TMI Blog1987 (2) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... under B/E No. 003415, dated 12-7-1982. The Collector in his order under appeal had accepted this fact and held that the goods namely, 79 takas seized from the appellants were out of the stock imported under the aforesaid B/E. However, the Collector confiscated the seized goods for contravention of Chapter IV-A and he levied the penalties for the same contravention. Shri Menon submitted that the penalties had been levied on Shri Ganatra and his pro-prietary concern. This was not legal. He drew our attention in this behalf to the provisions of Section 140 of the Customs Act and explained that a proprietary concern would not come under the definition of a Company under Section 140. In reply to a question from the Bench as to whether the separate penalties should not be treated as a combined penalty of the total amount, Shri Menon submitted that this would not be correct and the question of this consideration was not before the Tribunal and hence the Tribunal could not hold the aforesaid view. Besides under law, it was not legal for the Addl. Collector to impose two penalties on the same person for the same offence. Shri Menon however admitted that the show cause notice was issued to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould have given an option to redeem the same on payment of a fine. He stated that the other facts regarding non-compliance with provisions of Chapter IV-A were not denied though, they were not relevant for the purpose of the request for giving the option for redemption of the confiscated goods. 2.The learned SDR Shri Senthivel drew our attention to the Collector's findings in his order. Shri Senthivel observed that the Collector had held that the appellants had discharged the burden of proof under Section 123 of the Customs Act though the description of the fabrics as given in the B/E was not quite explicit with reference to the description of the takas seized from the appellants. However, the Collector extended the benefit of doubt to the appellant. Shri Senthivel however argued that the appellant had sold the goods to bogus customers. The sales were bona fide. As regards the non-compliance with the provisions of Chapter IV-A, the offence was accepted by the appellants. Shri Senthivel however did not advance any arguments as to why the Collector did not give an option to redeem the goods on payment of a fine. He merely contended that the confiscation under Section 111(p) was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide for confiscation of goods which have been properly imported earlier. Besides, sub-section (p) there are sub-sections like (n), (o) etc. There is therefore no escape to the appellants from the admission that goods imported properly earlier can be confiscated under Section 111(p). Once this position is established, it is seen that under Section 112, a person is rendered liable to penalty under sub-sections (a) and (b) for the reasons mentioned therein. Applying the provisions of law to the facts of the case, it is seen that after import, the appellants did not comply with the requirements of Chapter IV-A and therefore this omission to comply with the requirements rendered the goods liable to confiscation under Section 111(p) and the appellants to a penalty under Section 112 of the Customs Act. It may further be seen that while Section 112(a) is attracted in the present case as seen above the objection raised by the appellants' learned Advocate is not fully answered so far. The liability to the penalty is to be determined in terms of the 5 clauses of Section 112. Examining these clauses it is seen that Clause (i) is fully attracted to the facts of the case, and this for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegory of "prohibited goods". This position emerges daily before the Customs authorities when they consider the imports which are made without a valid licence. Hence Section 112(a) is very much attracted to the circumstances of the present appeal. In this view, Section 117 is precluded from consideration as this Section provides for a penalty for contravention of any provisions of the Act only where no express penalty is elsewhere provided for such contravention or failure to comply with any provisions of the Customs Act. It is therefore not possible to accept the Advocate's argument that Section 112 does not come into operation but only Section 117 of the Customs Act. The next question which the learned Advocate agitated was to request for release of the confiscated goods on payment of a redemption fine. He has urged that under Section 125 of the Customs Act, the goods were not prohibited and hence the Addl. Collector was under statutory obligation to permit release of the goods on payment of a fine. For the purposes of penalty leviable under Section 112 of the Customs Act, it is seen from the foregoing facts that the imported goods come within the general definition of "prohibite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Ganatra and, his firm separately, the same are not in order and accordingly the penalty of Rs. 25,000/- (Rupees twenty-five thousand only) levied on M/s. Export Enterprises under Section 112 is set aside. Except for the aforesaid modifications in the order of the Addl. Collector of Customs, the same is confirmed and the appeal of Shri H.D. Ganatra and M/s. Export Enterprises is otherwise rejected. 7. [Order per: K. Gopal Hegd, Member (J)]. - I have carefully gone through the order proposed to be delivered by Brother Dilipsinhji. I respectfully disagree with his conclusions and his interpretation of Sections 112 and 125 of the Customs Act. I however agree with his conclusion that separate penalties was not leviable on the proprietary firm when penalty had been levied on the proprietor. 8.As Brother Shri Dilipsinhji has set out the facts as well as the contentions urged by the two sides, it is not necessary to repeat the facts as well as the contention urged in detail. Suffice if I refer to a few undisputed facts and to the order passed by the Collector. 9.Shri Hasmukh Dalpatrai Ganatra, was, at the relevant time proprietor of the firm M/s. Export Enterprises, Bombay. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed a penalty of Rs. 25,0.00/- on 'his proprietary firm M/s. Export Enterprises under Section 112 of the C.A. 12.In this appeal Shri Menon appearing for the appellant contended that the order of the Addl. Collector was illegal inasmuch as that he has no jurisdiction to order absolute confiscation, he cannot impose the penalty greater than Rs. 1,000/- for violation of the provisions of Chapter IV-A and that separate penalties cannot be imposed on the proprietor and the firm. 13.Shri Senthivel the learned Departmental Representative has however justified the order passed by the Addl. Collector. His contentions are set out by brother Dilipsinhji in his order and it is not necessary to repeat them. 14.Having regard to the contentions of Shri Menon, the three questions that arise for consideration in this appeal are : (1) Whether the Addl. Collector has no jurisdiction to impose a personal penalty of Rs. 75,000/- on Shri H.D. Ganatra under Section 112 of the C.A. and penalty of Rs. 25,000/- on M/s. Export Enterprises under Section 112. (2) Whether the Addl. Collector has no jurisdiction to order absolute confiscation of the seized goods. (3) Whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or who fails to comply with any provision of this Act with which it was his duty to comply, where no express penalty is elsewhere provided for such contravention or failure, shall be liable to a penalty not exceeding one thousand rupees. 125. Option to pay fine in lieu of confiscation :- (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods give to the owner of the goods an option to pay in lieu of confiscation such fine as the said officer thinks fit. 15.It is seen that Section 112 consist of two parts. The first part deals with as to when a person becomes liable for imposition of penalty and part two deals with the amount of penalty that could be levied on a person. Unless both the parts are complied with, no penalty could be levied on a person. 16.As per Section 112, the quantum of penalty leviable are :- (1) if the goods liable for confiscation are prohibited goods the penalty not exceeding five times the value of the goods or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... psinhji after referring to the definition of the expression "prohibited" goods" defined under Section 2(33) of the Customs Act and after referring to Clause 3 of the Imports (Control) Order and Section 11 of the Customs Act had held that the seized goods are prohibited goods. As stated earlier, I am in total disagreement with this finding of his 20.Clause 3 of the Imports (Control) Order, 1955 reads : 3(1). Restriction of Import of certain goods:- (1) Save as otherwise provided in this Order, no person shall import any goods of the description specified in Schedule I, except under and in accordance with a licence or a Customs permit granted by the Central Government or by any officer specified in Schedule II. The rest of the clause is not relevant for our purpose. This clause prohibits import of goods specified in Schedule I of the Order except under and in accordance with the licence or a Customs Clearance Permit granted by the authorities specified in Schedule II, the finding of the Addl. Collector was that the seized goods formed part of the goods imported and cleared against the licnece. Therefore, it cannot be said that the appellant violated the provisions of Clause 3(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of confiscation. In support of his contention, Shri Menon relied on the provisions of sub-section (1) of Section 125 of the Act. I have already extracted the provision of Section 125. The contention of Shri Menon is well founded. The absolute confiscation of the goods by an Adjudicating Officer is permissible in respect of the goods the importation or exportation whereof is prohibited under the Customs Act or under any other law for the time being in force. In all other cases even if the goods are liable to confiscation, the adjudicating authority is required to give an option to the owner of the goods to pay a fine in lieu of confiscation. As has been rightly contended by Shri Menon, the finding of the Addl. Collector was that the seized goods formed part of the licitly imported goods. Therefore, it cannot be said that they are prohibited goods. I have already referred to the provisions of the Import Control Order. If the import is in pursuance of a valid licence or Customs Clearance Permit then the import is considered legal and not prohibited under the said order. The Customs Act as such did not prohibit import of the goods in question. In the said circumstances, I accept Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to its import. Similarly, there was no evasion of duty in respect of the said goods. Further, there was no declaration as to the value. Thus none of the Clauses 1 to 5 enumerated in Section 112 is attracted. The only other section which provides for penalty in contravention of the provisions of the Act is Section 117. But the penalty imposable under that Section cannot exceed one thousand rupees. I, therefore impose a penalty of Rs. 1,000/- on the appellant Shri H.D. Ganatra. 25.With the result this appeal is allowed. The imposition of penalty of Rs. 75,000/- on Shri H.G. Ganatra and the imposition of penalty of Rs. 25,000/- on M/s. Export Enterprises under Section 112 are set aside and a penalty of Rs. 1,000/- is imposed on the appellant Shri H.D. Ganatra under Section 117. 26.The order of absolute confiscation of the seized goods is set aside. The appellant is however allowed redemption on payment of a fine of Rs. 24,000/- in lieu of confiscation. 27.The appellant be granted consequential relief. As there is difference of opinion between the two Members, the records are submitted to the President for referring the points of dispute to one or other Members of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e orders of the Members of the West Regional Bench. The President had indicated that since the points of difference had been differently formulated by the two learned Members of the West Regional Bench, the Members of this Bench, will formulate the points of difference on which submissions are to be heard. 29.Accordingly, members of this Bench formulated the points of difference as follows : (i) Whether, on the facts and in the circumstances of the case, the 79 takas in question were prohibited goods (for purposes of confiscation without option for redemption) as held by Shri Dilip Sinhji, Member (T) or whether they were not prohibited goods as held by Shri Hegde, Member (J)? (ii) Whether, on the facts and in the circumstances of the case, the levy of penalty of Rs. 75,000/- under Section 112 of the Customs Act on Shri H.D. Ganatra was justified or not? (iii) Whether, on the facts and in the circumstances of the case, any penalty could be imposed on Shri H.D. Ganatra, under Section 117 of the Customs Act as has been done in the order of the Member (Judicial)? 30.Accordingly, after issue of notice to both sides, we have heard Shri S.P. Luthra, Advocate for the appellants a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been found guilty only of non-compliance of the requirement prescribed under Chapter IV-A of the Act. In this view of the matter in our opinion the goods in question cannot be said to be prohibited goods and consequently the said clause of the second part of Section 112 could not be attracted." He contends that, similarly, in the present instance also, the goods having been validly imported in terms of REP licences produced therefor, the subsequent failure to comply with the provisions of Chapter IV-A of the Customs Act could not make the importer Shri Ganatra liable for penalty under Section 112 of the Customs Act and penalty could be levied only under Section 117 of the Customs Act. 34.On the other hand Shri Sachar relies upon the decision of the Supreme Court in Sheikh Mohd. Omer v. Collector of Customs, Calcutta (AIR 1971, Supreme Court 293) to contend that the word "prohibition" would take in not merely prohibition at time of import and export but would include restrictions or other controls relating to goods imported. We take note of the fact that the decision of the Supreme Court related to an import of 1964 (i.e.) prior to the introduction of Chapter IV-A of the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions subject to which the goods are permitted to be imported or exported have been complied with". As we have seen earlier, the import of the goods in question were not subject to any prohibition under the Customs Act or any other law for the time being in force except insofar as valid licences were required for their import. Nor was it subject to any condition subject to which the goods were permitted to be imported. In the circumstances the goods would not be prohibited goods within the meaning of Section 2(33) of the Customs Act. The mere circumstance that a licence would be required to be obtained under Clause 3 of the Import (Control) Order, 1955 would not render the goods as prohibited goods as defined in Section 2(33) of the Customs Act. On the issue of the licence the goods could be validly imported and, as we have seen, no condition has been imposed subject to which the import was to take place. 36.But the further question is whether, for the reason that the goods were such as were subject to observance of the provisions of Chapter IV-A of the Customs Act they would be goods in respect of which any prohibition may be said to be in force under the Customs Act for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the importation thereof was not prohibited under the Customs Act or under any other law for the time being in force, we hold that under Section 125 of the Customs Act an option for redemption was mandatory. 40.In the light of the above discussion our findings on the three points of difference between the two members of the West Regional Bench, is enumerated earlier, are as follows : 1. We hold that the 79 takas in question were not prohibited goods as defined in Section 2(33) of the Customs Act which could be confiscated without an option for redemption but that though they are liable for confiscation an option for redemption is mandatory. We note that so far as the quantum of redemption fine is concerned there has been no difference between the two members. 2. We hold that the levy of penalty of Rs. 75,000/- under Section 112 of the Customs Act on Shri H.D. Ganatra, was justified. 3. In view of the finding on Point No. 2 our finding on this point is in the negative. We may further note in this connection that when the departmental representative was asked whether, in any event, any penalty can be levied under Section 117 of the Customs Act in the absence of any no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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