2006 (3) TMI 158 - HC - Customs

Issues Involved:
1. Jurisdiction of the Board to issue notice under Section 114A of the Customs Act.
2. Validity of imposing penalty under Section 129D after cancellation of bond.
3. Legality of the first respondent entertaining an appeal against its own order.
4. Applicability of the principles of res judicata.
5. Correct interpretation of Sections 110, 111, and 112 of the Customs Act.
6. Application of Section 114A of the Customs Act.
7. Correct application of the law of limitation.

Detailed Analysis:

1. Jurisdiction of the Board to issue notice under Section 114A of the Customs Act:
The appellant contended that the notice issued by the Board on 2-8-1999 was without jurisdiction as Section 114A came into force only on 28-9-1996, whereas the import occurred in 1990-91. The court rejected this contention, stating that the Board had found a conscious violation of the Notification dated 1-3-1988, and the Commissioner should have imposed a penalty under Section 112(a), which was applicable at the time of import. Thus, the contention failed.

2. Validity of imposing penalty under Section 129D after cancellation of bond:
The appellant argued that since the bond executed at the time of provisional release of the imported goods was canceled, penalty under Section 129D could not be imposed. The court found no material evidence of the bond cancellation and noted that the appellant was not eligible for the exemption under the Notification dated 1-3-1988. The court also cited the Bombay High Court's decision in Bussa Overseas and Properties P. Ltd. v. C.L. Mahar, which held that the power to levy penalty is not dependent on the availability of the goods but on the act or omission of the importer. Thus, the imposition of penalty was justified.

3. Legality of the first respondent entertaining an appeal against its own order:
The appellant questioned whether the first respondent could entertain an appeal against its own order. The court referred to Sections 129A and 129D of the Customs Act, clarifying that while Section 129A allows an aggrieved party to appeal, Section 129D empowers the Board to revise orders suo motu. The Board's initiation of proceedings under Section 129D within the limitation period was valid, and the plea of res judicata under Section 11 C.P.C. failed.

4. Applicability of the principles of res judicata:
The appellant argued that the first respondent's order violated the principles of res judicata. The court explained that the Board's power under Section 129D is independent of the powers under Section 129A. The omission of imposing a penalty in the original order was corrected by the Board's direction under Section 129D. Thus, the principles of res judicata did not apply.

5. Correct interpretation of Sections 110, 111, and 112 of the Customs Act:
The court upheld the interpretation of Sections 110, 111, and 112, stating that the appellant's violation of the Notification dated 1-3-1988 rendered the imported goods liable for confiscation under Section 111, which justified the imposition of a penalty under Section 112(a).

6. Application of Section 114A of the Customs Act:
The court noted that although Section 114A was mentioned in the Board's proceedings, the penalty was ultimately imposed under Section 112(a), which was applicable at the time of import. Thus, the application of Section 114A was not relevant to the case.

7. Correct application of the law of limitation:
The court found that the Board initiated proceedings under Section 129D within the six-month limitation period from the issuance of the show cause notice on 6-3-1998. Therefore, the law of limitation was correctly applied.

Conclusion:
The court dismissed the appeal, upholding the imposition of a penalty under Section 112(a) for the violation of the Notification dated 1-3-1988. All contentions raised by the appellant were rejected, and the appeal failed on all grounds. The connected CM.P. was also dismissed.

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