2017 (10) TMI 364 - AT - Customs

Confiscation - import of stainless steel drums - differential duty was confirmed in the impugned order on the ground that the privilege of exemption allowed to packaging material in N/N. 184/76-Cus dated 2nd August 1976 was not available to the importer as the drums did not meet the criteria listed therein - eligibility of stainless steel drums to exemption as packaging material - Held that - With the stainless steel drums being ineligible for exemption, they are to be subject to assessment for appropriate duty. It is the contention of Learned Counsel that the impugned order has not complied with the statutory prescriptions relating to valuation and that no consideration had been contracted with supplier of the goods for the packaging material. Consequently, it was argued that the adjudicating authority should have accorded weightage to the affidavit of the supplier instead of relying upon a pro forma invoice of M/s Imperial Container Pte Ltd to hold that no differential duty was recoverable. The impugned order has concerned itself primarily with the proposal to confiscate the stainless steel drums and for imposition of penalty under section 111 and section 112 respectively of Customs Act, 1962. With our finding on duty liability devolving on the packaging material consequent upon ineligibility for exemption, it necessarily follows that compliance with the regime of the EXIM Policy, as prevailing then, must also be gone into. There is no dispute that the drums are made of stainless steel and that these were not importable except through designated canalizing agency. Import by any another was permissible only against a valid licence which the importer-appellant, admittedly, was not in possession of. On behalf of the appellant, it is claimed that they had no intention of importing any goods that were not permitted under the EXIM Policy. A plain reading of section 111(d) of Customs Act, 1962 along with the provisions of the EXIM Policy, leave no doubt that the imported stainless steel drums are liable to confiscation. The impugned order cannot be faulted to that extent - the offence of import without licence did occur in 1978-79 and necessary consequences must follow. The confiscation of goods in the impugned order is confirmed. Considering the various circumstances narrated above, the importer-appellant is permitted to redeem the goods on payment of fine of ₹ 5,00,000 within 60 days of this order. In accordance with section 125 (2) of Customs Act, 1962, the redemption is subject to payment of duty which will be determined by the Asst Commissioner of Customs, New Customs House, Mumbai in accordance with law on finalizing the less charge notices. In the event of failure to exercise the option, the confiscation is rendered absolute and the goods to vest in the Central Government in accordance with section 126 of Customs Act, 1962. The ends of justice will be met by restricting the penalty imposed on Shri Vinod Jain and Shri Rakesh Jain to ₹ 50,000 each - appeal allowed in part.

Summary

Issues Involved:
1. Eligibility of 'stainless steel drums' for exemption as packaging material.
2. Legality of applying public notice no. 90 for penal action.
3. Reliance on documents not before the Supreme Court and lack of cross-examination.
4. Bar of limitation and suppression of facts.
5. Valuation of imported goods and compliance with statutory prescriptions.
6. Confiscation of goods and imposition of penalties under Customs Act, 1962.
7. Appeals of Revenue against dropping of proceedings against other noticees.

Issue-wise Detailed Analysis:

1. Eligibility of 'stainless steel drums' for exemption as packaging material:
The exemption under notification no.184/76-Cus dated 2nd August 1976 was denied as the 'stainless steel drums' did not meet the criteria for packaging material. The conditions for exemption included that the packaging should not be a separate commercial transaction, should not be of permanent character for repeated use, and should conform to normal trade practices. The drums were found to be of 'non-magnetic stainless steel' and were stored for reuse, indicating they were not mere packaging but separate goods liable for duty.

2. Legality of applying public notice no. 90 for penal action:
The public notice no. 90, supplement to 'Daily List of Imports/Exports' dated 10th September 1979, reiterated conditions of notification 184/76-Cus. The tribunal discarded findings based solely on this public notice, as it should not contradict the exemption notification. The notice mandated a separate declaration of packaging material costs, which was not relevant to the exemption criteria.

3. Reliance on documents not before the Supreme Court and lack of cross-examination:
The tribunal discarded any findings exclusively relying on documents not presented to the Supreme Court and statements that were not subject to cross-examination, adhering to the directions of the Supreme Court.

4. Bar of limitation and suppression of facts:
The tribunal noted that confiscation proceedings are not subject to the bar of limitation, which applies only to section 28 of the Customs Act, 1962. The 'less charge demand' notices are subject to limitation periods, contingent on facts to be scrutinized. The plea of no suppression by the importer required examination during the evaluation of facts.

5. Valuation of imported goods and compliance with statutory prescriptions:
The tribunal found that the impugned order did not comply with section 14 of the Customs Act, 1962, and the Customs Valuation Rules, 1963. The valuation based on a pro forma invoice from M/s Imperial Container Pte Ltd was not substantiated. The recovery of ?55,77,333 was ordered without proper ascertainment of assessable value, leading to the demand being unsustainable. The 'less charge notices' were to be disposed of in accordance with the law.

6. Confiscation of goods and imposition of penalties under Customs Act, 1962:
The tribunal confirmed the confiscation of 'stainless steel drums' under section 111(d) of the Customs Act, 1962, due to non-conformity with the EXIM Policy. The redemption fine was reduced to ?5,00,000, and the duty was to be determined by the Asst Commissioner of Customs. The penalties on the Directors were reduced to ?50,000 each, considering the circumstances and the lapse of time.

7. Appeals of Revenue against dropping of proceedings against other noticees:
The tribunal upheld the decision to drop proceedings against other noticees, as they were not provided with relied-upon documents and did not participate in the adjudication proceedings. There was no specific evidence of their involvement in the import or storage of drums, and their role was deemed insignificant.

Conclusion:
The tribunal disposed of the thirteen appeals by confirming the ineligibility for exemption and confiscation of the 'stainless steel drums,' reducing the redemption fine and penalties, directing the disposal of 'less charge notices,' and dismissing the appeals of Revenue.