TaxTMI 
TaxTMI 
2021 (3) TMI 775
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....s liable to confiscation under section 111, or abets the doing or omission of such an act shall be liable to a penalty. Section 111 of the Customs Act deals with confiscation of improperly imported goods. 3. Section 1 (2) of the Customs Act, as it stood prior to its amendment on 29.03.2018, provided that the Act would extend to the whole of India. The amended section, however, makes the Act applicable also to any offence or contravention thereunder committed outside India by any person. It is reproduced below:- "Section 1 (2). It extends to the whole of India and, save as otherwise provided in this Act, it applies also to any offence or contravention thereunder committed outside India by and person." 4. The issue that is involved in both the appeals is as to whether during the relevant period i.e. 2012-13, the Customs Act was applicable only to the whole of India or whether it was applicable also beyond the territorial jurisdiction of India, in which case penalty could be imposed on companies incorporated abroad. The learned Member, after making reference to the decisions of the cited on behalf of the appellant in support of the contention that the Customs Act is app....
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....ed to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest." 7. A Division Bench of the Tribunal in Shafeek P.K. vs Commissioner of Customs, Cochin, 2015 (325) ELT 199 (Tri.-Bang.), after placing reliance upon a decision of a learned Member of the Tribunal in C.K. Kunhammed vs Collector of Central Excise & Customs, 1992 (62) ELT 146 (Tribunal), observed that the provisions of the Customs Act would extend only to the whole of India and could not be made applicable to a resident of Dubai. The relevant portion of the decision is reproduced....
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....missions of the learned advocate that the appellant being a resident of Dubai for the last 20 years, the provisions of the Customs Act, 1962 which only extend to the whole of India, cannot be invoked. For the said purpose, reliance by the learned advocate on the decision in the case of C.K. Kunhammed (supra) is appropriate. Revenue has not been able to show us any other decision laying to the contrary. As such, we find favour with the appellant on the point of jurisdiction also. 14. As a result, the impugned order is set aside insofar as the same imposes penalty of Rs. 10 lakhs (Rupees ten lakhs only) on the appellant and the appeal is allowed with consequential relief." (emphasis supplied) 8. Another Division Bench of the Tribunal in Guru Electronics Singapore Pte Ltd. vs Commissioner of Customs, Bangalore, 2009 (240) ELT 56 (Tri.-Bang.) also observed that since the provisions of the Customs Act extend only to the whole of India, proceedings against a company which is incorporated abroad cannot be sustained. The relevant portion of the decision is reproduced below : "2. On a very careful consideration of the entire issue, we find that the company is incorpo....
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....nt of the Tribunal in Shafeek P.K. and also on the decision of a learned Member of the Tribunal in C.K. Kunhammed but the learned Member confirmed the imposition of penalty upon the appellant. The relevant portion of the decision of the learned Member in Prerna Singh is reproduced below:- 6. The issue of jurisdiction of Customs Act and its application to the appellant is primarily challenged in the present appeal, besides the legality of the Order of the Commissioner. Though the issue appears to be small it has wide ramifications. No Municipal law can ever be extended beyond the territorial boundaries of a country including its continental self and exclusive economic zone, whether or not there is express provision in the Act or statute to stretch the same beyond the country's territory since the same would amount to encroachment upon the territorial authority of other State. It is therefore, defined in the Statute of the country that the said Act has its application within the territorial limits of the country. Likewise in case of penal statute, it is clearly defined that the "act or its violation" should have its effect and consequence within the territorial limit of the ....
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....ion 4 of IPC in the cited judgements of the above referred case laws. However, a comparison is required to be made between Section 3 & Section 4 of the Indian Penal Code concerning its application beyond the territorial jurisdiction of sovereign India. While Section 4 deals with application of IPC to extra territorial offences, Section 3 provides judicial power of punishment to any person for violation of any Indian law. Such primary distinction is not noticeable in the judgement of Shafeek P.K. v. CC, Cochin-2015 (325)ELT 199 cited Supra. (emphasis supplied) 14. After having made the aforesaid observations, the learned Member also noted that the appellant had subjected to the jurisdiction of the Customs Act upon notice having been sent under section 108 of the Customs Act and concluded that penalty was rightly imposed. 15. It would be seen from a perusal of the aforesaid decision that though the Division Bench decision of the Tribunal in Shafeek P.K. and the decision of a learned Member of the Tribunal in C.K. Kunhammed had been placed, which decisions clearly held that at the relevant time the Customs Act extended only to the whole of India and not beyond the territorial....
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....decided by a Bench of two learned judges." (emphasis supplied) 18. Thereafter, another Constitution Bench of the Supreme Court in Pradip Chandra Parija and others vs Pramod Chandra Patnaik and others also made the same observations : "2. The question is whether two learned Judges of this Court can disagree with a judgment of three learned Judges of this Court and whether, for that reason, they can refer the matter before them directly to a Bench of five Judges? 3. We may point out, at the outset, that in Bharat Petroleum Corporation Limited v. Mumbai Shramik Sangha and Ors., [2001] 4 SCC 448, a Bench of five Judges considered a some what similar question. Two learned Judges in that case doubted the correctness of the scope attributed to a certain provision in an earlier Constitution Bench Judgment and, accordingly, referred the matter before them directly to a Constitution Bench. The Constitution Bench that then heard the matter took the view that the decision of a Constitution Bench binds a Bench of two learned Judges and that judicial discipline obliges them to follow it, regardless of their doubts about its correctness. At the most, the Bench of two learn....
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....er and we would have sent the matters to a Bench of three learned judges for consideration. But since the questions involved are pending in many cases in different High Court and certain doubts have arisen with regard to the interpretation to the provisions of Section 28-A of the Act, we thought it appropriate to answer the two questions ......." 20. It is, therefore, clear from the aforesaid Constitution Bench judgments of the Supreme Court that judicial discipline and propriety demands that a Bench of two learned Judges should follow the decision of a Bench of three learned Judges, but if a Bench of two learned Judges concludes that an earlier judgment of three learned Judges is so very incorrect that in no circumstances can it be followed, the proper course for the Bench of two learned Judges to adopt is to refer the matter before it to a Bench of three learned Judges setting out the reasons why it could not agree with the judgment rendered by three Hon'ble Judges. It is only when the Bench of three learned judges also comes to a conclusion that the earlier judgment of a Bench of three learned Judges is incorrect, that a reference to a Bench of five learned Judges would be ju....