2018 (6) TMI 649 - AT - Customs

100% EOU - Confiscation of seized goods - theft of seized goods - the relief claimed is based on the allegation put forward by appellant that, after confiscation the property in goods vests with Government and the department has been negligent in taking proper care of the goods confiscated - Held that - The Customs Act, 1962 does not provide for any right or remedy by way of compensation/damages. All these issues fall within the realm of civil law. It requires to be examined whether there was a duty cast on the department and whether such duty is absolved by the letter of undertaking signed by the appellant. The definition of adjudicating authority under 2(i) means any authority competent to pass any order or decision under the Act . Thus an appeal can be preferred against the decision or order passed by an officer in the capacity as adjudicating authority - In the present case, since the Act does not provide for any remedy in respect of loss caused after confiscation or for any negligence on the part of department, it cannot be said that the impugned order is an order or decision passed by the Commissioner under the Customs Act as an adjudicating authority. Appellant relied upon the decision in the case of Ratan Kumar 2000 (8) TMI 572 - CEGAT, KOLKATA , Samsudeen 1990 (10) TMI 219 - CEGAT, CALCUTTA - All these decision analyse the situation wherein the goods which were confiscate has been auctioned or sold by the department invoking Sections 142/150 of the Act. When the goods have been removed or sold by the department during the pendency of appeal, the Courts have held that the appellant is entitled to be compensated to the extent of value of goods. In the present case, the goods were lost by theft as seen from the Police compliant. Therefore these decisions do not assist the appellant. The Tribunal being a creature of the statute is empowered to pass orders only on appeals as provided in section 129A of the Customs Act - the issues arising for consideration as presented by the facts of the case does not fall within the jurisdiction of the Tribunal - appeal dismissed being not maintainable.

Summary

Issues Involved:
1. Alleged clandestine disposal of imported scrap in the local market.
2. Seizure and confiscation of goods.
3. Theft of confiscated goods and subsequent liability.
4. Claim for compensation for the loss of confiscated goods.
5. Jurisdiction and maintainability of the appeal.

Detailed Analysis:

1. Alleged Clandestine Disposal of Imported Scrap:
The appellants, a 100% EOU, were engaged in importing mixed metal scrap, segregating it, and re-exporting the segregated scrap. They availed duty exemption under Notification No. 52/2003. Based on intelligence, it was alleged that the appellants disposed of a substantial quantity of imported scrap in the local market instead of exporting it as per the Letter of Permission (LOP).

2. Seizure and Confiscation of Goods:
On 24.1.2003, SIIB officers seized 453 MTS of scrap from the appellants' premises under Section 110 of the Customs Act, suspecting a violation of the Act. A show cause notice was issued on 17.7.2003 proposing the confiscation of 2259.326 MTS of scrap. The Commissioner (Exports) passed an Order-in-Original on 20.4.2004, ordering the confiscation of 1609.326 MTS of scrap and imposing fines.

3. Theft of Confiscated Goods and Subsequent Liability:
The appellants reported a theft of the confiscated scrap on 14.6.2005. An FIR was registered, and subsequent investigations confirmed the theft. The department later quantified the remaining stock as 155.94 MTS, indicating a deficit of 297.06 MTS. The department issued a show cause-cum-demand notice on 6.11.2007, demanding duty on the deficit. The original authority confirmed the duty demand on 3.12.2007. The appellants appealed, and the Commissioner (Appeals) stayed the recovery of duty and penalty.

4. Claim for Compensation for the Loss of Confiscated Goods:
The appellants claimed compensation of ?3 crores for the lost goods, arguing that as per Section 126 of the Customs Act, the confiscated goods vested with the Central Government, making the department responsible for their custody. The Commissioner rejected this claim, stating that the goods were in the appellants' custody based on an undertaking by the Managing Partner, Shri Saminathan.

5. Jurisdiction and Maintainability of the Appeal:
The department argued that the appeal was not maintainable as the order passed by the Commissioner was not an adjudication order but an administrative one. The Tribunal examined Section 126 and concluded that the issues of custody, negligence, and liability for the loss of goods fall within the realm of civil law and are outside the jurisdiction of the Tribunal. The Tribunal emphasized that the Customs Act does not provide for compensation for lost goods and dismissed the appeal as not maintainable.

Conclusion:
The Tribunal dismissed the appeal, stating that the issues raised pertain to civil law and do not fall within its jurisdiction. The appellants' claim for compensation for the lost goods was rejected, and the department's stance that the goods remained in the appellants' custody was upheld. The Tribunal's decision highlighted the limitations of its jurisdiction under the Customs Act.