TaxTMI 
TaxTMI 
2012 (11) TMI 125
X X X X Extracts X X X X
X X X X Extracts X X X X
....irm and other persons to the effect that the rough and polished diamonds had been smuggled into India by passengers. On the basis of these statements and other documents, notice was issued to M. Ambalal & Company and others concerned proposing confiscation of the diamonds under clause (d) of Section 111 of the Customs Act, 1962 and for imposition of penalty. On adjudication, the Collector of Customs (Preventive) [now renamed as Commissioner of Customs (Preventive)] vide Order No. VIII(b)10(200) Cus/92/310, dated 3-12-92 ordered confiscation of the diamonds with an option to redeem them on payment of fine of Rs. 60 Lakhs. The adjudicating authority also imposed a penalty of Rs. 25 lakhs on Ambalal and penalties of varying amounts on the persons involved. The adjudicating authority further ordered that "appropriate duty on these diamonds shall be paid". 2.2 An appeal was filed by M/s. Ambalal & Co. and others before this Tribunal against the said order. This Tribunal vide Order Nos. 2477-87/95 WRB dated 29-12-1995 confirmed the order of the adjudicating authority relating to M/s. Ambalal & Co. and set aside the penalties on other persons. 2.3 M/s. Ambalal & Co. filed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, Commissioner of Customs (Preventive), Mumbai, vide Order No VIII/10-13/EB/91/VIII(b)10(35)Cus/2002 dated 5-12-2002 held that duty is payable at the rate of 250% as applicable to baggage classifiable in Heading 98.03 of the Customs Tariff. The Commissioner did not accept the contention raised before him that the diamonds were entitled to exemption in terms of Notification 247/76-Cus., dated 2-8-1976 which unconditionally exempted the rough diamonds from payment of basic customs duty and auxiliary duty. 2.8 Ambalal filed an appeal before this Tribunal against the aforesaid order of the Commissioner of Customs (Preventive) Mumbai on the following grounds : (a) The Commissioner has erred in not allowing the benefit of exemption Notification No. 247/76-Cus., dated 2-8-1976; (b) Duty under Heading No. 98.03 of the Customs Tariff can be demanded only on dutiable goods. 2.9 This Tribunal vide Order No. CII/1536/WZB/2003, dated 23-6-2003 [2003 (169) E.L.T. 944 (Tri. - Mumbai)] held that Ambalal are entitled to benefit of exemption Notification No. 247/76-Cus., dated 2-8-1976 and allowed the appeal. The Tribunal did not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....98 in relation to indirect tax enactment (Customs Act, 1962 being indirect tax enactment) to mean the amount of duties determined as due or payable under that enactment as on 31st March 1998 but remaining unpaid as on the date of making a declaration under Section 88. In the present case no amount of duty was determined by the Order dated 3-12-1992 of the Commissioner and hence duty was not a tax arrear. 3.1.2 Further, the said Section 87(m)(ii) provides that where a show cause notice is issued in respect of seized goods, tax arrear shall not include the duties on seized goods where such duties on the seized goods have not been quantified. In the present case the show cause notice did not quantify the duties on the seized goods. Thus duty on the seized goods was not a tax arrear. 3.1.3 The tax arrear was determined by the Designated authority under Section 90 of the Finance Act, 1998 by his Order dated 29-12-1998 and the tax arrear was determined as 50% of the fine and penalty and no duty was determined by the Designated authority as being payable by the appellant. The amount determined by the designated authority and duly paid by the appellant has to be taken towar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by the designated authority under Section 90 of the Finance Act, 1998 and which order is as per Section 90(3) final and conclusive and which cannot be re-opened. There was no requirement to pay any duty as per the Order passed under Section 90 and the same is final and conclusive. 3.2 Without prejudice to the aforesaid submissions, and assuming while denying that the Appellants are liable to pay duty on the diamonds, in any event such duty cannot be demanded at the rate prescribed under Customs Tariff Heading No. 98.03 which covers "All dutiable articles, imported by a passenger or a member of crew in his baggage." The Supreme Court has in its Order in paras 7, 8 and 12 to 14 held that smuggled goods cannot be said to have been imported and smuggled goods are antithesis of imported goods. In para 7 the Supreme Court has held that dutiable goods are those goods whose import is permitted by the Act or any other law in force. The Supreme Court has further held that since the goods in the present case are smuggled goods they cannot be said to be imported. Applying the law so laid down by the Supreme Court, it must necessarily follow that since the goods in the present case ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y is that under Heading 71.02 as in force on the date of payment of duty in terms of Section 15(1)(c) of the Customs Act, 1962. Thus the duty will have to be re-quantified by applying today's rate of duty under Tariff Heading 71.02. 3.2.4 The reliance placed by the revenue on the decisions of the Tribunal in Suessen Asia Ltd. v. C.C. - 2006 (198) E.L.T. 143 and Pidilite Industries Ltd. v. C.C. - 2006 (195) E.L.T. 153 is untenable in law since the said decisions were rendered by the Tribunal much prior to the present decision of the Supreme Court which draws a distinction between goods which are imported and goods which are smuggled. Since it is a requirement of Tariff Heading 98.03 that the goods should have been imported by the passenger in his baggage and since this requirement is not satisfied in the case of smuggled goods, Tariff Heading 98.03 cannot apply. The law laid down by the Supreme Court will prevail over the said two decisions of the Tribunal which were rendered much prior to the Supreme Court decision. 4. The learned Additional Commissioner (AR) appearing for the Revenue made the following submissions : 4.1 As regards the demand of duty in resp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubmission regarding rate of duty in terms of Section 15(1)(c) of the Customs Act, 1962, in terms of sub-section (2) of the said section, provisions of Section 15, sub-section (1) are not applicable to goods imported by post or as baggage and in this case Adjudicating Authority had held in para 40 of the order that goods have been imported as baggage. The Adjudicating authority had held that :- "40. Regarding the duty proposed under the Baggage Rules, M/s. Ambalal & Co. have submitted that in their statements has been mentioned that the diamonds used to be imported/smuggled personally or through carriers by air and by "other means" suggests that they could have been imported/smuggled other than through baggage also and therefore, the duty under baggage rules should not be charged. However, I find that there has been no practice to import diamonds other than through "other means", they should have declared those other means which they have failed to do, I, therefore, take it that all the diamonds under seizure were imported personally in baggage or through carriers and therefore, they could be charged to duty at the baggage rate. They have given the citation on the Hon'ble Supreme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Customs. Tariff This Tribunal in the matter of Suesseen Asia Ltd. [2006 (198) E.L.T. 143 (Tri.-Mum.)] & Pidilite Industries Ltd. [2006 (195) E.L.T. 153 (Tri.-Mum.)] has taken a similar view. As regards rate of duty, in case of imports through baggage, as per Section 78 of the Customs Act, 1962, the relevant date is the date of declaration made under Section 77 of the Act ibid. However, in this case the goods have been brought into the country on various dates and no declaration has been filed by the persons carrying these goods. Therefore adjudicating authority has taken the rate of duty as applicable on the date of seizure as the rate applicable to the goods under reference. 5. We have considered the rival submissions very carefully. 5.1 In the certificate of intimation dated 29-12-1998 under Section 90(1) of the Finance (No. 2) Act, 1998, in respect of Kar Vivad Samadhan Scheme, 1998 the designated authority under the said scheme had determined that the declarant therein (the appellant in the instant case) is liable to pay a sum of Rs. 30 lakhs towards fine and a sum of Rs. 12.5 lakhs towards penalty in full and final settlement of tax arrears covered by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the aforesaid declaration made by the declarant." 5.2 It can thus be seen that as per the final settlement certificate issued by the designated authority, the settlement of arrears towards fine and penalty was made at a sum of Rs. 42.5 lakhs whereas regarding duty, the certificate stated that the declarant can redeem the goods on payment of duty at the appropriate rate. When the final settlement was made, the petition before the Hon'ble High Court had been withdrawn and there was no dispute pending regarding payment of duty by the appellant and the Tribunal's order, against which the writ petition was filed before the High Court, had become final, there being no challenge to the said order. Inasmuch as the Tribunal had upheld the confiscation of the goods and the redemption thereon, it can only imply that the Tribunal had upheld the payment of duty at the appropriate rate in case the appellant wants to redeem the goods in addition to fine and penalty. In other words, there was no dispute about payment of duty when the declaration under the KVS Scheme was made and settlement was allowed. The settlement was limited to only fine and penalty which was imposed and there was no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in accordance with the statute i.e. Section 125(2) of Customs Act, 1962. Petitioner was given an option of payment of redemption fine and penalty in lieu of confiscation. Petitioner had challenged the quantum of redemption fine and penalty at various levels culminating it in dismissal of appeal by the CEGAT and confirmation of the redemption fine and penalty as imposed. It is significant that the goods stand confiscated and it is only when the petitioner exercises its option, by payment of redemption fine and penalty, that the question of release of goods would arise. Petitioner hitherto before, neither challenged nor could challenge the payment of customs duty, which being a statutory obligation, on import of goods is payable. Petitioner wishes to avail of the benefit of redemption of confiscated goods. Neither the classification of the goods nor the rate of duty applicable or the amount thereof has been in dispute. In fact, there has been no dispute or controversy whatsoever in respect of the amount of custom duty payable. Accordingly, the present case would clearly fall within Section 88f(1) of the Scheme, wherein tax arrears are those of redemption fine and penalty. The obligat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in dispute is not there. 20. We, therefore, find no merit in any of the contentions raised by the petitioner. The writ petitioners are dismissed with no order as to costs." 5.4 The ratio of the above judgment applies squarely to the facts of the present case as the facts involved are more or less identical. Accordingly, we hold that in the instant case also, in addition to 50% of the fine and penalty paid for settlement of the case, the appellant is also liable to pay duty at appropriate rate on the confiscated goods and only on such payment of duty the appellant can redeem the goods and we hold accordingly. 5.5 The next issue for consideration is whether the duty is liable to be paid on the confiscated goods by treating them as baggage under Chapter Heading No. 98.03 of the Customs Tariff Schedule. While the revenue's contention is that since the goods have been brought by way of passenger baggage, the baggage rate of duty is applicable. The learned counsel for the appellant contests this point and submits that the rate of duty prescribed under Chapter 98 in respect of baggage can be applied only if the conditions therein are satisfied. The condition to be....