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2019 (11) TMI 1360 - AT - Customs100% EOU - import of prohibited goods - Department entertained the view that the impugned goods are prohibited as the appellant has not produced the said certificate of legally mined minerals - whether the impugned goods have been legally mined and whether the appellants have produced sufficient documents to prove the same? - principles of natural justice. HELD THAT - The show-cause notice was issued to the appellant on 26/07/2019 proposing to confiscate the goods on the ground that they are not legally mined minerals and are prohibited goods. In the show-cause notice, 30 days time has been given as observed in para 24 of the show-cause notice to file the reply. But the Commissioner passed the impugned order on the next day itself i.e. 27/07/2019 without affording an opportunity of filing the reply to the show-cause notice by the appellant. It appears that the Commissioner has no regard for the principles of natural justice. The opportunity of proper hearing has to be accorded to the appellant against whom the order of absolute confiscate has been passed on the next day of the issue of show-cause notice and that too without taking proper reply to the show-cause notice and without affording proper opportunity of hearing to the appellant. The manner and the speed with which the impugned order has been passed by the Commissioner without affording adequate opportunity to the appellant to file the reply to the show-cause notice is in complete violation of the principles of natural justice. Once the appellant has produced the legally mined minerals certificate along with other documents which have also been filed along with the appeal before the Tribunal but the same have not been considered at all and the instructions issued subsequent to the filing of the shipping bills has been considered for passing of the impugned order absolutely confiscating the impugned goods - further, during the same period, identical goods were allowed to be exported under 16 shipping bills without any objection by the same Customs authorities after a proper examination and verification and the impugned goods have been absolutely confiscated on the basis of instructions issued by the Tamil Nadu Government as well as Trade Facility circular issued by the Customs House , Cochin and that too after the filing the shipping bills. Absolute confiscation - HELD THAT - As per the policy prevalent during the relevant time, the natural garnet was freely exportable and importable without any restriction - further, the DGFT has issued a Notification No.26/2015-2020 dt. 21/08/2018 canalising the export of beach sand minerals through M/s. Indian Rare Earths Ltd. and the appellants are now legally not authorized to export the said goods. Once the goods are found to be not prohibited, then it is mandatory for the Customs authorities to release the same on payment of redemption fine if there is a violation of any conditions prescribed by any other law in force - Whereas in the present case, according to my considered view, appellant has not violated the provisions of Customs Act and has purchased the legally mined Garnet from N/s. Transworld Garnet India (P) Ltd. The impugned order is not sustainable in law as the same has been passed without following the principles of natural justice and without considering the documents produced by the appellant justifying the legally mined minerals - the impugned order is set aside and the Customs authorities, Cochin are directed to release the impugned goods to the appellant because the same cannot be exported by the appellant in view of the DGFT Notification No.26/2015-2020 dt. 21/08/2018 - appeal allowed.
Issues Involved:
1. Legality of the confiscation of Garnet under Section 113(d) of the Customs Act, 1962. 2. Violation of principles of natural justice in passing the impugned order. 3. Requirement of a certificate of legally mined minerals from the concerned District Collector. 4. Consideration of the goods as prohibited under Section 2(33) of the Customs Act. 5. Applicability of Trade Facility Notice and other instructions issued by Tamil Nadu Government and Cochin Customs House. 6. Imposition of penalty under Section 114(i) of the Customs Act. 7. Demand of testing charges under Section 145 of the Customs Act. Issue-wise Detailed Analysis: 1. Legality of the Confiscation of Garnet under Section 113(d) of the Customs Act, 1962: The Commissioner of Customs ordered the absolute confiscation of 13,81,000 kgs of Garnet under 14 shipping bills, 2,48,000 kgs of Garnet stored at the Container Freight Station, and 13,00,000 kgs of Garnet under 16 shipping bills. The appellant argued that the goods were legally mined and transported with proper permits from Andhra Pradesh. The Tribunal found that the appellant had produced sufficient documents to prove the legality of the minerals, which were not adequately considered by the Commissioner. 2. Violation of Principles of Natural Justice in Passing the Impugned Order: The appellant contended that the impugned order was passed in violation of principles of natural justice, as the show-cause notice was issued on 26/07/2019 with a 30-day period to respond, but the order was passed the next day on 27/07/2019 without considering the appellant's reply. The Tribunal agreed, noting that the Commissioner wrongly claimed that written submissions were filed on 27/07/2019, which was categorically denied by the appellant. 3. Requirement of a Certificate of Legally Mined Minerals from the Concerned District Collector: The Commissioner insisted on a certificate of legally mined minerals from the District Collector of Tamil Nadu, while the minerals were mined in Andhra Pradesh. The Tribunal found this requirement unreasonable, as the District Collector of Tamil Nadu could not issue such a certificate for minerals mined in Andhra Pradesh. The appellant had already provided necessary documents from Andhra Pradesh authorities. 4. Consideration of the Goods as Prohibited under Section 2(33) of the Customs Act: The Commissioner considered the goods as prohibited under Section 2(33) of the Customs Act, which was not invoked in the show-cause notice. The Tribunal held that the confiscation order was not legal as it relied on provisions not mentioned in the show-cause notice. 5. Applicability of Trade Facility Notice and Other Instructions Issued by Tamil Nadu Government and Cochin Customs House: The Commissioner relied on Trade Facility Notice No.13/2016 and instructions from the Tamil Nadu Government, which were issued after the goods were transported to Cochin. The Tribunal held that these instructions could not be applied retrospectively and were not in force when the shipping bills were filed. 6. Imposition of Penalty under Section 114(i) of the Customs Act: The Commissioner imposed a penalty of ?10,00,000 on the appellant under Section 114(i) of the Customs Act. The Tribunal set aside the penalty, as the confiscation itself was found to be unsustainable. 7. Demand of Testing Charges under Section 145 of the Customs Act: The Commissioner confirmed the demand of ?20,884 towards testing charges under Section 145 of the Customs Act. The Tribunal did not specifically address this issue in the detailed analysis but set aside the entire impugned order, implying that this demand was also annulled. Conclusion: The Tribunal set aside the impugned order, directing the Customs authorities at Cochin to release the impugned goods to the appellant, as the goods could not be exported due to the DGFT Notification No.26/2015-2020. The appeal filed by the appellant was allowed, and the early hearing application was disposed of.
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