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TMI Blog2019 (7) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction Ltd to redeem the same upon payment of redemption fine of Rs. 21,00,000/- (Rupees Twenty One Lakhs only) under Section 125(1) ibid. b (ii) I order for recovery of duty amounting to Rs. 55,52,528/- (Rupees Fifty Five Lakhs Fifty Two Thousand Five Hundred and Twenty Eight only) leviable on the Paver Finisher and evaded by the importer i.e. M/s D S Construction Ltd under Section 12 read with Section 125(2) of the Customs Act, 1962. (c) I order for appropriation of the amount of Rs. 55,52,528/- (Rupees Fifty Five Lakhs Fifty Two Thousand Five Hundred and Twenty Eight only) voluntarily paid by the importer towards Customs duty against liability of duty as in (b)(ii) (d) I impose a penalty of Rs. 10,00,000/- ( Rupees Ten Lakhs only) on M/s D S Construction Ltd under section 112 of the Customs Act 1962. (e) I impose a penalty of Rs. 1,00,000/- ( Rupees One Lakhs only) each on Shri M S Narulla, Shri N S Narulla and Shri R K Agnihotri under section 112 of the Customs Act 1962. 2.1 M/s D S Construction Ltd (Appellant 1) having IEC No 0502000341 filed a B/E No 369860 dated 02.07.2003 for Custom Clearance of "Ashpalt Electronic Paver Finisher (with sensor dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 28(1) read with Section 12 and Section 125(2) of the Customs Act, 1962 and interest under section 28AB ibid, the amount of Rs. 55,52,528/- voluntarily deposited by them should not be appropriated against the duty demanded and penalty should not be imposed on them under section 112(a) & (b) and/ or 114A ibid. 2.6 Show cause Notice also called upon Appellant 2, Appellant 3 and Appellant 4, to show cause as to why for their act of omission and commission leading to confiscation of the imported goods, penalty should not be imposed on them under Section 112(a) & (b) and/ or Section 114A of the Customs Act, 1962. 2.7 The show cause notice has been adjudicated by the Commissioner as per the impugned order referred in para 1, supra. 2.8 Aggrieved by the order of Commissioner, appellants have filed these appeals to tribunal. 3.1 In their appeal appellant 1 have challenged the order of Commissioner stating that, i. Commissioner has mis directed himself by asking them to pay duty under Section 125(2) of the Customs Act, 1962. Since M/s Gawar Construction Co (Buyer) was the rightful owner of the said goods at the time of sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the importer for sale or disposal of such goods and cannot include such acts which vest by operation of law rather than a product express agreement. In other words, since the goods vested in the insurance company by the doctrine of subrogation, such vesting of right and title in goods was by operation of law and not by express agreement. Reliance is place on the decision of Apex Court in case of Economic Transport Organization Delhi Vs Charan Spinning Mills Pvt Ltd [2011 (4) SCC 114]. iii. No duty could have been demanded by the appellant in terms of Section 125(2) of the Customs Act, 1962. Reliance is placed upon the decision of Apex Court in case of Fortis Hospital Ltd [2015 (318) ELT 551 (SC)] and Jagdish Cancer & Research Centre []. In view of these decisions the duty could have only been recovered from M/s Gawar Construction Co, in the event they chose to redeem the goods seized from them. In any case, even the question of payment of redemption fine, for recovering the duties does not arise in as much as the goods were not actually confiscated and had been released to M/s Gawar Construction Co in compliance with the order dated 29.09.2009 of Hon'ble Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he name of sub contractor. Since the name of appellants was not in the original contract between the Jaypee DSC Venture and NHAI they misled the authorities by producing the contracts as referred in para I, supra. iii. In similar cases as follows the appeals filed by the party have been dismissed by the tribunal: a. Gammon India Ltd [2013 (298) ELT 740 (T-Mum)] b. Apco Infratech Ltd [Order No A/86750-86753/2018 dtd 8.6.18] c. Patel Engineering Ltd [2013 (295) ELT 243 (T-Mum)] d. Patel Engineering Ltd [2016 (338) ELT A35 (SC)] e. Shreeji Construction [2014 (313) ELT 566 (T-Mum)] f. RajhooBarot [2017 (348) ELT 562 (T-Mum)] g. Gammon India Ltd [2011 (269) ELT 289 (SC)] iv. Hon'ble Supreme Court has in case of Dilip Kumar & Co [2018 (361) ELT 577 (SC)] clearly laid down that exemption notification should be strictly interpreted. v. The appellants contention that the demand is barred by limitation and that there cannot be any demand from them as the goods have changed hands and has been disposed of by the insurance company is without any merits. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent heard forthwith. The respondent no. 3 has not put any appearance though served. 2. By this petition, the petitioner seeks a mandamus or a direction or order directing the Union of India and the customs authorities to forthwith release the Hot Mix Paver Machine seized by them from the premises of the petitioner under the seizure memo dated 14th November, 2008. 3. The respondent no. 3 imported Hot Mix Paver Machine bearing model No. M/C-S-1800, Sl. No. 06681674 (for short "the machine") through WIRTGEN India Pvt. Ltd., Bangalore in the month of October, 2005 without payment of customs duty as an actual user in view of an exemption allowed to actual users. The machine was insured by it with ICICI Lombard General Insurance Co. for a sum of Rs. 9,29,89,400/-. The machine met with an accident in or about January, 2007. The respondent no. 3 reported the accident to the insurance company. After the inspection, the insurance company was of the view that the machine could not be repaired and brought back to its original condition and was required to be discarded. The insurance company settled the claim of the respondent no. 3 on a total loss basis and paid the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay High Court has taken into account the transfer of the imported paver machine on account of damage and sale by the insurance company we do not dwell on the decision referred by the learned Counsel for the appellant in case of Economic Transport Organization Delhi Versus Charan Spinning Mills Private Ltd [(2010) 4 SCC 114]. Also the decision rendered by the Hon'ble Apex Court explaining the difference between "subrogation" and "assignment" [Para 24 relied upon by the counsel], in case of Consumer Protection Act, 1986, would not be applicable in the case of special statue as Customs Act, 1962. 5.4 From the facts as are available, it is admitted that Appellants had claimed the exemption in respect of the said pavers by producing the documents in respect of projects namely Major Maintenance works of State High way No 47 portion between Meerut and Bijnore of 65 kms under UP state Road Project and construction of rehabilitation of State Highway 47 of portion between Bijnore to Nazirabad of 53 kms length. The paver was permitted clearance under exemption 21/2002-Cus, which allowed clearance under complete exemption subject to the condition that the goods were actually us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondition No. 40(a). This conclusion was arrived at after careful and detailed analysis of the constitutional and organizational architecture of MMRDA and on a critical analysis of the constitutional and generic statutory functions entrusted to MMRDA. Therefore, the appellant was not entitled ab initio for the benefit of the Notification No. 21/2002-Cus. 6.2 In the case of hot mix plant, the same was imported claiming that the same would be used in a contract awarded by the Government of Gujarat for construction of road in Surat. But the hot mix was never put to use in terms of the said contract and was used in respect of construction contract awarded by MMRDA which is not a specified organization. Both these machineries, after being put to use for about 1½ years, were diverted. The stone crushing plant was diverted for use in respect of contract awarded to M/s. Balaji Tollways Pvt. Ltd. for construction work in the Nagpur area. Similarly, the hot mix plant also was rented out to Indian Equipment Infrastructure Pvt. Ltd. for a monthly consideration of Rs. 4.75 lakhs per month. Notification No. 21/2002-Cus. envisaged the importer undertake to use the imported goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is appropriately 15% of the value of the goods. This appears to be on the higher side. Accordingly, we reduce the redemption fine imposed to Rs. 35 lakhs and Rs. 22 lakhs respectively in respect of the two machineries mentioned above." 5.6 At the time of clearance of the goods under exemption Appellant 1 have given an undertaking binding himself, that the subject goods namely Electronic Paver Finisher imported by them and cleared by them under exemption, shall be actually used by them for construction of National Highway by the said importer. The undertaking specifically states "We M/s D S CONSTRUCTIONS LTD. Shall use the imported goods for the construction of National Highway and this not be sold or otherwise dispose of the goods, in any manner for the period of 5 years from the date of importation." By selling the imported goods to M/s Gawar Construction Ltd., the Appellant have contravened the undertaking given by them and should have paid the duty as stated in the undertaking. For ease of reference the Undertaking given by the appellants is reproduced below: In terms of the above undertaking in case of transfer of the goods to some other project or to some other perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, but has arisen subsequently on account of failure to fulfil the post-importation conditions under the Notification No. 64/88, the said Section 28 has no application to a duty demand of this kind. We do not, therefore, wish to dwell further on the inapplicability of Section 28 to such demands. However, we note that since no specific time limit is prescribed under any other provision of the statute, the notice of demand in such cases cannot be subjected to any limitation of time. This view is supported by the ratio of the following two decisions of the Honourable Bombay High Court and the Apex Court :- (i) Prakash Cotton Mills Pvt. Ltd. v. S.K. Bhardwaj, A.C.C.E. - 1987 (32) E.LT. 534 (Bombay) (ii) Commissioner v. Raghuvar (India) Ltd. - 2000 (118) E.L.T. 311 (S.C.) 13. We find that while Section 12 gives the power to levy customs duty, Section 25 gives the power to grant exemption of duty in the public interest either absolutely or subject to conditions. In the case of Notification No. 64/88, the exemption granted is conditional. The conditions relating to (i) free treatment of 40% outdoor patients and (ii) reservation of 10% of beds for free treatment of patie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amilies with an income of less than Rs. 500/- p.m. The competent authority, therefore, should continue to be vigilant and check whether the undertakings given by the applicants are being duly compiled with after getting the benefit of the exemption notification and importing the equipment without payment of customs duty and if on such enquiry the authorities are satisfied that the continuing obligation are not being carried out then it would be fully open to the authority to ask the person who have availed of the benefit of exemption to pay the duty payable in respect of the equipments which have been imported without payment of customs duty. Needless to mention the Government has granted exemption from payment of customs duty with the sole object that 40% of all outdoor patients and entire indoor patients of the low income group whose income is less than Rs. 500/- p.m. would be able to receive free treatment in the Institute. That objective must be achieved at any cost, and the very authority who have granted such certificate of exemption would ensure that the obligation imposed on the persons availing of the exemption notification are being duly carried out and on being satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. We are of the view that DGHS and the Customs authorities are two branches of the same Government that has issued the exemption notification and Lady Amphthil (supra) has correctly concluded that the Customs authorities have jurisdiction for demanding of duty for violation of postimportation conditions by placing a reliance on the decision of the Apex Court in Sheshank Sea Foods Pvt. Ltd. v. UOI - 1996 (88) E.L.T. 626 (S.C.). We also note that this part of the order of the Larger Bench in Lady Amphthil (supra) is not under reference to us for reconsideration. 19. The learned senior Counsel argues that by implication, Mediwell (supra) requires duty to be demanded in accordance with Section 125(2) only and no duty is demandable under that Section, if the appellants do not redeem the impugned goods after confiscation. In this regard we observe the following :- (i) Mediwell (supra) and Medical Relief Society (supra) make no reference to Section 125(2) and allow recovery of duty to be made independent of the said Section. (ii) Section 125(2) states that where any fine in lieu of confiscation of goods is imposed, the owner shall, in addition, be liable to any duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed under the customs law to cover such cases, we are of the view that the notice of demand will not be subject to any limitation of time in such cases of non-fulfillment of post-importation conditions casting a continuing obligation as noted by us in Paragraph 12 above." This decision of Larger Bench has been affirmed by the Bombay High Court as reported in [2006 (201) ELT 555 (Bom)] "6. On appeal filed by the assessee, a Division Bench of the CESTAT by its order dated 1st July, 2003 referred the matter to the President for constituting a Larger Bench. Thereafter, a Larger Bench, of CESTAT heard the matter and by its judgment and order dated 8th April, 2005 directed that the matter be placed before the President to constitute a five member Bench. Accordingly, the matter was heard by a five member Bench constituted by the President of the CESTAT. By its decision dated 3rd October, 2005 [2005 (188) E.L.T. 374 (Tri.-LB)], the five member Bench of CESTAT held that when post importation conditions in an exemption notification are not fulfilled, the department has the power to recover the escaped duty in terms of Section 12 of the Customs Act, 1962. Challenging the aforesaid decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s fact that notice proposing confiscation of goods should also have been issued to owner of the goods/ person from whose possession the goods have been seized. But once seized and power to seize such goods can be shown to exist the notice will have to be issued to the person who had contravened the provisions of law which have made the goods liable for confiscation. It is settled law that without any notice, no adverse order can be passed against the owner/ possessor of the goods from whose custody the goods have been seized. OFFICE OF THE COMMISSIONER OF CUSTOMS (IMPORT) SPECIAL INVESTIGATION & INTELLIGENCE BRANCH (IMPORT) 10TH FLOOR, ANNEXE BLDG., NEW CUSTOM HOUSE, BALLARD ESTATE, MUMBAI - 400 001. F.No.SG/INV-05/AC/2008 SIIB(I) &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ackage no. UPSRP/RMC/04. b) As specified under condition 40(b), an undertaking in the form of a bond, binding itself in regard to the condition, to use the Paver finisher exclusively for construction of National Highways and that it will not sell or 5.9 In case of Kay Bee Spin Tex [2017 (349) ELT 451 (Guj)], Hon'ble Gujarat High Court has held as follows: 5.1 In the said form, the respondent-Unit had also declared that the said written bond shall continue to be in force, notwithstanding the transfer of goods to any other person or removal of goods from one warehouse to another. The said bond was also backed by an undertaking. On execution of such bond and the conditions mentioned in the bond, the respondent-Unit was permitted to warehouse the goods without payment of any duty. 5.2 It is an admitted position that thereafter, the respondent-Unit clandestinely removed the goods and thereby committed breach of condition by diverting the goods illicitly into the open market and the raw materials which were procured by foregoing Customs duty have not been used for the purpose for which they were imported, and therefore, the goods were liable to be confiscated. 5.3 Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts, the same shall not be applicable to the facts of the case on hand, since in the matters before the Bombay High Court, there was no bond/legal undertaking executed. The submission made on behalf of the respondent-Unit that unless and until the goods are first seized, there is no question of confiscation and consequently, there is no question of imposing the redemption fine in lieu of confiscation is concerned, considering the language used in Section 125 of the Customs Act, we do not agree with the same. As observed hereinabove, Section 125 of the Act shall be applicable in a case where confiscation of any goods is authorized by the Customs Act. If it is found that there is breach of any of the provisions of the Customs Act and/or even the Export/Import Policy, and/or there is a breach of any of the terms and conditions on which goods were permitted to be imported without payment of duty and permitted to be deposited in the warehouse, confiscation of such goods can be said to be authorized thereafter, when it is found that the goods are not available for confiscation as the same were illicitly diverted to the open market, and the purpose for which the goods were permitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fest, are also liable to be confiscated. Similarly, any imported goods, which have been exempted from payment of duty, subject to any condition in respect of which the condition so imposed, was found to have been not observed, are also liable to be confiscated. Thus, in a variety of circumstances and contingencies, the goods which have been improperly imported into India, are liable to suffer confiscation under this Section. 11. The provisions contained in Section 111 are clearly directed against the goods. In juxtaposition to this, under Section 112(a) of the Act, any person, who in relation to any goods, does or omits to do any act, which act or omission, would render such goods liable for confiscation under Section 111 of the Act, shall be liable to a penalty, in respect of which any prohibition is in force under the Act, not exceeding the value of the goods or Rs. 5,000/-, whichever is greater. Under Section 112(b), any person who acquires possession or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe, are liable to confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. The principal contention that is canvassed before us is that the fine contemplated under Section 125 is a redemption fine and hence, the goods which are improperly imported, are liable to be cleared. In other words, Section 125 is considered as providing for a redemption fine, and therefore, the availability of goods is a pre-requisite for offering the redemption fine. The argument proceeds that when once the goods imported improperly are not available for redemption, the question of payment of fine would not arise. Where the goods are not physically available, the Department could not have imposed the redemption fine. On that score, the penalty imposed under Section 125 of the Act is sought to be faulted. 19. Per contra, learned Senior Standing Counsel appearing for the Revenue placed reliance upon the meaning of the noun "redemption" as found in "Compact Oxford Dictionary, Thesaurus and Wordpower Guide", (Ninth impression - 2004) (Dictionary Editor : Catherine Soanes), which means, "the action of redeeming or the state of being redeemed". He therefore contended that any redemption is not necessarily confined to the goods in question, but the redemption is with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal in the case of Vibhuti Exports - 2006 (194) E.L.T. 195 (Tri.-Del.) and the decision of Hon'ble Apex Court in the case of Harbans Lal - 1993 (67) E.L.T. 20 (S.C.). Learned AR further pointed out that in this case the appellant had executed a Bond and Bank Guarantee in respect of imports made and the DEEC licence was subject to actual use and condition. He also relied on the decision of the Hon'ble Apex Court in the case of Weston Components Ltd. - 2000 (115) E.L.T. 278 (S.C.). 3. None appeared for the respondents despite notice. 4. I have gone through the submissions made by the learned AR and the records. I find that the Notification No. 30/97 prescribes as follows :- that the importer at the time of clearance (ii) of the imported materials executes a bond with such surety or security and in such form and for such sum as may be specified by the Assistant Commissioner of Customs binding himself to pay on demand an amount equal to the duty leviable, but for the exemption, on the imported materials in respect of which the conditions specified in this notification have not been complied with, together with interest at the rate of twenty-four percent per an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of goods and redemption are action in rem on the goods and not on the person, we are not in agreement with that part of order whereby commissioner states that option of redemption is given to Appellant 1. Also we find that the redemption fine imposed by the Commissioner is Rs. 21 lakhs, which is about 20 percent of the declared value of the goods. In our view since the salvage value of the goods was determined around Rs. 24 lakhs, in our view ends of justice will be met if the redemption fine is reduced to Rs. 2.5 lakhs. 5.14 Now coming to the penalties imposed on Appellant 1, Appellant 2, Appellant 3 and Appellant 4. Commissioner has in para 36.1 to 36.4 of his order discussed the role each of appellant. The said paras are reproduced below: "36.1. M/s. D.S. Construction Ltd., as held in the foregoing paras, had imported the Paver Finisher in complete breach of the conditions of the Notification No.21/2002 and rendered the said Pavar Finisher liable to confiscation under Section 111(o) of the Customs Act, 1962. Their act of commission and omission, therefore, have rendered them liable to penal action under Section 112 of the Customs Act, 1962. 36.2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act, 1962. 36.4. Finally, I come to the penal liability of Shri R.K. Agnihotri, Executive Dirctor of the notice-company. He has submitted that all his actions in the context of clearance of the goods and subsequent thereto are in the capacity as Executive Director of the notice-company. He has submitted that all his actions in the context of clearance of the goods and subsequent thereto are in the capacity as Executive Director of the notice-company; that none of his actions are distinguishable from the actions of the importing firm; that he has not done anything in his personal capacity to render the goods in question liable to consfication by his individual acts of omission or commission as contemplated under Section 112(a) of the Customs Act, 1962; that he had not dealt with the goods for his personal benefit in any manner as contemplated under Section 112(b) of the Customs Act so as to render himself liable to penalty thereunder. However, Shri R.K. Agnihotri in the position of Executive Director of M/s D.S. Constructions Ltd. had complete knowledge about the conditions of the Notification and that being the case abetted in usage of the goods at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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