TMI Blog1991 (2) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector has imposed a penalty of ₹ 50,000/- which imposition has been upheld by the Appellate Tribunal. We find no ground for interfering with the said direction about imposition of penalty. Appeal dismissed. - 4092 of 1986 - - - Dated:- 5-2-1991 - S.C. Agrawal and N.M. Kasliwal, JJ. [Judgment per : S.C. Agrawal, J.]. - This appeal has been filed under Section 130E(b) of the Customs Act, 1962 (hereinafter referred to as "the Act") against the order dated July 29, 1986 passed by the Customs, Excise Gold (Control) Appellate Tribunal (hereinafter referred to as "the Appellate Tribunal") whereby the Appellate Tribunal dismissed the appeal of the appellant against the order dated February 24, 1983 passed by the Collector of Customs Central Excise, Cochin (hereinafter referred to as "the Collector"). 2. M/s. Jacsons Thevara, the appellant herein, is a partnership firm. It was originally constituted on January 1, 1973, with two partners, Jacob Punnoose and K.O. Thomas. It was registered as a Small Scale Industrial Unit with the Department of Industries Commerce of the Government of Kerala, and was manufacturing wooden furniture and flush doors. 3. The firm was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. Sally Jacob, Managing Director of the Company and Jacob Punnoose and K.O. Thomas, partners of the appellant. Under the said agreement the Company agreed to take over and the appellant agreed to hand over the business run by the appellant as a going concern with the assets and liabilities described in Schedule A to the agreement and it was also agreed that the appellant shall transfer the import licences, permits, quotas, factory licences, lease hold rights, telephone connections etc. described in Schedule B to the agreement to the Company and the Company agreed to pay to the appellant a net consideration of Rs. 38,587.52 paise. After the execution of the said agreement a joint application dated August 31, 1979 was submitted by the appellant as well as the Company before the Deputy Chief Controller of Imports Exports, Ernakulam for approval for transfer of business of the appellant to the Company and for transfer of import licence dated February 14, 1979, issued in favour of the appellant. The said application was based on the agreement dated July 31,1979. In the meanwhile, on July 31, 1979, the goods had been shipped by the foreign supplier from Japan. By his letter dated Nov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 38,587.52 paise payable to the appellant in terms of the agreement dated July 31, 1979 was satisfied by allotment of 400 Equity Shares of Rs. 100 each of the Company to the partners of the appellant on October 5, 1985. Jacob Punnoose and K.O. Thomas were allotted 50 shares each whereas Thomman Jacob and Dilip Jacob were allotted 150 shares each. 4. The Assistant Collector of Customs issued a show cause notice dated June 4,1982, wherein it was stated that the machinery imported by the appellant under import licence dated February 14, 1979, by paying concessional rate of customs duty applicable to Project Imports had not been installed by the appellant at its premises and the same was never utilised for the substantial expansion of their factory and that the declaration made in the application for registration of contract and in the Bill of Entry filed for clearance of goods in question was not correct and appellant had misdeclared and suppressed the actual facts for claiming the benefit of concessional assessment available to project imports and that the said wilful misstatement and suppression of facts by the appellant had resulted in the incorrect levy of the customs duty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy from the appellant. The Collector in his order aforesaid further observed that the suppression and wilful misstatement of facts and attempt made by the appellant to misdeclare material particulars for claiming clearance of the goods at a lower rate of duty and the attempt to evade payment of the correct duty payable on the goods made the goods liable to confiscation under Clauses (m) and (o) of Section 111 of the Act, and the appellant was liable to penalty under Section 112 of the Act and since the goods were not available for confiscation, the Collector imposed a penalty of Rs. 50,000/- on the appellant. In pursuance of the said order of the Collector of Customs, the customs duty payable on the goods imported was re-assessed at Rs. 4,16,600.37 P. and after deducting the amount of Rs. 2,90,436.93 paise paid by the appellant at the time of clearance of the goods, demand for Rs. 1,26,163.45 P. was raised by the Assistant Collector of Customs, Special Investigation Branch, Cochin, by his letter dated July 27, 1983. By the order under appeal the Appellate Tribunal has affirmed the order dated February 24, 1983, passed by the Collector and has dismissed the appeal filed by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCR 338 = 1983 (13) E.L.T. 1342 (SC) wherein it had been laid down that the customs authorities have no power to take action for breach of conditions of an import licence. 7. These contentions, in our view, are misconceived because here the customs authorities have not taken action against the appellant for breach of any condition of the import licence dated February 14, 1979. Action has been taken against the appellant under the provisions of the Act for obtaining clearance of the goods by paying customs duty on a concessional rate under Heading 84.66 of the Customs Tariff by suppression and wilful misstatement of facts. What is of relevance is whether before obtaining clearance of the machinery imported under import licence dated February 14, 1979, the appellant had informed the customs authorities that the said machinery had been transferred to the Company under agreement dated July 31, 1979. The office of the Deputy Chief Controller of Imports and Exports, Cochin, had no role in the matter of levy of customs duty on the imported machinery and, therefore, the conduct of the appellant in informing the Deputy Chief Controller of Imports Exports about the agreement dated July ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore any order is made by the proper officer of customs permitting the clearance for home consumption, or deposit in a warehouse of items, components or raw materials: (ii) all spare parts, other raw materials (including semi-finished material), or consumable stores imported, as a part of a contract or contracts, registered in terms of sub-heading (i), provided the total value of such spare parts, raw materials, and consumable stores does not exceed 10 per cent of the value of the goods covered by sub-heading (i) and further provided that such spare parts, raw materials or consumable stores are essential for the maintenance of the plant or project mentioned in sub-heading (i). 40% 9. It appears that under various other headings of the Customs Tariff Act a higher rate of customs duty was prescribed for the various items of machinery that were imported by the appellant. Under Heading No. 84.66 duty at a concessional rate was provided in respect of machinery, etc., imported for substantial expansion of an existing unit of a specified industrial plant. In order to avail this concessional rate of customs duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the concessional rate of duty under Heading No. 84.66 of the Customs Tariff and is liable to pay such duty at the normal rates prescribed in the Customs Tariff. This was, therefore, a case of short levy of customs duty which is dealt with in Section 28 of the Act. In sub-section (1) of Section 28 it is prescribed that a notice shall be served on the person chargeable with the duty requiring him to show cause why he should not pay the amount specified in the notice. The said notice has to be served within one year of the relevant date in cases when import is made by an individual for his personal use or by Government or by an educational, research or charitable institution or hospital and the period for service of such notice is six months in other cases. The proviso to sub-section (1) of Section 28 enhances the aforementioned periods for service of the notice to five years in cases where any duty has not been levied or has been short levied or erroneously refunded by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter. Here the relevant date was December 7, 1979, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "111. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscation - xxxxx xxxxx xxxxx (o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer;" 12. Shri Avadh Bihari has urged that Clause (o) of Section 111 envisages that the goods are exempted from payment of duty or any prohibition in respect of import thereof and that in the present case the goods that were imported by the appellant were not exempted from duty but were chargeable to duty and, therefore, it cannot be said that the present case falls under the said Clause and the goods imported by the appellant were liable to be confiscated under it. We are unable to agree with this submission. The expression "exempted" in Clause (o) does not mean full exemption from duty because under Section 25 of the Act power has been conferred to grant exemption from the whole or any part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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