2017 (10) TMI 306 - HC - Customs

Smuggling - Absolute confiscation - Sandal Wood Chips - penalty - Section 129 (E) of the Customs Act - The appellant mainly objected the adjudication on the ground that Section 125 of the Customs Act, 1962, requires exercise of judicial discretion by the adjudicating authority and grant option to the exporter or importer to redeem goods. He explained that the goods were sandalwood chips and were procured from genuine sources and not attempted to smuggle - Held that - if the party was prevented from appearing due to sufficient cause and when the cause shows the prevention of the party from appearing before the authorities, the Tribunal or Court may take into consideration of recalling the order. The show cause notice was issued in the year 1992 and the original authority passed confiscation order and imposed penalty. Even after a lapse of 25 years, the authority was not able to implement the order till date, which would go to show that the appellant, was not interested in pursuing the adjudication and tried to protract the matter in one way or the other either before adjudicating authority or before this court - the appellant, in one way or the other, has protracted the proceedings, right from the year 1992, till date and on perusal of the application made before the authority for recalling the order, it would show that no sufficient cause was established for preventing the person from appearing before the authority. Without establishing sufficient cause for non-appearance before the authority, that too, when the appellant has filed a petition to recall the order when he all along, agitated the case before the authorities, his non-appearance before the Appellate Authority in his appeal, this Court, is not convinced with the reason given in the application for recalling the order - decided against appellant.

Summary

Issues Involved:
1. Legitimacy of the Certificate of Origin and other documents.
2. Compliance with statutory requirements for sandalwood export.
3. Exercise of judicial discretion under Section 125 of the Customs Act.
4. Validity of the Tribunal's rejection of the restoration application.

Detailed Analysis:

1. Legitimacy of the Certificate of Origin and other documents:
The appellant, a partnership concern, attempted to export 10 MTs of sandalwood chips using allegedly false documents, including a Certificate of Origin and Form-II. Investigations revealed that the Certificate of Origin was not issued by the Principal Conservator of Forest, Andhra Pradesh, and the Divisional Forest Officer confirmed the permit was not genuine due to discrepancies in the form and office seal. M/s. Divya Impex Corporation, the alleged supplier, was found to be a fictitious entity. The original authority concluded that the documents were fabricated to cover smuggling activities, leading to the confiscation of the sandalwood under Section 113(d) and 113(i) of the Customs Act, 1962, and a penalty under Section 114(i).

2. Compliance with statutory requirements for sandalwood export:
The appellant argued that the Certificate of Origin was genuine and that they held a proper license to export the goods. However, the adjudicating authority found that the sandalwood chips were not accompanied by a valid permit as required by Rule 3 of the Tamil Nadu Sandalwood Transit Rules, 1967. The investigation showed that the appellant manipulated fake documents to overcome statutory requirements, indicating a clear intent to commit fraud. The Tribunal upheld the confiscation and penalty, noting that the appellant's actions were not permissible under the EXIM Policy, 1997, and the goods were on the negative list of exports.

3. Exercise of judicial discretion under Section 125 of the Customs Act:
The appellant contended that the adjudicating authority failed to exercise judicial discretion by not granting an option to redeem the goods under Section 125 of the Customs Act. The court, however, found that the appellant's actions demonstrated a conscious effort to export prohibited goods using fraudulent documents. The appellant did not provide sufficient evidence to disprove the allegations, and the court held that there was no basis for exercising judicial discretion in favor of the appellant.

4. Validity of the Tribunal's rejection of the restoration application:
The appellant filed a restoration application and a miscellaneous application under Rule 41 of the CESTAT Procedure Rules, 1982, which were dismissed by the Tribunal. The Tribunal held that recalling the order would defeat the spirit of justice, as the order was passed on merits. The appellant argued that they were prevented from appearing due to sufficient cause, citing a case where an ex parte award was set aside due to sufficient cause. However, the court found that the appellant had protracted the proceedings since 1992 and did not establish sufficient cause for non-appearance. The reason stated in the application, that the counsel was held up in another matter, was not convincing. The court upheld the Tribunal's decision, finding no reason to interfere with the order.

Conclusion:
The Civil Miscellaneous Appeal was dismissed, with the court finding no merit in the appellant's arguments. The confiscation of the sandalwood and the imposition of penalties were upheld, and the appellant's attempt to recall the order was rejected due to a lack of sufficient cause for non-appearance.