1990 (12) TMI 206 - AT - Customs

Tribunal Upholds Customs Act Penalty & Goods Confiscation in Duty Exemption Scheme Case

The Tribunal determined that the Collector of Central Excise, Rajkot, had jurisdiction to order the confiscation of goods under Section 111(o) of the ... Jurisdiction Issues Involved:1. Jurisdiction of the Collector of Central Excise, Rajkot.2. Legality of the seizure of goods.3. Interpretation of Exemption Notification 117/78.4. Imposition of penalty under Section 112 of the Customs Act.5. Confiscation of goods under Section 111(o) of the Customs Act.6. Applicability of previous judgments (Metro Export and Bliss Impex Corporation).7. Jurisdiction of the Special Bench.Detailed Analysis:1. Jurisdiction of the Collector of Central Excise, Rajkot:The appellants argued that the Collector of Central Excise, Rajkot, did not have the jurisdiction to order the confiscation of goods and demand duty, citing the settled law by the Special Bench in Bliss Impex Corporation. The Tribunal found that the Collector had ordered the confiscation of goods under Section 111(o) of the Customs Act due to non-compliance with the Duty Exemption Scheme (DEEC) as per Notification 117/78. However, no duty was demanded in the Show Cause Notice or the impugned order, which only related to confiscation and penalty. Thus, the appeal did not fall within the jurisdiction of the Special Bench but should be dealt with by the West Regional Bench.2. Legality of the Seizure of Goods:The appellants contested the legality of the seizure, arguing that the goods were imported and cleared through Bombay Port, making the seizure by Jamnagar authorities illegal. The Tribunal noted that the goods were seized as they were being illicitly dispatched to Bombay, and the Collector concluded that the appellants had not followed the Duty Exemption Scheme with the intent to avoid duty payment.3. Interpretation of Exemption Notification 117/78:The appellants contended that the Collector's order involved the interpretation of Notification 117/78, which should fall within the jurisdiction of the Special Bench. The Tribunal found that the Collector's order did not demand any duty but only related to the confiscation of goods and imposition of a penalty, thus not involving any question related to the rate of duty or value of goods for assessment.4. Imposition of Penalty under Section 112 of the Customs Act:The Collector imposed a penalty of Rs. 1 lakh on the appellants under Section 112 of the Customs Act for their acts/omissions related to the goods under seizure. The Tribunal upheld the penalty, noting the appellants' failure to follow the Duty Exemption Scheme and their intent to avoid duty payment.5. Confiscation of Goods under Section 111(o) of the Customs Act:The Collector ordered the confiscation of 37 drums of MPDSA and 6 drums of PNA under Section 111(o) of the Customs Act, allowing the appellants to clear them on payment of a fine of Rs. 1.25 lakhs. The Tribunal found that the Collector's order was based on the appellants' non-compliance with the Duty Exemption Scheme and the intent to avoid duty payment.6. Applicability of Previous Judgments (Metro Export and Bliss Impex Corporation):The appellants relied on the judgments in Metro Export and Bliss Impex Corporation, arguing that the Collector of Central Excise, Rajkot, lacked jurisdiction. The Tribunal distinguished these cases, noting that in both cases, there was a demand for duty, whereas, in the present case, no duty was demanded. Thus, the ratio of those decisions was not applicable.7. Jurisdiction of the Special Bench:The Tribunal concluded that the appeal did not involve questions about the rate of duty or value of goods for assessment, and therefore, it did not fall within the jurisdiction of the Special Bench. The appeal should be dealt with by the West Regional Bench.Separate Judgment Analysis:Contra Opinion:One member dissented, arguing that the impugned order related to the determination of questions having a relation to the rate of duty or value of goods for assessment, thus falling within the jurisdiction of the Special Bench per Section 129(C)(3) of the Customs Act. This member emphasized that the duty amount would be payable if the appellants chose to redeem the goods, thus involving a question related to the rate of duty.Assent Opinion:Another member agreed with the majority, emphasizing that the case did not involve the determination of the rate of duty or value of goods for assessment, and thus, the appeal should be heard by the West Regional Bench.Conclusion:The majority opinion held that the appeal should be dealt with by the West Regional Bench since it did not involve questions about the rate of duty or value of goods for assessment. The dissenting opinion argued for the jurisdiction of the Special Bench, citing the potential duty payable upon redemption of the goods. The final decision was to transfer the appeal to the West Regional Bench for hearing and disposal as per law.