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2017 (2) TMI 420

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..... nt field. It is further observed that the import duty has to be paid inevitably by the importer. Confiscation or fine in lieu thereof is an infliction on the offender or circle of offenders. It is also observed that sometimes, the burden in both the cases, falls on the same person and at the other times, they may fall on different person. Appeal allowed - decided in favor of Appellant-Revenue. - TAX APPEAL No. 672 of 2006 - - - Dated:- 1-2-2017 - M.R. SHAH AND MR. B.N. KARIA, JJ. FOR THE APPELLANT : Ms. AVANI S MEHTA, ADVOCATE FOR THE OPPONENT : SERVED BY RPAD ORAL JUDGMENT (PER : HONOURABLE Mr. JUSTICE M.R. SHAH) Feeling aggrieved and dissatisfied with the impugned judgment and order dated 18th October 2005 passed by the Customs, Excise Service Tax Appellate Tribunal, West Zonal Bench, Mumbai [hereinafter referred to as, the Tribunal ] in Appeal Nos. CD/949, 987, 395 503/86 by which the learned Tribunal has allowed the Appeals preferred by the respondent herein [original appellant] and has set-aside the demand of duty on the goods seized and consequently confiscated under Section 111 [m] and 111 [o] of the Customs Act, 1962, the Revenue has pref .....

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..... ustom House Laboratory at Kandla which gave the result that the goods were wholly man-made fibres of cellulosic organic [viscose]. The consignment was cleared free of duty under the Customs Notification No. 117/78 dated 9.6.78 as amended. For availing of exemption under this Notification, the importers were issued the Duty Exemption Entitlement Certificate [DEEC] Book No. 5088/Kandla dated 6.8.83. This import entailed the export obligation of shipping 500 M/Ts of yarn spun out of imported man-made fibres of British counts 15s ranging to 60s of f.o.b value of ₹ 75,00,000/=. However, the importers could not fulfill the export obligation and they by their letter dated 26.2.85 signed by Shri Yogesh Mehra addressed to the Superintendent of Customs, Veraval intimated that due to our non ability to comply with the export obligation, forced by factors beyond our control, since there was an illegal strike at our factory at Ankleshwar, which lasted more than 90 days, we were not in a position to manufacture and ship our goods on time. They thus paid the duty of ₹ 62,84,656.54 by bank draft drawn in favour of Veraval Customs. 2.2 Against the second licence No. 2963408 dated 4.6 .....

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..... them in terms of the Duty Exemption Export Entitlement Scheme. The check of the accounts revealed that their books of accounts showed Nil balance of the raw materials imported by them. Therefore, their godowns was searched and the search yielded 2275 bales of polyster fibre of different makes. These bales included 365 bales of polyester staple fibre imported by M/s. L.D Textile Industries Limited in April 1984. All these 2275 bales were seized under Panchnama dated 15.3.85 as the same were liable to confiscation. Further inquiries revealed that the importers were having another godown outside their factory premises in Shed No. A- 1/7307. On search of this godown, it was found that it contained 1837 bales of Korean Polyester staple fibre of brand Eslon . These 1837 bales were also seized under a panchnama dated 15.3.85, the Customs Officers also seized records relevant to the enquiry, recorded statements and conducted investigations. The scrutiny of the seized documents revealed that M/s. L.D Textiles Industries Limited sold or transferred 1978 bales to different parties including the other captioned appellants. The investigations further confirmed that these 1978 polyester fibre b .....

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..... ed 30.10.84 were made after the provisional assessment of the goods covered by these two Bills of Entry was finalized by the Collector under his impugned order. The order of confiscation and levy of duty was made as part of adjudication without prejudice to the action for levy of penalty on the importers and other respondents, as mentioned in the show cause notice. 3. Feeling aggrieved and dissatisfied with the order passed by the Adjudicating Authority, the respondent herein preferred appeals before the learned CESTAT. By the impugned common judgment and order, the learned Tribunal has though confirmed the order of confiscation of the goods seized, however, has setaside the demand of duty on the goods seized and thereafter confiscated under Section 111 [m] and 111 [o] of the Act. 4. Feeling aggrieved and dissatisfied by the impugned common judgment and order passed by the learned Tribunal in quashing and setting aside the demand for duty on the confiscated goods, the Revenue has preferred the present Tax Appeal. 5. Heard Ms. Avni Mehta, learned counsel appearing on behalf of the Revenue. Though served, no body appears on behalf of the respondent. 6. The presen .....

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..... lutely confiscated under Section 111 [m] and 111 [o] of the Customs Act ? Considering Sections 111 and 125 of the Act, it appears that both are penal in nature. The liability to pay duty has nothing to do with confiscation of the goods under Section 111 and/or under Section 125 of the Act. Under the circumstances, the learned Tribunal has materially erred in setting aside the demand for duty on the goods solely on the ground that they were seized after the customs clearance and absolutely confiscated under Section 111 [m] of the Customs Act. 9. Identical question came to be considered by the Apex Court in the case of Security Finance [P] Limited [Supra]. In the case before the Hon'ble Supreme Court, fine in lieu of confiscation under Section 183 of the Sea Customs Act was ordered by the Dy. Collector of Customs, who also imposed and directed payment of full duty on the goods imported. The question arose before the Hon'ble Supreme Court was, does the order under Section 183 of the Act preclude the Collector from levying duty under Section 20 of the Act ? While holding the same in affirmative, it is held and observed that the levy of duty and the order of confi .....

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..... attack two levies imposed in exercise of two distinct powers, as earlier explained. The import duty has been made a condition for the clearance of the goods. This is right and it is impossible to say that the said payment is not justified by Section 20. Likewise, the authority, when it imposed a fine, was exercising its power under Section 183. We can readily see that he did not mean to confiscate the goods. He only proposed to confiscate and proceeded to fix a fine in lieu thereof. Non felicitous and inept expressions used in the order are perhaps apt to mislead,but the intendment is clear that what was done was not confiscation but giving an option to pay a quantified fine in place of confiscation. The order was composite one, when read in the sense we have explained, and is quite legal. Therefore, we reach to the conclusion that the appellant is entitled to win and the High Court was in error. 10. In view of the above, the questions raised in the present Tax Appeal are required to be answered in favour of the Revenue and against the assessee. Consequently, the impugned common order dated 18th October 2005 passed by the Customs, Excise Service Tax Appellate Tribunal, West .....

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