2011 (7) TMI 815 - AT - Customs

Tribunal rules in favor of appellant due to lack of jurisdiction, invalid penalty

The Tribunal ruled in favor of the appellant, holding that the Commissioner of Customs, Mumbai lacked jurisdiction to issue the show-cause notice as the ... Notification No. 30/97-Cus and 48/99-Cus - Confiscation - Since the goods seized in Mumbai at M.H. Warehouse and Priya Warehouse cannot be correlated to the imported goods at Chennai, the seizure of goods is just town seizure in Mumbai - The appellant in their statements have stated that the goods are imported ones and they have purchased these goods from the three suppliers namely, M/s Ratnaguru Steel International, M/s Ajanta Impex and M/s Naman Steel - Since the physical inspection of thickness, width and grade did not tally with the seized goods, the statements of the suppliers again recorded by the department in which the suppliers had stated the details as mentioned in the import documents do not tally with the seized goods - Once it is held that the goods have no connectivity with the goods imported at Chennai Port by the adjudicating authority there cannot be any violation of import policy and goods cannot be confiscated under Section 111(d) of the Customs Act - Since the goods are freely importable under Open General Licence, there is no prohibition on import of these goods - Appeal is allowed Issues:1. Jurisdiction of the Commissioner of Customs, Mumbai in issuing show-cause notice.2. Confiscation of goods under Section 111(d) and 111(o) of the Customs Act, 1962.3. Burden of proof regarding the confiscated goods.4. Validity of penalty imposed under Section 112(b) of the Customs Act.5. Reliability of physical inspection and weighment testing procedures.6. Compliance with import policy and Open General Licence regulations.Jurisdiction of the Commissioner of Customs, Mumbai:The appellant challenged the jurisdiction of the Commissioner of Customs, Mumbai, arguing that if the goods were imported at Chennai Port and diverted to Mumbai, the show-cause notice should have been issued by the Commissioner of Customs, Chennai. The appellant contended that duty can only be demanded from the real importer at Chennai, not from them. Furthermore, since the goods were not notified under Section 123 of the Customs Act, the burden to prove that the goods were smuggled should lie on the department. The appellant emphasized that the goods were freely importable under Open General Licence, indicating no prohibition on their import, and thus, the goods should not be liable for confiscation under Section 111(d) of the Customs Act.Confiscation of Goods under Section 111(d) and 111(o) of the Customs Act:The appellant argued that the goods, imported against a valid license but diverted to Mumbai, should not be considered smuggled or unauthorized, making them ineligible for confiscation under Section 111(d). The appellant contended that the Commissioner's confiscation of the goods under Section 111(d) lacked authority. The Tribunal found that the goods confiscated by the adjudicating authority were not connected to goods imported at Chennai, leading to the conclusion that the seizure in Mumbai was baseless.Burden of Proof and Penalty Imposition:The department imposed a penalty under Section 112(b) of the Customs Act, indicating that the Commissioner did not treat the appellant as the importer. The appellant argued that no penalty could be imposed without evidence of breach of notification conditions. The Tribunal agreed with the appellant, stating that since the goods were not liable for confiscation under Section 111(d), no penalty should be imposed under Section 112.Reliability of Inspection Procedures:The appellant raised concerns about the reliability of the physical inspection and weighment testing procedures, emphasizing that their representative was not present during these processes. They argued that the department should have conducted these procedures in their presence to ensure accuracy. The Tribunal acknowledged this argument and considered the lack of appellant representation during inspections.Compliance with Import Policy and Open General Licence Regulations:The Tribunal found that since the goods were freely importable under Open General Licence and had no connection to goods imported at Chennai, there was no violation of import policy. As a result, the goods could not be confiscated under Section 111(d) of the Customs Act. The Tribunal concluded that the goods should not be subject to any penalty, ultimately setting aside the order of the adjudicating authority and allowing the appeal.