2000 (3) TMI 322 - AT - Customs

Summary

Issues Involved:
1. Confiscation of 200 T.T. Gold Bars under Section 111(d) of the Customs Act, 1962.
2. Imposition of penalties under Section 112(a) of the Customs Act, 1962.
3. Rights of the unpaid foreign supplier regarding the ownership and disposal of goods.
4. Legality of the import process and the stage at which import is considered complete.
5. Applicability of Supreme Court decisions and other legal precedents.

Detailed Analysis:

1. Confiscation of 200 T.T. Gold Bars under Section 111(d) of the Customs Act, 1962:
The Commissioner of Customs ordered the confiscation of 200 T.T. Gold Bars under Section 111(d) of the Customs Act, 1962, with a redemption fine of Rs. 1 crore. The appellants, M/s. Bin Sabt Jewellery, challenged this order. The Commissioner held that since the consignee in India was bogus, the foreign supplier could not divert the goods to another importer in India. The import of gold was restricted and required a Special Import License (SIL), which was not present in this case, leading to the conclusion that Section 111(d) was attracted.

2. Imposition of penalties under Section 112(a) of the Customs Act, 1962:
Penalties were imposed on the appellants and M/s. Shri Ganesh Exports under Section 112(a) of the Customs Act. The Commissioner found that the appellants had failed to exercise due care and prudence, leading to the imposition of penalties. The appellants contended that the Commissioner could not impose penalties as the original order set aside by the Tribunal did not impose any penalties.

3. Rights of the unpaid foreign supplier regarding the ownership and disposal of goods:
The appellants argued that as unpaid foreign suppliers, they retained ownership of the goods and had the right to sell the goods to another buyer in India or re-export them. The Commissioner, however, rejected this claim, stating that the foreign supplier had no legal obligation to verify the antecedents of the buyer but was supposed to protect their interests. The Tribunal held that the foreign supplier's rights as an unpaid seller remained protected, and their title to the goods could not be interfered with by confiscation or penalties.

4. Legality of the import process and the stage at which import is considered complete:
The appellants contended that import is not complete until the goods have crossed the customs barrier for home consumption. They relied on the Supreme Court decision in Garden Silk Mills Ltd. v. UOI, which held that import continues until the goods are cleared from the customs barrier. The Tribunal agreed with this contention, stating that since the goods were still within the customs barrier, the import was not complete, and therefore, liability to confiscation under Section 111(d) did not arise.

5. Applicability of Supreme Court decisions and other legal precedents:
The appellants cited the Supreme Court decision in M/s. Union of India v. Sampat Raj Dugar, which recognized the rights of unpaid foreign suppliers. The Tribunal found that the ratio of this decision applied to the present case, as the foreign supplier retained ownership of the goods. The Tribunal also considered other legal precedents, including decisions in Siemens Ltd. v. CCE and Easter Industries Ltd. v. Collector of Customs, which supported the appellants' contentions.

Conclusion:
The Tribunal set aside the order of confiscation and the penalties imposed on the appellants. It directed the Commissioner to allow the appellants to find an Indian buyer for clearance of the goods for home consumption within three months or, alternatively, to permit re-export of the goods without any fine or penalty if a buyer could not be found. The appeal was disposed of in these terms.