TMI Blog1993 (3) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Reserve Bank of India. As per the Import Export Policy of 1980-81, extruder machine having screw diameter of above 150 mm was a permissible item for import under the Open General Licence (OGL). On 18th January, 1981, the confirmed order for the above machine was placed to the supplier. The contract was registered prior to 28th February, 1981 and in accordance with the import policy the shipment could be effected within 31st March, 1982. After registration, approval of the Reserve Bank of India was duly obtained for payment of the price on deferred terms. Two letters of credit were duly opened with United Commercial Bank -one for payment of the initial sum of 15% and the other for payment of the remaining value of the machine on deferred terms. Two letters of credit were opened on 19th May, 1981. 4. The said machine was duly shipped by the foreign supplier on 30th March, 1982 on the Vessel 'Kastro-K' that is, within the period permitted under the Import Policy for the year 1980-81. All the relevant shipping documents relating to the said machine namely Bill of Lading, supplier's invoice, packing list etc., were duly received by the applicant and negotiated by its bank und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rew was found to be of 150 mm only by the Customs authorities. The customs authorities also alleged that the Import Policy for 1983-84 did not specify extruder as an item under O.G.L. 8. The Import Policy for the year 1980-81 which permitted the import of the machine with a screw diameter above 150 mm was discontinued in the subsequent policy, namely, Import Policy for the year 1983-84 which was in vogue when the said machine was re-shipped on 11th February, 1984 after its wrongful and illegal detention in the Greek Port. Accordingly, the Customs authorities were not allowing the clearance of the said machine and further wanted confirmation as to the diameter of its screw from the foreign supplier. Such confirmation was obtained from the foreign supplier and submitted to the Customs authorities. The Customs authorities later measured the diameter of the screw of the said machine and found that it was 150 mm instead of 152.4 mm as claimed by the applicant and as certified by the foreign supplier. 9. A notice to show-cause was issued by the Customs authorities alleging that the said machine was liable to confiscation on the ground that its importation was not permitted at the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances relevant to the bonafide conduct of the importer in importing the goods and the extenuating circumstances leading to the import have to be taken into consideration for determining as to whether the goods should be confiscated and if so whether an option for redemption of goods should be allowed. He has submitted that the Tribunal fell in error in holding that the question of intention is not relevant in deciding the question of confiscation and quantum of redemption fine. 12. On the other hand the contention of Mr. S.K. Mitra, learned Advocate for the respondents, is that the machine arrived when the policy for 1980-81 was not in force. This is a clear and an undisputed fact. According to him, nothing further is required to be considered. The validity of the import should be considered with reference to the policy for 1983-84 which did not permit the impugned importation. Hence, the order is justified. He has submitted that the Tribunal took into account all the relevant facts and such finding cannot be held to be perverse. According to Mr. Mitra, mens rea and/or motive is wholly irrelevant in the context of confiscation and imposition of redemption fine. Mr. Mit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis that the date of shipment of the machine had to be considered as 11th February, 1984 and on the same material date a specific licence was required which the applicant was not having; proceeding on the aforesaid basis, the Tribunal came to the conclusion that the applicant had taken a calculated risk in importing the machine without licence. The Tribunal held that there had been a wrong statement in the Bill of Entry with regard to the diameter of the screw of the machine and the question of mens rea, motive or bonafides was not relevant for confiscation or imposition of redemption fine. In the context of imposition of penalty, an observation was made that the applicant was not innocent. The Tribunal, accordingly, upheld the order of the Collector confiscating the same machine and levying the same redemption fine and penalty. 18. In our view, Mr. Bajoria is right in his submissions that the Tribunal came to its finding by ignoring relevant materials without taking into consideration some relevant evidence. Firstly, the Tribunal completely ignored the conditions and in particular condition 4, governing imports under Open General Licence (OGL) specified in Appendix-10 of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose for which it was allowed, was also ignored. 23. Fourthly, the Tribunal did not uphold the finding of the Collector with reference to the catalogue of the foreign supplier and inference sought to be drawn by him from the fact that whereas the other dimensions were given in whole millimeters only the screw diameter was expressed in fractions of millimeter. It did not agree with the finding of the Collector that there was collusion between the applicant and the foreign supplier. Tribunal was of the view that the said finding was wholly irrelevant and, accordingly, did not deal with or advert to the evidence on record, e.g. proforma invoice of the foreign supplier, the order placed by the applicant, the foreign supplier's acknowledgement, letters of credit. Bill of Lading, Packing lists, suppliers invoices and confirmation, payments made, disputes between the applicant and the foreign supplier, proceedings in this Court, statement of the foreign supplier's representative before the Collector etc. This evidence undoubtedly establishes that there was no basis for the finding of collusion. 24. Fifthly, the Tribunal proceeded on the basis that the bonafides and the other a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nduct of the applicant and all the other relevant materials and/or evidence, the Tribunal could not arrive at any finding that there was misstatement or that the applicant was not innocent. 27. Eighthly, it is now well-settled that in the matter of imposition of redemption fine and/or penalty, mens rea and/or conduct and/or attending extenuating circumstances are material and relevant. 28. In Akbar Badruddin Jiwani v. Collector of Customs reported in 1990 (47) E.L.T. 161, the Supreme Court held as follows :- "57. Before we conclude it is relevant to mention, in this connection, that even if it is taken for argument's sake that the imported article is marble falling within Entry 62 of Appendix-2, the burden lies on the Customs Department to show that the appellant has acted dishonestly or contumaciously or with the deliberate or distinct object of breaching the law; 58. In the present case, the Tribunal has itself specifically stated that the appellant has acted on the basis of bonafide belief that the goods were importable under OGL and that, therefore, the appellant deserves lenient treatment. It is, therefore, to be considered whether in the light of this specific finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 987 (29) E.L.T. 492 (SC) = 1987 (3) SCC 66; and B. Vijay Kumar v. Union of India, reported in AIR 1987 SC 1794. In these two decisions, this Court held that while imposing fine or penalty for the import of goods in contravention of the Import Policy, the authorities should consider the plea of bonafides in the background of the facts attending to the import of the relevant goods." 30. In P. Ripakkumar and Company v. Union of India, reported in 1991 (54) E.L.T. 67, a Division Bench of the Bombay High Court set aside the confiscation on the finding that the importer had acted bonafide. It was held at page 71 of the report as follows :- "8. On the specific statement made by both the counsels, we propose to examine the question as to whether on the facts and circumstances of the case, the order of confiscation passed by the Customs authorities and the order of imposition of redemption fine in lieu thereof should be sustained. In these circumstances, Shri Mehta submitted that the action of the petitioners was bonafide and consequently the order of confiscation and redemption fine in lieu thereof should be set aside .... .In these circumstances, in our judgment, the import made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be kept in mind and duly applied, mutatis mutandis, in cases of confiscation of goods and imposition of redemption fine as well. In the instant case, however, the Tribunal fell in error in holding that the question of intention is irrelevant in deciding upon the confiscation and quantum of redemption fine. The instant case is a fit one where confiscation should not have been made having regard to the bonafide conduct of the applicant. 32. Mr. Mitra, learned Advocate appearing for the respondents, has however relied on a decision of Supreme Court in Collector of Customs v. D. Bhoormul, reported in AIR 1974 SC 859 = 1983 (13) E.L.T. 1546 (SC). In that case, the Supreme Court held that proceedings for confiscation of contraband goods were proceedings in rem and the penalty of confiscation was enforced against the goods irrespective of whether the offender was known or unknown. Goods found to be smuggled could be confiscated without proceeding against any person and without ascertaining who is their real owner or who were actually concerned in their illicit import. It was held that penalty on the other hand was enforced against the person concerned in the smuggling of the goods an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent has also contended that even for the purposes of imposition of penalty under Section 112 of the Act, presence of mens rea is not a condition precedent. This contention, however, is contrary to even the authorities relied upon on behalf of the respondent. On the other hand, Akbar Badruddin Jiwani (supra) and Jain Exports Private Ltd. (supra) clearly lay down that for imposition of penalty mens rea is a necessary condition. In our view, the decisions in Gujarat Travancore Agency v. Commissioner of Income Tax, reported in 1989 (42) E.L.T. 350; Kirloskar v. Union of India, reported in 1988 (34) E.L.T. 30; Nizam Sugar Factory v. Collector, reported in 1987 (27) E.L.T. 40 and Arun Spinning Mills v. Collector of Customs and Central Excise, reported in 1988 (33) E.L.T. 270, do not assist the respondent as they were rendered on construction of the provisions of different statutes. 37. The respondent has also submitted that the intention of the importer was malafide and the conduct of the importer justified the levy of redemption fine and penalty. The Tribunal, as indicated, neither considered nor had given any finding on the bona fide and otherwise of the applicant. None of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the learned Counsel for the applicant was right in laying emphasis on the question of proof of collusion as the most decisive question of fact in the case. Unless it could be said that the applicant consciously and in collusion with the exporter sought to pass off the misstatement to get away with the violation, it would not be proper to take an adverse inference against the applicant, particular regard being had to the fact that the exceptional circumstances which disrupted shipment and the normal arrival of the goods. The applicant's statement in the Bill of Entry could be said to be a misstatement only if the misstatement was the result of a collusion between the supplier, i.e. the foreign exporter and the Indian importer, the applicant. 40. It is clear from the correspondence between the foreign exporter and the applicant that the applicant was not aware that the exporter replaced the earlier machines damaged by new machine with screw of 150 mm diameter. The deviation again appears to have crept in because of the long period during which litigation was going on and the foreign manufacturer changed over to metric system and 150 mm diameter was adopted as the usual size. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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