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2015 (8) TMI 1280 - SETTLEMENT COMMISSION CUSTOMS AND CENTRAL EXCISE KOLKATA

2015 (8) TMI 1280 - SETTLEMENT COMMISSION, CUSTOMS AND CENTRAL EXCISE, KOLKATA - 2016 (332) E.L.T. 549 (Sett. Comm.) - Confiscation of goods and imposition of interest and penalty - Import of Polyester Knitted Fabric without payment of duty under two Advance Licences - Availed exemption in terms of Customs Notification No. 96/2009, dated 11-9-2009 - Duty free goods had been diverted to the domestic market though in both the licences it is specified that materials imported shall not be transferre .....

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ssion and also that the proper and complete compliance of the conditions laid down in the statute cannot be compromised or condoned in any manner. Therefore, the Bench holds that the cases relating to goods which are specified/notified under sub-section (2) of Section 123 of the Customs Act, 1962 are outside the purview of Settlement Commission. Accordingly, as the goods to which the instant case relates are notified under sub-section (2) of Section 123 of the Customs Act, 1962 and also so admit .....

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akrabarti, SIO, for the Department. ORDER This order disposes of Settlement Application No. 1062/2015 filed by Shri Rahul Ahuja, Propreitor, M/s. Multitrade Oveaseas, 819, 8th Floor, Devika Tower, Nehru Place, New Delhi - 110 019 (hereinafter referred to as the applicant ) under Section 127B of the Customs Act, 1962 (in short the Act ). This application has been filed for settlement of the dispute arising out of show cause notice bearing DRI F. No. 147/KOL/APP/4272, dated 13/14-8-2013 (hereinaft .....

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623 kg) Polyester Knitted Fabric valued at ₹ 1,36,60,084.91 through Kolkata Port through four Bills of Entry Nos. 7299977, dated 4-7-2012, 7341160, dated 9-7-2012, 7415146, dated 17-7-2012 and 7428384, dated 18-7-2012 (hereinafter referred to as the said BEs) without payment of duty under two Advance Licences No. 0510327957 & 0510327963 both dated 20-6-2012 issued by DGFT, Delhi (hereinafter referred to as the said licences), availing exemption in terms of Customs Notification No. 96/2 .....

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3 (1 consignment) (hereinafter referred to as the said importers ) who sold the consignments to the applicant on high sea sales basis and the same were cleared without payment of duty under the above mentioned Advance Licences held by the applicant. The applicant declared its factory address to DGFT as E-6, Deepak Vihar, Chodha Colony, Ghaziabad, U.P. where the imported goods were to be deposited but the applicant had no factory at the declared address and the duty free goods had been diverted t .....

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.3 In his statement dated 30-8-2012, the applicant admitted the fact of purchasing the four consignments from the said importers and clearing of the same without payment of duty against the said licences and not having factory at the address declared to DGFT and inter alia stated that the said four duty free consignments were sent to the factory premises of M/s. K.R. Industries, Bodai Panchyat Road, P.O. Jugberia, Dist. North 24 Parganas, Kolkata - 700110, not declared in the said licences, .....

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four bills of entry. 2.5 During investigation the applicant voluntarily deposited ₹ 10,00,000/- through Demand Draft, Bearing No. 029634, dated 4-5-2013 drawn on IndusInd Bank, New Delhi which was realized vide Customs Receipt No. 54 (S121-169/2004 SIB, dated 19-7-2013 and ₹ 10,00,000/- through Demand Draft No. 166365, dated 9-7-2013) drawn on IndusInd Bank, New Delhi. 3. On completion of investigations, SCN was issued whereby the applicant was called upon to show cause to .....

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one amounting to ₹ 39,41,186/- in connection of importation of the above-mentioned four consignments under Advance License availing exemption under the said Notification and in respect of which the condition laid down in the said Notification were violated, should not be demanded and recovered in terms of Section 28(4) of the Act inasmuch as the said consignments were cleared on the basis of false/incorrect declarations submitted by the Importer wilfully before the Customs Authority; (iii) .....

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the Act should not be imposed on the applicant for knowingly and intentionally using documents containing false declarations. 4. In the application for settlement, the applicant admitted the allegation of non-payment of Customs duty to the extent of ₹ 39,41,186/- as demanded in the SCN and ₹ 8,61,297/- payable as interest on the admitted amount of duty. 4.1 As detailed above the applicant during investigation has voluntarily deposited ₹ 20,00,000/-. Later on the appl .....

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es from penalty and prosecution for true and full disclosure and full cooperation. 5. Notice under Section 127C(1) of the Act was issued on 11-2-2015. 5.1 On 19-2-2015, the applicant was, inter alia, asked to clarify - As per the subject show cause notice, the goods (Polyester knitted Fabric) for which Customs duty has apparently been evaded, appears to attract the provisions of Section 123 of Customs Act, 1962. Hence, as per the proviso of Section 127B(1) ibid, the applicant do not ap .....

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nder CTH 6006 32 00. That it is humbly submitted that in the present case, the classification of the impugned goods are not in dispute. That it is further submitted that the impugned goods are not synthetic yarn or fabrics made of synthetic yarn. That thus as the impugned goods are not amongst the notified goods the bar to filing settlement is not applicable. That without prejudice to the above made submission even if the Hon ble Bench assumes that the said goods are notified goods as per Sectio .....

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ve been validly/legally imported. That the only dispute is in relation to non-fulfilment of the conditions of the advanced licence under which the said goods have been imported. That the said issue was decided in the case of Idris Y. Porbunderwala - 2005 (186) E.L.T. 356 (Sett. Comm.) wherein a reference was made to the Larger Bench of the Hon ble Commission to decide whether the bar of Section 123 is to be applied in all the case. The said reference was answered as below : (a) Whether appl .....

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16-3-2015. 5.4 Deputy Director, DRI vide his letter dated 23/24-3-2015 has inter alia stated that - In the import documents the goods have been declared as Polyester Knitted Fabric under CTH 6006 32 00 wherefrom it appears that the goods will come under the purview of the Notification No. 204-Cus., dated 20-7-1984 and ....the goods were imported under four bills of entry filed before the Customs and were cleared availing the benefit of Notification No. 96/2009-Cus., dated 11-9-2009. After .....

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mount of interest liable to be paid by the applicant as ₹ 11,78,171/- and the total liability of Customs duty and interest of the applicant comes to ₹ 51,19,357/- and informed the differential amount to be ₹ 3,19,357/- (Rs. 51,19,357 - ₹ 48,00,000) vide his office letter dated 2-6-2015. 6. However, as the applicant has deposited ₹ 2500/- on 16-2-2015, i.e. after submission of settlement application, the differential amount payable by the applicant comes to S .....

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that they have already made out a Demand Draft for ₹ 3,19,357/- which has been despatched from Delhi to Kolkata to be submitted to the jurisdictional Commissioner for depositing the same in the Government Treasury through TR-6 Challan. According to Shri Batra, the delay in depositing the balance amount is due to the time taken in generating TR-6 Challan, Shri Batra, advocate, submitted a copy of the Demand Draft. Shri Ashish Batra, advocate, on perusal of the description of the goods in q .....

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t barred from approaching the Settlement Commission. He drew attention to clause (c) of Para 28C of the said judgment and stated that since the particulars and the description in the Bills of Entry tally with the description of the goods, they are not barred from approaching the Settlement Commission. Shri Batra, advocate, also prayed that a lenient view may be taken as far as imposition of penalty is concerned. 9.1 The Department was represented by Shri Abhijit Bhattacharya, Asstt. Commr. .....

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8377; 2,500/- so far. The balance amount of ₹ 3,16,857/- has not been deposited so far. Both Shri Abhijit Bhattacharya, Asstt. Commr. (in-situ), Commissionerate of Customs (Port), Kolkata, and Shri Siddhartha Chakrabarti, SIO, DRI, KZU, Kolkata, submitted that since this is a case of pre-planned smuggling of goods, no immunity from penalty should be granted. 9.3 The Bench has examined the contentions of Shri Ashish Batra, advocate, appearing on behalf of the applicant. The first conte .....

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el Ltd. v. Union of India reported in 1978 (2) E.L.T. J355 (S.C.) and the decision of the Hon ble High Court of Gujarat at Ahmedabad in the case of Sanjay Vimalbhai Deora v. CESTAT reported in 2014 (306) E.L.T. 533 (Guj.) the plea of Shri Ashish Batra, advocate is not tenable. The petition for Special Leave to Appeal (Civil) No. 23930 of 2012 filed by Shri Sanjay Vimalbhai Deora against the said judgment was dismissed by the Hon ble Supreme Court vide its Order dated 1-11-2013 = 2014 (309) E.L.T .....

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per se are not barred in relation to goods which are listed or notified under sub-section (2) of Section 123 of the Act. Bench has also examined Section 123 of Customs Act, which reads : SECTION 123. Burden of proof in certain cases. - (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be - (a) in a case where such seizure is made from the posses .....

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ial Gazette specify. 9.5 Thus, the burden of proof in certain cases is on the person from whose possession the goods specified in sub-section (2) of Section 123 are seized. This burden of proof is invoked if the three conditions, namely, the goods are notified under sub-section (2) of Section 123; the goods have been seized and seized under the reasonable belief that they are smuggled, are fulfilled. 9.6 All these conditions covering both the goods and the circumstances under which the .....

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have to be fulfilled in unison. However, as far as the bar under the third proviso to sub-section (1) of Section 127B is concerned, it just requires the goods to be notified under Section 123(2) of Customs Act, 1962. For the bar under the third proviso to sub-section (1) of Section 127B of Customs Act to be applicable, the application should be in relation to the goods notified and covered by Section 123. It is immaterial why, when, where, how or by whom the goods were seized. These may be rele .....

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tion 127B of the Customs Act, 1962, which debars applications for settlement relating to certain class of goods. The third proviso to sub-section (1) of Section 127B of the Customs Act, 1962, only states that no application under the sub-section shall be made in relation to goods to which Section 123 applies. The application of Section 123 is specified in sub-section (2) of Section 123, which reads : This section shall apply to gold (and manufactures thereof,) watches and any other class of good .....

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ettlement Commission applications in respect of goods to which Section 123 applies, in the sense, the goods which are notified for the purpose of raising initial presumption on the possessor that the goods are smuggled goods unless the person in possession of the same is in a position to establish the proper import of the goods into the country. (Para - 21). 14. Thus, the Bench differs with the decision of Special Bench of the Settlement Commission in the matter of Idris Y. Porbunderwala in .....

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ter the scope and dilute the restrictions imposed by the statutory provisions. This is supported by the observations of the Constitution Bench of five judges of the Hon ble Supreme Court in R.S. Nayak v. A.R. Antulay, AIR 1984 SC 684 : …if the words of the Statute are clear and unambiguous, it is the plainest duly of the Court to give effect to the natural meaning of the words used in the provision. The question of construction arises only in the event of an ambiguity or the plain meaning .....

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) E.L.T. 22 (S.C.)], wherein it has been held that : A literal construction would not be denied only because the consequences to comply with the same may lead to a penalty. The Courts should not be over zealous in searching for ambiguities or obscurities in words which are plain. Hon ble Supreme Court in Grasim Industries Ltd. v. Collector of Customs, Bombay [(2002) 4 SCC 297 = 2002 (141) E.L.T. 593 (S.C.)] has followed the same principle and observed : Where the words are clear and there is no .....

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p;The intention of the Legislature has been succinctly brought out by the Constitution Bench of the Hon ble Supreme Court of India in the matter of Collector of Cus., Madras v. Nathella Sampathu Chetty - 1999 (110) E.L.T. 157 (S.C.) where in Para 18, the Court has observed : As pointed out already, the disparity between the internal and external price of gold became, by 1948, so great as to provide considerable incentive to smuggling by making it very profitable. This was assisted by the very lo .....

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78A was introduced into the Sea Customs Act in 1955 . 17. The provisions as contained in Section 123 of the Customs Act, 1962, are extraordinary provisions incorporated with a view to create a stringent environment to curb smuggling in sensitive commodities. These provisions were first introduced in the Sea Customs Act, 1878, through amendment by Section 14 of Act 21 of 1955 by incorporating Section 178A in the Sea Customs Act, following recommendations of the Taxation Inquiry Commission s .....

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y are not smuggled goods shall be on the person from whose possession the goods were seized. (2) This section shall apply to gold, gold manufactures, diamonds and other precious stones, cigarettes and cosmetics and any other goods which the Central Government may, by notification in the Official Gazette, specify in this behalf. (3) Every notification issued under sub-section (2) shall be laid before both Houses of Parliament as soon as may be after it is issued. 18. Exactly, the s .....

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ized; and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any, who claims to be the owner of the goods so seized. (2) This section shall apply to gold (and manufactures thereof), watches and any other class of goods which the Central Government may by notification in the Official Gazette specify. 19. Thus, it is clear that the provisions as containe .....

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f approaching the Settlement Commission. It is quite logical to conclude that in view of the deleterious effect of smuggling of the specified goods notified under Section 123 on the economy, the cases relating to these goods have been intentionally kept out of the purview of the Settlement Commission. 21. Allowing the application for settlement relating to goods notified under sub-section (2) of Section 123 will effectively do away with the distinction between the goods specified under the .....

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esh Raj, reported in 2006 (195) E.L.T. 261 (Kar.), has upheld the bar imposed by Section 127B of the Customs Act, 1962. (Para - 21). 23.1 The Hon ble High Court of Judicature at Madras in the case of V.C. Mohan v. Commissioner of Customs (AIR), Chennai-I, reported in 2008 (222) E.L.T. 344 (Mad.), has also examined in detail the conditions laid down by Section 127B of the Customs Act, 1962. Having considered all the conditions laid down in Section 127B and nothing that the same had been fulf .....

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stoms Act, being an exemption to the normal procedure contemplated under the Act and occurring in a fiscal statute, has to be necessarily construed strictly in our considered view, the scope of the proceedings cannot be unduly enlarged. Court has also been held that when the applicant seeks to avail benefit of settlement, the provisions of Sections 127A and 127B are to be strictly construed. There is no force in the contention of the learned counsel for the appellant that the provisions are to b .....

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decided by the Court in this case was whether cases of baggage where no Bill of Entry or Shipping Bill had been filed can be settled by the Settlement Commission since they do not involve short-levy or non-levy. 23.5 Earlier in Para-9 of the said judgment, the Hon ble High Court has observed that although provisions relating to baggage fall under Chapter 11 of the Customs Act, the provisions relating to confiscation - which are invoked in the present case are general in nature and apply to .....

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as observed that The opportunity to approach the Settlement Commission is a sort of concession given by the Government to errant assessee to enable them to come clean. This opportunity is hedged in by certain conditions, one of which is that the assessee shall pay the additional amount of customs duty accepted by him along with interest due under Section 28AB. The legislative intention, however, appears to us to be otherwise. If one of the many conditions prescribed by the first proviso to Secti .....

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