1988 (7) TMI 296 - AT - Customs

Summary

Issues Involved:
1. Jurisdiction of the Collector of Customs, Cochin to demand duty.
2. Compliance with conditions of the DEEC scheme.
3. Imposition of penalty under Section 114 of the Customs Act, 1962.

Detailed Analysis:

1. Jurisdiction of the Collector of Customs, Cochin to demand duty:

The primary issue was whether the Collector of Customs, Cochin had the jurisdiction to demand customs duty on goods imported at Madras and cleared by the Madras Customs. The judgment states, "Taking first the question of the Cochin Collector's jurisdiction to demand duty in the present case, we have to note the import of the goods took place at Madras. Their clearance duty free in terms of Customs notification was granted at Madras." It was emphasized that the proper authority to demand duty was the Collector of Customs, Madras, as the import and clearance of goods occurred within his jurisdiction. The Tribunal concluded, "The Cochin Collector, however, seems to have assumed jurisdiction to deal with the matter himself," and this was deemed inappropriate. Consequently, the demand for duty by the Cochin Collector was set aside.

2. Compliance with conditions of the DEEC scheme:

The exporters, M/s. Costa Foods, were alleged to have violated the conditions of the DEEC scheme by not utilizing the imported materials (white card board, kraft paper, and polythene moulding powder) for the purpose specified. The judgment notes, "No evidence was available to show that the imported white card board, kraft paper and polythene moulding powder were converted into cartons and polythene sheets, as specified in the advance licence and DEEC book." Despite the scrutiny of seized documents, it was revealed that locally made packing materials were used instead. This non-compliance led to the issuance of a show cause notice under Section 124 of the Customs Act, 1962, demanding an explanation from the exporters.

3. Imposition of penalty under Section 114 of the Customs Act, 1962:

The Tribunal examined whether the penalty imposed by the Collector under Section 114 was justified. The judgment states, "The order does not in terms spell out the provision of the Customs Act under which the penalty has been imposed." It was inferred that the penalty was likely imposed under Section 114, which pertains to acts or omissions rendering goods liable to confiscation under Section 113. However, the Tribunal found that the exported goods did not fall under any of the categories mentioned in Section 114, such as prohibited goods, dutiable goods, or goods exported under claim for drawback. The judgment clarifies, "It has not been shown before us that in respect of the exported goods, there was any such prohibition," and "The Department's case is not that the exported goods were dutiable or that they were exported without payment of duty." Therefore, the imposition of the penalty was deemed unjustified and was quashed.

Conclusion:

In conclusion, the Tribunal set aside the demand of Rs. 5,66,739/- and quashed the penalty of Rs. 50,000/- imposed by the Collector of Customs, Cochin. The judgment emphasized that the proper jurisdiction for demanding duty lay with the Collector of Customs, Madras, and that the conditions of the DEEC scheme were not met by the exporters. Additionally, the penalty under Section 114 was found to be improperly imposed as the conditions for its application were not satisfied. The appeal was allowed, and the impugned order was set aside.