be given so that the officers are able to keep an eye and ensure their use for the prescribed purpose, i.e. permission was necessary so that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of a Collector. He is also right in pointing out that a penalty under Section 112 can be imposed only on that person(s) who by any of his acts of omission or commission renders the goods liable to confiscation. In other words, the burden is on the department to show that the ingredients of Section 112 were satisfied in respect of a person before imposing penalty on him. In the present case however, admittedly the orders for the goods had been placed by the appellants Sh. Biren Shah/Audio Visual and admittedly they were interested in the purchase of the goods and had bought them. A question arises whether in view of the above admitted position and circumstance of the case they were really innocent buyers as they claimed or they were one of the persons concerned in doing or omitting to do an act which act or omission rendered the goods liable to confiscation or had abetted in the doing or omission of such an act or were concerned in acquiring possession of or in any way concerned in any of the activities mentioned in Section 112 or in any other manner dealing with the goods which he knows or has reason to believe are liable to confiscation under Section 111. In this respect, a st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Biren Shah/Audio Visual about ownership of some of the goods, the admission of Sh. M.D. Palaria and Sh. M.C. Shrimankar of having acted as a conduit for the import and the sale of duty free goods and that they were aware that import of such goods and their clearance without payment of duty and sale to persons other than actual users was in contravention of the law, the admitted role of Sh. M.D. Palaria in procuring the licence and finding a buyer and of rendering active assistance by Sh. M.C. Shrimankar in disposal of the goods knowing fully well as a clearing agent that the same goods cannot be disposed of to persons other than actual users, the deemed purchase of the goods by Sh. Biren Shah/Audio Visual, their taking clearance even though they were not imported against a DEEC passbook in their name and with or without having filed Bill of Entry and willingness to pay the duty in respect of some of the consignments and even fine, all taken together show that all these persons had acted in tandem and none of them could be considered as an innocent person or on not concerned in any manner in rendering the goods liable to confiscation or not dealing with them knowing that such acts a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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