TMI Blog2002 (8) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of the order. The Hon ble Calcutta High Court in matter No. 285 of 1985 vide order dated 13-8-1986 vide para (g) had directed the appellant to file the appeals against the adjudication order passed by the Collector of Customs, Calcutta within one month from 13-8-86. The appellant had again approached the Hon ble Calcutta High Court for the extension of time for the filing of appeal and vide order dated 12-9-86 the Hon ble Calcutta High Court had extended the time for the filing of appeals till 31-10-86. Thus both the appeals filed in the tribunal are well within period of limitation prescribed under the Act. In terms of the provisions of Section 129A(3) the last date for the filing of the appeals was 8-11-86. 2. In view of Hon ble High Court s directions the appellant had paid a sum of ₹ 22 lakhs in cash and had further furnished bank guarantee of ₹ 5 lakhs. In para (h) the Hon ble Calcutta High Court vide its order dated 13-8-86. It was ordered that the deposit of ₹ 22 lakhs and furnishing of the bank guarantee for ₹ 5 lakhs in pursuance of the Hon ble High Court s order may be treated as a deposit in terms of Section 129E of the Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) The following additional endorsement all attested with the security stamp and rubber stamp impressions and signatures of the Controller of Imports Exports, Shillong were seen on the said licence : - (i) The endorsement Transferable deleted and endorsed Not Transferable . (ii) Below that a fresh endorsement This licence is transferred in favour of M/s. Agrico Industries, G.S. Road, Garikhana, Shillong 793002 was there. (iii) The description of goods F.1.3. O.T.S. containers deleted and instead the endorsement as per list attached was made. (iv) On the reverse of the licence the following additional endorsements was made. Para 140 is replaced by Para 148 of the Import-Export Policy 1984-85. This licence is valid for import of items appearing in Appendix 5, Part A of A. M. 85 Policy as per list attached and shall be subject to the condition that the items to be imported are those as are required by the transferee in his own unit and the entire production shall be exported in terms of provisions in Para 148 of Import Policy A.M. 85 . M/s. Agrico Industries, G.S. Road, Garikhan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 123/85 123/85 123/85 3. L. No. 24 23 15 4. No. of pkgs 30 metal containers 22 metal containers 135 bundles 5. Quantity 25.156 M.T. 24.176 M.T. 141.300 M.T. 6. Description of the goods Low carbon defective CRCA sheets Low carbon defective CRCA Sheets Tin plate secondaries 7. C.I.F. Value ₹ 50,964.67 ₹ 50,264.47 ₹ 3,22,543.77 8. Licence No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar goods imported through Calcutta Port. This assessment was completed on 21-2-85 and 28-2-85 and the BEs were released to the importers with the endorsement on the reverse of the duplicate copies of the BEs for submission of the bank endorsed invoice. It appeared that the importer accepted the above value determined for the purpose of assessment in respect of the consignments of C.R.C.A. sheets. One secret information was received in the Customs House that a group of importers at Calcutta had purchased fake import licence from the market in the name of M/s. Agrico Industries and are clearing canalised items of steel like G.P. Sheets, CRCA Sheets, tin plate waste waste etc. against fake/forged import trade control licences and investigation was initiated by the Special Investigation Branch of the Customs House on 12-3-85. On initial investigation it appeared that the import licences in the name of Agrico Industries were produced by M/s. G.S. International and M/s. G.S. Overseas Corpn. for clearance of canalised items of iron and steel. In order to verify the genuineness of the information that the licence in the name of Agrico Industries contained fake/forged end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assam for the last 2-3 years; and recently he came to know that Toshi Loya started one industry in the name of M/s. Agrico Industries at Miao, Arunachal Pradesh and sometime in the month of October/November, 84 Toshi Loya came to him to Calcutta and asked him that he (Loya) wanted to import G.P. Sheets but as he was not well conversant with the procedure and bank facilities, he wanted somebody who would act on his behalf for import against commission, that as he had the knowledge that Shri Govindram Agarwal was an experienced man in that line, he ('S.N. Agarwal) took him (Toshi Loya) to Govind Babu and introduced him, that he had no idea whether Shri Loya authorised Mr. Govindram Agarwal finally for the import of his materials or not. Shri S.N. Agarwal could not give details about the whereabouts of Shri Loya nor he could produce Shri Toshi Loya to the Customs Authority. Shri S.N. Agarwal dishonoured further summons issued to him under Section 108 of Customs Act, 1962 and moved the Hon ble Calcutta High Court on 9-3-85 for anticipatory bail which was rejected by the Division Bench of Hon ble Mr. Justice Majoj Kumar Mukherjee and Hon ble Mr. Justice Sankar Bhattacharjee of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, it became evident that Shri G.R. Agarwal, proprietor of the aforesaid firm was the person connected behind these importations and the required information might be available from the possession of Shri Agarwal. Thus for the interest of the investigation it became absolutely necessary to record the statements of Shri G.R. Agarwal in order to ascertain the extent of his involvement in the matter. Accordingly summons were issued to Shri G.R. Aggarwal under Section 108 of the Customs Act, 1962 on 16-3-85. However, Shri G.R. Agarwal, moved before the Hon ble High Court, Calcutta and obtained an interim order dated 18-3-65 passed by Hon ble Mrs. Justice Padma Khastagir directing Shri Agarwal to appear before the Customs Authorities on 25-3-85 between 2-4 P.M. The said order was recalled by Hon ble Mrs. Justice Padma Khastagir on 21-3-85 with a fresh directive to Shri Agarwal to appear before the Customs Authority on 22-3-85 between 10.30-11A.M. Shri G.R. Agarwal preferred an appeal before Hon ble Mr. Justice Dipak Kumar Sen and Hon ble Mr. Justice Ajit Kumar Sengupata in the Division Bench and obtained an interim order directing the Customs Authorities not to issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t invoices it was seen that the orders for the supply of the goods were placed with supplier as early as on 15-11-84. Further Shri Agarwal furnished a contradictory statements inasmuch as on 28-3-85 he stated that licence and the letter of authority was procured by him from Toshi Loya whereas on 6-4-85 he stated that the letter of authority was received by him from Shri Satyanarayan Agarwal of M/s. Agrico Industries. This appeared to show the motive of M/s. G.S. Overseas Corporation to import canalised items without the cover of a valid import licence as well as to produce a fake licence for clearance of the goods. Shri G.R. Agarwal of M/s. G.S. Overseas Corpn thus failed to reveal the circumstances properly under which the licence and the letter of authority in question was produced for the clearance of the goods and has also attempted to suppress the fact. It appears that they would have taken the advantage of the said fake licence for clearance of the canalised goods if the same was not detected and inter cepted by the Special Investigation Branch, Customs House, Calcutta. The goods in question are canalised items and these cannot be imported by any other catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. It, therefore, may be logically concluded that there is no existence of Mr. Toshi Loya which is also corroborated by the fact that the address of Toshi Loya recorded in the New Bank of India, Shyambazar Branch, has been found to be fake inasmuch as the premises, 13/1D, Balaram Ghosh Street, Calcutta - 4 is owned and occupied by the Board of Trustees Shri Sri Iswar Sridhar Jew Trust Estate. Thus it was apparently evident that Shri Satyanarayan Agarwal and Shri G.R. Agarwal of M/s. G.S. Overseas Corpn were the persons who clandestinely conspired to operate upon a fake licence. It also appeared from the statement of Shri Sushil Kayan that Shri Satyanarayan Agarwal was the person who was dealing in the market with licences issued to M/s. Agrico Industries. Therefore M/s. Agrico Industries and Shri Satyanarayan Agarwal were also liable for penalty under Section 112(a) and (b) of Customs Act, 1962. In view of the allegations as stated above and contained in the office show cause notice of even number dated 1-8-86. M/s. G.S. Overseas Corpn, Shri G.R. Agarwal, M/s. Agrico Industries and Shri S.N. Agarwal were requested to show cause to the Collector of Customs, Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. Collector did not accept the contentions of the importers and had held that the importer M/s. Agrico Industries was a fictitious firm and the importer had attempted to clear the goods against a forged licence and had come to the conclusion that the goods were imported without a valid import licence and hence the importation was unauthorised and the goods were liable to confiscation. The ld. Collector had confiscated the goods under Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Imports and Exports (Control) Act, 1947 and had further ordered that M/s. G.S. Overseas Corpn, Shri G.R. Agarwal, M/s. Agrico Industries and Shri S.N. Agarwal were liable to penalty under Section 112 of the Customs Act, 1962. He had ordered the confiscation of the goods valued at ₹ 4,42,344.57 CIF under Section 111(d) of the Customs Act, 1962. However, an option was given to redeem the goods on payment of fine of ₹ 4,50,000/- and had also imposed a penalty of ₹ 1 lakh on Shri G.R. Agarwal and ₹ 1 lakh on Shri S.N. Agarwal under Section 112 of the Customs Act, 1962. Being aggrieved from the aforesaid order the appellant has come in appeal before the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. P/L/0432104/C/30-11-84 5. P/L/0432104/C/30-11-84 On the same Import licence additional endorsements were made as follows : - Para 140 is replaced by Para 148 of the Import-Export Policy 1984-85. This licence is valid for import of items appearing in Appendix 5, Part A of A.M 85 Policy as per list attached and shall be subject to the condition that the items to be imported are those as are required by the transferee in his own unit and the entire production shall be exported in terms of provisions in Para 148 of Import Policy A.M. 85 . M/s. Agrico Industries, G.S. Road, Garikhana, Shillong, Meghalaya executed a legal undertaking to the effect that their entire production of select products would be exported within 18 months from the date of import of the first consignment, as required under Para 148/X A.M. 85 Policy. All the five consignments were as per invoice supplied by M/s. A.P. Landowski - Samis, Paris. The ld. Collector s findings and observations are similar to the observations in Appeal No. C-305/86-Cal. The ld. Collector had confiscated the goods valued at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence and has failed to explain the circumstances properly under which the licence and letter of authority in question was produced for the clearance of goods and thus the appellant had attempted to suppress the facts. Shri Sen has argued that this allegation by the Collector is without any base. He has argued that the Revenue authority had issued a notice under Section 108 of the Customs Act, 1962 and the appellant had challenged the same before the Calcutta High Court and on the directions of the Hon ble Calcutta High Court the goods were kept in the Customs Bonded warehouse. Shri Sen has argued that the statement of Shri S.N. Agarwal and Shri Kharmalong were taken in the absence of the appellant and no opportunity of cross-examination was afforded to the appellant and the affidavits dated 10-6-85, 14-6-85 and 23-4-85 were not sworn in accordance with law. Shri Sen has argued that Shri G.R. Agarwal, the present appellant, had filed the writ petition on 18-3-85. He has argued that the assessment was completed under Section 17(4) of the Customs Act, 1962. He states that after the completion of the assessment the proper course for the Revenue should have been to take recourse to prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had agreed to consider the reasons given by the Collector in the affidavit as if they were the reasons embodied in the order. Shri Sen, the ld. Sr. Advocate has argued that in the present matter before the Tribunal the bills of entry filed by the appellant were duly assessed by the Revenue authorities and an assessment is an assessment and if at all the Revenue proposes to challenge that assessment, the Revenue should have taken recourse to the provisions of Section 129D of the Customs Act, 1962 or if there was less charge proceedings under Section 28 of the Customs Act, 1962 should have been started. He has argued that as per observations of the Hon ble Bombay High Court in para No. 16 of the case cited by him, the appellants case is fully covered by that and since the Revenue has not chosen to resort to the provisions of Section 129D of the Customs Act, 1962, the Collector cannot suo motu exercise powers. The learned Collector had passed the order after about 1 years from the date of the filing of the bills of entry, and that too he had allocated the case to himself, and had passed the order. The proper course for the Collector was that he should have reviewed the order and fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed to have been imported without licence in contravention of the order issued under Section 3 of the Act so as to bring the case within clause (8) of the Sea Customs Act. Assuming that the principles of Law of Contract applied to a licence to be issued under the Act, a licence obtained by fraud is only voidable : it is goods till avoided in the manner prescribed by law : in the circumstances we must hold that when the goods were imported, they were imported under a valid licence and therefore it is not possible to say that the goods imported were those prohibited or restricted by or under Chapter IV of the Act within the meaning of clause (8) of Section 167 of the Sea Customs Act. He has further referred to a judgment of the Bombay High Court in the case of Vasanji Ghela and Co. v. Commissioner of Sales Tax reported in 1977 (40) STC 544, where the Hon ble High Court had held that if a party makes a request to be allowed to cross-examine a person who made a statement for the purpose of meeting the statement or with a view to commenting thereon such a request cannot save in exceptional or special cases, be denied without violating the principles of natural justice. He has also refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way. The cause of the community deserves equal treatment at the hands of the court in the discharge of judicial functions. The community in the State is not a persona non grata whose cause may be treated with disdain. The entire community is aggrieved if the economic offender who ruins the economy of the State are not brought to book. These observations are to be found in para No. 6 of the Hon ble Supreme Court s judgment. Shri Ghosh had argued that there are 8 Bills of Entry and the first bill of entry was filed on 16th February, 1985 and these were supported with two licences. Assessments were made from 26th February, 1985 to 6th March, 1985 and the assessments were made before the actual arrival of the goods. The two import licences on the basis of which the importations were made were originally REP licences. One licence was issued by the Controller of Imports and Exports, Madras. The other licence was issued by the Controller of Imports and Exports, Cochin for open tin containers. He has argued that in one licence the word transferable was deleted from the licence and the endorsements on the licences are forced ones. He has referred to departments paperbook filed in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of summons in the Hon ble Calcutta High Court by way of a Writ and as per directions of the Hon ble Calcutta High Court the goods were warehoused under Section 49 of the Customs Act, 1962 on 1st April, 1985 and the SCN was issued on the 1st August, 1986. He has referred to the order-in-original appearing in appellants paperbook on pages 65 to 90 in the order-in-original. He has stated that the SCN was issued, to Shri G.K. Aggarwal and M/s. Agrico Industries. M/s. Agrico Industries did not file any reply to the SCN and did not pursue the matter as Agrico Industries never existed. Shri G.R. Aggarwal, the present appellant before the Tribunal had paid the money in these cases. Shri Ghosh, the learned advocate has argued that Shri Aggarwal is the letter of authority holder and he does not become the owner of the goods and as such he has no right to file the appeals as he was not the owner. He has again referred to the order-in-original and has laid special emphasis on the findings of the Collector. Shri Jatin Ghosh has referred to the provisions and the scheme of the Customs Act, 1962. He has stated that Section 12 of the Customs Act is the charging section. Section 14 relates to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be the letter of authority holder. The adjudication order is valid, correct, proper and in accordance with law and has again argued that the present appellant has no locus standi to file an appeal. He again reiterates the facts and states that the following dates are very relevant. From 16th February to 6th March, 85 - 8 B/Es were filed before the actual arrival of the goods. The assessments were made by 6th March, 85. Licences were produced. He has referred to page 61 of the appellants paperbook, para No. 2.2 of the Order-in-Original. The appellant had presented the licences along with the bills of entries for clearance. Secret information was received by the Customs authorities. Investigations were made. The details are in para Nos. 4.1 to 4.4. Summons were issued under Section 108 of the Customs Act on 16th March, 85. Served on Shri G.R. Agarwal on the same date and desiring him to appear at 3.30 P.M. The summons were served on him at 12.05 P.M. The goods had arrived at Calcutta Port on 26th March, 85 and on 28th March, 85 the Hon'ble Division Bench of the Calcutta High Court had directed that the goods should be warehoused under Section 49 of the Customs Act. The Writ P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has also referred to the analysis of the statement recorded under Section 108. He has again argued that the importers were allowed inspection and states that the original bank s letter was not given to them. Shri Ghosh has again referred to the Statement of Shri G.R. Agarwal. He has argued that the letter of authority is dated 12th January, 1985 whereas the order for the supply of goods was placed much earlier i.e. on the 15th November, 1984. Shri Ghosh has referred to Shri Kharmawlong s statement which appears on pages 25 to 27 of the department s paperbook and states that these statements were recorded on 13th March, 1985. He has again referred to the affidavit of Shri Kharmawlong and in the affidavit there is a mention of the import licence in dispute. He has again referred to the Import Licence the photostatcopy of which appears from pages 80 to 82 of the department s paperbook. He has referred to the New Bank of India s reply to the Revenue s investigation Agency in response to summons under Section 108 of the Customs Act which appears on pages 77 and 78 of the paperbook. He has again referred to the following :- (1) The statement and affidavit of Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Miao. He further stated that the order was placed in November, 1984 whereas the Letter of Credit was opened on 7th December, 1984 through Bank of Baroda. He has argued that in the normal course of business the order is placed after the procuring of the letter of the authority. He has pleaded for the rejection of the appeal. Shri Sen, the learned Sr. Advocate, in reply states that the arguments of Shri Jatin Ghosh, learned Sr. Advocate for the respondent are not tenable. Shri Sen has argued that Shri Ghosh s argument that the concern M/s. Agrico Industries does not exist is not correct. In support of his argument he has referred to the certificate of registration-cum-membership certificate (page 51 of the paperbook) and M/s. Agrico Industries is duly registered with the District Industries Centre, Khonsa vide registration No. DIC/T-1(86)/81 and has stated that Agrico Industries had applied for registration on 24-10-81 and this registration is for the purpose of import policy for registered exporters and these were duly attached with the reply to show cause notice. Shri Sen has also referred to the application for registration (page 52 of the appellant s paperbook) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no endorsement was made by him. Shri Sen has stated that how Shri Kharmalong could depose that the endorsements were not made by him especially when this licence was very much in the possession of the appellant and the affidavit has been given by Shri Kharmalong without even looking at the licence and without going through the endorsement and as such no reliance should be placed on the affidavits filed by Shri Kharmalong. His statement cannot be relied upon. The statement has not stood the test of cross-examination. He has referred to the date sheet filed on 15-9-87 and again said that the bills of entry were filed on 16-2-85. The licence No. P/L/3012892, dated 17-10-84 was seized from the appellants on 15-3-85 whereas the statement of Shri Kharmalong was recorded on 13-3-85 and how Shri Kharmalong could have given a statement in respect of the licence when this licence was in the possession of the appellants on 13-3-85. He has argued that the statement of Shri Kharmalong is at the instance of the Revenue authorities and as such no reliance should be placed on the same. While Shri Sen was replying to arguments of Shri Jatin Ghosh he stated that Shri Jatin Ghosh has accepted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1972 S.C. 2136 para 12 - Kanungo case (3) AIR 1984 S.C. 273 para 41 - K.R. Tripathi v. State of Bombay holding that it depends on the facts and circumstances of each particular case whether there was denial of principles of natural justice or not therefore Hon ble Supreme Court had held that the rules of natural justice are flexible and cannot be put on any rigid formula. In order to sustain a complaint of violation of principles of natural justice on the ground of absence of an opportunity of cross-examination is has to be established that prejudice has been caused to the party concerned by the procedure followed. Neither cross-examination nor the opportunity to lead evidence by the delinquent is an integral part of the quasi-judicial adjudications. Shri Ghosh has argued that the cross-examination was not necessary and as such there is no infirmity in the order passed by the Collector of Customs, Calcutta. He has argued that the statement of Shri S. N. Aggarwal was recorded under Section 108. He has also referred to the statement of Shri S.N. Aggarwal and statement of Shri Santosh Kumar (pages 59 to 62 and 83 to 84 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellate Tribunal may, in its discretion, refuse to admit an appeal in respect of an order referred to in Clause (b) or Clause (c) or Clause (d) where - (i) the value of the goods confiscated without option having been given to the owner of the goods to pay a fine in lieu of confiscation under Section 125; or (ii) in any disputed case, other than a case where the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment is in issue or is one of the points in issue, the difference in duty involved or the duty involved; or (iii) the amount of fine or penalty determined by such order, does not exceed ten thousand rupees . A simple perusal of clause (a) of sub-section (1) of Section 129A of the Customs Act, 1962 will clearly show that any person aggrieved by an order passed by the Collector of Customs as an adjudicating authority may appeal to the Appellate Tribunal. In the matter before us the appellant satisfies all the conditions. The argument of the learned Senior Advocate, Shri Ghosh that Shri G.R. Aggarwal was not the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the relevant date, serve notice on the person chargeable with the duty which has not been levied or which has been so short-levied or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any duty has not been levied or has been short-levied or has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words one year and six months , the words five years were substituted. Section 47. Clearance of goods for home consumption. - Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption. Section 49. Storage of imported goods in warehouse pending clearance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities did not resort to the provisions of Section 28 of the Customs Act or to Section 129D of the Customs Act, it was not open to the Collector to allocate the matter to himself for assessment. In support of his argument he has relied upon the following judgments :- (1) 1986 (26) E.L.T. 873 - Ajay Export Another v. CC, Madras (2) 1987 (28) E.L.T. 63 (Bom.) - Union of India Others v. Popular Dyechem (3) 1982 (10) E.L.T. 418 (CBE C) in the case of M/s. Aleuin Tapes Subsequent to the judgment in the case of Ajay Export [1986 (26) E.L.T. 873] South Regional Bench in another matter in the case of Parkar Leather Export Co. v. C.C., Madras reported at [1987 (29) E.L.T. 53 (T) = 1987 (12) ECR 283] had considered all the earlier judgments. In the matter before us there had been no clearance of goods, the Bills of Entry were filed much before the arrival of goods and were permitted by the Revenue authorities to be assessed to duty on the basis of the statements made in the Bill of Entry and the documents produced and the information furnished under Section 17(3) of the Customs Act, 1962. But subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the argument of the ld. Sr. Advocate. The judgment of the Hon ble Bombay High Court in the case of Glaxo Laboratories India Ltd. v. A.V. Venhad also does not help the appellant. There also the clearances were effected. Accordingly we hold that under the law there was no requirement of resorting to the provisions of Section 28 and 129D of the Customs Act, 1962. Accordingly the reassessment proceedings could have been gone into with the other provisions of the Act. In terms of provisions of Section 5(1) and 5(2) of the Customs Act, 1962, an officer of the Customs may exercise the powers and discharge the duties conferred or imposed on him under this Act on any other officer of Customs who is subordinate to him. In the present matter the original assessment under Section 17(4) was made by the Assistant Collector before the arrival and actual inspection of the goods on the basis of bill of entry filed by the appellant and the documents viz. import licence attached with the bill of entry. If subsequently any defect is found in the documents attached along with the bill of entry, the Revenue authorities could reassess the same. Accordingly we uphold the action of the Collector in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long or not. The Revenue authorities had sent registered letter at Garikhana, Shillong address which was returned by the postal authorities with the remarks that there was no firm by such name whereas the appellant in reply to the show cause notice had agitated that the firm was very much in existence. In support of his argument for the existence of the firm Agrico Industries, he had relied on the following documents : - (a) Agrico Industries has been registered with the Director of Small- Scale Industries, Arunachal Pradesh having registration No. PMT/SSI/50/05/051049, dated 29-9-81. (b) Agrico Industries was granted actual users import licence by Controller of Imports and Exports, Shillong in the year 1983, being licence No. P/5/1945989, dated 4-9-85. (c) The abeyance order No. 1/84-85/Gau, dated 26-9-84 was issued by the Dy. Chief Controller of Imports and Exports, Gauhati against several business concern including Agrico Industries. In the said abeyance circular the address of Agrico Industries and also of its proprietor have been mentioned. (d) Order of withdrawal dated 22-12-1984 bearing No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evidence filed by the appellant as a result of which it cannot be conclusively said that the first Agrico Industries was not in existence. Documentary evidence is always superior to oral evidence. Accordingly benefit of doubt must be extended to the appellant in this regard. Now coming to the question of forgery on import licence. The Revenue has relied solely on the statement of Shri Kharmalong, Controller of Import and Export, Shillong and the affidavits filed by him. For the proper appreciation of the facts the statements of Shri Kharmalong and the affidavits dated 23-4-85, 14-6-85 and 16-6-85 are reproduced below : - Statement of Shri L. Kharmalong Shri A.S.R. Nair, Deputy Collector of Customs, Special Investigation Branch, Customs House, Calcutta called on this office today (13-3-85) for enquiring in the matter of Import of Tinplate Secondaries imported Ex Jalagopal, from Antwerp to Calcutta by M/s. G.S. Overseas Corporation, P/3, New CIT Road, Calcutta - 73 against B/E No. 1331 dated 16-2-85 . As desired by him, I do hereby state the following facts in the said matter : - The Import Trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the past. That I am seeing this licence for the first time, when it is shown to me by Mr. A.S.R. Nair, Deputy Collector, Customs. (b) Three metal stamp impressions reading Sl. No. 118 of A.C.I E Shillong appearing on the front page of the licence No. P/L/3012892/C/XX/93/E/84, dated 17-10-84 are not of this office. (c) Three rubber stamp impressions reading Controller of Imports Exports, Shillong on the front page of the licence No. P/L/3012892/C/XX/93/E/84, dated 17-10-84 are not also of this office. (d) Three signatures dated 11-1-85 put above the rubber stamps Controller of Imports Exports, Shillong are not my signatures. (e) That at Shillong, there is only one Controller of Imports and Exports. (f) That I am the Controller of Imports Exports, Shillong since February, 1984. (g) That the endorsements Not Transferable . This licence is transferred in favour of M/s. Agrico Industries, G.S. Road, Garikhana, Shillong 793002 and As per list attached appearing on the front page of the aforesaid Import Trade Control Licence were not giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impressions on the body of the licence and on the list attached showing those to be of this office are fake. As desired, I am putting below :- 1. My signature - Sd/- 2. My office Metal seal - Office seal 3. My office Rubber Stamp - Seal Witnesses 1. Sd/- Sd/-(L. Kharmalong)Controller of Imports Exports,Shillong 2 Sd/- Recorded in my presence Sd/-(K.K. Bhattacharya)SuperintendentCustoms and Central Excise,Shillong Affidavit of Shri L. Kharmalong dt. 23-4-85 I, Shri Lestarwell Kharmawlong son of Shri Stanley Syiemlich aged about 34 (thirty-four) years working as Controller of Imports Exports, Govt. of India, Ministry of Commerce, Shillong solemnly affirm and say as follows :- 1. That I am the Controller of Imports and Exports, Shillong and have been working here since February, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovember, 1980. 2. That no endorsement under para 148 of Import and Export Policy, 1984-85 have been made by me on the following import Trade Control Licences : 1. P/L/0431609 dated 10-11-84 2. P/L/0431640 dated 9-11-84 3. P/L/0431620 dated 9-11-84 4. P/L/0421856 dated 19- 11-84 5. P/L/0431639 dated 9-11-84 6. P/L/0431854 dated 19-11-84 7. P/L/3054505 dated 17-10-84 8. P/L/3053837 dated 9-10-84 9. P/L/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as at the time of personal hearing. Relevant points are reproduced below :- (i) The show cause notice has been issued belatedly; (ii) That the importer is not responsible for the forgery on the import licence; (iii) That he produced an import licence different from that mentioned in the letter of credit since the need for the material by M/s. Agrico Industries was urgent; (iv) That no reliance should be placed on the statement of Shri L. Kharmawlong by the adjudicating authority since it was a procured one; (v) That no enquiry has been made at Arunachal Pradesh about the existence of M/s. Agrico Industries; (vi) That copy of statement of Satyanarayan Agarwal and Shri S. Kanoria had not been furnished to them. Shri G.R. Agarwal, the present appellant, had filed a writ petition before the Hon'ble Calcutta High Court challenging the summons issued by the revenue authorities under Section 108 of the Customs Act, and during those proceedings both the sides had filed affidavits before the Hon ble High Court. Copies of those affidavits have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... security seal, rubber stamp impression and signature of the Controller of Imports and Exports, Shillong in terms of the endorsement and the attached list a special permission has been given for importation of tin plate waste, CRC sheets etc. All those items at all relevant time were and still are canalised items and are prohibited goods for individual importers. A copy of the said licence is annexed hereto and marked with the letter A . 7. The Special Investigation Branch of the Customs House received an information from its intelligence source that the special endorsements made on the licence in favour of M/s Agrico Industries, were not genuine. On the basis of the said information a team of Customs Officers were sent to Shillong to verify the authenticity of the endorsements made on the said licence by the Controller of Imports Exports, Shillong. On enquiry Shri L. Kharmawlong, Controller of Imports Exports, Shillong confirmed that his office had not made any special endorsement under para 148 of the Import Export Policy April/March 1985 on the licence bearing No. P/L 3012392, dated 17-10-1984. He further confirmed that the metal seal impression and rubbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t licence in good faith and in the belief that the same was genuine. While I had no means of verifying the genuineness of import licence the customs authorities do have complete machinery for verifying the checking the genuineness of any import licence. Customs Authorities maintain a Register containing specimen signatures of all the Controllers of Import and Exports. The practice of the customs authorities is and it be also their duty to check the genuineness of import licence and signature of the Controller appearing thereon before assessment of the Bill of Entry. In fact the customs authorities of Bombay after verifying the genuineness of import licence makes an endorsement on the reverse of the licence that signature has been verified and licence checked. As a specimen two of such import licence verified by Bombay customs is annexed hereto and marked with the letter A . The Customs Authorities at Calcutta do not put such endorsement on the reverse of import licence as done by the Bombay Customs Authorities. I have reason to believe that Calcutta Customs to check and satisfy themselves about the genuineness of the signature appearing thereon which is their duty also. Had the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne or that there was even any suspicion about the genuineness. I have no knowledge of the alleged information received from intelligence source or of the alleged enquiry from Controller of Imports and Exports, Shillong or of the alleged confirmation by him. The allegations in the said paragraphs are wholly vague. Information if at all received from intelligence source must be in writing and but no copy thereof has been disclosed. I deny and dispute the correctness and bona fide of the confirmation alleged to have been given by the Controller of Imports Exports, Shillong. The alleged statement is obviously procured and significantly not on oath. I deny and dispute the correctness of the purported statements which is not in any event inadmissible. I have not other import licence signed by Shri L. Kharmalong about which there has been no dispute whatsoever and against which goods have been cleared without any demur. As a specimen, I am enclosing some of such import licence in Annexure B . In view of the doubt now expressed in this affidavit I have taken the opinion of handwriting expert regarding the signature now sought to be disputed which I crave leave to produce at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te had argued that the appellant should have been given an opportunity of cross-examination. In his written arguments-cum-reply to the query from the Bench he had referred to the latest judgment of the Hon ble Supreme Court in the case of Kalra Glue Factory v. Sales Tax Tribunal reported in 1987 (167) ITR 4987 where it had been held that if in arriving at a conclusion against a person, statement of any other person is to be relied on the same as to be decided by allowing cross-examination. Shri Jatin Ghosh, the learned Sr. Advocate for the respondent had opposed the contention of Shri Bhola Nath Sen, ld. Sr. Advocate as to the denials of principles of natural justice in not allowing the cross-examination of Shri Kharmalong and other witnesses. In support of his arguments he had referred to the following judgments :- (1) CC v. D. Bhoormal - 1983 (13) E.L.T. 1546 (S.C.) = AIR 1974 SC 859 [Para 30] (2) Kanungo case - 1983 (13) E.L.T. 1486 (S.C.) = AIR 1972 SC 2136 (3) K.R. Tripathi v. State of Bombay - AIR 1984 SC 273 [Para 41] where it was held that it depends on the facts and circumstances of ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Advocate for the Revenue prays for leave to initiate adjudication proceedings against the petitioner. It appears that there was no order restraining them from initiating adjudication proceedings at any time. Therefore, no such leave was necessary. By consent of the parties the following order is passed :- The petitioner waives service of the show cause notice for the proposed adjudication. The respondents will initiate the adjudication proceedings by the 1st August, 1986. The respondents will give a hearing to the petitioner on the 5th August, 1986 without any further notice at 11.30 A.M. at the office of the Collector of Customs. The proceedings will be completed by 7th August, 1986 and the order will be passed by the 8th August, 1986 before 12 noon. These applications are adjourned till 8th August, 1986 and will be taken up at 3 p.m. when the orders will be passed. It is further ordered that the order of adjudication will abide by the decision of this Court. The adjudication order will not be given effect to without further orders of this Court. Both the sides complied with the order passed by the Calcut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence is no ground for allowing a party to adduce further evidence on remand. If there is insufficiency of evidence for any party to prove his case he will suffer. (Extract taken from Code of Civil Procedure, 1908 by A.N. Saha, 2nd Edition 1982 published by Debooks, Eastern Law House, Calcutta). (3) AIR 1977 NOC 282 Calcutta - East India Hotel v. Chand Prakash We would also like to observe that the remanding of the matter at this stage will mean providing of opportunities to fill in the lacunas of their cases. Neither the appellant nor the respondent has made any prayer before us for granting of permission for the production of additional evidence. The Hon ble Supreme Court in the case of Natha Singh Others v. Financial Commissioner, State of Punjab reported in 1976 SC 1053 had held that the Supreme Court did not experience any inherent lacuna or obscurity which was required to be filled up or removed or any other difficulty in rendering the judgment on the material already available before the court. Instead it felt that the prayer for adducing additional evidence had been made merely to fill up ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Calcutta High Court in reply to the affidavit filed by Shri K.M. Mondal, Shri G.R. Agarwal had stated that - With reference to paragraph 6 of the said affidavit I say that I had received the import licence in good faith and in the belief that the same was genuine. While I had no means of verifying the genuineness of the import licence, the customs authorities do have complete machinery for verifying and checking the genuineness of any import licence. Shri G.R. Agarwal in his statement dated 28-3-85 had deposed that one Shri S.N. Agarwal came to him along with one Santosh Kanoria and introduced another person with description of dark complexion, fatty and bulging valley, roughly 5 4 in height without a spec and black hair as Toshi Loya. In another statement on 6-4-85 Shri G.R. Agarwal stated that he had procured the letter of authority from one Shri S.N. Agarwal who is known in the trade as man of M/s. Agrico Industries. Keeping in view the totality of the facts and circumstances of the case we are of the view that Shri G.R. Agarwal, the appellant before us, had acted as a letter of authority holder in good faith and the forged endo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of appeal No. C-306/86-Cal. we reduce the fine in lieu of confiscation from ₹ 21 lakhs to ₹ 7 lakhs (Rupees seven lakhs only) and personal penalty on Shri G.R. Agarwal from ₹ 4 lakhs to ₹ 1,33,000/- (Rupees one lakh and thirty three thousand only). Personal penalties were also imposed on Shri S.N. Agarwal at ₹ 1 lakh and ₹ 4 lakhs. He has not filed any appeal and as such we are not passing any order in this regard Except for this modification in the orders, the appeals are otherwise rejected. Before we part with this matter, we would like to express our regrets to Hon ble Calcutta High Court, for not delivering the judgment earlier as the matter required extensive study and thought. We also express our thanks to Shri Bhola Nath Sen, learned Sr. Advocate and Shri Jatin Ghosh learned Sr. Advocate for rendering valuable assistance to the Bench. Sd/-(Harish Chander)Member (J) 6. [Contra per : S.K. Bhatnagar, Member (T)]. - With due respects to learned Member (Judicial), I am unable to agree with the order passed by him. My analysis of the case and my order is as follows :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive plea on the fact that the classification, valuation and rate of duty had been indicated on the Bills of entry before the issue of show cause notice. 16. However, the learned Counsels appear to have presumed that such an indication amounts to finalisation of assessment and the significance of the fact that the bills of entries were processed under prior entry system has not been fully realised by both the sides. 17. Under prior entry system the paper work regarding processing of the bill of entry is undoubtedly completed before the arrival of the goods but the examination of goods, which is an essential part of the process of assessment is completed subsequently. 18. The assessment of duty under the Customs Act involves two essential steps :- (1) Scrutiny of documents; (2) Examination of goods; And the process is not complete unless both the steps have been duly taken and concluded. 19. [However, the sequence of the above steps is interchangeable, i.e., the goods can be examined first and documents later or the other way round.] 20. In fact, Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Court allowing warehousing is clear from the endorsements on the copies of the bills of entries (which also show that further action was contemplated). Therefore, it could only be concluded that the department's action was not yet complete. Furthermore, the endorsements also clearly show that the goods had been allowed to be removed only for the purpose of warehousing under Section 49; Such a permission or order does not amount to an order under Section 47, which was required to be given only when goods finally pass out of Customs control. In fact, it is evident from the submissions of the appellants themselves and the documents (including Bills of Entry) before us that the goods were ultimately passed out of Customs charge only after adjudication when they were handed over to them (as rightly pointed out by the learned Counsels for the respondents). 24. In other words, no order under Section 47 had been passed till the date of issue of the show cause notice and, therefore, in this view of the matter also, the department was free to proceed in terms of Section 11 and other provisions of the Customs Act read with the Section 3 of the Imports Exports Trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment got the information that the clearance was sought to be taken on the basis of forged endorsements and, therefore, the department withheld the clearance and started investigation; (2) That according to the department, only one search and seizure was conducted at the premises of the appellants and this was done under proper authorisation. A panchnama showing seizure of a file containing 104 documents was drawn. Subsequently, 7 bills of entries were resumed from the Clearing Agents, as evident from the letter dated 15-3-85 of the Clearing Agents (The so-called resumption slip ). On the other hand, the appellants have stated that two searches and seizures were Conducted one at the Clearing Agent s premises and that during the course of the second search (at the Clearing Agent s premises), no panchnama was drawn and the documents were taken away without completion of necessary formalities. In this connection, our attention has been drawn by both the sides towards two affidavits filed in the Hon ble High Court - one by Shri K.M. Mondal, Assistant Collector and another By Shri K.K. Pradhan, Assistant Collector. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urprised at the lack of care and caution in filing them. However, one of the affidavits filed by Shri K.M. Mondal clearly states that one licence No. P/L 3012892, dated 17-10-84 was retained by the department (although it does not indicate the reasons for such retention). The learned Counsels for the respondent have explained that in respect of the bill of entry No. 1331 some queries were raised which resulted in retention of the licence. From the copies of the bill of entry filed before us it is evident that a query was raised and the bill of entry was required to be resubmitted to the Group after payment of duty. Therefore, there is a high probability of the department s contention being correct. This belief is further strengthened by the fact that this licence has also been referred to in the secret D.O. by the Collector to D.I.G., C.B.I. No. S. 121-27/85/SIB, dated 4-4-85 and the affidavit of Controller of Imports and Exports Shri Kharmalong. The appellants have also not produced any positive evidence to show that this licence was still in their possession on the date Shri Kharmalong claims to have seen it. 33. In view of the totality of the circumstances and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... care and caution was required to be exercised and it was really not clear as to why the department had not taken the trouble of obtaining the opinion of the examiner of questioned documents or any other expert and why the departmental officers themselves did not inspect the documents of the Controller or Deputy Chief Controller s office. 38. It is noteworthy that the conduct of officials of the office of Controller of Imports was itself in doubt (as is evident from the D.O. of the Collector S. 121-27/85/SIB, dated 4-4-85 to the D.I.G., C.B.I.) and the involvement of one or more officers was in any case not beyond the pale of possibility. Therefore, it is not clear as to why the department did not await C.B.I. report. The learned Counsel s plea of shortage of time is not convincing as the Collector could always request the Hon ble High Court for more time if that was necessary. [It is also not clear as to why an application under Rule 23, CEGAT Procedure Rules, 1982 was not filed if C.B.I. enquiry had thrown more light on the case and some evidence had come in the possession of the department]. 39. Further, it is common knowledge that for making or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I find that the learned Counsels for the appellants have rightly pointed out that the enquiries were not conducted at all the places mentioned in the documents. They have not made any enquiry at all at Miao (Arunachal Pradesh) where the factory was said to be located and at Kanubari (Arunachal Pradesh) where the firm s head office was said to be located; And the department has erred in placing too much emphasis on the statement of only one person. In fact, banking on the statement of one and only one person picked .up at random at a place like Shillong was rather unusual. 45. It is also not clear as to why the departmental officers did not bother to check up the facts from either the Central Excise authorities or other Central/State/District authorities particularly when being Customs officers they were, (I presume), aware that factories engaged in manufacturing goods are required to be declared to the Central Excise authorities and also to State/District Authorities or DGTD, particularly, if they are also engaged in import/export business and wish to avail of the benefits of ITC/ETC provisions; And why having gone upto Shillong the officers could not proceed furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1985. Therefore, it was evident that at least after the submissions of these documents the department was required to make further enquiries and cross-check the facts with the Deputy Chief Controller of Imports Exports and Directors of Industries of Assam and Arunachal Pradesh and the District officers etc. Such a cross-checking was all the more necessary when the results of a Customs enquiry were at variance with the Circular issued by the Deputy Chief Controller of Imports Exports. 49. In any eventuality, as an adjudicating officer, the Collector of Customs was required to consider the documents produced before him by the appellants carefully and record his findings with reference to them. It was not open to him to ignore the same and refrain from examining the implications thereof. 50. The plea of the learned Counsels for the respondent that the documents produced being merely photostat copies were not looked into, is not acceptable as it was always open to the Collector to demand production of original documents or to verify the genuineness or correctness thereof by referring the matter to the issuing authorities. 51. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil Procedure Code and the Court cases arising with reference to them whereas the cases before us are under the Customs Act. The provisions of the Civil Procedure Code are different in wordings and scope from the provisions in the Customs Act, (i.e. they are not para materia) and the cases cited by my learned Brother are clearly distinguishable. It is noteworthy that Section 129 of the Customs Act, 1962 itself vests statutory power in this Tribunal to, inter alia, remand the cases to the authorities below and has specific provision for allowing additional evidence to be taken, if necessary, in the interests of justice, during the de novo proceedings. Similarly, Rule 23 of the CEGAT Procedure Rules, 1982 regarding additional evidence has a wide scope and specifically vests suo moto powers in the Tribunal, including the power to direct any departmental authority to take additional evidence. Hence, even in the absence of a request from either side (and even in the face of opposition from them, if needs be), the Tribunal could on its own examine the sufficiency or otherwise of the evidence and order re-examination of the matter with directions to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, personal penalty of Rs. l lakh (Rupees one lakh) was imposed on Shri G.R. Agarwal in the first case and of ₹ 4 lakh (Rupees four lakhs only) was imposed in the second case. The appeal was filed in the Tribunal in the year 1986 and thereafter heard and the orders passed on 22nd February, 1988. 57. Member (Judicial) has observed that licences against which imports were made, were forged. However, taking in view the totality of the circumstances and the Hon ble Supreme Court s decision in the case of Arvind Mohan Singh, he observed that the ends of justice will be met if the fine and penalty are reduced. Accordingly, he reduced the redemption fine from ₹ 4.50 lakhs to Rs. l.50 lakhs in one appeal and from ₹ 21 lakhs to ₹ 7 lakhs in another appeal. Similarly, penalty was reduced from Rs. l lakh to ₹ 33,000/- in the first case and from ₹ 4 lakhs to ₹ 1,33,000/- in the second case. 58. Member (Technical) in his order has observed that number of documents have not been considered by the Department which were required to make further enquiries and cross-check the facts with the Deputy Chief Controller of Imports ..... X X X X Extracts X X X X X X X X Extracts X X X X
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