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In Re : Rahul Ahuja

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

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 transferred even after the fulfilment of the stipulated export obligation and the same shall be utilized only for further export .....

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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 admitted by the applicants during the hearing on 24-7-2015, the Bench rejects the application for settlement filed by the ap .....

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ul 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 (hereinafter referred to as the SCN ) issued by the Additional Director General, Directorate of Revenue Intelligence, Kolkata Zon .....

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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. 96/2009, dated 11-9-2009 (hereinafter referred to as the said Notification). Total amount of duty foregone in respect of th .....

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ea 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 to the domestic market though in both the licences it is specified that materials imported shall not be transferred even .....

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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, that no export against the above imports had been effected. 2.4 In his statement dated 30-8-2012, the applicant a .....

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and 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 the Commissioner of Customs (Port), Kolkata Customs House, 15/1 Strand Road, Kolkata - 700 001 as to why : (i) The imp .....

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e 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) Interest at applicable rate/(s) on the duty amount demanded should not be demanded and recovered under Section 28AA of .....

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ations. 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 applicant deposited ₹ 19,50,000/- vide Demand Draft No. 415887, dated 5-1-2015 & ₹ 8,50,000/- vide Demand D .....

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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 appear to be eligible for approaching the Settlement Commission 5.2 In the reply dated 27-2-2015 of the advocates Sh .....

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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 Section 123 of the Act it is humbly submitted that there is per se no blanket bar on maintainability of an application for go .....

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ced 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 applications, per se are barred in relation to goods which are listed under sub-section (2) of Section 123 or are notified .....

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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 Customs clearance, the importer failed to comply with the conditions of the said notification dated 11-9-2009, which ma .....

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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 ₹ 3,16,857/- (Rs. 3,19,357 - ₹ 2,500). 7. Vide this office letter dated 2-7-2015, the jurisdictional Commi .....

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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 question classified under CTH 6006 32 00 and the notes to Chapter 54 of the Customs Tariff Act, submitted that he agrees .....

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nd 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. (in-situ), Commissionerate of Customs (Port), Kolkata, and Shri Siddhartha Chakrabarti, SIO, DRI, KZU, Kolkata. Shri Si .....

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harya, 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 contention of Shri Batra is that the SCN has not invoked the provisions of Section 123 of the Customs Act, 1962. Shri Ashish .....

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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. A131 (S.C.). 9.4 Bench has examined the judgment of the Special Bench of the Settlement Commission in its Order .....

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t. 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 possession of any person, - (i) on the person from whose possession the goods were seized; and (ii) if any person, other than .....

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ds 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 goods are seized have to be fulfilled in totality for the burden of proof to lie on the person from whose possession t .....

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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 relevant to other provisions of the Customs Act, 1962, but so far as the bar under the third proviso to sub-section (1) of .....

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ird 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 goods which the Central Govt. may by notification in the Official Gazette specify. 13. This has been clarified by the .....

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otified 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 inasmuch as satisfying all the three conditions which are essential for fastening the burden of proof cannot be the basis .....

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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 of the words used in the Statute would be self-defeating. (para 18). Hon ble Supreme Court has again in Union of India .....

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uences 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 obscurity, and there is no ambiguity and the intention of the legislature is clearly conveyed, there is no scope for Co .....

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rt 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 long coast-line which India has, coupled with the extensive land frontiers both on the east as well as on the west, ignor .....

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s 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 Report, The Taxation Inquiry Committee had recommended to make smuggling a criminal offence and to transfer the onus of .....

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l 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 same provisions have been continued in Section 123 of the Customs Act, 1962, which is again reproduced below. Section 12 .....

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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 contained in Section 123 of the Customs Act, 1962, and in Section 178A of the erstwhile Sea Customs Act, 1878, were specificall .....

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gling 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 said Section 123 and other goods not so specified. Allowing such applications for settlement will also make relevant pa .....

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(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 fulfilled, the Hon ble High Court observed that even the cases in which fraud or smuggling or deliberate misdeclaration has .....

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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 be liberally construed . (Para - 26) 23.3 The Hon ble High Court of Delhi in the case of Commissioner of Customs v. .....

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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 all classes of imports - made either where goods are sought to be cleared under Chapter 7 or under Chapter 6 as in the .....

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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 Section 127B cannot be complied with, albeit because of statutory disability - even assuming the petitioner is right in its .....

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