TaxTMI 
TaxTMI 
1998 (5) TMI 196
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.... are made available. The department's basic contention in brief is that the prescribed terms and conditions were not fulfilled and therefore the goods were liable to confiscation and duty, and the persons concerned were liable to penalty. It was explained by ld. Counsel Sh. Nankani that as a matter of fact 69 consignments were received out of which 26 consignments were located at first and placed under seizure. Of these 13 consignments were adjudicated by Collector Sh. Gowri Shankar who did not pass any orders regarding penalty; And subsequently the Collector Sh. Bhardwaj adjudicated about the remaining consignment as also w.r.t. penalty aspect of 13 consignments already adjudicated by Sh. Gowri Shankar. In view of the above position, six appeals were heard as follows :- 1. M/s. Chaudhary International appeal against Sh. Gowri Shankar's order. 2. Audio Visual's appeal against Sh. Gowri Shankar's orders. 3. Department's appeal against Sh. Gowri Shankar's orders in Chaudhary's Intt.'s case. 4. M/s. Chaudhary Intt. appeal against Sh. S.K. Bhardwaj's order. 5. Sh. Biren Shah's appeal against Sh. S.K. Bhardwaj's order. 6. Sh. M.C. Sh....
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....p;It was their submission that they had disclaimed the remaining 11 consignments which were the subject matter of the impugned order dated 30-4-1991 and therefore they had not filed any appeal in respect thereof. The 11 disclaimers letters written by the appellants are Exhibits E to O from pages 33 to 43 of the Memorandum of Appeal. There are no disclaimer letters in respect of these two consignments. 6. As far as these two consignments are concerned they have not at any stage whatsoever disclaimed the same. The appellants are the true and absolute owners thereof but these have been confiscated without issue of show cause notice or opportunity of personal hearing to them. The order of the Collector is therefore illegal and bad in law. 7. It is also wrong and improper inasmuch as the option to redeem the goods has not been given to them but to M/s. Audio Visual Devices. 8. It was therefore their prayer that the impugned order may be set aside to the extent of confiscation of these two consignments and the option of redeeming the same given to M/s Audio Visual Devices. 2. Audio Visual Devices Appeal Against Shri Gowri Shankar's Order 9. Ld. Cou....
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.... as laid down in Section 48 was not followed. 13. It was their submission that as far as Part B of the seized goods are concerned, M/s. Chaudhary Intt. could not disclaim the goods once they were imported by them under their import export passbooks and allowed clearance by the customs against the same. It was their submission that there has been no violation of provisions of Section 111(d). 14. It was also his submission that from the various statements recorded and relied upon it could only be said that the appellants wanted to purchase some goods after their valid importation. Even if it is admitted that the appellants have placed orders for the goods to be imported against passbooks of M/s. Chaudhary Intt. it cannot automatically lead to the inference that the appellants had imported the goods. As the appellants were not the owner of the goods at that time they were under obligation to fulfil the terms and conditions of the import export passbook scheme. Therefore they could not be held responsible for the disposal of the goods in the market in contravention, if any, of para 281 of the Import Export Policy 1981-91. 15. The appellants had agreed to purchas....
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....nably and not arbitrarily or capriciously but in the present case 13 consignments of diverse types have been confiscated but have been allowed to be redeemed on payment of lumpsum fine of Rs. 11 lacs without indicating the fine bill of entrywise or consignmentwise. There was no material evidence to show that all these various types of goods in different consignments would have fetched the same margin of profit meriting the imposition of fine at a uniform rate of about 50% of the C.I.F. value. Not only that whereas in case of Sr. No. 12 consignments of viscose rayon fabrics only 67 Cartons were seized (as against 74 imported) and in case of velvette fabrics Sr. No. 13 only 47 rolls were seized against 322 rolls) but the Collector of Customs has ordered confiscation of the entire quantity of 74 cartons and 322 rolls i.e. including even that part of the goods which were not available for confiscation. This shows total non-application of mind and similarly the fine has been imposed without bothering as to whether the goods were available for being allowed to be redeemed and therefore the action is unsustainable. The Collector has relied on the judgment of Supreme Court in Jaya....
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....s under Section 111(d) and 4 under Section 111(o). He has also allowed M/s. Audio Visual Devices to redeem the goods on payment of fine of Rs. 11 lacs in addition to import duty. The Collector has not passed any order regarding penalty. It was the Department's contention that the order of the Collector was not legal or proper as : (1) The Collector has erred in giving the option to redeem the goods to M/s. Audio Visual Devices as the bills of entry were filed by M/s. Chaudhary Intt. and the goods had been imported against their passbook. (2) It is also their submission that the goods carried a high margin of profit (average MOP being 170%) whereas redemption fine imposed was only 50% approx. of CIF value and therefore the amount was grossly inadequate. 20. It was their submission that the Collector was required to keep in mind the definition of import indicated in Section 2 as also the fact that Bill of Lading was in the name of M/s. Chaudhary Intt. He was also required to keep in view that M/s. Audio Visual never held any title to the goods nor were there any documents in their name. 21. In view of the above position, the Collector should not have h....
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....evices and released the consignments to them without bothering about either the facts or law. He has also not taken cognizance of the fact that Sh. M.D. Palaria has also referred to certain sales to Naresh Modi and as also the other relevant aspects including reference to the quantities of the fabric which had not been sold but only talked about with Biren Shah and about which sales had not been finalised and in respect of which therefore Sh. Biren Shah or the Audio Visual Devices could not claim to be either owner or purchaser. Ld. Collector has also ignored that from the statement of Sh. Palaria it would appear that there was no sale of passbooks but only sale of goods which could be sold under the policy to the actual users. He has also not given weightage to the relevant aspects of the statements of Sh. M.C. Shrimanker who had cleared some of the consignments and various contradictions which were apparent. Ld. Counsel also stated that he would like to clarify in response to queries from the Bench that out of 11 consignments the respondents M/s. Chaudhary Intt. had filed Bills of Entry in respect of only 4 consignments and had not filed Bills of Entry in respect of balance 7 ....
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....f the records and on the submissions of the ld. Counsels and the DR are as follows :- 1. In respect of all the consignments relating to the items in question the DEEC passbooks were issued by the concerned authority in favour of M/s. Chaudhary Intt. 2. The Bills of Lading were in the name of M/s. Chaudhary Intt. and assigned to them. 3. The import documents were in the name of M/s. Chaudhary Intt.; and 4. Goods were consigned to them. 5. Some Bills of Entries were filed by or (on behalf of) M/s. Chaudhary Intt. and some by or on behalf of Biren Shah/Audio Visual Devices. All the parties (including the department) have a grievance against the order of Sh. Gowri Shankar and have prayed that it may be set aside as it is incorrect or improper. 31. We observe that insofar as M/s. Chaudhary Intt. are concerned they have accepted the fact that the Bills of Lading and the documents were in their name and the goods were imported and clearance was sought with reference to the DEEC passbooks issued to them but have emphasised that they had filed disclaimer in respect of 11 out of 13 consignments. 32. A question has also been raised th....
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....e available show that M/s. Chaudhary Intt. were the title holders and importer of the goods, we do not have to proceed further to see whether anybody else was desirous of clearing the goods, because a mere expression of such a desire or willingness was not sufficient to consider one as an importer. In our opinion it is also immaterial whether the order was placed by Sh. Biren Shah/M/s. Audio Visual Devices - whether directly or through M/s. Chaudhary Intt. or the clearance was sought with reference to DEEC passbook of M/s. Chaudhary Intt. for the purpose of determining who was the importer particularly when they did not held themselves out to be the importer of the goods before clearance. The fact that they had agreed to clear the goods and were willing to pay duty or fine was not relevant. Similarly purchase of the goods after importation was a different issue. As rightly pointed out before us even in the second part of Section 2 of Customs Act, 1962 the significant words are before the clearance of the goods and there is no evidence to the effect that they held themselves out to be the importer of the goods by filing any proof of being the real importer before clearance. Even at ....
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....sclaimer has only this much implication that it shows that the party was no longer interested in clearing the goods and therefore it was open to the department to confiscate them in case any violation of law was established or otherwise takeover the goods or allow them to be auctioned in order to realise the Government's dues. 36. This brings us to the question whether any offence was committed at all by any one of the persons concerned. In this respect also we find that the Collector has not dealt with the case thoroughly or properly and as seen above has made blunders and mis-directed himself regarding basic facts and issues; He has neither analysed the evidence properly nor taken relevant aspects into account. The department's contention is that in spite of a serious offence having been committed only a nominal or very little fine has been imposed but the question of imposition of fine whether less or more and the question as to how much was appropriate is linked with establishment of offence(s) in the first instance and fixation of liability on the right person and then demanding duty, fine or penalty etc., if any leviable, from the right person. The Collector has not b....
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....se it is well established that consent between parties can neither create any obligation or right nor extinguish it unless there was an explicit provision to that effect in any law. It was his contention that there is no provision in the Customs Act which bars filing of an appeal against a consent order. It was also his contention that at the original stage a party may give consent for a variety of reasons including expediency or pressure of circumstances or of the authorities or under mistaken belief or mistake of law or otherwise but that does not bind it for all time to come. Arguing forcefully he emphasised that the Supreme Court has also recognised the right of appeal as a substantive right vested by a statute as evident from case law in this regard and it was his contention that such a right once vested would not and could not be affected by consent. 41. It was his plea that in this case, on further consideration, it was found by the appellants that as a matter of fact no offence had been committed since they had complied with the export obligation and the goods had been imported against the DEEC passbooks and sold to actual users; And, further, not giving an intimati....
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....s but the appellants had in good faith relied on the registration certificate of the buyers and had no other means of verifying the status of the buyers. Therefore, they had the bona fide belief that the goods were being sold by them to actual users. In view of the precaution taken by them their bona fides need not be doubted and the benefit of full exemption may be extended. It was their alternative submission that the Collector has himself stated that the breach was of a technical nature. In other words there was substantial compliance by the appellants and the benefit could not and should not be denied merely on account of a technical breach. And in view of the above position the demand was not required to be confirmed and seized goods were not liable to confiscation or fine and they were not liable to any penalty. In support of above contentions he cited the following case law :- 1.  1988 (34) E.L.T. 442 (Guj.) 2.  1989 (40) E.L.T. 180 3.  1990 (49) E.L.T. 147 4.  1992 (59) E.L.T. 69 5.  1993 (68) E.L.T. 514 (Cal.) 6.  1992 (61) E.L.T. 375 (Kar.) 7.  1994 (71) E.L.T. 98 8.  1988 (36) E.L.T. 468 9.  1992 ....
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....very fairly agreed that Sh. Biren Shah was interested in the purchase of the goods in question but he would like to very much object to the use of the word manipulation by the department and would emphasise that he was in no way concerned with the violation if any committed by others and could not be penalised for the omission or commission if any committed by others. Drawing attention to the order of Collector Sh. Bhardwaj he stated that he would like to reiterate and emphasise that this order is required to be seen w.r.t. the show cause notice, the facts as mentioned therein, the Sections which have been invoked and the findings of the Collector w.r.t. his clients. In this respect he will in particular draw attention to Collector's own observations and findings that penalty under Section 112 can be imposed only if a person is responsible for an act of omission which makes the goods liable to confiscation under Section 111 of the Customs Act. 50. The Collector has in this respect taken note of the fact that in respect of 13 consignment released to them by the order of the predecessor Collector, the orders were placed by Sh. Biren Shah with the foreign supplier and the s....
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....rough the same and heard ld. DR. 54. It was observed that in the appeal memorandum the main ground of appeal by this appellant was that he was not the person with reference to whom the provisions of Section 111(d) and (o) could be invoked as he was not responsible under the law to observe the post-importation conditions which only the importer was required to satisfy. 55. It was his main contention that he had nothing to do with the imported goods as they were imported by M/s. Chaudhary Intt. under their DEEC passbook and advance import licence and if any post-importation conditions were to be discharged then it was for the importers to discharge whether under the Customs Act or the Import Export provisions and the DEEC Scheme. It was his submission that the fact that M/s. Chaudhary Intt. had already shown their willingness to make the payment of duty and virtually admitted their offence and the Collector had also imposed redemption fine and personal penalty on them, itself shows and implies that the department has also conceded this position. The Collector having so held, it is M/s. Chaudhary Intt. who were responsible for the obligation, not the appellant. Further....
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....tion to the submissions made before him. The Collector has thus imposed penalty on this appellant in view of the role played by him in this group of cases. 62. Speaking in reply both the ld. Advocates Sh. Nankani and Sh. B.B. Gujral once again emphasised that in this case the show cause notice itself refers to the fact that regarding 13 consignments covered by Sh. Gowri Shankar's order the case stood adjudicated by that Collector and once he had not imposed the penalty at that time for whatever reasons it was no longer open to the second Collector Sh. Bhardwaj to reopen that chapter or keep it in mind while deciding the cases before him. 63. It is also interesting to note that the date of the second show cause notice is 31st July, 1991 whereas the date of issue of order of first Collector Sh. Gowri Shankar is 25-2-1992 and it is in the context of these dates that the words used in the show cause notice (second para) to the following effect gain importance :- "Document showed that 26 consignments were imported by M/s. Chaudhary Intt. under Import Export Passbook. Out of these M/s. Chaudhary Intt. disclaimed 13 consignments. The adjudication of these consignments a....
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....matical error is, however, not of much consequence and we need not take a very serious note of it except to say that the officers concerned should have been more careful and avoided such drafting errors. 66. We have also already observed and recorded our findings w.r.t. the adjudication of 13 consignments by Sh. Gowri Shankar and noted that in the operative portion of his order he confines himself to holding the goods liable to confiscation, confiscating them and allowing them to be redeemed by M/s. Audio Visual on payment of duty and fine. Shri Gowri Shankar has not passed any order regarding penalty, if any, imposable in view of the facts and circumstance of the case on any of the persons allegedly concerned with the matter and had left that aspect in abeyance. This is clear from the sentence used by him "I do not propose to pass orders regarding penalty at this stage". In this respect we consider that while it would have been desirable and more appropriate for Collector Sh. Gowri Shankar to have dealt with all the relevant aspects at the same time and he need not have kept the penalty imposition in abeyance when the persons were concerned were the same who had allegedly ....
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....ed by them, the clearance had been taken by them and they have themselves stated that they were also the owner of the goods seized from the godown. It is w.r.t. these facts that the submissions have to be appreciated. During the original level proceedings a question which was, inter alia, involved was relating to the amount of duty and the Collector heard them on this, put both the departmental side people and the appellants people jointly on the job and they came up with an agreed figure which he accepted and confirmed on the basis of his finding. Since it was his view that the goods were liable to duty amount agreed upon by both the sides (besides confiscation and consequentially the redemption fine), he imposed the same. 71. Now to come before the Tribunal against such an order claiming themselves to be aggrieved person is rather taking the matter too far. The very purpose of mutual consent and an order passed on the basis of such a consent would be defeated if the appellants were allowed to reopen the matter in the way they have urged. 72. There is another way of looking at it. The fact remains that the appellants were entitled to the benefits extended to the....
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....ers of the goods at the time of importation and in Collector's judgment the goods were liable to confiscation he was right in demanding duty, imposing a fine and giving them as importers the option to redeem the same. It is therefore not necessary to go any further into the merits of the case insofar as M/s. Chaudhary Intt. and the question of dutiability and confiscation of goods is concerned. 75. Insofar as Sh. Biren Shah/Audio Visual are concerned the ld. Counsel is right to the extent of pointing out that they were not the importers of the goods even though they had placed the orders for the same and cleared some of them under orders of a Collector. He is also right in pointing out that a penalty under Section 112 can be imposed only on that person(s) who by any of his acts of omission or commission renders the goods liable to confiscation. In other words, the burden is on the department to show that the ingredients of Section 112 were satisfied in respect of a person before imposing penalty on him. In the present case however, admittedly the orders for the goods had been placed by the appellants Sh. Biren Shah/Audio Visual and admittedly they were interested in the pur....
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.... ld. DR has been content with merely reiterating the observations and findings of the Collector and it doesn't help in clinching the issue. 77. One fact however, clearly emerges that the scenario as a whole has to be taken into account and when we do so we find that placing of order by Sh. Biren Shah/Audio Visual, importation against M/s. Chaudhary Intt.'s DEEC passbooks, clearance of some of the consignments against Bills of Entry filed by M/s. Chaudhary Intt., abandonment of claims to some of the consignments by M/s. Chaudhary Intt., their asserting the claim for being given delivery in respect of some of the consignments, the admission by Sh. Biren Shah/Audio Visual about ownership of some of the goods, the admission of Sh. M.D. Palaria and Sh. M.C. Shrimankar of having acted as a conduit for the import and the sale of duty free goods and that they were aware that import of such goods and their clearance without payment of duty and sale to persons other than actual users was in contravention of the law, the admitted role of Sh. M.D. Palaria in procuring the licence and finding a buyer and of rendering active assistance by Sh. M.C. Shrimankar in disposal of the goods know....