TMI Blog2013 (9) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... d not had been cleared for home consumption unless it was sold to Actual Users and sale of the same when the goods were under bond was in contravention of the Import (Control) Order, 1955 - it was very evident that they colluded and connived with each other to illegally import CPTs circumventing the provisions of the Exim policy and also exported the same in contravention of the said policy – The imported goods were liable to confiscation u/s 111(d) The show cause notice had been issued u/s 124 – issue of a show cause notice prior to passing of an order of confiscation or imposition of personal penalty was mandatory, but the language of Section 124 was clear and precise and no restriction of or limitation or even a fetter was imposed as regards the time when proceedings may be initiated by issue of a show cause notice - Mohanlal Devadhanbhai Choksey and Others v. M.P. Mondker and Others [1976 (3) TMI 54 - HIGH COURT OF JUDICATURE AT BOMBAY] - Confiscation of goods, imposition of fine in lieu thereof or imposition of penalty are not subject to any time-bar. Sale in Custom bond - Permissibility to Export - Whether the sale of CPTs while in customs bond and the subsequent export wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shree Dhoot Trading Agencies Ltd. (SDTAL in short) purchased Additional Licence No. P/W/3280748C/XX/08/B/88 from the open market for part of the value. 2.1 M/s. SDTAL imported 6300 Nos. of Toshiba CPTs, Model 510ZAB(PM) from Japan and they gave a letter of authority to M/s. VIL. On 26-7-88, M/s. VIL filed Bill of Entry for Warehousing vide B/E No. 2003/1 for the said CPTs. The said B/E was assessed finally under Section 17 of the Customs Act, 1962 and order for clearance to warehouse was passed under Bond No. CWp20/2485 after debiting the Additional Licence permitting the import of CPTs. M/s. VIL purchased the imported CPTs from M/s. SDTAL vide invoice no. 1014 for a sum of Rs. 67,56,750/-. On 9-8-88, M/s. VIL sought permission to export the said CPTs bonded in the warehouse and filed a Bond Shipping Bill dated 11-8-1988 for export of CPTs and Free shipping bill for export of indigenously procured degaussing coils to USSR. They also sought permission from the Asst. Collector, Export Department for export of imported CPTs from bonded warehouse under Section 69 of the Customs Act with a copy of invoice dated 5-8-88 and additional licence as endorsed on the reverse of the invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 1-4-88 were non-transferable. Therefore, the CPTs imported by M/s. SDTAL could not have been cleared for home consumption unless it is sold to Actual Users and sale of the same when the goods were under bond by M/s. SDTAL to M/s. VIL was in contravention of the Import (Control) Order, 1955. 2.5 The notice was replied to by the appellants. On application by the department, the Hon ble Supreme Court vide order 29-4-2004 permitted the department to issue orders with a direction that the said order will not be enforced till further orders from the Apex Court. The department passed the order dated 18-5-2004 imposing a penalty of Rs. 10 lakhs on VIL and a penalty of Rs. 5 lakhs on SDTAL apart from confirming the duty demand. The said order was challenged by the appellants before the Hon ble High Court by way of civil appeal 6637 of 2002 [2011 (266) E.L.T. 155 (S.C.)]. 2.6 The Hon ble Supreme Court vide order dated 15-12-2010 [2011 (266) E.L.T. 155 (S.C.)] disposed of the civil appeal by setting aside the Order-in-Original dated 18-5-2004 observing that the question of limitation is a relevant issue and the same goes to the root of the adjudication proceedings and remanding the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion raised by the appellants that the adjudication proceedings are barred by limitation, had observed that the contention of time-bar is a relevant issue and the same goes to the root of the adjudication proceedings. The ld. Commissioner has wrongly given a finding in the impugned order that there was a stay on adjudication by the Hon ble Courts. There was no such stay whatsoever, save and except, on adjudication during the period 22-3-2002 to 7-10-2002. Therefore, the respondent cannot give a finding that the show cause notice was not issued in view of the stay orders given by the courts. 3.4 Ld. Commissioner has wrongly taken refuge under Section 28(7) since the said section was introduced with effect from 8-4-2011. The period involved is 1988. Section 28(7) has no retrospective effect. Moreover, the limitation period had already expired and therefore, the stay to adjudication proceedings for the period from 22-3-2002 to 7-10-2002 is irrelevant. Further the stay given by the Hon ble Apex Court during 22-3-2002 to 7-10-2002 relates to the adjudication proceedings and not to the issue of the show cause notice. 3.5 Though no limitation period is provided for issue of show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel submitted that as they were not in possession of the Addl. Licence, they had requested for a copy of the same from the department and the department has wrongly thrown the burden on the appellants. He further submits that as per the prevailing practice, when the B/E was assessed, production of addl. licence was a pre-condition as that enables the assessing officer to decide on the legality and validity of the import. The assessing officer verifies whether or not the imports are in accordance with the licence. After the appraising officer is satisfied that the goods are covered by the licence, he debits the customs copy of the licence to the extent of value of imports. Thereafter, the licensing department makes entries in the licence register, with the particulars of the licence debited and also retains the customs copy of the licence debited. In the present case, the validity of imports made by the appellant was never questioned either at the time of imports or at the time of exports till the issue of the show cause notice after a period of 14 years from the date of clearance of the imported goods. Therefore, the allegation made in the notice in this regard is baseless and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in the same form has been upheld. 4.4 In view of the above legal and factual position, the ld. Counsel submits that there has been no violation of the Exim Policy or the Import (Control) Order as alleged and therefore the question of confiscation of the goods under Section 111(d) of the Customs Act does not arise at all. Consequently imposition of redemption fine is also not sustainable. Inasmuch as the confiscation is not sustainable, the question of imposition of penalty on the appellants also does not arise. 4.5 In addition to the above, the ld. Counsel further submits that under the same contract, subsequent identical imports of CPTs were allowed for re-export to Russia after the CPTs were bonded on final assessment and clearance order, under Bond shipping bill No. 548709, dated 26-8-1988 and free shipping bill No. 548701, dated 26-8-88. This export was allowed under the order of the Collector of Customs in File No. S/6 Gen. 1060/8803 as is evident from the endorsement on the bond shipping bill. No objection has been raised in respect of the said transaction till date. Therefore, in the present case also, a different treatment could not have been made as the circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VIL, the ld. AR submits that as per Clause 3 of the Export (Control) Order No. 1/88, dated 30-3-1988, in respect of goods specified under Schedule I, exports could have been undertaken only in accordance with a licence granted by the Central Government. Colour Picture Tubes and sub-assemblies of colour TV containing colour TV picture tubes are specified at Sl. No. 2798 of Part B of Schedule I. The said list deals with items export of which is allowed on merits or subject to ceiling or other conditions to be specified from time to time. Further as per Clause 15(g), export is not permitted in respect of any goods imported and bonded on arrival in India for re-export to any country outside India, except Nepal and Bhutan. In other words, since the CPTs were bonded on their arrival in India with the Customs, the re-export of the same by VIL to Russia is prohibited and therefore, such goods become prohibited goods in terms of Section 2(33) of the Customs Act. Therefore the goods are liable to confiscation. The argument of the appellant that Section 64(c) read with Sections 69 and 74 is misplaced as the said sections cannot override the provisions of exim policy. The provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2625 of 1988, filed by VIL, seeking permission to export the goods, the Hon ble High Court of Bombay had given liberty to the department to adjudicate the case. The relevant portion is extracted below :- Respondents and their officers at liberty to adjudicate on the transaction and if necessary take, initiate action against the Petitioners or the Dhoot Trading for contravention of the law, if any. Thus there was no restriction placed on the department either for issue of notice or adjudication of the notice in accordance with law. 6.3 While passing the final order in the said writ petition on 6th January, 2002, the Hon ble High Court observed as follows :- In view of the interim order, the petitioners have already exported their goods. Now what remains is the adjudication of the duty and satisfaction thereof. The respondents in spite of grant of liberty to proceed with the adjudication of duty failed to adjudicate upon the same. The respondents failed in their duty to protect interest of revenue. However, considering the involvement of public revenue, we direct the respondents to adjudicate upon the question of payment of duty on the consignment exported by the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same by VIL to Russia is permissible under the provisions of exim policy or not. The appellant s contention is that the actual user condition is not applicable to addl. licences issued to export/trading houses and such licences are freely transferable as per the provisions of Paras 215 and 216 of the exim policy as they stood at the relevant time. From the records of the case, it is clear that the addl. licence was not issued to SDTAL but was purchased by them from the market. The additional licence under which the imports have been made is Licence No. P/W 3280748, dated 2-6-88, that is, it has been issued after 1-4-88. Para 217(9) of the Exim policy states as follows :- Additional licences issued to Export Houses/Trading Houses after 1-4-88 on exports during 1986-87 or earlier periods, will be non-transferable . These licences will be valid for import of the goods appearing in Part I of List 8, Appendix 6 of the Policy. 7.1 Further as per Clause 5(3)(ii) of the Import (Control) Order, it is a deemed condition of every licence - that the goods for the import of which a licence is granted shall be the property of the licensee at the time of import and thereafter upto t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. Export Trade (Control) Order (No. 1/88) dated 30th March, 1988, in clause 3 thereof provides as follows :- 3. Restrictions on export of certain goods. - (1) Save as otherwise provided in this Order no person shall export any goods of the description specified in Schedule I, except under and in accordance with a licence granted by the Central Government or by an officer specified in Schedule II. 7.5 Colour Picture Tubes are specified in Schedule I, Part B, Serial No. 2798. The said Part deals with Items export of which is allowed on merits or subject to ceiling or other conditions to be specified from time to time . The appellants have not produced any evidence to show that they had the requisite licence to export the impugned goods. The contract of sale with the USSR buyer was in respect of CTV assembly consisting of sub-assemblies of CTV consisting of Toshiba CPT model No. 510 ZI B22TC05 with integrated beck components, deflection yoke and corresponding to the picture tube PCB s socket neck components including parity magnets and degaussing coil as per buyer s design and specification for manufacturing colour television . Assuming that the appellant had the requisite pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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