TMI Blog2022 (3) TMI 1229X X X X Extracts X X X X X X X X Extracts X X X X ..... en place pursuant to the seizure, leaves us with no manner of doubt that the claim of Rekhatex of ownership of the goods on the basis of the documents of title, BOLs, cannot be said to be undisputed. We cannot turn a blind eye to the attending circumstances which necessitate an in-depth inquiry before rendering a factual finding regarding ownership of the consignment which may not be possible for us to do so in this writ petition under Article 226 of the Constitution of India. The stand of the Department that the documents viz. BOEs, BOLs and invoices in the name of Shine Metal are sufficient indicator to suggest that there exists a dispute of title cannot be brushed aside. The stand of the Department, of there being a failed business contract between Rekhatex and Shine Metal upon seizure of the goods, cannot be ruled out altogether. From the materials on record, it is obvious that Rekhatex took steps to effect changes in the documents only after seizure of the goods - Except for the oral submissions made by learned counsel for Rekhatex, there is nothing on record to indicate that the process for sale of the consignment commenced before the seizure. On one hand, Rekhatex has tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls for entry in respect of consignments covered by Bill of Lading Nos. AGNJEANSA00465 dated 20th November, 2019, ASCOKHLNSA1900054 dated 10th March, 2020, MSLJEANSA2521 dated 15th June, 2020 and ASCOKHLNSA1900063 dated 10th March, 2020 respectively and to assess them in accordance with law; (c) that pending the final hearing and disposal of the present Writ Petition, this Hon ble Court be pleased to pass an order directing the Respondent No.3 (their servants, agents and successor in office) to forthwith release the said consignments, on such terms and conditions as the Hon ble Court may in its discretion deem fit to grant in the circumstances of the case; (d) this Hon ble Court be pleased to grant costs of the Petition and orders thereon; and (e) this Hon ble Court be pleased to grant such other and further reliefs in favour of the Petition as may be deemed necessary. 2. To appreciate the controversy, it would be apposite to set out the facts of this case in brief. The petitioner ( Rekhatex for short) claims to be the owner of the consignment shipped to India from United Arab Emirates. The consignment comprises Electrolytic Tough Pitch (hereafter ETP for shor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before us. 6. SUBMISSIONS ON BEHALF OF THE PETITIONER: - In order to establish the claim of ownership in respect of the consignment, learned counsel Mr. Shah for Rekhatex submitted as under: (a) The seized goods are freely importable and import thereof is not in any manner in contravention of the Customs Act, 1962 (hereafter the Customs Act for short). Neither the Commissioner of Customs nor DRI claims that the said consignments are prohibited goods. (b) Rekhatex is the owner of the seized goods and is alone entitled to it. The seized goods are under the custody/ control of Customs. They are not seized from Shine Metal. Shine Metal has no title to the seized goods. Shine Metal has admittedly not retired the documents sent by Rekhatex through its bankers. (c) The original BOLs are with Rekhatex. The BOLs represent the title to the consignments. (d) Shine Metal is not named as the consignee in the BOLs. Shine Metal is only a notified party. Rekhatex has paid for the seized goods. It has produced a complete chain of documents showing payment of the price of the seized goods to the consignor. Reliance is also placed on the additional affidavit dated Aug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods by the Commissioner of Customs and the DRI in their respective affidavits is based on the assumption that Shine Metal has the original BOLs. This assumption is factually incorrect and contrary to the documents on record. (j) The question as to who can claim title over the consignment is squarely covered by the decision of the Supreme Court in the case of Union of India and another vs. Sampat Raj Dugar 1992 (58) ELT 163. (k) Neither the order permitting clearance for home consumption nor deposit in the warehouse is passed by the proper officer. The goods are pending assessment. (l) The seizure is illegal. No notice under section 124 of the Customs Act is admittedly issued to Rekhatex either within one year from the purported seizure or otherwise. Having regard to the decision of the Apex Court in the case of Canon India Private Limited vs. Commissioner of Customs 2021 SCC OnLine SC 200, the DRI officers, who purportedly seized the goods, are not the proper officers. The impugned seizure of goods is non-est and per se without jurisdiction. (m) The present case is squarely covered by the decision of this Court dated December 3, 2020 in M/s. Nikom Copper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that most of the imported ETP Copper Wire Rods had been sold in the open market and the factory was not having any facility to manufacture LWEP. Shri Kuldeep Kshirsagar also admitted that Shine Metal was working under the control of Shri Jayant Shantilal Mirani, owner of Nikom Group. Shri Kuldeep Kshirsagar further stated that he was working as proprietor of said firm only on paper and was made a dummy proprietor by Shri Jayant S. Mirani. All the controls, viz. sales, finance, imports, etc. were handled by Shri Jayant S. Mirani or by his employees. (v) The statement of the General Manager of M/s. Nikom Copper Conductors Pvt. Ltd., namely, Shri Mukesh Balchand Jain was also recorded wherein he had admitted that they were controlling the financial, manufacturing and sales operations of the firms namely M/s. Shine Metal Industries and M/s. Chandrashekhar Industries. He too admitted that these two firms were not having any facilities to manufacture lead wires for electronic parts in their factory premises. (vi) Shine Metal was supposed to manufacture lead wire for electronic parts from the imported ETP copper wire rod. Fraudulently availing the benefit of the 1999 Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including all bank account transactions. The necessary charges for incorporating the company were borne by Shri Mukesh Jain. The entire business was handled by Shri Jayant Mirani through Shri Mukesh Jain and Shri Anil Satpute. Shri Anil Satpute is the mastermind and involved in Shine Metal business. Shri Kshirsagar relied upon various e-mail correspondence exchanged in support of this stand. It is further averred that Shri Kshirsagar was getting a monthly salary of ₹ 72,000/-. To contend that he was merely an employee, it is averred that he was getting a house rent allowance. He was following instructions of Shri Mukesh Jain. All the operations of the Shine Metal were controlled by Shri Jayant Mirani. The modus for import of ETP copper rods 8 mm at concessional rate of duty and diversion of the same without manufacturing lead wire was hatched, implemented and supervised by Shri Jayant Mirani. So far as transfer of consignments to Sagun Copper, the NOC for the same was signed by Shri Kshirsagar in his capacity as a proprietor of Shine Metal because Shri Jayant Mirani and Mukesh Jain assured that they will clear all the dues and statutory requirements of Shine Metal and they wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were conspiring together to evade payment of duty in respect of an earlier consignment of identical goods which had arrived two weeks prior to the shipment in question and which had also been shipped by the respondent to M/s. Rahul Associates. It was found by the appellants that the first consignment was grossly undervalued. Proceedings had been commenced under the Customs Act, 1962 in respect of the first consignment and ultimately by an order of adjudication dated 31st May, 2001 it was found that M/s. Rahul Associates was liable to pay customs duty of more than ₹ 9 lakhs of which the customs duty of only about ₹ 4 lakhs had been paid. After adjusting this amount the difference is, according to the appellants, recoverable by the appellants from M/s. Rahul Associates by sale of the second consignment being the goods in question under Section 142(1)(b) of the Customs Act. 6. Section 142(1)(b) of the Act would come into operation provided that goods in question belong to M/s. Rahul Associates. Dependent upon the question of title is also the relief which the respondent would be entitled to namely, re-export. The issue of title was an issue of fact which the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 1999 Notification. The goods were seized at M/s. Kerry Indev Logistics CFS at Navi Mumbai, under seizure memo dated January 9, 2020. On the basis of the available records, the department claims Shine Metal was the original owner of the goods and there was no evidence of there being business difficulties or financial constraints leading to the question of collapsing the business terms between Rekhatex and Shine Metal. 14. From the record, we find that four BOEs dated November 28, 2019, December 7, 2019, December 9, 2019 and December 10, 2019 indicate the name of Shine Metal as the importer. The seizure memo of the DRI is dated January 9, 2020. The copy of the original BOLs at Exhibit C-1 indicates the shipper to be UCR LLC and Shine Metal is shown as a notified party . The invoices dated November 20, 2019, December 1, 2019, December 3, 2019, December 7, 2019 drawn by Rekhatex at page 38 indicate Shine Metal as the buyer of the imported goods. The BOEs for home consumption at Exhibit E-1 , E-2 , E-3 and E-4 reflects that Shine Metal is the importer of the said goods. 15. It is the case of Rekhatex that in view of the failure on the part of Shine Metal to retir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is mentioned that the goods are abandoned by original importer Shine Metal and as the goods are now transferred in favour of Sagun Copper along with the documents of title, Sagun Copper has to be regarded as importer and entitled for BOEs for clearing the goods for home consumption. Thus, on one hand Rekhatex claims that it continues to be the owner, whereas, on its own showing, the consignment has been sold by them to Sagun Copper. Sagun Copper has represented itself to be the owner which fact is brought on record by Rekhatex itself. After this transaction, there is nothing on record to indicate on what basis Rekhatex now claims to be the owner. 19. Another circumstance which we cannot ignore is a document at Exhibit K-1 which is the copy of the BOL indicating the shipper to be UCR and the consignee to be Sagun Copper. The place and date of issue of this BOL is indicated Dubai-20th November, 2019. The other BOLs in favour of Sagun Copper bear the dates on or after March, 2020. The document at Exhibit K-1 raises a doubt and appears to be backdated. In November, 2019, Sagun Copper was never in the picture. Document at Exhibit K-1 and C-1 are carbon copies except that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and substitution of the BOEs in its name was not entertained by the Customs on the ground that a show cause notice has been issued by DRI which is required to be adjudicated. It was further informed that action against the consignments will depend upon the outcome of the adjudication order. Sagun Copper, surprisingly, has not initiated any proceedings even after being informed by the Customs that further action against the consignments will depend upon the outcome of the adjudication order. 23. It is also the stand of Rekhatex that on December 4, 2020 Shine Metal has issued a NOC in its favour stating that due to financial problems, Shine Metal was not able to pay duty and cost of the goods to the supplier. Even this NOC was issued as late as on December 4, 2020, much after the seizure. Furthermore, we do not feel that any credence should be given to such NOC in the light of the stand taken by the proprietor of Shine Metal in its affidavit-in-reply to the writ petition. In this context, it is necessary to reproduce paragraph 29 of the affidavit-in-reply filed on behalf of Shine Metal through its proprietor Shri Kuldeep Ramesh Kshirsagar: 29. I say and submit that, now the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore do not find force in the contention of Rekhatex that this is a case of abandonment of goods. 27. The stand of the Department that the documents viz. BOEs, BOLs and invoices in the name of Shine Metal are sufficient indicator to suggest that there exists a dispute of title cannot be brushed aside. The stand of the Department, of there being a failed business contract between Rekhatex and Shine Metal upon seizure of the goods, cannot be ruled out altogether. From the materials on record, it is obvious that Rekhatex took steps to effect changes in the documents only after seizure of the goods. We are not impressed with the submission of learned counsel for Rekhatex that the process for effecting the sale of the consignments, started before seizure of the goods. Except for the oral submissions made by learned counsel for Rekhatex, there is nothing on record to indicate that the process for sale of the consignment commenced before the seizure. On one hand, Rekhatex has taken a plea that Shine Metal abandoned the goods after submitting the BOEs, whereas on the other hand, it relies upon the NOC issued by Shine Metal for sale of the goods much later in distance of time from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Court in the case of Sampat Raj Dugar (supra), that the definition of importer in the Customs Act only indicates the person who is in possession of goods at the time of filing of bill of entry but does not indicate the title to the goods; and that the questions as to when does the sale take place and who is the owner of goods would be determined only under the Sale of Goods Act and not under the Customs Act. 35. For dealing with this part of submissions, we may usefully take note of the relevant definitions in Clauses (23), (24), (25) and (26) of Section 2 as also the other provisions in Sections 30 and 47 (1) of the Customs Act, as applicable and effective at the relevant point of time, as follows: - (23) import , with its grammatical variations and cognate expressions, means bringing into India from a place outside India; (24) import manifest 16 or import report means the manifest or report required to be delivered under section 30; (25) imported goods means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption; (26) importer , in relation to any goods at any time bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding himself to be the importer but, only between the time of their importation and their clearance for home consumption. In other words, the net result of the expanded definition of the expression importer is that while any person who imports goods into India would be an importer but, the owner of the goods or a person holding himself to be an importer would also be regarded as an importer during the period between importation of goods and their clearance for home consumption. This crucial period would generally be that period when the goods have been warehoused after importation and are cleared from warehouse by a person other than the person who actually imported the goods. That being the position, in our view, the High Court has rightly said that this definition of importer cannot be used to usurp the identity of an importer from the person who filed the bill of entry. In other words, the person in whose name the bill of entry is filed does not cease to be an importer and, if that person claims to be not the owner or importer, the onus would be heavy on him to establish that someone else is the owner or importer of goods. 37. As noticed, on the connotation of the term impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Copper Conductors Private Limited (supra). Learned counsel for Rekhatex submitted that the present case is squarely covered by the decision rendered in M/s. Nikom Copper Conductors Private Limited (supra) as the issue involved is the same. The petitioner in M/s. Nikom s case, imported copper wire rods. In the course of import, the petitioner contemplated high seas sale of the imported goods to M/s. Chandrashekhar Industries, subsequently added as respondent no.4. The respondent no.4 was required to pay the agreed amount for the high seas sale by entering into a written agreement. The consignments were seized vide seizure memo dated January 9, 2020. M/s. Nikom Copper Conductors Private Limited (supra) questioned the legality and validity of such seizure by contending that the impugned seizure memo does not comply with the requirements of section 110 of the Customs Act. A reading of this decision would reveal that there was no dispute raised as to the title of the goods. In such circumstances, the challenge to the seizure was entertained. Furthermore, on both the Bills of Entry, the name of the original importer was M/s. Nikom Copper Conductors Private Limited which has been menti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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