TMI Blog2017 (4) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... e by this order, to learned Adjudicating Authority to reach to his decision on the basis of outcome of the civil appeal in Mangli Impex and granting fair opportunity of hearing to both sides shall pass appropriate order. - Matter remanded back. - C/42616/2014 And Others - 40249-40271/2017 - Dated:- 14-2-2017 - Shri D.N. Panda, Judicial Member And Shri Devender Singh, Technical Member Sl.Non Appeal Nos. Appellant Respondent 01 C/42616/2014 M/s. Subham Enterprises CC (Sea Port-Export), Chennai 02 C/42739/2014 CC, (Sea Port-Export), Chennai M/s. Ravi Enterprises 03 C/42625/2014 M/s. Patel Carrier Transport Service CC (Sea Port-Import), Chennai 04 C/42626/2014 Vijay Suresh Shah CC (Sea Port-Import), Chennai 05 C/42740/2014 CC, (Sea Port-export), Chennai M/s. Subh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 M/s. Balaji International CC (Sea Port-Export), Chennai Shri Sathish Sundar, Shri Hari Radhakrishnan, Shri Derrick Sam, Shri. Mudimannan, Shri Narayan R. Panicker Adv. For the Assessee Ms. P. Hemavathi, Commr. (AR) and Shri K. Veerabhadra Reddy, JC (AR), For the Revenue Per D.N. Panda: Following assessees as well as Revenue came in appeal as mentioned against each and as tabulated below challenging the common OIO No.29138/2014 dt.28/8/2014 passed in pursuance of the Final order No.40155-40156/2014 dt.27/01/2014 of Tribunal on various grounds. TABLE 1 Appeal Nos. Appellant Respondent Appearance for Assessee Appearance for Revenue 01 C/42616/2014 M/s. Subham Enterprises CC (Sea Port-Export), Chennai Shri Hari Radhakrishnan Shri Derrick Sam Ms. P. Hemavathi Commr. (AR) Shri K. Veerabhadra Reddy JC (AR) 02 C/42739/2014 CC, (Sea Port-Export), C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Chennai-IV M/s. Jiju Silk Mills Shri Hari Radhakrishnan Shri Derrick Sam -do- 15 C/42750/2014 CC, (Sea Port-Export), Chennai-IV M/s. Balaji International Shri Sathish Sundar -do- 16 C/42751/2014 CC, (Sea Port-Export), Chennai-IV Ramanand Surekha None for the Assessee -do- 17 C/42752/2014 CC, (Sea Port-Export), Chennai-IV Rajesh Bangawala None for the Assessee -do- 18 C/40026/2015 M/s. Shreepal Silks Sarees CC (Exports), Chennai Shri Hari Radhakrishnan Shri Derrick Sam -do- 19 C/40027/2015 M/s. M. Jiju Silks CC (Exports), Chennai Shri Hari Radhakrishnan Shri Derrick Sam -do- 20 C/40030/2015 R. Sent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with law. (ii) The Tribunal by Final order No. 40105-40126/2014 dated 22-01.2014 disposed the appeals against adjudication order No. 20684/2013 dated 12.06.2013 and order of rejection of provisional release of the goods passed in terms of OIO No. 19798/2012, dated 22.11.2012. (iii) The adjudicating authority consequent upon the remand of the matter by the Tribunal as above, passed the re-adjudication order No. 29138/14 on 28.08.2014 with the consequences appearing in para 6 thereof such consequences are under appeal in this batch of appeals. (iv) M/s. Maruti Impex (refer para 3.7 of the order dated 22.01.2014 of the Tribunal) who was in appeal no.C/42068/2013 before Tribunal against order of adjudication No. 20685/2013, dated 13.06.2013 in the batch of appeals disposed vide final order No. 40545 to 40557/2014, dated 24/07/2014 of the Tribunal, has not come in the present batch of appeals. Therefore, Tribunal in this batch of appeal, is concerned only in respect of the matters, dealt by readjudication order dated 28.08.2014. (v) The readjudication relates to the live consignments as well as past consignments. The authority in para 28 of the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pping services are CHA , who are in appeal nos. C/40030/2015 and C/40033/2015 . Parties Viz., Sr Co and Balaji International in appeal nos .C/40034/2015 and C/40035/2015 respectively are high sea sellers. 2.3 It was further explained by him that although there was direction to the adjudicating authority by Tribunal by its order darted 22.01.2014 firstly to determine ownership of the goods, the adjudicating authority failed to so do so. The second direction to that authority was to determine duty liability, interest and penalty. But he failed to act in such sequence. Accordingly, the impugned readjudication order dated 28.08.2014 was passed arbitrarily and has become unsustainable. 3. Shri Narayan R. Panicker , learned Advocate appearing on behalf of the respondent M/s. Ravi Enterprises submitted that his client supports the re-adjudication order dated 28.08.2014 and prayed for leave of absence against Revenue appeals, He expressed that, he having difficulty to represent on 11 th August, 2016, his attendance may be dispensed. Against such proposition, he was categorically enquired as to whether he is under instruction of his client for no representation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o first determine ownership of the goods and thereafter he shall determine the liability. But that authority failed to act in such order. He rather passed the impugned order arbitrarily. 5.4 Placing para 28 onwards of the readjudication order, he pointed out that there was lack of proper appreciation of the evidence and improper evaluation thereof for which the authority came to different Conclusion in respect of similar imports made in past and present (live) while Parties in all such consignments were common. He brought out in that para that the goods were seized from M/s. Ravi Enterprises . Therefore, high sea sellers, who are the appellants, namely, M/s. S.R. Co. and M/s. Balaji International cannot be held to be the importers under any circumstances in respect of both live and past consignments. 5.5 Placing para 36 of the readjudication orders, he submitted that when the adjudicating authority relied on the finding of the previous adjudicator made in his order dated 12.06.2013 , he erred in law without application of his independent mind. This is also apparent from Para 20 of the impugned order. The same M/s. Ravi Enterprises , who was found to be importer f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parekh 7 Ors. Vs Commissioner of Customs (Airport), Chennai vide Final Order Nos.1288 to 1295./2008, dated 17.11.2008 in Appeal Nos.C/169 to 172/2001 and C/321 to 324/2002. (v) Shree Chamundi Mopeds Ltd. Vs Church or South India Trust Association, CSI, Cinodsecretariat, Madras reported in 1992 AIR 1439, 1992 SCR (2) 999. (vi) M/s. B.P.L. Ltd. Ors. Vs R. Sudhakar Ors. reported in Appeal (civil) 2999-3011 of 2004. 5.8 Arguing on behalf of the CHAs , Shri Sathish Sundar submitted that they were not contributory to the offence alleged in absence of their conscious or deliberate involvement brought to record. Therefore No penalty on them is imposable under section 112 (a) of the Customs Act, 1962. There is no positive finding as to their culpability before imposing penalty. That being absent, penalty is not imposable. They have neither acted malafide nor made breach of law. He further submitted that appeals of the two CHAs have also arisen out of SCNs issued without jurisdiction for which, the readjudication order against them is liable to be set aside. 5.9 Learned counsel further submitted that the jurisdiction issue in respect of the notice issued by DRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the re-adjudication proceeding held that M/s Ravi Enterprises was the importer of the goods while that was not really so. The authority held that in so far as the past imports are concerned, that concern was the importer and the three high sea seller-appellants were de facto co-importers in respect of live consignments even though M/s. Ravi Enterprise was importer. Thus, the adjudicating authority acted erroneously with two divergent views in respect of live consignment and past consignments making a mockery of the issues. 6.4 Penalty was imposed on live consignment even though the goods were in the custody of the customs. That is contrary to law. When the goods were confiscated under section 111 (d), (n) and (o) of the Customs Act, 1962, the authority should have brought out that there was a prohibition or mis-declaration as well as violation of the law. Without any such element, being present, invoking of all the three sub-clauses of section 111 is unwarranted and un-called for. The authority mechanically imposed penalty in gross violation of rule of justice. 6.5 So far as penalty on the high sea sellers is concerned, Revenue failed to show violation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the parties, the authority held that M/s. Ravi Enterprises and high seas sellers were jointly and severally liable for the duty liability since the high sea sellers were de facto co-importers of the offending goods in the past. 7.2 The live consignments related to 8 bill of entries and past consignments related to 13 bill of entries . In few bill of entries of the live consignments, there was misdeclaration as to the grade of raw silk imported which was established by laboratory test report drawing samples from the respective consignment. Such conclusion of the laboratory remained unrebutted by the parties. Added to this, the questionable modus operandi of the parties came to record bringing them into the fold of law for appropriate action. 7.3 There were nine high sea suppliers in respect of live consignments and past consignments, who are as under:- TABLE - 3 SI.No. Name of the part Appeal Nos. 01 M/s. Subham Enterprises C/42616/2013 02 M/s. Shreepal Silks Sarees C/40026/2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot disclose what was the sales consideration and commercial terms and conditions. He mentioned that one of the chines supplier M/s. Sichuan Shunchen Silk Co. Ltd., although was in appeal before Tribunal earlier in appeal No. C/40396/2014, they are not in appeal before the Tribunal in this batch of appeals. 7.9 Revenue's grievance in appeal against M/s. Ravi Enterprises, who is held to be the importer by the learned adjudicating authority is that the said authority did not levy penalty on that concern under section 114 A of the Customs Act, 1962. 7.10 According to Revenue, there is nothing on record to show the terms of contracting parties with the Chinese suppliers. No payment details in respect of supplies were brought to record by them. There is no evidence of any payment made by M/s. Ravi Enterprises to high sea sellers. 7.11 M/s. Ravi Enterprises claiming to be advance license holders, made clearance of past consignments. But, when it was attempting to clear the live consignments, pretending to be an advance authorisation holder, such authorisation was found to be fake and fraudulently obtained for which that was cancelled by JDGFT by order dated 31.05.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was holder of fraudulent advance authoritsation, which was cancelled by JDGFT. They all have defrauded customs making duty-free clearances in past on the basis of fake advance authorization and were attempting to clear the live consignment. 7.17 On all other aspects, learned DR supported the investigation result and readjudication order, Praying that all Revenue appeals are for imposition of penalty on Respondents under section 114 A of the Customs Act, 1962. Specific prayer was made in para 7 of ground of appeal of Revenue for such imposition in view of allegation in that respect made in para 31.15 of the Show-cause notice. According to Revenue, to impose penalty, elements of law in that regard are present since all the parties colluded to defraud Revenue and they caused huge loss to exchequer using fake authorization in the name of M/s. Ravi Enterprises a non-existent concern who made duty-free clearances. 7.18 Arguing against the CHAs, who are in appeal, learned departmental representative says that they were actively and consciously involved in the fraudulent imports making mis-declaration of the grade of the chinese silk imported as well as fraudulent advance authorizat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the request of the person concerned be oral. 9.1 In rejoinder, learned counsel Sri Derrick submitted that in so far as the prayer of Revenue for imposition of penalty under section 114 A of the Customs Act, 1962 is concerned, that issue no more arises because of the reason stated by the learned adjudicating authority in his previous order No.206484/13, dated 12.06.2013. Accordingly, no initiation of further penalty was warranted in the impugned readjudication order. Section 114A is not applicable when there is no duty liability at all on the high sea sellers. There is no joint and several liability concept in Customs law, for which, readjudication suffers from legal infirmity. If at all any liability is incurred by any importer, that is only recoverable from him and from none else. 9.2 Shri Derrick repeatedly objected to Revenue's plea of no provisional issue can be pursued further, stating that there was violation of natural Justice when no order was passed in that regard. The authority should have passed provisional release order first before going into the merits of the case. The readjudication has therefore travelled beyond the Tribunal's direction. The evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Adjudicating Authority should note that not only past consignment were cleared on the basis of fake and fraudulent advance authorization filed by M/s. Ravi Enterprise but also live consignments were attempted to be cleared on that basis and such material fact remained unrebutted all through and even before Tribunal. 14. So far as the first preliminary issue on jurisdiction is concerned, that point involves question law which is dealt in succeeding paragraphs here under. 15.1 Jurisdiction of the Officers of Directorate of Revenue Intelligence (DRI) was challenged raising the question whether they were empowered to issue show cause notice under Section 28 of the Customs Act, 1962 (hereinafter referred to as the Act ) prior to 08.04.2011 and even after enactment of sub-section (11) thereto w.e.f. 16.09.2011. Section 28 of the Act underwent amendment w.e.f. 08.04.2011 and the law thereunder as on that date reads as under: 28. Recovery of duties not levied or short-levied or erroneously refunded.- (1) Where any duty has not been levied or has been short-levied or erroneously refunded, or any interest payable has not been paid, part-paid or erroneously refunded, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified in the notice. (5) Where any duty has not been levied or has been short-levied or the interest has not been charged or has been part-paid or the duty or interest has been erroneously refunded by reason of collusion or any wilfulmis-statement or suppression of facts by the importer or the exporter or the agent or the employee of the importer or the exporter, to whom a notice has been served under sub-section (4) by the proper officer, such person may pay the duty in full or in part, as may be accepted by him, and the interest payable thereon under section 28AA and the penalty equal to twenty-five per cent of the duty specified in the notice or the duty so accepted by that person, within thirty days of the receipt of the notice and inform the proper officer of such payment in writing. (6) Where the importer or the exporter or the agent or the employee of the importer or the exporter, as the case may be, has paid duty with interest and penalty under sub-section (5), the proper officer shall determine the amount of duty or interest and on determination, if the proper officer is of the opinion- (i) that the duty with interest and penalty has been paid in full, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty or interest. Explanation 2- For the removal of doubts, it is hereby declared that any non-levy, short-levy or erroneous refund before the date on which the Finance Bill, 2011 receives the assent of the President, shall continue to be governed by the provisions of Section 28 as it stood immediately before the date on which such assent is received . 15.2 Sub-section (11) was enacted in September, 2011 and that came into force from 16.09.2011. The said sub-section reads as under: (11) Notwithstanding anything to the contrary contained in any judgment, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of Section 4 before the 6 th day of July 2011 shall be deemed to have and always had the power of assessment under Section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this Section. 15.3 Emphasis was made in the course of hearing submitting that even after incorporation of sub-section (11) to Section 28 of the Act, the Explanation 2 appearing under that section operates against the proceedings initiated by DRI issuing show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not conferred power on DRI Officer before 08.04.2011 to be proper officer for the purpose of section 17 and 28 of the Act. The said para reads as under: 70.2 Section 28(11) interpreted in the above terms would not suffer the vice of unconstitutionality. Else, it would grant wide powers of assessment and enforcement to a wide range of officers, not limited to customs officers, without any limits as to territorial and subject matter jurisdiction and in such event the provision would be vulnerable to being declared unconstitutional . 15.5 It was further emphasized that on reading of para 70.1 and 70.2 of Mangli Impex judgment, it may be appreciable that by no means the defective show cause notices issued by DRI officers are curable prior to 16.09.2011 [on which date sub-section (11) came into force]. Therefore, section 28 amended with effect from 08.04.2011 declares that notice issued by DRI officers prior to 08.04.2011 are without jurisdiction. According to them, on the conjoint reading of section 2(34) and Section 28 leads to construe that there should be specific power conferred by law on the DRI officer under Section 28 to issue notice. There was no such au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 28 of the Act for the period prior to 8.4.2011 is not validated by Explanation 2. Legislation has not made it express that Section 28(11) which came into force from 16.9.2011 has overriding effect on Explanation 2 to section 28(10) of the Act. Hon'ble Court held that by reason of Explanation , a substantive law may also be introduced. If a substantive law is introduced, it will have no retrospective effect. But, in the present case, the Explanation 2 introduced to Section 28(10) of the Act was clarificatory in nature which shall have retrospective effect. 15.9 It is settled position of law that when something is prohibited to be done directly that cannot be done indirectly as has been held in the case of Jagir Singh Vs, Ranbir Singh - AIR 1979 SC 381 and reiterated in M.C. Mehta Vs. Kamalnath and Ors. - AIR 2000 SC 1997. According to assessees, contention of Revenue has no merit in the light of Sayed Ali's judgment and Mangli Impex. The law settled in the case of Commissioner of Customs Vs. Sayed Ali (supra) by the Hon'ble Supreme Court is that an officer to be proper officer for the purpose of Section 28 of the Customs Act, 1962 has to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision on the basis of outcome of the civil appeal in Mangli Impex and granting fair opportunity of hearing to both sides shall pass appropriate order. We order accordingly. 16. At the cost of repetition, it may be stated that serious fraud being alleged by Revenue against Customs, the Authority shall make thorough enquiry and establish his finding on the strength of evidence, to do Justice. 17. In the result: (1) Following appeals not being represented by the appellants are dismissed. Appeal No. Appellant Respondent C/42625/2014 M/s. Patel Carrier Trans ort Service CC (Sea Port-Import), Chennai C/42626/2014 Vijay Suresh Shah CC (Sea Port-import), Chennai (2) Following Revenue appeals praying for levy of penalty, not being contested by Respondents are allowed and Revenue succeeds therein. Appeal No. Appellant Respondent C/42745/2014 CC, (Sea Port-Export), Chennai-IV Kalpesh Patel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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