2005 (10) TMI 535 - AT - Customs

Tribunal Upholds Confiscation, Partially Sustains Duty Demand, Directs Assessment Finalization; Appeal Partially Allowed.

L.D. TEXTILE INDUSTRIES Versus COMMISSIONER OF CUSTOMS, AHMEDABAD

L.D. TEXTILE INDUSTRIES Versus COMMISSIONER OF CUSTOMS, AHMEDABAD - 2005 (190) E.L.T. 174 (Tri. - LB) Issues Involved:1. Jurisdiction of the adjudicating authority.2. Applicability of Section 28 of the Customs Act to provisional assessments.3. Invocation of Section 143A of the Customs Act.4. Allegation of misdeclaration of goods.5. Demand for duty on absolutely confiscated goods.6. Confiscation of goods from other appellants.Detailed Analysis:Jurisdiction:The appellants argued that the Collector of Customs, Gujarat, lacked jurisdiction to adjudicate the case. It was contended that the Collector of Customs, Gujarat, was designated for anti-smuggling operations and not for assessment functions. The Tribunal noted that the Central Government, under Section 4 of the Customs Act, appointed the Collector of Customs, Gujarat, with jurisdiction over the entire state of Gujarat, excluding KFTZ. The Tribunal found that both the Collector of Customs, Gujarat, and the Collector of Customs, Rajkot, had concurrent jurisdiction over Veraval Port. The Tribunal rejected the argument that the Collector of Customs, Gujarat, lacked jurisdiction, stating that the Collector acted within his mandate when seizing the goods and proceeding against them.Applicability of Section 28 to Provisional Assessments:The appellants argued that Section 28 of the Customs Act could not be invoked for provisional assessments. The Tribunal referred to the case of Reliance Industries Limited v. Union of India, where it was held that a show cause notice could be issued under Section 124 even without finalizing the assessment. The Tribunal concluded that action could be initiated and concluded against offending goods even when the assessments were provisional, thus upholding the applicability of Section 28.Invocation of Section 143A:The appellants contended that Section 143A was not notified in the official gazette and hence could not be invoked. The Tribunal acknowledged that Section 143A was not gazetted but noted that the Collector also invoked Section 28 while demanding duty. The Tribunal held that the reliance on Section 143A did not vitiate the proceedings as the primary demand was under Section 28.Allegation of Misdeclaration:The appellants argued that there was no misdeclaration of goods. They claimed that they declared the correct quality and value of the goods and that their failure to fulfill the export obligation was due to factors beyond their control. The Tribunal found that the appellants declared the goods as viscose staple fibre (VSF) while they imported polyester staple fibre (PSF), which constituted misdeclaration. The Tribunal held that the declaration in the DEEC book formed part of the declaration in the Bill of Entry, and the appellants' conduct amounted to misdeclaration and suppression.Demand for Duty on Absolutely Confiscated Goods:The appellants argued that duty could not be demanded on goods that were absolutely confiscated. The Tribunal referred to a recent decision by the Bombay High Court, which ruled that liability to pay customs duty does not arise if the goods are not redeemed. The Tribunal applied this principle, setting aside the demand for duty on the absolutely confiscated goods. The Tribunal upheld the confiscation but concluded that no duty was payable on the confiscated goods.Confiscation of Goods from Other Appellants:The appellants argued that there was no nexus between the confiscated goods and the imported goods. The Tribunal found that the Department provided sufficient evidence to connect the confiscated goods with the imported goods. The Tribunal upheld the confiscation of goods from the other appellants, stating that offending goods are liable to confiscation regardless of their possession.Majority Order:The majority opinion, delivered by Member (Technical), upheld the confiscation and partial demand for duty, while setting aside the demand for duty on absolutely confiscated goods. The Tribunal directed the finalization of assessments and recomputation of duty in accordance with the order. The appeal by M/s. L.D. Textiles was partially allowed, while the appeals by the other appellants were rejected.Separate Judgment by Member (Technical):One member, S.S. Sekhon, dissented, arguing that the Collector of Customs, Gujarat, lacked jurisdiction to finalize the provisional assessments and that the matter should be remitted to the appropriate authority in charge of Veraval Custom House. He also suggested that the show cause notice issued before finalizing the assessment was not sustainable. However, the majority opinion prevailed, and the appeals were disposed of accordingly.