TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1787
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....ondent. Respondents 1 & 2 are in the business of manufacturing bulk drugs and other pharmaceutical products. They have been importing various raw materials required for manufacture of their finished goods. To handle the customs clearing activity at Chennai Sea and Airports, they had engaged the services of M/s.Far Port International, Chennai, a proprietary concern run by one Mr.D.Ramesh. The respondents 1 to 2 used to pay the duty in the form of crossed demand drafts, favouring the Commissioner of Customs-A/c Hetero Drugs, in respect of the materials imported and received the goods as mentioned under the cover of Bills of Entry. The respondents 1 & 2 were also taking modvat credit on the strength of these Bills of Entry. The said bills were regularly scrutinized and defaced by the Central Excise authorities. 3.In September 1999, the respondents 1 & 2 wanted to bond certain imported goods, and permissions were refused. When the said goods were cleared, it came to light that one Mr.D.Ramesh, Proprietor of M/s.Far Port International has indulged in malafide action of substituting the goods at the Bonded Warehouse. The CHA has sent the goods imported under the cover of fake Bills of E....
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....rmation from their bankers with regard to the payment of duty amounts made by them. Those details are available in the letter issued by the State Bank of Hyderabad with regard to various demand drafts sent in respect of the 68 Bills of Entry. On the above factual position, which narrated the activities undertaken by M/s.Far Port International in substituting the goods or in forging the documents, the Appellant had come to the conclusion that the malafide act had been committed by Mr.Ramesh, Proprietor of Far Port International on his own or in assistance with persons other than the importer. The said Mr.Ramesh had expired on 01.09.1999. Thus, the appellant cannot initiate proceedings against the respondents 1 & 2 herein. Taking into consideration all the above aspects, the Tribunal has passed the following order: "12 (a). The liability of a principal i.e. the appellants company herein, for the acts committed by the agent i.e. CHA at Chennai will only be with reference to the bonafide acts committed by the agent and not for the malafide acts committed by the Agent or the Custom House Officers. On examination of Section 147 of the Customs Act, 1962, it is found that Section 147 (1)....
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....mesh, Proprietor of Far Port International who is reported to have expired on 01/09/1999, cannot entitle them to proceed against the appellants to recover from them alleged non-payment/short payment of duty, which in fact stand paid and credited to the Revenue's accounts. (c) That a principal is not to be considered guilty for the wrongful acts of the agents, is settled law, please see Bombay High Court in the case of M. Shashikant & Company and others Vs. UOI reported in 1987 (30) ELT 868 (Bom). Therefore, provisions contained in the proviso to Section 147 (3) of the Customs Act would come into play if the CHA had undertaken the malicious activity, has been settled by the following decisions: a) K.M. Mohamed Ghouse & Co., Vs. ACCE (1979 (4) ELT J683 (Mad) b) Commissioner of Customs, Cochin Vs. Trivandrum Rubber Works Ltd. (1999 (106) ELT 9 (SC) c) Pilmen Agents Pvt Ltd., Vs. Commissioner of Customs, Madras (2000 (126) ELT 79 (Mad) (d) The demand in this case is made under Section 28 of the Customs Act, 1962. That a demand to recover customs duty can be made only under Section 28 and not under Section 147 is set out by the Madras High Court in the case of Pilmen Agent....
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....ore against the appellant is not in accordance with law. 13. CMA.No.3233 of 2004 was admitted on the following substantial questions of law: "(1) Whether the Tribunal is correct in law in its reasoning that the demand to recover Custom Duty can be made only under Section 28 of Customs Act, 1962 and not under Section 147 of the Customs Act 1962, when there is a Statutory provision under Section 147 of Customs Act 1962, which commands duty liability on the importer if there is a failure of his statutory obligation ? (2) Whether the reliance of the Tribunal on the case law Pilman Agents Pvt. Ltd, ..VS..Commissioner of Customs, Chennai reported in 2000 (126) ELT 79 (Mad) is correct in law, though there is a factual difference ? (3) Whether the Tribunal is correct in accepting to defer the adjudication proceedings till the completion of the investigations by the CBI, by relying upon a judgment, which differs, on facts? (4) Whether the Tribunal is correct in holding that the liability of the principal that is respondent No.1 will only be with reference to the bona fide acts committed by the Agent and not for the mala fide acts committed by the Agent of the Custom House Office, s....
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....fered by fake Cash Department Deposit Numbers as per the investigation and the cash deposit only in spurious book of account and not in reality? 6. Whether mere delivery of a demand draft, which was drawn in favour of the Commissioner of Customs to the CHA by the importer amounts to payment under the Customs Act, 1962 as well as the Negotiable Instruments Act, 1881? 7. Whether by mere handing over the draft to the CHA, the importers have discharged the responsibility towards the imported goods and/or discharged the liability to pay duty on them? As per the Customs Act, it is the prime and sole responsibility of the importer to pay the duty as prescribed. The procedure is that any amount payable has to be paid either at the cash section of the Customs Department or at the nominated scheduled bank?" 15.The Tribunal has negatived the claim of the appellant by relying upon the following observation made by this Court in the case of M/s.Pilmen Agents (Pte.) Ltd., Vs. Collector of Customs reported in 2000 (126) ELT 79 (MAD): "On a reading of Sections 12, 28 and 147 together, it is clear that in cases in which duty had not been levied, the owner should be called upon to pay if the ....