TaxTMI 
TaxTMI 
1987 (6) TMI 223
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....lcutta Customs and cited various provisions of relevant Acts and case laws in support of their respective contentions. The learned counsels for the appellant submitted that Mrs. Ramnarain Biswanath, as Letter of Authority holder, imported 1514.790 metric tonnes of Second Grade G.P. Sheets/Coils amounting to Rs. 26,79,475.25 p. These goods were shipped from Japan on 31st January, 1985. The Appellant paid the full C. & F. value of the goods as also the insurance premium on 11-3-1985 and 18-2-1985 respectively. 6. The goods arrived at Paradwip Port during middle of March 1985 and the Appellant filed Bill of Entry for Home Consumption on 14-3-1985. The proper officer under Section 46 of the Customs Act, 1962, namely the Appraiser, Paradwip Customs, physically examined the goods and checked the declaration and assessed the duty payable in respect of the said goods. The assessment of duty was countersigned by the Assistant Collector of Customs, Paradwip. The Appellant thereafter paid the entire Customs duty as assessed by Paradwip Customs amounting to Rs. 50,13,034.21 p. on 21-3-1985. The Appellant also paid port charges of Paradwip Port Trust amounting to Rs. 91,620/- and Rs. 18,9....
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....962, and adjudicate in respect of goods which have been cleared for home consumption upon payment of assessed duty and all charges. The power of Collector of the port of import, if not satisfied with an assessment already made by an officer subordinate to him, is only to direct the matter to be referred to the Collector (Appeals) under Section 129(d) of the Customs Act, 1962. Such power has to be exercised within a period of one year from the date of assessment of the Bill of Entry. (iii) Unless the original assessment order passed under Section 47 of the Customs Act, 1962 is set aside, even the Collector of the Port of import has no jurisdiction to issue show cause notice under Section 124 of the Customs Act, or to reopen the assessment proceedings. Section 2, Sub-section 34 - The proper officer defined. :Section 17 Proper officer to examine the goods for assessment. :Section 18 Proper officer to make provisional assessment. :Section 21 Proper officer to satisfy to admit duty-free entry of certain goods. :Section 26 An application for a refund of duty to be moved to a proper officer. :Section 28 Power to give notic....
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....with the permission of the proper officer. :Section 72 The proper officer empowered to demand from the owner of the warehoused goods all charges payable. :Section 77 Owner of the baggage for clearance of his baggage to give a declaration to the proper officer. :Section 79 The proper officer may release the baggage free of duty. :Section 80 The proper officer empowered to detain the prohibited article included in the baggage of the passenger. :Section 83 Postal authorities to present list containing the particulars of goods imported to the proper officer. :Section 85 Proper officer may permit the goods to be warehoused without being assessed. :Section 86 Proper officer may permit to transfer the goods to any vessel or aircraft as stores for consumption. :Section 89 Proper officer may determine the quantity of duty-free export of the stores on a foreign going vessel. :Section 92 The consignor of any coastal goods to present an entry to the proper officer. :Section 93 Master of a vessel not to permit loading of coastal goods without being passed by the prop....
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....0,000/- and Rs. 70,000/- respectively. Held, Collector of Customs, Madras was wrong in adjudicating the matter without setting aside the earlier order passed by his subordinate officer being the adjudicating authority under Section 47 and as such adjudicating the matter as an original adjudicating authority was illegal. He had the only course under the act open to refer the matter to the Collector Appeals under Section 129D of the Customs Act, 1962 and on the above law point the appeal was allowed in favour of the Appellant. 15. Reliance was also placed on the decision of the Board reported in 1982 E.L.T. 418 (M/s. Aleuin Tapes). 16. The above order was passed by Mr. J. Dutta, the then member of the Central Board of Excise and Customs where in the 4th para it has been clearly stated that "As the goods have been cleared under the Customs Act and the orders of clearance have not been set aside on the basis of review proceedings it was also not correct for the Collector to draw up separate proceedings ignoring those orders of assessment and clearance". 17. Reliance was also placed on the judgment of the Calcutta High Court reported in A.I.R. 1985 Calcutta page 122 in the matt....
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....t was also contended that the Customs authorities, Calcutta could not have proceeded on the basis that the importation of the goods in question was against, a forged licence. Even today the said licence has not been cancelled and remained valid. The import was issued by the licensing authority, namely the Joint Chief Controller of Imports and Exports, and it is that authority who can cancel the licence. In the instant case that authority has not done so. Reference was made to the case reported in A.I.R. 1960 Supreme Court, page 415, and it was urged that there is a procedure prescribed for cancellation of an import licence and since no such procedure was adopted in the instant case no one can proceed on the basis that the licence was forged. 22. The attention of the Tribunal was also drawn to the definition of the express "imported goods" in Section 2(25) of the Customs Act, 1962. The power to confiscate is confined to imported goods from an importer the attention of the Hon'ble Tribunal is also drawn to Section 2(26) which defines the word 'importer'. According to the said definition an importer is one in relation of any goods at any time between their importation and the time ....
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....e goods as validly imported while another may form a belief that they are not validly imported and liable to confiscation and seize the same and then issue a show cause notice in respect thereof. No authority could have been cited on behalf of the Customs to show that when one authority had cleared a consignment another authority may consider the said goods as illegally cleared and confiscate the same. Reliance was placed by the Customs Department on a decision reported in 1980 E.L.T. 442. It was a case of Excise duty and not Customs. In that case, the goods were manufactured in Surat but the seizure took place in Bombay, but the officer exercising the power in Bombay was specially empowered. In the instant case, the Collector of Customs, Calcutta was not specially empowered to seize the goods and consequently the aforesaid judgment can be of no assistance to the Customs. 25. The Customs authorities for the purpose of showing the jurisdiction of Calcutta Customs, relied in a Departmental adjudication manual. The administration instructions do no have any force of law. It appears that such administrative instructions were issued by the Directorate of Inspection. They did not obvi....
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....in Orissa. No part of it has arisen at Calcutta. It was contended on behalf of the Customs that cause of action arises where the offence was detected. It is absurd to contend that when the goods were cleared by misleading a Customs officer, the offence was not committed, but the offence was committed when the Customs authorities, Calcutta could detect such offence. Such submission goes against the very concept of cause of action or rule or law. 28. It has been urged on behalf of the Appellant that even assuming that the goods have been imported by making a fraudulent representation, that only rendered the act viodable and not void. As such the goods imported in Paradwip Port by making false representation, even if true, does not ipso facto render the said goods smuggled nor do they become liable to confiscation. 29. To show why the Calcutta Customs had jurisdiction the Department referred to 2 letters of Collector of Customs, Orissa, addressed to the Collector of Customs, Calcutta. It is elementary that jurisdiction cannot be conferred by mutual consent. If the Collector of Customs, Calcutta had no jurisdiction, the Collector of Customs, Bhubaneswar, cannot by writing such le....
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.... 178 of Cr.P.C. has been referred. It appears that this section is wholly irrelevant and the point in issue raised at the threshold as a preliminary issue. 35. The learned counsels on behalf of the respondent submitted that the above appeal is directed against the order, dated 14-8-1986 passed by the Collector of Customs, Calcutta in the adjudication proceeding arising out of the show cause notice, dated 7-10-1985 issued by the Assistant Collector of Customs, Special Investigation Branch, Custom House, Calcutta. 36. The Learned Counsel appearing on behalf of the appellant has admitted that the adjudication proceeding initiated by the Assistant Collector of Customs, Calcutta and the adjudication order passed thereon by the Collector of Customs, Calcutta are void ab initio inasmuch as neither the Assistant Collector nor the Collector has in the admitted facts of the instant case any jurisdiction either to initiate the proceedings or to pass the adjudication order impugned in the appeal. 37. His further contention is that by the said order the Collector has confiscated the goods and has also imposed a personal penalty on the appellant who has imported the goods as holder of L....
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....ion that the facts alleged or allegations made therein were true, none of the conditions laid down in the specified sections was contravened". In other words, a show cause notice or an adjudication order on the ground of lack of jurisdiction can be only challenged if it can substantiated that the allegations made in the show cause notice even if are taken to be true do not empower the Collector either to initiate adjudication proceedings or to pass any order thereon. We rely also on the full Bench judgment of the Calcutta High Court in the case reported in A.I.R. 1980 Calcutta, P.188, Paras 33, 34 and 35. This Hon'ble Tribunal at this stage as held by the Full Bench of the Calcutta High Court is not concerned with the correctness or otherwise of the allegations but has to see whether the goods, if the allegations are taken to be true, are smuggled goods and/or liable to be confiscated under Section 111 of the Customs Act. (ii) The substance of the allegations as made in the show cause notice as well as in the adjudication order briefly are that the appellant has brought in the foreign goods into India as an alleged Letter of Authority holder of two licences which are a forged....
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....ansfer of the licence from the original holder to M/s. Agrico Industries, conversion of the licence from Transferable to Non-transferable, granting new licence/permission to import canalised items under Actual Users condition instead of OTS Containers are forged and fake. (e) The firm being a non-existent firm the alleged letter of authority is also a non-existent one. 40A. If the above allegations are taken to be correct, the imported goods are smuggled goods as the same have been brought into India without any licence and such importation is illegal being violative of the provisions of Section 3 of the Import Control Act read with Section 3(i) of the Import Control order and Section 111(d) of the Customs Act and the goods become 'offending goods' and are liable to be confiscated. 41. It is now well settled by Courts of law that if any foreign goods are imported into India illegally or in violation of any of the provisions of Section 111 the goods become smuggled offending goods and are liable to be seized on the reasonable belief that the goods are liable to be confiscated, under Section 110 of the Customs Act and the Customs authorities have the jurisdiction to confisca....
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....er is no bar to exercise the power of seizure under Section 110. The Hon'ble Division Bench of Bombay High Court in the case reported in A.I.R. 1967, Bombay, P. 138 at 141, Para 9 (last six lines) has held that "Section 110 does not place any limitation as to the person from whose possession or the time and the place at which the goods believed to be liable for confiscation can be seized. If there is reasonable ground to believe that the goods are liable for confiscation, they can be seized from any person who has custody of them even if he has obtained such custody unlawfully". 45. Whether Order under Section 47 is no bar for seizure of the goods under Section 110 or initiate adjudication proceedings for confiscation and personal penalty. (i) The order of release under Section 47 is no bar either of exercising the power of seizure or initiating proceedings by issuance of show cause notice under Section 124 is now well settled by four decisions of the Calcutta High Court. (ii) In the case reported in A.I.R. 1961 Calcutta, P.616 it was, inter alia, contended or behalf of the importer that once an order under Section 89 (equivalent to Section 47) is passed and goods are clea....
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....para 21 A.I.R. 1980 Calcutta, P.188. 47. Why officers of Customs, Calcutta have jurisdiction to initiate proceedings and pass adjudication order : (i) Smuggled goods are offending goods and are liable for confiscation under Section 111 of the Act. This is a mandatory provision, as the word is 'shall'. This liability for confiscation is attached to the goods and is carried wherever the goods goes. In fact, this liability for confiscation in case of goods imported on fake or forged licence accrues from the point of 'attempt to import' and it is a continuing liability and continuous till the seizure of the goods resulting in ultimate confiscation. This would be clear from Section 111(d) itself which reads as follows : "Chapter XIV. Confiscation of goods and conveyances and imposition of penalties. Section Ill-Confiscation of improperly imported goods etc. The following goods brought from a place outside India shall be liable to confiscation : (a) ..................... (b) .................... (c) ................... (d) Any goods which are imported or attempted to be imported or are brought within Indian Customs water for the purpose of being imported,....
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....r under whose jurisdiction cause of action partly or wholly has arisen or offences have been partly or wholly committed. (vi) We may draw an analysis from Section 178 of the Criminal Procedure Code where it is clearly stated that : 178(a) When it is uncertain in which of several local areas an offence was committed, or (b) where an offence is committed partly in one local area and partly in another, or (c) where an offence is a continuing one, and continues to be committed in more local areas than one, or (d) where it consists of several acts done in different local areas, it may be inquired into or tried by a Court having jurisdiction over any of such local areas. 49. Why the Collector of Customs, Calcutta is the appropriate authority to adjudicate in the context of the facts of this case? (i) In case of offending goods, there are two fold liabilities viz: (a) goods are confiscated and (b) persons involved in illegal importation are liable to penalty. (ii) The goods have been seized in Calcutta under the territorial jurisdiction of the Collector of Customs, Calcutta. He is the only authority under whose possession the goods were lying on seizure. The goo....
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....d in 1977 Cr. Law Journal P.1303, has been pleased to hold that adjudication Manual can be looked into the matter of excise or of power by an officer in a breach of any law to such exercise of power under the statutes. 52. In the following decisions the Hon'ble Supreme Court has upheld the adjudication order passed by an officer under whose jurisdiction the goods have been seized although the offending goods have been brought from the jurisdiction of another Collector A.I.R. 1962 S.C. 1559 - 1983 E.L.T. 1360. 53. The cases referred to by Mr. Sen has no application. The only case referred to by Mr. Sen is Ajoy Exports and Another v. Collector of Customs, Madras reported in 1986 (26) E.L.T. 873. 54. This case has no application whatsoever. In that case it has been held that an order passed under Section 47 of the Act is an order of adjudication which can be reviewed or revised under Section 129(d). The Learned Tribunal relied on the decision of Jain Sudh Vanaspathi Ltd. and Another v. Union of India and Others reported in 1982, a Division Bench Judgment of Delhi High Court, where the Hon'ble Court in Para 10 of the judgment held that the order under Section 47 reaches the fi....
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....wer Function & authority. Clearance Section 2(34) Sections 4 & 5 47 Seizure Section 2(34) Sections 4 & 5 110 Adjudication Section 2(1) Sections 4 & 5 122 60. In other words, the jurisdiction under the Customs Act is territorial-cum-functional jurisdiction. That is to say the jurisdiction is vested in the authorities appointed under Section 4 for the territories notified therein and we have to look at Section 2 for definitions, Section 5 for checking whether any conditions/limitations have been imposed on their powers and the relevant operational or functional section(s) for seeing how these powers are required to be exercised i.e. in what manner and subject to what limitation(s) and condition(s) etc. (These are merely illustrations and other relevant sections may have to be seen wherever necessary). 61. In view of this position when we examine the present case we find that the goods were imported at Paradip Port and were allowed clearance under Section 47 by the proper officer of Paradip Customs. This is in fact the position undisputed by both the parties both in respect of the fact and the law. 62. In other words, in terms of S....
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....emphasis on the 'reason to believe' on the part of the proper officer(s) but it is really interesting to note that neither the so-called order under Section 110 has been produced nor any Panchnama has been produced nor the date and time and other particulars of seizure, if any, have been indicated. Not only that, we notice from the show cause notice and the order-in-original (vide para 2.1) that the words used are "..... In the circumstances, there was strong reason to suspect that the goods in question cleared at Paradwip ... being imported unauthorisedly". 67. And as per para 2.2, "on 11-4-1985, 26 wagons containing 282 coils of the aforesaid goods arrived at the Shalimar Railway Yard. As there was reason to believe that the goods were liable to confiscation the notice under Section- 110 of the Customs Act, 1962 was served upon the railway authorities who were the custodians of the goods at that time requesting them not to remove/part with or otherwise deal with the goods except with the previous permission of the proper officer.....". It was found that the address of M/s. Ramnarain Bishwanath, the imports of the subject goods as per their declaration, was 7, Lyons Range, Calc....
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.... Lyons Range was only a detention order. In this connection we have checked up the proformas which are commonly used by the department (as the copies of the notices themselves have not been produced before us) for serving such orders and we notice that a detention order is issued when, inter alia, it is not practicable to seize the goods believed to be liable to confiscation. This is significant. It is also significant that the show cause notice and the order-in-original reproduce only a part of the language used in proforma but whatever has been reproduced is enough to give a clue to the nature of action taken. We notice in this connection that admittedly the goods remained in the custody of the railway authorities for quite some time and were subsequently removed with the consent of the parties and under the order of the High Court to a warehouse. 71. The learned counsel for the respondent has not shown whether at any stage after their detention at Shalimar Yard and before the order of the confiscation passed by the Collector the goods were actually seized in terms of Section 110 of the Customs Act by the proper officer(s) of Customs. As already noticed, no documents have been....
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....trikes us as a very important date inasmuch as it is the date prior to the date of the order of clearance under Section 47 passed by the Paradip Customs namely 21-3-1985 and a question arises in our mind that if the officers of Calcutta Customs, as a result of their detailed investigation had already come to the conclusion that there was strong reason to believe that the licences in question were forged whether they informed their counterparts at Paradip or not prior to the date of the order of clearance. This position has not been made clear by the respondents, but there are only two possibilities, namely, either they did or did not do so prior to the date of clearance. If they did inform the Paradip Customs prior to the date of the order of the clearance then obviously the Paradip Customs would have been on their guard and would have taken care to satisfy themselves fully about the genuineness and validity of licences produced before them and in case they developed a "reason to believe" that the licences were not genuine or were forged or were not valid, or were void or unacceptable for any reason whatsoever then in the normal course the Paradip Customs would have themselves deta....
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.... the conclusion that endorsement(s) thereon had been forged and, therefore, the goods imported against the said licence would be liable to confiscation. 79. We notice that there is no reference to any expert opinion in the matter and we consider that while Controller's opinion could have created a reason to suspect, it could hardly create by itself, a 'reason to believe' and that is why, perhaps, the officers merely detained the goods and did not seize them. But even if we presume for a moment, for argument's sake, that the goods had been seized under Section 110 then a question arises whether such a seizure was by itself sufficient to create or vest jurisdiction in the Collector of Customs, Calcutta to adjudicate the case. 80. In this respect we notice that the Section 122 read with Sections 2, 4 and 5 of the Customs Act shows that the adjudicating authority as defined under Section 2 and as appointed under Section 4 could exercise the powers vested in him only within the territory notified under Section 4. In other words, a Collector of Customs could adjudicate cases in respect of the goods and persons only if the cause of action arose within his territorial jurisdiction. T....
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....formed the Paradip Customs authorities and the Collector of Customs and Central Excise, Bhubaneswar for such action as they deemed fit. Perhaps, that is why, the goods were only detained and not seized. The detention on account of strong suspicion is understandable as a preventive measure and such an action at that stage was, therefore, justified. But it was not open to the Calcutta Customs to appropriate the role of the Director of Revenue Intelligence or the Director of Inspections or the Collector of Central Excise and Customs, Bhubaneswar or/Paradip Customs. In fact if one Collector starts disregarding the action taken by another, chaotic conditions will prevail and a citizen would never be at rest. This could not be the intention of the legislature or the Government or even the Department of Revenue itself for that matter. 81. Both the sides have cited a number of case laws. But in view of the above position it is not necessary to go into the details thereof. It may be sufficient to mention that the cases cited by the learned counsel for the respondents do not help his case, nay/not even the cherished adjudication manual. First and foremost, the Adjudication Manual has no a....
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....ation made by the Hon'ble High Court of Bombay, the citation does not really help the cause of the appellants in this case. 84. Insofar as the case of "Sheikh Mohammed Sayeed v. Assistant Collector of Customs for Preventive (I) and others" (AIR 1970 Calcutta 134) is concerned, it had been relied upon to show that if the goods are cleared on the basis of a forged licence, the goods so imported cannot be treated to be lawfully imported goods; and such goods, though cleared after payment of duty, are liable to confiscation and power to seize under Section 110(1) may be invoked by the Customs authority. But the question before us at the moment is which Customs authority, whether Paradip Customs or Calcutta Customs? The points regarding validity or forgery, if any, are undoubtedly required to be considered very carefully but by whom? The competent authority having jurisdiction naturally. Since at this moment we are addressing ourselves only to the question of jurisdiction we need not enter into these aspects in details and we need not examine at length as to whether a forged licence was void or voidable and related matter. We may, however, mention in the passing that according to the....