TaxTMI 
TaxTMI 
TaxTMI 
2007 (2) TMI 534
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.... No. 74, Peters Road, Royapettah, Chennai-14. Shri H. Akbari, Managing Director of the company, when queried by the DRI officers, stated that they had nothing to do with the above import and also that they did not have any office at Pondicherry. The container, upon examination by DRI officers, was found to contain 2840 pcs. of VCD players of 'AFTRON' brand and of 2 models as also 4 cartons containing spare parts. The goods were seized under a mahazar dated 5-8-2003. There being no claimant for the goods and no Bill of Entry having been filed in respect thereof, the MRP shown on the packs was adopted for the purpose of determining the market value of the goods at Rs. 1,17,27,000/-. One Shri K. Nagendran representing the steamer agents for the cargo stated that the cargo had arrived in the name of M/s. W.W. Shipping & Forwarding P. Ltd. Chennai and that they did not take delivery of the cargo. He also stated that nobody from the shipper's side had contacted him in relation to the above container. One Shri S. Padmanabhan representing M/s. W.W Shipping & Forwarding P. Ltd. stated that they had received a copy of the Bill of Lading and cargo manifest from their overseas principals and t....
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....54769 and that a Bill of Lading dt. l6-10-2002 was issued to M/s. Longrow Shipping Ltd., Hong Kong as carriers on behalf of the claimant. (c) That the impugned goods were shipped to M/s. Arks Appliances Pvt. Ltd. even before the Letter of Credit was opened based on the assurance given by M/s. Arks Appliances Pvt. Ltd, and that they would be opening Letter of Credit shortly and that they wanted the consignment urgently and after several reminders from M/s. Al-Futtaim Engineering Co. M/s. Arks Appliances Pvt. Ltd. informed that they were facing legal problems With partners and assured the opening of Letter of Credit once the problems were sorted out. However vide letter dated 22/23-3-2003, M/s. Arks Appliances Pvt. Ltd. duly signed by Mr. Akbari H. informed that they were unable to release the consignment due to financial problems as they did not have the approval of bankers. (d) In view of the above, they informed (letter dated 24-3-2003) the Forwarding agent, M/s. W.W. Shipping & Forwarding Pvt. Ltd, Chennai, to arrange for re-export of the container to Dubai and a similar letter was sent to arrange for re-export to Dubai Via Hong Kong. (e) The seller, i.e. M/s. Samwin, Hong ....
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....s. Arks Appliances Pvt. Ltd., Pondicherry. (g) The Claimants submitted that since the Director himself had signed on behalf of M/s. Arks Appliances Pvt. Ltd., Pondicherry, they were under the bona fide impression about the existence of the Company at the above mentioned address. The bona fides of the Claimants were further more proved by Annexure I which was provided by Mr. Akbari which specifically gave the address of Arks Appliances Pvt. Ltd., as # 140, Anna Salai, Pondicherry 605 001 and further contended that though the Department alleged that M/s. Arks Appliances Pvt. Ltd., Pondicherry, was not in existence at # 140, Anna Salai, Pondicherry, the subject Show Cause Notice did not mention the name of the Company which was operating at the said premises and that neither the Foreign Trade (Development & Regulation) Act, 1992, nor the Customs Act, 1962, stipulated that the overseas supplier was required to verify the address of the importer. What they were concerned was about the terms of payment for the goods they would be exporting on the basis of the purchase order received by them. (h) The claimant referred to Proforma Invoice No. INV/178/02 dated 15-8-2002 for ....
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....nces Pvt. Ltd., Pondicherry. However, M/s. Arks Appliances Pvt. Ltd., Pondicherry, were unable to clear the impugned goods since they were unable to obtain the approval of their Bankers and as such abandoned the impugned goods. The noticees would like to submit that the goods, which have been legally imported, could not be termed as smuggled merely because the importer abandons the goods after placing the order for the said goods in the course of international trade, due to financial constraints. (l) The Noticees/Claimants submitted that the Video recording or reproducing apparatus whether or not incorporating a video tuner falling under the Exim Code No. 8521 10 11 to 8521 90 90 (including DVD players etc.,) or freely importable vide ITC HS (Classification of Export and Import items) 2003-2004. Under the circumstances, to say that the impugned goods have been smuggled into India was factually incorrect and that the customs authorities have not been conferred or delegated with any powers under the Foreign Trade (Development and Regulation) Act, 1992, or the Rules made thereunder. (m) The Claimants, submitted that the importer has abandoned the goods and no evidence ....
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....ll be the property of the licensee from the time of import? For appreciating this, one has to ascertain the object underlying the said provision. The interpretation to be placed upon the provision should be consistent with and should be designed to achieve such object. In our opinion, the object underlying Condition (ii) in Clause 5(3) is to ensure a proper implementation of the Imports (Control) Order and the Imports and Exports (Control) Act, 1947. The idea is to hold the licensee responsible for anything and everything that happens from the time of import (till they are cleared through Customs. The exporter is outside the country, while the importer, i.e., the licensee is in India. It is at the instance of the licensee that the goods are imported into this country. Whether or not he is the owner of such goods in law, the Imports (Control) Order creates a fiction that he shall be deemed to be the owner of the goods from the time of their import till they are cleared through Customs. This fiction is created for the proper and effective implementation of the said order and the Imports and Exports (Control) Act. The fiction however cannot be carried beyond that, it cannot be even in....
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.... confiscation on the ground that they were not covered by a valid licence at the time of importation, M/s. Esvee Enterprises in whose favour the documents had been transferred by the exporter should have been given an opportunity to clear the goods against any valid licence held by them after establishing that the import was otherwise legal and permissible". (p) In the case of M.J. Exports v. CEGAT - 1992 (60) E.L.T. 161 (S.C.), the Hon'ble Supreme Court have, inter alia, observed as follows : "On the other hand, there are provisions which indicate that export of imported goods is very much envisaged under the statute. The provisions contained in S.74 fully reinforce this interpretation. Indeed S.74 would be redundant if the Department's stand that imported goods cannot be exported were to be accepted as correct. As pointed out by counsel for the appellant, para 174(1) of the Policy which reads : "No REP benefits are admissible in the case of imported goods which are re-exported in the same state without undergoing any processing or manufacturing operations in India". Also impliedly recognizes that imported goods can be re-exported as such; only the exporter thereof cannot cl....
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.... the appellants that one container with 'AFTRON' brand VCD players imported from Hong Kong by the latter for delivery to M/s. Arks Appliances, Pondicherry was lying uncleared at Chennai Port. The appellants were requested to confirm the facts and state the reason as to why the consignment was not taken delivery of by M/s. Arks Appliances, Pondicherry. In their reply to the above letter, the appellants by letter dated 2-9-2003 informed the Consulate General as under : 1. In August 2002 Arks Appliances Pvt. Ltd. of Pondicherry (Arks Appliances) had placed an order with us for 2840 nos. of AFTRON brand and VCD Players. 2. We accepted the order and a Proforma Invoice was issued to Arks Appliances which they accepted. (Copy of Proforma Invoice is attached as Annexure -I). 3. Since the VCD Players were required urgently by Arks Appliances they requested us to ship the goods immediately to them and that they would process the LC in the meantime. On their assurance that the LC would be opened at the earliest we shipped the goods to them prior to their opening the LC. (Copy of the Bill of Lading ....
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.... to Dubai. They were also pursuing the matter with DRI and other Customs authorities at Chennai for re-export of the goods, but did not get any response. Learned Counsel submitted that this affidavit was also not considered by the Commissioner. He also submitted that it was not correct to say that M/s. Arks Appliances had no IE Code. They were holding IE Code No. 040028182 allotted to them on 29-3-2001 by the Foreign Trade Development Officer, Chennai. Their Royapettah address was very much shown in the IE Code Certificate, which also showed their branch address as No. 140, Anna Salai, Pondicherry 605 001. Learned Counsel submitted that M/s. Arks Appliances were not to be considered as without IE Code by mere reason of the fact that they were not found to be having any office at Pondicherry. It was also pointed out that the Proforma Invoice dated 15-8-2002 raised by the appellants on M/s. Arks Appliances P. Ltd. had also been signed for the latter by Shri Akbari as admitted by him in his cross-examination. It was only on account of refusal of their bankers to open Letter of Credit that M/s. Arks Appliances did not receive regular invoice from the appellants. Counsel also submitted ....
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.... Policy for the time being in force. The subject goods were imported contrary to this prohibition and, therefore, its confiscation under Section 111(d) of the Customs Act was in order. Learned SDR further submitted that the statements given by Shri Akbari of M/s. ARKS Appliances P. Ltd., Shri K. Nagendran of M/s. K. Steam Ship Agencies (P) Ltd. and Shri S. Padmanabhan of M/s. W.W. Shipping & Forwarding (P) Ltd., under Section 108 of the Customs Act, provided clear facts constituting breach of the above prohibition in relation to the goods in question. None of these statements was retracted. Even Shri Akbari did not choose to retract his statements until he was cross-examined before the adjudicating authority. He did not adduce any evidence of having been coerced by the DRI to give the statement dated 1-8-2003. In the circumstances, confiscation of the goods under Section 111(d) required to be sustained, learned SDR submitted. The confiscation was also sought to be justified on the strength of the following case law:- (i) Uniflex Cables Ltd. v. Collector of Customs, Bombay [1995 (77) E.L.T. 737 (Tribunal)]. (ii) Peer Chemicals and ....
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....nvoice dated 31-10-2002 raised by the appellants on M/s. Arks Appliances P. Ltd, Radhakrishnan Road, Chennai-4 and the same also covers 2840 pcs. of VCD players of 2 different models as in the Proforma Invoice. This document does not contain any entry evidencing its receipt or acceptance by M/s. Arks Applicances P. Ltd. In a letter dated 22-3-2003, M/s. Arks Appliances P. Ltd. informed the appellants that they were not in a position to clear the cargo for want of approval from their bankers. In a letter dated 24-3-2003, the appellants informed M/s. W.W. Shipping & Fowarding P. Ltd. that their customers (M/s. Arks Appliances P. Ltd.) were unable to clear the goods. In the same letter, they requested the shipping agents to make arrangements for return of the containers to Dubai. On this subject, a reminder was also sent by the appellants to their shipping agents on 24-5-2003. These correspondences were prior to the seizure of the goods. The facts and circumstances as brought out in such correspondence were confirmed by the appellants in their letter dated 2-9-2003 to the Consul-General. Meanwhile, in a letter dated 19-7-03, M/s. Samwin Hongkong Ltd. informed the Commissioner of Custo....
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....icence. The importer had obtained an Advance Licence and had already cleared similar imports without payment of duty subject to the condition that the final product would be exported. Subsequently, however, the licence was found to have been fraudulently obtained. Hence, in respect of the present import, the importer did not come forward to clear the goods. Neither any Bill of Entry was filed nor any licence was produced by the importer for fear of action by the department. On these facts, the Supreme Court held that the import was one prohibited in law, which rendered the goods liable for confiscation under Section 111(d) of the Customs Act. Their Lordships also noted that M/s. Grand Prime Ltd., (from whom the goods had been imported), who appeared before the adjudicating authority with a prayer for permission to re-export the goods, had colluded with the importer and, on this basis, re-export of the goods was held not permissible. In the instant case, there is neither any allegation in the show-cause notice nor any finding in the impugned order to the effect that the appellants had colluded with M/s. Arks Appliances P. Ltd. The evidence on record would go to show that the appella....
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....ng incriminating M/s. Arks Appliances P. Ltd. Shri Padmanabhan's statement, insofar as it concerns M/s. Arks Appliances P. Ltd., is that the cargo arrival notice issued to them by M/s. W.W. Shipping & Fowarding P. Ltd. did not receive any response. He stated that the said notice was issued to the Pondicherry address of M/s. Arks Appliances P. Ltd. In this connection, it is pertinent to note that, in his statement dated 1-8-2003 given to the DRI, Shri Akbari had stated that, in their application for IE Code, they had given the Pondicherry address for the purpose of availing Sales Tax benefit but did not open any office at such address (No. 140, Anna Salai, Pondicherry 605 001). In his cross-examination before the Commissioner, he stated that the proposed branch at Pondicherry could not be opened because of financial crisis. In cross-examination, he also stated that their present business address was No. 74, Peters Road, Royapettah, Chennai-14, which, we find, is the same as the main address given in the IE Code Certificate issued by the Foreign Trade Development Officer. Shri Akbari, in cross-examination, also stated that they had a branch at Radhakrishnan Road but the same was clos....
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....tion to be considered is whether learned Commissioner was right in turning down the request of the appellants for permission to re-export the goods. We have found no support from the judgment of the apex court in Grand Prime case to the Commissioner's action. In that case, the foreign exporter was found to have colluded with the Indian importer. The position is different in the present case. As we have already found, the appellants were genuinely transacting business, in the normal course of international trade, with M/s. Arks Appliances P. Ltd. When M/s. Arks Appliances P. Ltd. expressed their inability to take delivery of the goods on account of financial problems, the appellants advised their shipping agents to make arrangements for reshipment of the goods to Dubai. The shipping agents informed the appellants that they were taking necessary steps for such reshipment. Later on, they informed the appellants that the DRI had destuffed the container and seized the goods for investigations. These facts were stated by the appellants in their letter dated 2-9-2003 addressed to the Consulate General, who was a senior officer of Customs. Earlier, in a letter dated 19-7-2003, M/s. Samwin ....