2003 (12) TMI 226 - AT - Customs

Tribunal allows appellant to clear goods at merit rate, criticizes customs for premature action.

The Tribunal set aside the impugned order, allowing the appellant to clear the goods on merit rate by paying appropriate duty. The appeal was disposed of ... Confiscation and penalty - EXIM - Export obligation Issues Involved:1. Confiscation of goods under Section 111(o) of the Customs Act, 1962.2. Imposition of duty under Section 28(1) of the Customs Act, 1962.3. Imposition of penalty under Section 112(a) of the Customs Act, 1962.4. Validity and jurisdiction over the advance licence issued under EXIM Policy 1997-2002.5. Procedural fairness and premature action by the customs authorities.6. Alternative plea for clearance of goods on merit rate.Detailed Analysis:1. Confiscation of Goods under Section 111(o) of the Customs Act, 1962:The appellant challenged the confiscation of copper scrap weighing 86.963 MTs under Section 111(o) of the Customs Act, 1962, arguing that the Commissioner failed to specify the condition not observed. The goods were yet to be cleared, and the appellant had agreed to pay duty at merit rates, forgoing the right to claim exemption under Notification 48/99-Cus. The Tribunal noted that the appellant had 18 months (until 10-1-2003) to fulfill the export obligation, and the seizure of goods on 14-3-2002 was premature. The customs authorities lacked jurisdiction to question the validity of the licence, which had not been canceled by the licensing authority.2. Imposition of Duty under Section 28(1) of the Customs Act, 1962:The Commissioner demanded duty amounting to Rs. 30,63,748/- under Section 28(1) of the Customs Act. The appellant argued that since the goods were not cleared, the proper course was to assess the Bill of Entry under Section 47 at merit rates. The Tribunal agreed, noting that the invocation of Section 28(1) was incorrect as the goods had not been cleared, and the appellant had agreed to pay duty at merit rates.3. Imposition of Penalty under Section 112(a) of the Customs Act, 1962:The Commissioner imposed a penalty of Rs. 10.00 lakhs under Section 112(a) of the Customs Act. The appellant contended that no penalty could be imposed as there was no violation of the provisions of the Customs Act with respect to the goods under import. The Tribunal found that the confiscation itself was illegal, and thus, no penalty could be imposed.4. Validity and Jurisdiction Over the Advance Licence Issued Under EXIM Policy 1997-2002:The Tribunal observed that the customs authorities had no jurisdiction to question the validity of the advance licence, which was still valid and had not been canceled by the licensing authority. The Tribunal cited various judgments, including East India Commercial Co. Ltd. v. CC, Calcutta, and Titan Medical Systems Pvt. Ltd. v. CC, New Delhi, to support the view that a licence obtained by fraud is voidable and remains valid until canceled by the appropriate authority.5. Procedural Fairness and Premature Action by the Customs Authorities:The Tribunal noted that the entire proceedings were premature as the appellant had until January 2003 to fulfill the export obligation. The seizure of goods in March 2002 prevented the appellant from exercising the right to fulfill the export obligations. The customs authorities' actions were deemed incorrect and premature.6. Alternative Plea for Clearance of Goods on Merit Rate:The appellant requested that the goods be cleared on merit rate as copper scrap is freely importable under Open General Licence (OGL) and falls under Chapter Heading 74.01. The Tribunal allowed this plea, noting that similar relief was granted in the case of M/s. Aglow Exports. The Tribunal directed that the goods be cleared on payment of duty at merit rate, setting aside the order of confiscation, redemption fine, and penalty.Conclusion:The Tribunal set aside the impugned order, allowing the appellant to clear the goods on merit rate by paying appropriate duty. The appeal was disposed of on these terms, emphasizing that the customs authorities acted prematurely and without proper jurisdiction over the validity of the advance licence.