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Commissioner of Customs (Import) , Raigad Versus M/s. Finacord Chemicals (P) Ltd & Others

2015 (5) TMI 371 - SUPREME COURT

Valuation - Undenatured Ethyl Alcohol - import price of the liquor - Import of goods against invalid licenses - Suppression of value of goods - Confiscation of goods - Redemption fine - Held that:- when the invoices are produced showing the purchase price of the goods in question and authenticity of these invoices is not doubted by the Department, these will form as the primary evidence in support of the contention of the respondents that the imported goods were purchased at UK pound 1.40 per bu .....

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s not towards duty, the question of unjust enrichment would not arise at all. - Decided against Rvenue. - Civil Appeal Nos. 1633-1638 of 2004, Civil Appeal No. 6541 of 2010, Civil Appeal No. 3410 of 2006 - Dated:- 8-4-2015 - A. K. Sikri And Rohinton Fali Nariman,JJ. For the Petitioner : Mr B Krishna Prasad For the Respondent : Ms Bina Gupta JUDGMENT Civil Appeal Nos. 1633-1638 of 2004 In August, 1991, respondent nos. 1 and 2 herein imported 2 and 3 containers respectively of alcohol under the de .....

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of the imported goods was pound 3.78 per bulk litre and that the goods were imported against invalid licenses. Accordingly, demand of customs duty was raised against respondent nos. 1 and 2. It also proposed confiscation of the goods and penal action against the respondents. The Collector of Customs vide Order-in-Original dated 28.02.1995 upheld the misdeclaration and undervaluation and further held respondent no. 1 to pay customs duty of ₹ 1,63,74,648/- along with penalty of ₹ 1,64 .....

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ieved, the respondents filed appeals before the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT') and the CESTAT vide its final order dated 10.09.2003, partly allowed the appeals thereby setting aside the order of the Collector regarding enhancement of the unit price, while upholding that import of the said goods was unauthorised and was liable for confiscation. However, the CESTAT reduced the amount of fine imposed and set aside the penalties impos .....

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. S. R. Nagpal from ₹ 22,65,006 to ₹ 10 lakhs. We may mention at this stage that against the other findings of the Tribunal which have gone against the assessee, the assessee has also filed the appeal which is pending before the Bombay High Court. Insofar as the first issue of import price of the liquor in question is concerned, the order of the Collector reveals that the respondents-assessees have relied upon a letter indicating that the goods were imported at the rate of UK pound 1 .....

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of the goods in question and authenticity of these invoices is not doubted by the Department, these will form as the primary evidence in support of the contention of the respondents that the imported goods were purchased at UK pound 1.40 per bulk litre. We thus, do not find any flaw in the reasoning of the CESTAT while deciding this issue. Insofar as the reduction of redemption fine as well as the penalty is concerned, the CESTAT has given the following reasons in doing so: - "Redemption F .....

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goods under REP licence was prevalent. We also note that a long period has lapsed since the import and that the goods are raw materials for manufacture of alcoholic beverages that this is not a case of duty evasion as the finding on undervaluation has on set aside by us thereby reducing the gravamen of the charge. The assessable value of the goods imported by FCPL is ₹ 15,08,040/- while the assessable value of the goods imported by SRN is ₹ 22,78,578/-. The fine levied by the Commiss .....

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; 15 lakhs." We are of the opinion that the CESTAT has given valid reasons for reducing the penalty and fine and the discretion exercised by the CESTAT on valid considerations does not call for any interference. These appeals are accordingly, dismissed. We make it clear that the dismissal of the appeals would not impact in any way the appeal which is preferred by the respondents-assessees and is pending in the Bombay High Court. The said appeal shall be decided by the Bombay High Court on i .....

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ch were in custody of the appellant were seized by the Customs Department in those proceedings. The appellant felt aggrieved by the said seizure and approached the High Court of Bombay for release of the goods. In the said Writ Petition No. 3220 of 1991 filed by the appellant, interim order dated 25.10.1991 was passed which reads as under: - "Rules returnable forthwith Respondents waive service. Order as per minutes. Petition disposed of accordingly adjudication proceedings to proceed. Upon .....

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by it be kept with the Nationalised Bank in a Fixed Deposit. On the said application, order dated 30.10.1991 was passed. Though the aforesaid request of the appellant was rejected, but at the same time, the Court gave the direction that in the event it is ultimately held that the appellant is entitled to get back the amount deposited by it, the same shall be refunded to the appellant with interest at the rate of 13 per cent per annum which was the rate of interest payable by the Nationalised Ba .....

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of the goods was decided in favour of the said parties and on that ground, the additional demand of duty was struck down. Even the redemption fine was reduced to ₹ 10 lakhs and as far as penalty is concerned, it was completely knocked off and set aside. We may mention here that against that order passed by the CESTAT, the Department had filed appeal and this court has affirmed that part of the order of the CESTAT dismissing the appeal of the Department. The effect thereof is that even qua .....

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y the High Court of Bombay in Writ Petition No. 3220 of 1991. The Commissioner while dealing with the case of M/s. S. R. Nagpal and company and M/s. Finacord Chemicals Private Limited had recorded certain findings in respect of the appellant herein as well. Insofar as the appellant is concerned, it is categorically held that no role could be attributed to the appellant in the import of goods in question and the appellant was the bona fide purchaser of the goods from the said two importers. The C .....

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of deposit by the appellant in lieu of permission to take back the goods and to utilise those goods pending adjudication and if adjudication orders so warrants, this amount could be appropriated towards dues as adjudicated, according to law. After the order of the CESTAT holding that no additional duty was payable, the appellant made an application for refund of the amount deposited by it stating that even the importers were held not liable to pay any duty. This application was, however, rejecte .....

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njust enrichment would not be attracted. It is this judgment which is under challenge in the present proceedings. From the aforesaid narration of facts, it is clear that insofar as the appellant is concerned, it had not imported the goods in question. The importers were M/s.S.R.Nagpal and company and M/s. Finacord Chemicals Private Limited. The dispute of under-invoicing was also qua the said two importers on the basis of which custom was claiming lesser payment of duty by the said importers. In .....

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s. What is significant is that as a condition for the release of the said goods, interim order directing the appellant to deposit the amount in the sum of ₹ 1,56,64,500 was passed. It was not towards any custom duty. In this scenario, it is difficult to hold that the principle of unjust enrichment can at all be applied. As far as the deposit of the aforesaid amount by the appellant and seeking refund thereof is concerned, we need not discuss the law on this aspect in detail as the position .....

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5F of the Central Excise Act, meaning thereby, the aforesaid provisions which pertain to aforesaid unjust enrichment would not be applicable. It is also specifically pointed out in the said circular that these deposits are other than duty. The circular was issued keeping in view of the orders of this Court in few cases including in Union of India v. Suvidhe Ltd . It is clear from the following portion of this circular: "The issue relating to refund of pre-deposit made during the pendency of .....

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ed refund of pre-deposit as to whether: (i) the High Court is right in granting interest to the depositor since the law contained in Section 35F of the Act does in no way provide for any type of compensation in the event of an appellant finally succeeding in the appeal, and, (ii) the refunds so claimed are covered under the provsions of Section 11B of the Act and are governed by the parameters applicable to the claim of refund of duty as the amount is deposited under Section 35F of the Central E .....

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s filed by the Union of India against the judgment of the High Court of Bombay in Suvidhe Ltd. v. Union of India [1996 (82) ELT 177. Since the special leave petition was dismissed in limine, we would like to reproduce para 2 of the judgment of the High Court wherein the High Court had observed that in case of such deposits, provisions of Section 11B of the Customs Act will have no application. This para reads as under: - "2. Show cause notice issued by the Superintendent (Tech.) Central Exc .....

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