TaxTMI 
TaxTMI 
1993 (9) TMI 232
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....ading concern in Taiwan. They have shipped six containers each declared to contain 102 M.T. of S.T.P.P. from Keelung, under Bill of lading dated 21-9-1992 issued by N.Y.K. Lines. The notified party in India as per the B/L is declared to be M/s. U.K. Paint Industries, Delhi. As per the export manifest filed by the shippers for export of this consignment through Keelung Customs, the same description is given as also the markings and other particulars as given in the Bill of lading. The goods are declared to be of Taiwanese origin. The destination port as per B/L is Bombay. The individual bags containing the material also bore the labels S.T.P.P. (Lot No. 05) - (Specimen of label given at page 46 of paper book filed by the S.D.R.). The vessel M.V. Paithoon carrying this cargo arrived in Bombay on or about 12-10-1992. The agents of the vessel prepared the Import General Manifest and delivered to Customs through the main agents M/s. Samrat Shipping Ltd. In the said manifest, the cargo in question was figuring at item No. 79 but found deleted, though the total of the items remained the same for discharge at Bombay and this item was also not figuring in the list of items as same bottom ca....
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....ained and hence the Customs asked M/s. U.K. Paint Inds. to file the B/E for clearance of the goods in accordance with proper procedure, failing which the Customs would examine the said goods and proceed with matter as per law. M/s U.K. Paint Inds., New Delhi in their letter dated 30-10-1992 stated that cargo in this case did not belong to them and they did not have any right, title or ownership of the cargo and hence requested the Customs to deal with the cargo as deemed fit. On 4-12-1992, the advocate authorised by the appellants wrote a letter claiming that the appellants are general merchants and traders in Taiwan and on account of bona fide mistake and lapse on their part, they have shipped Poly Vinyl Alcohol (P.V.A.) instead of declared description, S.T.P.P. As both the items are in the form of white powder, this mistake has occurred. S.T.P.P. was intended for M/s. U.K. Paint Inds., New Delhi and after shipment of the goods, the appellants realised that mistake and accordingly instructed their shippers not to unload the said goods at Bombay. The goods are not claimed by anyone in India and they, being exporter of the goods, and also the owner, should be restored the goods by a....
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....to unload the six containers in Bombay and if unloaded, the steamer agents would be responsible for all consequences. (vi) Letter dated 14-10-1992 from F.F.C. to the appellants that it is their statutory duty to comply with Customs directions and if the goods are not offloaded, the Customs has full powers to execute the action for arresting the ship. The admitted position even till date is that no documents for their claim of purchase of S.T.P.P. in Taiwan for supply to M/s. U.K. Paint Inds. in pursuance of their order is available. 2(6) The Customs Department also recorded the statement of one Shri Bhaskar Shivaram Ghaisis (Executive) of M/s. F.F.C., Bombay. In this statement, he admits having handed over the B/L for the consignment to Customs officers on 7-10-1992. He also stated that on 8-10-1992, his office received a fax message from M/s. N.Y.K., Singapore for awaiting further instructions regarding discharge of the six containers in Bombay. Taipe officer of M/s. N.Y.K. sent a telex stating that due to the import licence problem, the consignee of the goods requested the shippers to divert the cargo from Bombay to Kandla and if not possible, to retain the car....
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....e Import Manifest was filed on 15-10-1992. Since even before the arrival of the vessel an I.G.M. was filed with the Customs, export of that consignment to India was countermanded by the appellants and hence there is no import into India. In short, the character of the goods is that in transit. Section 2(23) of the Customs Act, defines `import' as that unless the context otherwise required, bringing of goods into India from a place outside India. Merely because the vessel with the cargo loaded entered into Bombay or the territorial waters of India, such a cargo cannot be said to have been imported into India, because of the fact that in this case, even before the vessel touched Bombay Port, and I.G.M. filed, export has been countermanded by the appellants and they have called back the goods. Non-mention of these goods as in transit or as in same bottom for discharge at Singapore cannot be a vital factor for confiscating the goods, especially when the evidences in the form of their correspondences with shipping line agents and the acceptance for retention of cargo clearly indicate the character of cargo as intransit. Even if it is construed an omission, it is not on account of the fa....
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....orm and both the previous consignment of S.T.P.P. and the present consignment of P.V.A. had same lot numbers, the bona fide mistake in wrong shipment has occurred. This cannot be construed as a conspiracy. The previous consignment of S.T.P.P. has been cleared without any allegation of misdeclaration. Hence, in the absence of any evidence, it cannot be alleged that the appellants were supplying high valued P.V.A. misdeclaring it as S.T.P.P. in their documents. The appellants' initial attempt to divert the consignment to Kandla was with a view to finding any other Indian buyer for P.V.A. and Kandla, being cheaper with regard to port charges for detention. In any case, their countermanding of exports or for diverting to Kandla was not after investigation by Customs. The Customs commenced their enquiry only on 7-10-1992 with the shipping agents and this was not also within the knowledge of the appellants. The appellants came to know of this for the first time only on 13-10-1992. Hence their instructions to the shipping lines for retention of cargo or for diversion to Kandla, having been initiated as early as on 6-10-1992, are not to be construed as an effort to retrieve the cargo after....
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.... in the case of Shri Kunhahammed v. Collector of Customs, Cochin - 1992 (62) E.L.T. 146 (Tribunal). 4(1) Shri Mondal, the ld. S.D.R. ably refuted each of these contentions. He took us through the various documents filed in the paper book filed by him and also cited by the other side to appreciate the chronological events. He also pointed out the inconsistent stand reflected in their earlier telexes with shipping line where they claimed that they wanted to bring back the goods to Singapore on account of Import licence problem without making a whisper about wrong shipment of the goods and their belated attempt to claim it as a wrong shipment, their initial refusal to answer any queries by Customs, though they wanted the Customs to allow reshipment. He also points out that their final replies to Customs queries clearly indicate that there were no documents at all with the appellants in the form of purchase order, the particulars of packing, from where the materials were procured in Taiwan, how wrong despatch has occurred. They were not even aware of the bank through which the documents are to be sent. Even the sale invoice has not been produced by them. Their claim that goods ....
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....really had sent the wrong shipment and faced consequent licence problem, the appellants would have stopped the consignment at Singapore itself on 26-9-1992, since the transhipment took place between 26-9-1992 to 28-9-1992. Viewed in this background, his waiting till 6-10-1992 for initiating telexes with shipping lines itself indicates that the appellants had got the news of the watch being kept over the consignment imported by M/s. U.K. Paint Industries and just prior to the vessel discharging the cargo at Bombay, they made frantic efforts to retrieve the cargo sought to be smuggled in with a false description. Hence, such an attempt is nothing but mala fide. Their attempts at keeping the cargo on board the vessel and preventing its discharge at Bombay and frantic effort to divert it to Kandla are to be viewed in this perspective. Hence mere deletion of the item from the manifest even without any information to Bombay Customs or to the master of the vessel and without even showing it as same bottom cargo is nothing but a ploy to retrieve the cargo sought to be smuggled in with a false description, which otherwise would have been cleared by M/s. U.K. Paint Inds. against D.E.E.C. lic....
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....ed only to import for commerce and it includes importation for transit across the country. He also refers to the decision of the Apex Court in the case of Shri Radhakrishan Bhatia - 1984 ECR 497 (SC) to urge that commission of the offence must be at a stage prior the completion of the illegal import into the country and the offence of illegal importation is complete, once the goods have crossed the Customs frontier. 4(5) Here not a shred of paper excepting B/L about the export of goods valued over Rs. 50 lakhs is produced, though the appellant takes pains to produce their correspondence with the shipping lines. No invoice is available. No bank is indicated for retirement of documents. No Letter of Credit has been opened by the importer. Even though contract may be oral, such oral contracts are normally noticed in the case of purchase of items from the shop for daily needs by the consumer and even in those transactions, cash bills are issued. These are not items of vegetables or grocery supplied on oral contract based on longstanding relationship. These are high valued chemicals valued over Rs. 50 lakhs, for which the admitted position is that no documents even for purchase ....
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....nfiscation is justified. Since the Collector has allowed redemption and no appeal has been filed by the Department, he cannot plead against redemption order. But the Collector, having realised the evil designs of the appellants, is well justified in imposing fine of a deterrent nature so that they do not resort to such dubious exports to India with false description and to facilitate in getting them cleared by their counterparts in India. He, therefore, pleads that fine imposed should not be modified. 4(8) On the question of jurisdiction of the Collector of Customs for imposing penalty on foreign national, he refers to the article written by Shri Raghavachari, erstwhile Member (Judicial) of the Tribunal in Excise Law Times dt. 15th April, 1993, wherein the view taken by South Regional Bench in the case of Shri Kunhahammed cited by the ld. advocate, has been seriously contested. He would like to adopt those arguments in that article. Since in this case the entire import has been engineered by the appellants by misdeclaring the description and once having got the scent of the Customs investigation, their attempt is to retrieve the goods by hook or crook. Hence their action cl....
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....er jurisdiction for imposing penalty. Section 1(3) of F.E.R.A. specifically confers extra territorial jurisdiction. Likewise Indian Penal Code also confers jurisdiction extending beyond India. The Customs Act only extends to the territory of India and not beyond. Hence any act of omission or commission done outside India by a foreigner though rendering the goods liable for confiscation in India, no penalty can be adjudicated for want of jurisdiction under the Act, which confirms itself in application only to India. Jurisdiction cannot be conferred or acquired, merely because the appellants have submitted to adjudication. Even that submission is only with regard to their claim for reshipment of the goods and not for agreeing to be imposed with a penalty. If, per se, under the Act, jurisdiction beyond India is not given, the order imposing penalty on a foreigner for acts done abroad, suffers from lack of jurisdiction. 6.1 Before considering the five propositions put forth by the ld. Counsel Shri Nankani, we would first consider the bonafides of their claim for reshipment on the ground of wrong shipment. Since these propositions revolve around this claim, it has become necessa....
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....d bonafides. On the face of it, this defence looks attractive but for the following adverse factors staring at the defence : (i)  Goods valued about Rs. 52 lakhs have been sent without cover of any document, even invoice, test certificate, packing slips. The method of retiring the documents through the Bank, (even if L.C. condition is waived because of standing business relationship) has been given a go-by. There is no document showing acquisition of STPP at Taiwan by the appellants before shipment. (ii)  The appellants even do not know the particulars of licence and their importability into India by U.K. Paints. Their claim is that STPP was supplied by them to U.K. Paints and they have gone by oral contract. This could possibly find acceptance, if as per the verbal contract, the goods supplied were found to be STPP. The admitted position is that it is only P.V.A. In the circumstance, their plea of oral contract and the theory of wrong supply are to be approached with due caution. That is what we propose to do. (iii) Though contracts can be orally agreed upon between the contracting parties, the burden of establishing that there was a valid contract existing....
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.... shipment. Such a theory being not supported by any piece of evidence regarding acquisition of STPP for shipment and their packing, mistake in shipment, cannot find acceptance by us, however much we are persuaded by the tempting and persuasive arguments of Shri Nankani. In the result, the factual position discussed above indicates that even if we assume the existence of a verbal contract, that contract apparently is for sending P.V.A. by declaring the goods as STPP for illegal import into India against duty-free import licences. This conclusion is inescapable, because of the admitted position that the appellants do not have any evidence of acquisition of STPP, their packing simultaneously with P.V.A. causing wrong shipment. On the contrary, the Department's allegation that previous consignment of STPP bearing same batch number also could have been P.V.A., because of the same batch number indicated in that, cannot be ruled out. However, we do not propose to give a finding on this possibility, because no other tangible evidences have been led by the department with regard to the previous consignment cleared. All the same, this gives support to the Department's claim for keeping a wat....
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....fides. Only subsequently, when they found that the goods have been detained for examination, they apparently have come forward with this theory, on legal advice. The ld. Counsel's plea that both explanations are two sides of the same coin does not convince us, especially when we find the coin itself is a counterfeit one, not being acceptable by looking into either side. 6.3 With this detailed analysis on their alleged claim of bonafide wrong shipment against verbal contract, we now proceed to look into the five propositions put forth by the ld. counsel. 7.1 Proposition (1) : Character of goods being in transit and not for import into India, there is lack of jurisdiction for confiscating the goods. Main thrust of the argument of Shri Nankani on the proposition is that since the appellants have revised their contract with the shipping line by surrendering the Bill of Lading and by giving a guarantee letter to retain the goods on board the vessel and to bring back to Singapore, even before the vessel arrived at Bombay on 12-10-1992 and I.G.M. filed on 15-10-1992, the goods are to be treated as in transit notwithstanding the fact that the shipping lines have deleted ....
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....points out that the goods are not prohibited and are allowed import under OGL and can be imported by all. If that be so, there was no reason for them to plead licence problem. This itself goes to show that they had sought to send the goods against D.E.E.C. licence of U.K Paints. This is also their claim. Going by this claim when the PVA misdeclared as STTP have landed and the importer backs out because his licence does not cover this item, it attracts the provisions of Section 111(d). It is not their claim that they shipped the goods for stock and sale in India, because the goods are under OGL. Hence when the goods have been loaded for discharge at Bombay and the subject goods are subject to investigation by Indian Customs at Bombay, the shipping line could not have unilaterally agreed for revising the contract for onward carriage to Kandla or Karachi or back to Singapore, without a clearance from Customs. The admitted position is that B/L for the consignment was taken over by Customs from the shipping line Agents at Bombay on 7-10-1992. We cannot persuade ourselves to agree to the proposition to treat these goods as in transit either to Kandla or Karachi or back to Singapore; view....
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....ed by the master. Hence we would prefer to ignore this Section 111(g) for confiscation of the goods. 7.4 Their fourth proposition is that fine for redemption for reshipment in any case is excessive. Such a fine can only be nominal and cannot be adjudged on the basis of profit margin in India, because the goods are to be reshipped to a foreign country and not to be cleared for home consumption in India. We agree that there is some force in this contention. But we find that there is total lack of bonafides in this shipment of the goods with a false description to facilitate their clearance against duty-free licence leading to huge evasion of duty, apart from violating the prohibition. In view of this overt act in deliberate misdeclaration, as held by us in our detailed analysis, even if we do not adopt the margin of profit for fixing the quantum of fine, it should be deterrent for preventing repetition of such an attempt. While accepting the proposition partly that levy of redemption fine for reshipment cannot be adjudged in terms of margin of profit likely to be earned; because the goods are not passed for home consumption in India, in a case like this, we are of the view th....
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....y an act of commission or omission deliberately done abroad by a foreigner, he cannot escape the mischief of the penal provisions. The question to be looked into is whether the goods have come into India including territorial waters of India and whether any act of omission or commission rendering the goods liable to confiscation and in that act of omission or commission, whether any foreign hand or Indian hand aids or abets such an act be it from abroad or in India, a person, irrespective of nationality or place of commission of such an abetment, he would render himself liable to penalty, so long as such an act results in confiscation of the goods on the soil of India. (ii) Though a case law cited by the 1d. counsel decided by the South Regional Bench by a Single Member takes a contrary view, the issue appears to have not been considered in the above perspective and no such arguments appear to have been advanced before that Bench. Even the law of England recognises that where offence initiated abroad terminates in England, the person initiating the offence though abroad can be tried in England. (iii) The special provision made for extra territorial jurisdiction in c....
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....re the main beneficiary. This is not the image to be projected. In this view of the matter, though I would not like to accept the theory that the Collector has no jurisdiction for imposing penalty, I would deem it proper to remit the penalty on the appellants. 8. While on the question of penalty, I would also like to add a suggestion. Deliberate mis-declaration of the export goods before Taiwan Customs (or for that matter before any Customs) would be an offence punishable under Taiwan Customs Law. The appellants are held by us as having knowingly misdeclared the description of the goods exported to India. They, on their own, without any knowledge of Taiwan Customs, appear to retrieve the goods and keep them in Singapore. Hence, I would deem it proper that Indian Customs should inform the Taiwan Customs of the results of investigation against the appellants, for such action as deemed necessary by the Customs authorities in Taiwan rather than taking upon ourselves the act of reforming their citizens. 9  We have considered the citations made by us and discussed some of them in our findings. To set at rest any possible doubts on this score, we would also give below the gist ....
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....er in this case, when the goods are claimed to have been shipped wrongly and the verbal contract was to supply STPP; we have held that existence of such a verbal contract and their plea of wrong shipment are to be established by them, since this is their claim and explanation and such a claim was found to be hollow based on their own explanation. (iii) Other citations relating to allowing re-export without fine have been considered already in our findings at the appropriate place. In all these decisions, the underlying principle, which runs through, is the absence of malafides on the part of shippers, which is absent in the case of the appellants before us. (iv) (Citation made by Shri Mondal) - A.I.R. 1984 SC 667 Gramophone Co. of India v. Birendra Bahadur Pande. Though this decision is in the context of Copyright Act, it is with regard to import of goods violating copyrights for transist to Nepal. The Apex Court held that the word `import' would convey not only import for commerce in India but also for transit to Nepal. Though this has some relevance to the issue before us, since it is in the context of import of goods for transit to a land locked state under Indo-....
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....s strikingly surprising, is that the departmental authorities have accepted the say of M/s. U.K. Paints that they are not concerned with the subject consignment, as gospel truth and have not made them the party to the adjudication proceedings, though some of the facts are glaringly staring against them. Undisputedly the subject consignment is in their name, and the plea of the appellants is that the consignment was despatched in view of the oral order/contract. Thus existence of contract (even if oral) is pleaded, and no effort seeems to have been made to probe in depth in that regards. Further, even in the first Telex dated 6-10-1992 from the appellants, it is mentioned that "due to import licence problem", the consignment was required to be diverted. The licence problem is always at the consignee's end and it could only be they, who, aware of the contents of the consignment coupled with investigation already going on in relation to their other import, must have communicated to the suppliers, the probability of the checking of this consignment, landing them in some difficulty. From the record, it is seen that M/s. U.K. Paints were working under DEEC Passbook scheme, and could not ....
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....nd such a huge quantity of different item had gone, it would not have been taken them much time to detect the same. The very fact that they have not detected such alleged mistakes even within a week after the despatch leads to presume that there was no mistake. Had then they all of a sudden realised the mistake, when the consignment was on the high seas and there was no scope for verification, remains a mysterious one, and only probable explanation is that both the consignor and consignee having known the contents, and the consignee having realised the probable detection, continued to raise a false plea of wrong despatch, and that too at a much later stage, as the telex dated 6-10-1992 does not even whisper about wrong despatch, though ordinarily, if what is now pleaded was true, the same would have been clearly projected. The theory of mistake in despatch therefore sounds highly inconvincing. Even the subsequent defences raised by the appellants also do not corroborate their plea of wrong despatch. 14. Some legal issues have been raised, of the nature that, because the consignment was deleted from IGM, and was, by the time the ship carrying the same entered into Indian Ter....
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....s the Indian territorial waters. 16. The issue as to the jurisdiction of the Collector to adjudicate upon and to order confiscation as also to impose personal penalty has to be examined from two different angles, one in relation to the goods, and second in relation to the party. 17. So far as the goods are concerned, the confiscation is ordered vide Section 111 of the Act, and the powers invested thereunder have been exercised in relation to the goods found within the Indian territorial waters and also within his own territorial jurisdiction. The goods are held to be not same bottom cargo, and hence have to be taken as brought in contravention of the provisions of the Customs Act, and allied laws, as also the relevant policy provisions, and with goods being physically lying within the jurisdiction of the concerned Collector and are held as liable to confiscation vide Section 111 of the Customs Act, the jurisdiction of the Collector for passing any order in relation to such goods cannot be challenged and the objection raised therefore cannot be sustained. 18. It however requires to be considered as to whether personal penalty vide Section 112 of the Customs A....
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....resident in a foreign territory instigating the commission of an offence which, in consequence, is committed in Indian territory, is not amenable to jurisdiction of an Indian court if the instigation has not taken place in India. 23. The Ld. SDR has however referred to an article, written by Hon. Mr. V.T. Raghavachari, the Ex-Member of this Tribunal, as published in 1993 (64) E.L.T. - A128, where the ld. author has expressed the view, by referring to Halsbury's Law of England, and certain judicial pronouncements of the courts in England, that penalty could be imposed. It may be observed that the said article has been published as a reaction to the order of the South Regional Bench of the Tribunal in C.K. Kunammed v. Collector of Central Excise & Customs, 1992 (62) E.L.T. 146 (Tri.) where the Single Member Bench has held that the Collector of Customs is not competent to try any person in respect of something committed in a foreign country. It may however be noted that the decisions given by the courts in England are based on the common law, whereas in India, the laws are codified and framed by Parliament and there could be no laxity availabe to go beyond what has been codifi....