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2005 (10) TMI 535 - AT - CustomsFinalization of assessment - Absolute Confiscation - Import of goods under Advance Licence scheme claiming duty free clearance under Notification 117/78 as amended - demand of duty when the goods are absolutely confiscated - Section 129A of the Customs Act - majority order. As per Moheb Ali M., Member (T) HELD THAT - It is hotly contested that the Collector erred in ordering absolute confiscation and demanding duty on the same quantity under Section 28 and Section 143A (the latter section has no legal standing). In a recent decision in the case of Union of India v. Shri Harkishandas Narottam Hospital (W.P. No. 388 of 2005), dated 13-4-2005 .......................................... , the DB of Hon ble High Court of judicature at Bombay ruled thus If the appellant were not interested in redeeming the goods, then, the Customs Act does not create liability to pay the Customs duty . If that were to be the legal position in regard to goods not redeemed it is equally so in respect of goods absolutely confiscated. The ratio laid down by the Hon ble High Court is applied to the facts of the present case. What the Hon ble High Court has laid down is that he who possess the goods shall bear the liability to duty. In other words, if the goods are absolutely confiscated it is the Central Government who would possess the goods. Liability to pay duty on absolutely confiscated goods does not shift to the person who either imported the goods or to the person from whose possession the goods were seized. The demand for duty on 4536 bales weighing 1169.575 needs to be set aside. Their confiscation under Sections 111(m) and (o) has to be upheld as the goods in question were misdeclared and the conditions under which the goods were imported were violated. Another significant feature in regard to clearances under Bills of Entry 22 and 23 is that in DEEC Part D the importers have not indicated the notification applicable to VSF even though they mentioned the duty applicable to VSF. The modus operandi was the same. In case the appellant failed to fulfil the export obligation they would pay duty applicable to VSF even when they imported PSF. The declaration made in the Bill of Entry read with the ones in the DEEC book would constitute misdeclaration with intent to evade duty. The goods are therefore liable to confiscation. Out of 4536 bales confiscated a quantity of 452 bales pertained to goods cleared under Bill of Entry No. 63. The balance therefore should be attributed to PSF cleared under Bill of Entry Nos. 22 and 23. Both these clearances took place under the same Advance Licence. It is not possible to attribute the quantity seized and confiscated to the Bills of Entry 22 and 23 individually unlike in the case of Bill of Entry No. 63. It is possible of course to relate the balance quantity that is 4536 452 4084 to the clearance made under Advance Licence used for clearing the goods under Bills of Entry Nos. 22 and 23. The Commissioner also confiscated absolutely 171 bags of yarn weighing 85.50 kgs seized from P.G. Textiles under Sections 111(m) and (o) read with Section 120 of the Customs Act on the ground that the yarn is made out of PSF liable to confiscation. We are not aware how much of PSF has gone into the production of this quantity of yarn. Duty is however not demandable on the quantity of PSF that had gone into the production of 171 bags of yarn. From the total demand duty attributable to this quantity of PSF will have to be deducted. To sum up, the position emerges like this. Confiscation of 4476 bales of PSF under Sections 111(m) and (o) is upheld in so far as L.D. Textiles is concerned. On the question whether they should be absolutely confiscated or not we observe that this action on the part of the Commissioner is seemed to have been prompted by the modus operandi adopted by the appellants. Goods which have been imported under certain conditions laid down by the Licensing Authority, when not complied with do become prohibited goods - Since it is held that the goods in question have rendered themselves liable to confiscation it is perhaps academic at this distant date in the present case whether the adjudicating authority should have given an option to redeem them on payment of duty. We are not inclined to modify the order into one of the confiscation with an option to redeem as it serves no purpose. It is not also possible to set aside the order of confiscation adjudicated by the lower authority. It is now well settled that mens rea on the part of the person from whose possession offending goods are seized and confiscated is not necessary to render them liable to confiscation though such a state of mind is necessary for penalty under Section 112 of the Customs Act. The Department is able to adduce enough evidence in the form of statements of transporters, owners and other documentary evidence as brought out in the show cause notice that the goods seized from the appellants - These goods were cleared duty free under certain conditions which were later found to have been not observed. The very fact that they have been removed from the premises of the importer without permission from the appropriate authorities rendered the goods liable to confiscation. There are no infirmity in the order in so far as confiscation of the goods in the hands of these appellants is concerned. These appeals are accordingly rejected. As per S.S. Sekhon, Member (T) The setting aside of the impugned order is ordered and the appeal is allowed as regards finalization of the assessment and duty demands thereafter, if any, in case of all these 3 Bills of Entry to be redetermined by the proper officer in charge of Veraval Custom House. MAJORITY ORDER - In view of the majority opinion, the appeals are disposed off in terms of the order prepared by the learned Member (Technical), Shri Moheb Ali M.
Issues Involved:
1. Jurisdiction of the adjudicating authority. 2. Applicability of Section 28 of the Customs Act to provisional assessments. 3. Invocation of Section 143A of the Customs Act. 4. Allegation of misdeclaration of goods. 5. Demand for duty on absolutely confiscated goods. 6. Confiscation of goods from other appellants. Detailed Analysis: Jurisdiction: The appellants argued that the Collector of Customs, Gujarat, lacked jurisdiction to adjudicate the case. It was contended that the Collector of Customs, Gujarat, was designated for anti-smuggling operations and not for assessment functions. The Tribunal noted that the Central Government, under Section 4 of the Customs Act, appointed the Collector of Customs, Gujarat, with jurisdiction over the entire state of Gujarat, excluding KFTZ. The Tribunal found that both the Collector of Customs, Gujarat, and the Collector of Customs, Rajkot, had concurrent jurisdiction over Veraval Port. The Tribunal rejected the argument that the Collector of Customs, Gujarat, lacked jurisdiction, stating that the Collector acted within his mandate when seizing the goods and proceeding against them. Applicability of Section 28 to Provisional Assessments: The appellants argued that Section 28 of the Customs Act could not be invoked for provisional assessments. The Tribunal referred to the case of Reliance Industries Limited v. Union of India, where it was held that a show cause notice could be issued under Section 124 even without finalizing the assessment. The Tribunal concluded that action could be initiated and concluded against offending goods even when the assessments were provisional, thus upholding the applicability of Section 28. Invocation of Section 143A: The appellants contended that Section 143A was not notified in the official gazette and hence could not be invoked. The Tribunal acknowledged that Section 143A was not gazetted but noted that the Collector also invoked Section 28 while demanding duty. The Tribunal held that the reliance on Section 143A did not vitiate the proceedings as the primary demand was under Section 28. Allegation of Misdeclaration: The appellants argued that there was no misdeclaration of goods. They claimed that they declared the correct quality and value of the goods and that their failure to fulfill the export obligation was due to factors beyond their control. The Tribunal found that the appellants declared the goods as viscose staple fibre (VSF) while they imported polyester staple fibre (PSF), which constituted misdeclaration. The Tribunal held that the declaration in the DEEC book formed part of the declaration in the Bill of Entry, and the appellants' conduct amounted to misdeclaration and suppression. Demand for Duty on Absolutely Confiscated Goods: The appellants argued that duty could not be demanded on goods that were absolutely confiscated. The Tribunal referred to a recent decision by the Bombay High Court, which ruled that liability to pay customs duty does not arise if the goods are not redeemed. The Tribunal applied this principle, setting aside the demand for duty on the absolutely confiscated goods. The Tribunal upheld the confiscation but concluded that no duty was payable on the confiscated goods. Confiscation of Goods from Other Appellants: The appellants argued that there was no nexus between the confiscated goods and the imported goods. The Tribunal found that the Department provided sufficient evidence to connect the confiscated goods with the imported goods. The Tribunal upheld the confiscation of goods from the other appellants, stating that offending goods are liable to confiscation regardless of their possession. Majority Order: The majority opinion, delivered by Member (Technical), upheld the confiscation and partial demand for duty, while setting aside the demand for duty on absolutely confiscated goods. The Tribunal directed the finalization of assessments and recomputation of duty in accordance with the order. The appeal by M/s. L.D. Textiles was partially allowed, while the appeals by the other appellants were rejected. Separate Judgment by Member (Technical): One member, S.S. Sekhon, dissented, arguing that the Collector of Customs, Gujarat, lacked jurisdiction to finalize the provisional assessments and that the matter should be remitted to the appropriate authority in charge of Veraval Custom House. He also suggested that the show cause notice issued before finalizing the assessment was not sustainable. However, the majority opinion prevailed, and the appeals were disposed of accordingly.
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