TMI Blog2004 (4) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 28AB. (iii) I hold that the imported goods are liable for confiscation under Section 111(m) and 111(o) of the Customs Act, 1962. The goods however are not available for the confiscation having been released on the basis of the undertakings. The importer is therefore, liable for penal action under Section 114A of the Customs Act. I, therefore, impose a penalty of Rs. 4,88,04,606/-(Rupees Four Crore Eighty Eight Lakh Four Thousand Six hundred Six only) on M/s. CPFL under Section 114A of the Customs Act. (iv) I also hold JPFL liable to penalty under Section 112(b) as they have been associated directly and have been the ultimate beneficiaries. I, therefore, impose penalty amounting to Rs. 50,00,000/-(Rupees Fifty Lacs Only) under Section 112(a) of the Customs Act on JPFL." Appeal No. 152 filed by M/s. Consolidated Photo Finvest Ltd. is against Clauses (i), (ii) and (iii) of the above order. Appeal No. 151 filed by M/s. Jindal Photo Films Ltd. is against Clause (iv) of the above order. 2.M/s. Consolidated Photo Finvest Ltd. (CPFL, for short) are a Public Limited Company engaged in trading activities. M/s. Jindal Photo Films Ltd. (JPFL, for short) are also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of exemption Notification Nos. 56/98-Cus., dated 1-8-98 and 22/99-Cus., dated 28-2-99. The claim was in terms of Sl. No. 12 in the Table annexed to Notification No. 56/98 ibid and Sl. No. 5 in the Table annexed to Notification No. 22/99 ibid for the relevant periods. The entries at Sl. No. 12 under Notification No. 56/98 and Sl. No. 5 under Notification No. 22/99 were identically worded. The entry at Sl. No. 12 ibid reads as under :- "All goods falling within the said First Schedule, which are imported for sale as such, other than by way of high seas sale and the importer at the time of importation or at the time of clearances of warehoused goods for home consumption under the provisions of Section 68 of the Customs Act, 1962 (No. 52 of 1962), as the case may be, makes a specific declaration to that effect in the bill of entry in the manner specified below : Provided that the rate specified herein shall not apply if the importer sells the said imported goods from a place located in an area where no tax is chargeable on sale or purchase of goods. Declaration I/We hereby declare that the goods of description_________ imported under Bill of Entry No._____________ date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation under the proviso to Section 28(1) of the Customs Act, demanded the aforesaid amount of SAD from CPFL and proposed to impose a penalty of equal amount on them under Section 114A of the Act. The notice also proposed penalties on JPFL and company officials under Section 112 of the Act. The demand of duty and the proposal for imposing penalties were contested by the noticees. The Commissioner of Customs, after hearing the noticees, passed the impugned order. CPFL, in their appeal, have challenged the demand of duty on merits as well as on the ground of limitation. They are also aggrieved by the penalty imposed on them under Section 114A of the Act. JPFL, in their appeal, are aggrieved by the penalty imposed on them under Section 112 of the Act. 3.The Commissioner found that, prior to the issue of Notification No. 34/98-Cus., dated 13-6-98 (which had contained a provision identical to the entry at Sl. No. 12 of Notification No. 56/98-Cus. ibid), the imports of Jumbo Rolls were exclusively in the name of JPFL; that all such imports were meant for conversion into finished products of film and paper in terms of specific agreements entered into between them and FUJI (Japan); that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the goods so sold by them to JPFL. Ld. Commissioner further noted that Silvassa was a place located in an area where no tax was chargeable on sale or purchase of goods. Accordingly, he found that CPFL's sale of the imported goods from Silvassa attracted the proviso under Sl. No. 12 of Notification No. 56/98 and the corresponding proviso under Sl. No. 5 of Notification No. 22/99. This finding was recorded after examining the provisions of the DNHST Regulations, 1978 and considering case law. On the basis of his findings, ld. Commissioner denied the benefit of exemption to CPFL and confirmed the demand of duty on them. After finding deliberate misdeclaration and suppression of facts, against CPFL, the adjudicating authority held them liable for penalty under Section 114A of the Customs Act, apart from ordering confiscation of the goods under Section 111 of the Act. It also found both CPFL and JPFL liable for penalty under Section 112(b) of the Act. 4.We have heard both sides. 5.The first issue is whether Silvassa --- from where the imported goods were sold by CPFL to JPFL --- is a "place located in an area where no tax is chargeable on sale or purchase of goods." Both side ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable turnover' for the relevant period did not render the goods non-taxable. Counsel has also relied on two letters issued by the Asstt. Commissioner of Sales Tax, Silvassa. These letters are to the effect that, if proper ST-XI forms were not submitted by the selling dealer, he shall be liable for payment of applicable sales tax on such sales. As a matter of fact, in respect of a part of the sales made to JPFL during the period of dispute, ST-XI forms could not be submitted to the assessing authority and, consequently, tax had to be paid on such sales. It was accordingly argued that the goods in question were chargeable to tax under the DNHST Regulations during the period of dispute. It was also argued that the proviso under Sl. No. 12 of Notification No. 56/98 as well as the corresponding proviso under Sl. No. 5 of Notification No. 22/99 had to be strictly construed. In this connection, reliance has been placed on the decision of the Supreme Court in the case of Innamuri Gopalan Others v. State of Andhra Pradesh [1963 (14) STC 742]. On the issue of chargeability to tax, ld. DR has submitted that chargeability of any goods to sales tax is not to be isolated from computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts) instructed the former i.e., FUJI, to consign a part of the ordered quantity to CPFL and, accordingly, FUJI issued separate Proforma Invoices to JPFL and CPFL. Acting upon the invoice issued to them, CPFL opened Letter of Credit in favour of FUJI who, thereupon, sent the goods to CPFL. The Bill of Lading, Invoice and other shipping documents of FUJI were collected by CPFL through Bank against payment for the goods. Thereafter, CPFL filed Bill of Entry for Customs clearance of the goods. After paying customs duty as assessed and taking delivery of the goods, CPFL sent the goods to Silvassa where the goods were sold to JPFL under Sale Invoices. It is also not in dispute that, in all the documents covering the goods shipped to CPFL, the latter was shown as the importer. We have seen the specimens of Proforma Invoice, Letter of Credit, Invoice, Bill of Lading and Banker's Debit Advice filed by the appellants. Though, admittedly, there was no formal agreement in writing between CPFL and FUJI for purchase of jumbo rolls by the former from the latter, the parties had, by their conduct, contracted for it as evidenced by these documents. Hence it has to be held that CPFL had imported the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces issued from their Branch Office at Silvassa. The Revenue has not recognised the transaction as 'sale' for the purpose of the Notifications. We have seen a specimen invoice of CPFL, filed by the appellants - Invoice No. 67, dated 20-1-99 issued by CPFL from their Sales Office/Godown at Dadra to JPFL at Dadra covering 331 imported jumbo rolls measuring 10096 sq.m. priced at Rs. 8,58,160/-. We have also seen specimens of National Insurance Company Limited's Policy of insurance for the goods as well as their policy of insurance for the containers, both covering transportation by road from Nhava Sheva (Mumbai) port. The policy relating to the goods covers transit from Mumbai port to Dadra factory and the one relating to containers is for Mumbai port to Dadra factory and return. It appears from these documents that the goods were removed from the dockyard directly to JPFL's factory at Dadra as alleged in the SCN. But CPFL's Branch office/Sales Office/Godown was also located in JPFL's factory premises. It could be said that there was no physical movement of the goods from seller's premises to the buyer's and that the goods were directly supplied by the seller from the port of importat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so not liable to pay any sales tax on the sale of his goods (i.e. High Seas Sale) amounting to Rs. 21,93,437/- is also allowed on production of the bill of entry." The admitted facts that all the jumbo rolls imported by CPFL from FUJI were sold only to JPFL and that ST-XI Forms issued by JPFL to enable CPFL to claim deduction of the sales turnover from the gross turnover of sales were produced by CPFL before the assessing authority have got to be read with the above order of the assessing authority. The result would be that "sale as such" of the imported jumbo rolls by CPFL to JPFL in the normal course of trade during the relevant period stands established. We therefore hold that the goods in question had been imported for sale as such, other than by way of High Sea Sale. The necessary declaration to this effect was made in the Bills of Entry filed by CPFL for clearing the goods. The requirements in terms of the main part of the entry at Serial No. 12/Serial No. 5 of Notification No. 56/98-Cus./No. 22/99-Cus. stood fulfilled. 10.Regarding the second finding recorded by the Commissioner with reference to the proviso to the entry at S. No. 12/S. No. 5 of Notification No. 56/98-C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to offset the burden of sales tax and other local taxes and charges borne by manufacturers who procure like goods indigenously on payment of such taxes and charges and that (ii) the rate of SAD is prescribed having regard to the maximum sales tax, local tax or other charges for the time being leviable on a like article on its sale or purchase in India. The proviso to the entry at S. No. 12/S. No. 5 in the Table to Notification No. 56/98-Cus./No. 22/99 - Cus., which reads : "Provided that the rate specified herein shall not apply if the importer sells the said imported goods from a place located in an area where no tax is chargeable on sale or purchase of goods." (Emphasis supplied) bars "Nil" rate of SAD in respect of goods imported for sale from a place where no tax is chargeable on sale or purchase of like goods. It is quite obvious from the provisions which we have examined, that the expression "chargeable" has been used in the proviso as a synonym for "leviable". If tax is "leviable" on any goods, the goods are said to be "taxable" also. In the instant case, admittedly, the non-taxable goods are only those goods specified in the Second Schedule to the DNH Sales Tax Regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PFL, for which the latter issued declaration in ST-XI Form, the assessing authority has allowed deduction from gross turnover in terms of Regulation 7(3)(II)(a)(iv). In respect of a minor quantity of Jumbo Rolls sold to JPFL by CPFL, for which no such declaration was made by the former, no deduction was allowed by the assessing authority. Accordingly, it appears, CPFL paid sales tax on this latter quantity of Jumbo Rolls sold to JPFL. It is on this basis that the appellants have argued that the goods in question were chargeable to local sales tax. The Revenue has argued that, where the declaration, in ST-XI Form, of the buyer is produced before the assessing authority by the seller, the turnover of sales of the subject goods is deductible from the gross turnover of sales for the purpose of determining the taxable turnover under Section 7(3) and, therefore, the goods cannot be held to be chargeable to tax. We are unable to accept this argument. The deduction of the sales turnover of the goods in question from gross turnover for the purpose of determination of taxable turnover is in the nature of an exemption. Any exemption from payment of tax on any goods which are otherwise taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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