2021 (12) TMI 491 - AT - Customs

Determination of the legality of confiscation of the impugned goods under section 111(d) of Customs Act, 1962 to be redeemed - levy of penalty - goods did not match the documents of clearance and section 123 of Customs Act, 1962 - HELD THAT - The appellant had obtained clarifications from the supplier that, in their local market, synthetic yarn was available or marketed under certain denierage which was adopted for the purpose of invoice and other documents on the basis of which the declaration was made in the bill of entry. The clarifications received from the overseas supplier was not within the possession of the adjudicating authority who appeared to have been influenced only by the discrepancy of the denierage and by the endorsement on the bill of entry produced by the appellant. The notings about availment of CENVAT credit as demonstrating transfer may well be a hypothesis that could have been tested from available records. It cannot be concluded whether the adjudication was carried out after affording the appellant of every opportunity of pleading their defence. It would be in the interest of justice for the adjudicating authority to take a fresh decision on the mater after giving an opportunity to the appellant to refute all allegations and also to consciously discharge the onus imposed on them under section 123 of Customs Act, 1962 - appeal allowed by way of remand.

Issues:
1. Competence under section 110 of Customs Act, 1962 for seizure and its impact on subsequent proceedings.
2. Jurisdictional validity of show cause notice issued by an officer of central excise.
3. Merit of the claim regarding legal possession of imported goods and compliance with Customs Act, 1962.
4. Adequacy of opportunity for the appellant to present a defense during adjudication.

Analysis:

Issue 1: Competence under section 110 of Customs Act, 1962 for seizure and its impact on subsequent proceedings:
The Tribunal was tasked with determining the legality of confiscation of impugned goods under section 111(d) of the Customs Act, 1962 and the imposition of penalties under section 112. The Hon'ble High Court directed the Tribunal to consider the competence under section 110 of the Customs Act, 1962 to effect seizure and its impact on subsequent proceedings. The confiscation and penalties were consequences of the finding that the goods seized did not match the description in the bill of entry, leading to confiscation and penalty imposition due to the failure to discharge the onus under section 123 of the Customs Act, 1962.

Issue 2: Jurisdictional validity of show cause notice issued by an officer of central excise:
The appeal raised concerns about the lack of competence of the Superintendent of Central Excise to exercise powers under section 110 and the Deputy Commissioner of Central Excise to issue the show cause notice. The Tribunal clarified the distinction between the powers under section 110 for seizure and section 28 for recovery of duties. It was noted that the Deputy Commissioner of Central Excise is not barred from issuing a notice under section 124 of the Customs Act, and there was no jurisdictional impediment that tainted the proceedings leading to the impugned order.

Issue 3: Merit of the claim regarding legal possession of imported goods and compliance with Customs Act, 1962:
The Tribunal analyzed the discrepancies between the imported goods and the documents of licit import. The appellant's claim of legal possession was challenged due to mismatches in denierage and markings on the cartons. The Tribunal highlighted the appellant's failure to prove legal possession under section 123 of the Customs Act, 1962, based on the evidence presented.

Issue 4: Adequacy of opportunity for the appellant to present a defense during adjudication:
The Tribunal emphasized the importance of affording the appellant every opportunity to present their defense during adjudication. It was noted that the adjudicating authority may not have considered all relevant clarifications provided by the appellant, leading to uncertainties regarding the fairness of the adjudication process. As a result, the Tribunal set aside the impugned order and remanded the matter back to the original authority for a fresh decision.

In conclusion, the judgment delves into the intricate legal aspects of competence for seizure, jurisdictional validity of notices, compliance with the Customs Act, and the importance of providing a fair opportunity for defense during adjudication. The Tribunal's decision to remand the matter for a fresh decision underscores the commitment to upholding procedural fairness and justice in customs-related disputes.

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