2016 (12) TMI 263 - AT - Customs

Continuation of appeal proceedings by legal heir of the deceased appellant - whether the appeal continued is valid? - Held that - Section 129E makes it a condition mandatory for filing an appeal that duty, if any, demanded in the impugned order should, unless waived, be deposited; waiver is at the discretion of the appellate authority and is not a matter of right. The statute does not contemplate reversal of a confirmation of demand except through the appellate mechanism. The appeals do not abate and must be decided. The deceased appellant Shri Inderjit Nagpal, not having filed the bills of entry for the consignment on which differential duty was confirmed, could not have been fastened with the duty liability - Held that - Nothing would prevent the tax authority from acting against any citizen in the country on the ground that the person was the owner either originally or in due course of imported goods. The limits of action are never left to the balance or rationale of the tax collector; it is the law that has to determine the line that must never be crossed. The jurisdiction arrogated in the impugned order, unwarranted certainly, is not contemplated by law. Fraud may excite moral outrage but to allow such outrage to justify widening the tax jurisdiction beyond the plain reading of the statute is an invitation to regress to the tax regimes of the darker periods of history. The importers are, admittedly, identifiable and have been put on notice. Fastening of tax liability on Shri Inderjit Nagpal is without authority of law. Confiscation of goods - Held that - Invoking the authority under section 111 and 113 of the Customs Act 1962 and failing to act on behalf of the new owners under section 126 is a breach of agency and a breach of trust. In the alternative, confiscation effected on goods that are not traceable, and have never been traced after its clearance for home consumption, is nothing short of a travesty. Confiscation is attended by the requirement to offer the confiscated goods to the person from whom it was confiscated on payment of redemption fine. Attaching a fine to the act of confiscation without the wherewithal to complete the process is not only futile but detracts from the credibility of government. It would appear that the adjudicating Commissioner has not comprehended the semantically insignificant but substantively major distinction between confiscation and liability to confiscation. The two are distinct and separate; with a finding of liability to confiscate, the lack of goods is admitted, thus foreclosing the possession of goods, but the ingredient necessary for invoking section 112 and section 114 is breathed into existence. Therefore, the confiscation of the goods in the impugned order is not in accordance with the law. Imposition of penalty - Held that - It appears from the impugned order that this was sought to be justified by a finding that he allowed Shri Inderjit Nagpal to import the goods by mis-declaration and, thereby, abetted in evasion of customs duty. The primary role assigned to Shri Inderjit Nagpal is erroneous in the circumstances referred to above. The case of Shri Sanjay Chauhan, therefore, requires further examination. Section 28 can be invoked only in relation to specific consignments and the corresponding bill of entry. Without enumeration of the bill of entry concerned, the recovery of duty is without authority of law. This is a glaring lack that would render the proceedings to be untenable. This needs to be remedied in the remand proceedings if the outcome is to have a legal sanction - appeal allowed by way of remand.

Summary

Issues Involved:
1. Continuation of appeal proceedings by legal heir of the deceased appellant.
2. Duty liability for consignment based on misdeclaration.
3. Confiscation of goods not traceable.
4. Penalty imposed on Shri Sanjay Chauhan.
5. Enhancement of assessable value and re-assessment of duty.

Detailed Analysis:

1. Continuation of Appeal Proceedings by Legal Heir of the Deceased Appellant:
The first issue was whether the legal heir of the deceased appellant could continue the appeal proceedings. The appellants cited the Supreme Court decision in Shabina Abhraham v. Commissioner of Central Excise and the Karnataka High Court decision in Commissioner of Central Excise, Bangalore - III v. Dhiren Gandhi, arguing that appeals should abate as confirmed demands cannot be recovered from successors of a deceased assessee. The Tribunal noted that the cited rulings applied to proceedings before the confirmation of demand by the adjudicating authority. Since the demand had already been confirmed, the appeals did not abate and must be decided.

2. Duty Liability for Consignment Based on Misdeclaration:
The deceased appellant, Shri Inderjit Nagpal, was held liable for duty on MPEG cards misdeclared as ‘PCB for VCD’. The investigation traced the consignments to Shri Inderjit Nagpal through customs house agents, transporters, and financial records. The Tribunal referenced several decisions, including Schlumberger Asia Services Ltd. v. Commissioner of Customs and Goodwill Clothing Co. v. Commissioner of Customs, which emphasized that duty liability can only be assigned to the person who filed the bills of entry and not based on moral or revenue considerations. The Tribunal concluded that there was no authority to demand duty from anyone other than the importer who filed the bills of entry.

3. Confiscation of Goods Not Traceable:
The Tribunal addressed the issue of confiscation of goods that were not traceable. It clarified that confiscation under sections 111 and 113 of the Customs Act culminates in the vesting of ownership in the Central Government, which requires the goods to be available for possession. Since the goods were not traceable, the confiscation was deemed not in accordance with the law. The Tribunal highlighted the distinction between liability to confiscate and actual confiscation, emphasizing that attaching a fine without the goods being available detracts from the credibility of the government.

4. Penalty Imposed on Shri Sanjay Chauhan:
The penalty on Shri Sanjay Chauhan was based on the finding that he allowed Shri Inderjit Nagpal to import goods by misdeclaration, thereby abetting in evasion of customs duty. The Tribunal noted that the primary role assigned to Shri Inderjit Nagpal was erroneous and required further examination. Additionally, the Tribunal acknowledged the contention that MPEG cards are standards, not goods, and that this aspect had not been adequately considered by the adjudicating authority. The Tribunal remanded the matter for fresh proceedings to ascertain the factual status and roles of the individuals involved.

5. Enhancement of Assessable Value and Re-Assessment of Duty:
The Tribunal found that the enhancement of assessable value and re-assessment of duty lacked compliance with the requirement to identify specific bills of entry. The adjudicating authority had rejected the declared value under Rule 10A of the Customs Valuation Rules, 1988, but did not make an effort to identify the bills of entry for which short-recovery was effected. The Tribunal emphasized that section 28 of the Customs Act can only be invoked in relation to specific consignments and corresponding bills of entry. The lack of enumeration of the concerned bills of entry rendered the proceedings untenable. The Tribunal set aside the impugned order and remanded the matter for compliance with the legal requirements.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for further proceedings in accordance with the law, emphasizing the need for specific identification of bills of entry and proper assessment of duty liability. The judgment highlighted the importance of adhering to statutory provisions and procedural requirements in customs duty assessments and recoveries.