TaxTMI 
TaxTMI 
2026 (9) TMI 751
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....], CEO of the importer, filed Customs Appeal no. 542 of 2010 to assail the penalty of Rs. 10,00,000/- imposed on him. 2. We have heard Shri Kunal Kishore assisted by Ms. Runjhun Pare learned counsels for the appellant and Shri Shiv Shankar, learned authorised representative for the Revenue and perused the records. 3. The importer imported an aircraft and filed Bill of Entry No. 221491 dated 30.7.2007 claiming exemption Notification No. 21/2002-Cus dated 1.3.2002 as amended (S. No. 347B) which provided for full exemption from duty subject to condition no. 104 of the notification which reads as follows: "104. (i) the aircraft are imported by an operator who has been granted approval by the competent authority in the Ministry of Civil Aviation to import aircraft for providing non-scheduled (passenger) services or non-scheduled (charter) services; and (ii) the importer furnishes an undertaking to the deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, at the time of importation that: - a. the said aircraft shall be used only for providing non-scheduled (passenger) services or non-scheduled (charter) services, as the ....
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....ther extended to 23.9.2007. The NOC to import was also extended till 7.9.2007 The aircraft landed in India on 10.8.2007. After clearance by the Customs, the aircraft took a test flight on 20.11.2007 and then took its first commercial flight on 29.12.2007 and from that date it had flown for over 100 hours. They raised invoices through their agents and had received payments through cheques. He further clarified that they were expecting clearance from the Ministry of Civil Aviation shortly after which they would obtain Non-Scheduled operator Permit (NSOP). He further clarified that although they had no permits at that time, they had operated the aircraft for charter to meet their fixed expenses. 8. Shri Lalani was also summoned and in his statement dated 8.9.2008, he said that they had applied for an extension of NOC to operate NSOP but the Ministry of Civil Aviation(MCA), by letter dated 13.2.2008, informed that no further extension would be considered. Thus, all the compliances/approvals/certifications were completed by 23.9.2007 but NSOP was held up due to lapse of NOC issued by the MCA. In anticipation of receiving the approvals, the appellant had undertaken first commercial fl....
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.... confirm the demand of customs duty Rs.2,86,96,309/- (Rupees two crore, eighty six lakh ninety six thousand three hundred nine only) as per the undertaking given by the MCL at the time of importation when read with Supreme Court's judgments in the case of Commissioner of Customs versus Jagdish Cancer & Research [2001 (132) E.L.T. 257 (S.C.)] and Commissioner of Customs versus C.T. Scan Research Centre (P) Ltd. [2003 (155) E.L.T. 3 (S.C.)] I also order the appropriation of Rs. 2,36,82,303/- (Rupees two crore thirty six lakh eighty two thousand three hundred and three only) already deposited by MCL against the above demand. (c) Since duty is not demandable under section 28 of the Customs Act, 1962, therefore, interest under section 28AB cannot be demanded. (d) I impose a penalty of Rs. 10,00,000/- (Rupees Ten lakh only) upon Shri Anil Kumar Soni, CEO, M/s MCL, under section 112 (b) of the Customs Act, 1962. (e) I impose a penalty of Rs. 10,00,000/- (Rupees ten lakh only) upon Shri Kunal Lalani, Managing Director, M/s MCL, under section 112 (b) of the Customs Act, 1962. (f) I impose a penalty of Rs. 30,00,000/- (Rupees thirty lakh only), upon M/s MC....
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.... under section 112 are not sustainable. (x) The demand is time-barred as the SCN was issued beyond the normal period of limitation of six months under section 28(1) of the Act. Submissions on behalf of the Revenue 16. Learned authorised representative for the Revenue vehemently supported the impugned order and submitted as follows: (i) The Notification No. 21/2002-Cus (S. No. 347B) was available subject to condition no. 104. The first condition is that the operator must be approved by DGCA for NSOP (Charter) services and second that the importer must furnish an undertaking to pay the entire customs duty if the importer fails to use the aircraft for the NSOP(charter) services. (ii) The NOC from MCA expired on 7.9.2007 and MCA expressly declined further extension by letter dated 13.2.2008. The NSOP from DGCA was never obtained before commencing commercial charter operations. Thus, the condition of the exemption was never satisfied. (iii) The importer had not disclosed the expiry of the NOC and denial of further extension. (iv) The aircraft operated commercially for over 100 hours without authorisation which was a breach of the undert....
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....9. 21. The case of the department is that the importer could, as per condition no. 104, use the aircraft only for providing non-scheduled (charter) services for the reason that non-scheduled (charter) services means, as per the explanation to the condition no. 104, services provided by any person, who is registered with and approved by the DGCA for such purposes and who conforms to the civil aviation requirement under the provision of rule 133A of the Aircraft Rules, 1937. The appellant had undertaken commercial flights on charter basis on 29.12.2007 and operated for over 100 hours but without any valid NSOP. This fact was stated by Shri Lalani and Shri Soni during investigation. 22. No documents have been produced by the importer at any stage including before us to show that it was authorised to operate NSOP (charter) services during that period by the MCA and DGCA or that such an authorisation was given retrospectively by the DGCA. We are, therefore, satisfied that the commercial flights undertaken by the importer during that period were non-scheduled (charter) services as per the condition no. 104 read with its explanation. They were unauthorised operations. As per the und....
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....on-levy, short-levy, etc. under section 28(1) of the Act can only be raised within six months. Extended period of limitation of five years would not apply because fraud, collusion, wilful mis-statement or suppression of facts were not established. Therefore, the SCN itself was time-barred regardless of the merits and thus needs to be set aside. However, we find that although the SCN invoked section 28 of the Act, the Commissioner has not, in the impugned order, confirmed demand under section 28 of the Act but has demanded recovery of duty under section 125(2) of the Act as was held applicable by the Supreme Court in cases of post import violations of conditions of notifications in C T Scan Research Centre (P) Ltd. and Jagdish Cancer and Research Centre. 26. Learned authorised representative for the Revenue submitted that in cases of post-importation violations of the conditions of the exemption notification, the limitation under section 28(1) would not apply as held by the Supreme Court in C T Scan Research Centre (P) Ltd. We find that in that case, the respondent had imported goods with a post importation obligation which it had not fulfilled. The demand was issued under sectio....
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....rson - (a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty; (b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c) is given a reasonable opportunity of being heard in the matter : Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may at the request of the person concerned be oral." 10. It provides that an order for confiscation of the imported goods may be made after giving a show cause notice to the importer of the goods. It also provides for imposition of fine. Section 125 reads as under :- "125. Option to pay fine in lieu of confiscation. - (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to th....
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.... goods and then to levy any duty or charge payable on such goods apart from the redemption fine that he intends to levy under sub-section (1) of that section." In this view of the matter the objection raised by the Centre that Section 28 of the Customs Act would be attracted is not sustainable. 12. The next question which falls for consideration is, as to whether or not a new ground or case for confiscation has been carved out as found by the CEGAT. According to the CEGAT, Para 3 of the notice relates to confiscation of goods under Section 111(o) of the Customs Act on the ground of non-submission of certificate under Condition 4(iii) of the Notification. Therefore, confiscation could be ordered only on the ground of non-submission of certificate and on no other ground. It is further pointed out by the CEGAT that Para 5 of the notice relates to payment of customs duty only, on the ground of violation of conditions relating to providing free treatment as well as on account of non-submission of certificate under Condition No. 4(iii) of the Notification. In connection with the above argument, it would be relevant to refer to para 7 of notice, a perusal of which would indicate ....
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....0 per cent in a given period, that may make good the deficiency in the previous or the following year. In any case, over and above all, it has not been in dispute that the Centre did not have inpatient facility. According to the condition of notification 10% of total beds in hospital are to be kept reserved for patients of the families having an income of less than Rs. 500/- per month. The case of the Centre, in this connection, is that they had an arrangement with another hospital in the proximity which is a sister concern of the Centre, with whom the Centre had entered into an agreement for reserving 10 per cent beds. Payments in respect of these inpatients is to be made by the Centre. We feel that the 10 per cent of the total number of beds are supposed to be reserved for patients of such families in the hospital where the equipment is installed. The purpose of the Notification for grant of exemption from payment of customs duty would not be served by making payment of expenditure incurred on some inpatients in some other hospital as alleged. It has also not been shown that alleged arrangements had the approval of the concerned authority or that it was brought to their notice at....
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.... an order clearing the goods for home consumption under section 47 of the Act. Once this order is issued, the goods cease to be imported goods and there cannot be any further assessment. However, the assessment can be modified through any of the five methods: (i) An appeal to the Commissioner (Appeals) under section 128 of the Act by either side; this can assail any part of the assessment but the appeal has to be filed within the time prescribed under section 128; (ii) An SCN under section 28 can be issued to recover duties not levied not paid, short levied, short paid or erroneously refunded by the Revenue; this option is available only to the Revenue and that too only for the purpose of recovering duties and not for any other purpose; the notice has to be issued within the normal period of limitation, or, as the case may be, the extended period of limitation; (iii) Finalisation of provisional assessment under section 18 of the Act, where applicable; (iv) Amendment of the documents under section 149 of the Act by the importer with permission of the proper officer; and (v) Correction of clerical or arithmetical mistakes under section 154....
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.... of the conditions. The term 'proper officer' has been defined in section 2(34) of the Act defines this term as follows: 2. Definitions.-In this Act, unless the context otherwise requires,- ....... (34) "proper officer", in relation to any functions to be performed under this Act, means the officer of customs who is assigned those functions by the Board or the Principal Commissioner of Customs or Commissioner of Customs under section 5; 34. The question which would arise is whose function is to the determine if the conditions for exemption from duty or exemption from prohibition of import are. Evidently, it is the officer who does the assessment. The proper officer for assessment of the Bill of Entry- such as the Assistant Commissioner or Deputy Commissioner in the assessment group in the Custom House- will also be the proper officer to determine if the conditions for exemption from duty or exemption from prohibition on import are violated and if so, when such violations can be sanctioned. It must be noted that although self-assessment of bill of entry by the importer under section 17 of the Act is also an assessment, the power to sanction non-fulfilme....
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.... hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of customs chargeable on such goods shall in no case exceed the statutory duty. Explanation. -"Form or method", in relation to a rate of duty of customs, means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable. (4) Every notification issued under sub-section (1) or sub-section (2A) shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette. (4A) Where any exemption is granted subject to any condition under sub-section (1), such exemption shall, unless otherwise specified or varied or rescinded, be valid upto 31st day of March falling immediately after two years from the date of such grant or variation: Provided that i....
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.... economy of the country by the uncontrolled import or export of gold or silver or any other goods; (g) the prevention of surplus of any agricultural product or the product of fisheries; (h) the maintenance of standards for the classification, grading or marketing of goods in international trade; (i) the establishment of any industry; (j) the prevention of serious injury to domestic production of goods of any description; (k) the protection of human, animal or plant life or health; (l) the protection of national treasures of artistic, historic or archaeological value; (m) the conservation of exhaustible natural resources; (n) the protection of patents, trademarks, copyrights, designs and geographical indications; (o) the prevention of deceptive practices; (p) the carrying on of foreign trade in any goods by the State, or by a Corporation owned or controlled by the State to the exclusion, complete or partial, of citizens of India; (q) the fulfilment of obligations under the Charter of the United Nations for the maintenance of international peace and security; (r) the implementa....
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....t is not necessary that in all such cases to issue an SCN and litigate the matter. 41. If the proper officer sanctions non-observance of any condition, then such goods go out of the scope of section 111(o) - be it with respect to exemption from prohibition on import under the Customs Act, other Acts or exemption from payment of duty. The decision of the proper officer to sanction non-observance of the conditions is also part of his quasi-judicial act of assessment. It is appealable by either side. In this case, nothing on record shows that any such sanction was sought by the appellant or issued by the proper officer. If the proper officer had not sanctioned the non-observance of the conditions and the matter becomes a subject matter of SCN, the assessment of duty is re-determined by the adjudicating authority or appellate authorities or courts in this case, who can, likewise, look into the non-observance of the conditions and if they can be sanctioned. 42. We have also examined if the non-fulfilment of the condition no. 104 of the notification by the importer in this case can be sanctioned. We find that this is not a case where the aircraft had to be flown out of some compuls....
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....as already released provisionally on bond, in the impugned order, the Commissioner imposed a redemption fine of Rs. 2,50,00,000/- on the importer under section 125 of the Act. Section 125 provides for imposition of a redemption fine not exceeding the market value of the confiscated goods. The value of the aircraft was Rs. 11,29,92,819/- and the redemption fine imposed was less than 25% of it's market value. In our considered view, this is quite reasonable and calls for no interference. 49. Penalties under section 112 can be imposed for acts or omissions which rendered the goods liable to confiscation. This section reads as follows: SECTION 112. Penalty for improper importation of goods, etc.-Any person, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confi....