2009 (11) TMI 70 - HC - Customs

Non clearance of goods for a long time after importation ownership of the goods - The consignment was seized by the officers of SIIB on 01.10.2004 and was liable for confiscation under the Customs Act. Be that as it may, the investigation by DRI revealed that M/s Sandip Exports Limited was a continuous defaulter and was misusing the import licence dated 22.03.2002 on very many aspects. Therefore, a show cause notice was issued to M/s Sandip Exports Limited by the Commissioner for recovery of duty of Rs.20,34,882/- - held that - After impleading the original importer in the appeal proceedings before the Tribunal it is for M/s Sandip Exports Limited to either avail the opportunity or to abstain itself from participating in the proceedings. But so long as the said party is a necessary party to the proceedings, the disposal of the appeal in its absence i.e., without even being impleaded as a party, in our considered opinion would vitiate the very proceedings. We therefore hold that M/s Sandip Exports Limited ought to have been impleaded as a party to the appeal proceedings before the Tribunal. - . As far as the merits of the issue which has been decided in the impugned order is concerned since at the instance of the first respondent the only question raised before the Tribunal was as regards his entitlement to get the goods released and as to what rate of redemption fine such relief should be ordered, we find that the Tribunal has not dealt with the said issue in the proper perspective. - when the question as to the ownership of the goods imported is substantially in issue, as such, the decision on that issue will have far reaching consequences for the determination of the release of the goods, the levy of duty, the levy of redemption fine in lieu of confiscation and for the levy of penalty for improper import. The Tribunal ought to have examined the question as to the rights of the original importer, namely, M/s Sandip Exports Limited and the present claim of the first respondent who seeks to virtually subrogate itself to that of the original importer based on certain documents stated to have been obtained from the overseas supplier.

Summary

Issues Involved:
1. Ownership of the imported goods.
2. Justification of the reduction in redemption fine by the Tribunal.
3. Non-impleading of the original importer (M/s Sandip Exports Limited) in the appeal proceedings before the Tribunal.

Detailed Analysis:

Ownership of the Imported Goods:
The primary issue revolves around the ownership of 3061.82 Kgs of "Mulberry Raw Silk" imported under an advance license. M/s Sandip Exports Limited, the original importer, failed to clear the goods, leading to their seizure by customs authorities. The first respondent claimed ownership based on revised documents issued by the supplier and sought amendment of the import documents. The Tribunal recognized the first respondent's claim to ownership, noting that they had retired the relevant shipping documents and undertook to pay customs duty and redemption fine. However, the High Court found that the Tribunal failed to consider the original importer's rights and the implications of the seizure adequately. The High Court emphasized that the original importer (M/s Sandip Exports Limited) had not relinquished the title to the goods, and the supplier's recall of documents was not legally valid after the seizure.

Justification of the Reduction in Redemption Fine:
The Tribunal reduced the redemption fine from Rs.30 lakhs to Rs.2 lakhs, following a precedent involving the same original importer but a different claimant (M/s Adani Exports Limited). The appellant argued that this reduction was unjustified. The High Court held that the Tribunal did not examine the issue of redemption fine reduction with sufficient care and caution, especially given the repeated defaults by M/s Sandip Exports Limited. The High Court found that the Tribunal's decision lacked a thorough analysis of the circumstances surrounding the reduction of the fine.

Non-impleading of the Original Importer:
The High Court found that the Tribunal's order was fundamentally flawed due to the non-impleading of M/s Sandip Exports Limited, a necessary party. The original importer was not included in the appeal proceedings, which the High Court deemed essential for a fair adjudication. The High Court noted that the original authority had considered the entitlement of M/s Sandip Exports Limited to the goods and imposed penalties and duties accordingly. The absence of the original importer in the Tribunal's proceedings meant that the appeal was decided without considering all relevant parties, thereby vitiating the process.

Conclusion:
The High Court set aside the Tribunal's order on the grounds of non-impleading the original importer and the inadequate examination of the ownership and reduction of redemption fine issues. The matter was remitted back to the Tribunal for a fresh decision, with a directive to implead M/s Sandip Exports Limited as a necessary party. The Tribunal was instructed to dispose of the appeal within two months of serving notice to the newly impleaded party. The High Court also dismissed the first respondent's reliance on certain customs department communications, emphasizing the need for a coordinated approach among customs officials and adherence to legal processes. The appeal was allowed with directions for a comprehensive re-evaluation by the Tribunal.