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TMI Blog1999 (10) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... ntana Valves and Compressors were searched alongwith the premises of M/s. Alankar Shipping and Clearing Agents. Scrutiny of the seized records revealed that on and around June, 1993, M/s. Montana Valves & Compressors Pvt. Ltd. imported a consignment of 600 numbers of Torrington Bearing System from Singapore. M/s. Alankar Shipping & Clearing Agents acted for the importer to clear the goods. Bill of Entry was filed on 8-6-1993. Cargo was declared as 'Ship stores'. The Customs House Clearing Agent filed an in Bond Bill of Entry for Warehousing the cargo in Central Warehousing godown at Cotton Green. The cargo remained in the C.W.C. godown upto 26-7-1993. The Customs House Agent filed pink shipping bills in which the cargo was declared as 'ship stores' meant for SSK Controller of Procurement Naval Dockyard, Lion Gate, Mumbai. The shipping bill was signed by the importer. Signature and rubber seal of the official of Indian Navy was also arranged in the shipping bill to the effect that the cargo was meant for use by Indian Navy on board of their ships. On the basis of this declaration shipping bill was processed and removal of the said cargo was permitted under Section 90 of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d filed the import related documents under his signature; that he never called for the purchase documents of Navy while filing the documents; that he simply relied on Shri Bhavesh Gandhi who had assured him that in case any problem arises with customs, he would handle it. He also stated that signature of Naval Officials were obtained and arranged by Shri Bhavesh Gandhi and Chetan Kothari on the shipping bills; that he never enquired whether the consignments had reached the Naval authorities. 5. Shri Bhavesh Gandhi in his statement dated 10-9-1997 deposed that in 1991, a company by name M/s. Montana Valves & Compressors was started; that in 1993, there was demand for Torrington Bearing Systems which had wide application; that they received order for supply of Torrington Bearing System to Steel Authority of India Ltd.; that M/s. Montana Valves imported the said bearings and cleared the same without payment of duty under Section 90 of the Customs Act, 1962; that they collected the said bearings through their Customs House Agents M/s. Alankar Shipping & Clearing Pvt. Ltd.; that the said goods have not been supplied to Indian Navy and therefore, they are ready to pay voluntarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders and Engg. and 30 consignments to M/s. Goa Shipyard Ltd. Out of the remaining six consignments two consinments of Hot Rolled stainless steel coils were supplied to M/s. S.S.K. Controller of Procurement, Naval Dockyard Lion Gate, Mumbai and four consignments were of ingots which were supplied to ocean going vessel M.V. Sea Horse Porbandar. Scrutiny of the documents further revealed that these six consignments were cleared by filing shipping bills under Sections 88 and 90 without payment of duty, the same were diverted enroute and sold in the local market and never reached the actual consignee mentioned in the shipping bills. On enquiry M/s. Garden Reach Ship Builders & Engg. Calcutta and M/s. Goa Shipyard, Goa revealed that M/s. Goa Shipyard, Goa had issued 30 Duty Exemption Certificate and M/s. Garden Reach Ship Builders & Engg. had issued 9 Duty Exemption Certificate in favour of M/s. Fairlon Engg. Pvt. Ltd. for supply of Customs Duty Free goods for consumption on Board by various ships and vessels. M/s. Garden Reach Ship Builders & Engg., Calcutta and M/s. Goa Shipyard Ltd., Goa confirmed about the receipt of the goods as well as remittances made by them. However, enquiries c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lankar Shipping & Clearing Pvt. Ltd. Out of the 12 consignments, 8 consignments were claimed to be supplied to Naval Dockyard, Mumbai, two consignments were claimed to be supplied duty free to Adalaj Bonded Warehouse, Gujarat, one consignments was claimed to be supplied to M/s. Garden Reach Ship Builders & Engg. and one consignment was claimed to be supplied to M/s. Goa Shipyard Ltd., Goa. Enquiries also revealed that apart from the 12 consignments cleared through M/s. Alankar Shipping & Clearing Pvt. Ltd., there were two more consignments cleared as coil by the said firm. Thus M/s. Seaking Marine Services had imported 14 consignments, 7 consignments were claimed to have been supplied to SSK Controller of Procurement, Naval Dockyard, Mumbai, 2 consignments were claimed to have been supplied to Ocean Going Vessel M.V. Amour, Porbandar. Some consignments were supplied without payment of duty and the same were diverted enroute and sold in the local market. The picture about the diverted consignments that emerged is indicated below : S. No. Name of the Company No. of Consignments Description Consignee for 'ship stores' as per shipping bill filed Diverted to 1 MONTANA 1 Torrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly) under Section 112(a) of the Customs Act, 1962. (c) I impose a Penalty of Rs. 15,00,000/- (Rupees fifteen lakhs only) on Shri Bhavesh Gandhi Director of SMS under Section 112(b) of the Customs Act, 1962. (d) I impose a penalty of Rs. 15,00.000/- (Rupees fifteen lakhs only) on Shri Chetan Kothari, Director of MVC under Section 112(b) of the Customs Act, 1962. (e) I impose a penalty of Rs. 5,00,000/- (Rupees five lakhs only) on the CHA firm viz. Alankar Shipping Agents P. Ltd. under Section 112(b) of the Customs Act, 1962. (f) I impose a penalty of Rs. 1,00,000/- (Rupees one lakh only) on Shri K.K. Nair, Director of the CHA firm under Section 112(b) of the Customs Act, 1962. (g) The amount paid on account voluntarily towards penalty amounting to Rs. 10,00,000/- (Rupees ten lakhs only) on 3-12-1997 in the case of MVC and the amount of duty paid in excess of what is being determined in the case of SMS amounting to Rs. 10,76,880 (Rupees Ten lakhs seventy six thousand eight hundred eighty only) be adjusted against the penalty liability of MVC and SMS respectively and the remaining amount of penalty imposed should be paid forthwith. (h) This order is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Hon'ble Supreme Court in the case of Kedar Nath Bahl v. State of Punjab & Others reported in AIR 1979 S.C. 220, the ld. Counsel submitted that the Apex Court held "At any rate the earlier order of the Chief Minister dated Oct. 13 could not give rise to any right in favour of the appellant as it was not expressed in the name of the Governor as required by Article 166 of the Constitution. He submitted that in Article 166 of the Constitution of India, it has been set out that all executive action of the Govt. of a State shall be expressed to be taken in the name of the Governor". Ld. Counsel submitted that Shri S. S. Shekhon the officer who adjudicated the case was not notified to be the Commissioner of Customs (Preventive), Mumbai. He submitted that under Articles 163(1) and 166(1) of the Constitution of India the advice of Council of Ministers becomes an order of State Govt. under Article 166, only when the decision of the Council is translated into action by issuing a notification in the name of the Governor. He also cited and relied upon the decision of the Hon'ble Supreme Court in the case of State of Kerala v. Smt. A. Lakshmikutty & Others. Ld. Counsel therefore, subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with. In the case of Vashitra Singh v. State of Punjab, the Apex Court held that the order has to be expressed in the name of the Governor as required by Clauses 1 of Article 166 then it has to be communicated. Ld. DR submitted that promotion of Class I Officer is always in the name of the President and thus the requirement of Article 177 is always complied with. He submits that in the case of Kedar Nath Behl the Apex Court held the same thing i.e. in terms of Article 166, the order must be expressed in the name of the Governor as required by this Article. He submits that in all the cases cited by the Counsel, the requirement was that the appointment must be in the name of the President or the Governor as the case may. Ld. DR submitted that this requirement is fully complied with in the case of Shri Shekhon. 12. We have heard the rival submissions on the question of jurisdiction. We find that the transaction of business rules refer to form of appointment order/notification. We have perused the order transferring Shri Shekhon as Commissioner of Customs (Prev.). We find that it is not a promotion order. But it is only a transfer order. In the Customs and Central Excise Deptt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Customs (Prev.), Mumbai. He submits that thus the Commissioner of Customs (Prev.), Mumbai lacks jurisdiction to issue SCN for demand of duty or imposition of penalty in respect of six shipping bills on the strength of which goods were cleared from warehouses in Gujarat. 16. Ld. DR submitted that no doubt the goods were cleared from warehouses in Gujarat. However, they were diverted for local consumption in the State of Maharashtra where the CCP, Mumbai had the jurisdiction and since the Commissioner of Customs (Prev.), Mumbai had jurisdiction he had rightly exercised that power. 17. We have considered the rival submissions. We note that after warehousing the goods in Bombay, certain goods were further transported to Gujarat under bond and were re-warehoused in Gujarat. Shipping Bills were presented in Gujarat and the goods were cleared from warehouses in Gujarat, we therefore, hold that the Commissioner of Customs (Prev.), Mumbai had no jurisdiction over these goods which were warehoused in Gujarat and then cleared from there. In this view of the matter, the plea of the Counsel for the appellants on the question of jurisdiction of the Commissioner of Customs (Prev.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ITO is not valid and all proceedings taken in pursuance of such notice are invalid. Ld. Counsel also submitted that signing of the SCN does not come within the formula of an obvious clerical mistake. He supported the above contention by citing and relying upon the decision in the case of B.K. Gooyee v. Commissioner of Income Tax reported in 1966 (62) I.T.R. 109 (Cal.). Ld. Counsel submitted that Hon'ble M. P. High Court in the case of Umashankar Mishra v. Commissioner of Income Tax reported in 1982 (136) ITR 330 held that the SCN proposing penalty under Income Tax must be signed by the ITO himself and that omission to do so shall invalidate the SCN. He submitted that non-signing of the SCN is not inconsequential technicality. (3) Ld. Counsel for the appellant submitted that in the case of Punalur Paper Mills Ltd. v. C.C., Cochin reported in 1987 (31) E.L.T. 770, this Tribunal held that demand - SCN invoking extended period signed by AC on the instance of the Collector himself was not valid. He submitted that notice will not be valid unless it bears the signature and concerned seal of office. In support of his contention he cited and relied upon the decision of the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rement in the Customs Act that a SCN will go under the signature of a particular officer. The law requires that the proper officer shall issue the notice. Proper Officer has been defined in Section 2(34) of the Customs Act. In the instant case SCN was attested by the AC. The AC is a senior gazetted officer of the Customs Department and can sign SCNs. Thus, we find that the facts of the two cases are different. (7) Ld. Counsel referred to the case of B. K. Gooyee v. Commissioner of Income Tax. In support of his contention that notice under the Income Tax Act not containing signature of ITO is invalid. We note that the facts in that case were that the notice under Section 34 of the Income Tax Act did not bear the signature of the Income Tax Officer, it further transpired that office copy of same notice was not signed by the Income Tax Officer. In these circumstances, the Hon'ble Calcutta High Court held that notice was invalid. In the instant case before us we find that the office copy of the SCN was initialled by the Commissioner and was attested by the AC and thus the facts in the two cases are different. So also can be said about the case of Shri Umashankar Mishra relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Co. reported in 1991 (55) E.L.T. 289 wherein the Apex Court ruled that the date of such order or decision is the date on which the order or decision was passed or made that is to say when he ceases to have any authority to tear it off and draft a different order and when he ceases to have any locuspaetentiae. The Apex Court further held that normally that happens when the order or decision is made public or notified in some form or when it can be said to have left his hand. In the case of Secretary for India in Council v. Gopisetti Narayanaswami Naidu Guru, it was held that the decision cannot properly be said to be passed until it is in some way pronounced or published under such circumstances the parties affected by it have a reasonable opportunity of knowing what it contains. Till then though it may be written out, signed and dated, it is nothing but a decision which the officer intends to pass. It is not passed so long it is open to him to tear off what he has written and write something else. Ld. Counsel referred that the locuspaetentiae means a place for repentance; an opportunity for changing one's mind; an opportunity to undo what one has done; a chance to withdraw from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgments cited cannot be applied to the facts of the present case with the same force. 25. Ld. Counsel for the appellants submitted that under the Customs law no provision requires signature on any decision, order, summons, notice or any other document. He submitted that under Section 153 of the Customs Act, 1962, order and notice have been treated at par. He submits that similarly attestation is not provided for under the Customs Act. Ld. Counsel referred to certain Orders-in-Original when "signed" - Collector (although these were also attested by the Gazetted Officer) had appeared instead of signatures of the Collectors, the same were held invalid on that account. He submitted that a SCN has to be treated on the same ground and cannot be treated differently. He further submitted that though there is no judgment of the Tribunal or of any Court with regard to such SCNs which are not signed but show 'signed Collector' instead. He submitted that different parameters of interpretation cannot be adopted for a demand SCN as compared to ones for an order even when the law is totally silent with regard to signature. He submitted that in all the four judgments 1996 (83) E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector. This position also follows on a perusal of the statement of Objects and Reasons for the identical provision under Section 11A of the C.E. Rules, 1944. In the instant case this statutory formality has not been followed although the decision to issue the SCN was taken by the Collector. The non-compliance with the statutory formality of the notice having to be issued by the Collector would make the issuance of the show cause notice by the Asstt. Collector as a notice issued without jurisdiction". Ld. DR submitted that the SCN was declared invalid inasmuch as the SCN was issued by the Asstt. Collector who was not competent authority to issue SCN. He submitted that in the instant case SCN was signed by the Collector in the file and was attested by the Asstt. Collector and issued to the assessee and thus the facts in the two cases are different. In the case of Garden Reach Shipbuilders & Engg. Ltd. cited and relied upon by the appellant ld. DR submitted that it was a case of a adjudication order without signature and date which was under consideration of the Tribunal and the Tribunal after considering that the Departmental Representative could not show from the case records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en perused by the AC and he has initialled the same. The SCN has been issued only after the draft was perused and signed by the Asstt. Collector. Therefore, there is no infirmity in issue of SCN by other Gazetted Officer. The SCN deemed to have been issued by the proper officer. Thus we do not find any force in this objection also. The same is also rejected. 29. After disposing of the preliminary objections, we proceed to consider the case on merits. Ld. Counsel for the appellants submitted that Section 15 (1)(a) and Section 15 (1)(b) is attracted only when a Bill of Entry for home consumption has been filed. He submitted that for this reason only Section 68 and not Section 69 finds mention in Section 15 (1)(b); that in other cases Section 15 (1)(c) alone applies. He submits that since no Bill of Entry for home consumption had been filed by the applicants, the applicable rate of duty shall be according to Section 15 (l)(c) and not as per Section 15 (l)(b). He submitted that calculated in terms of Section 15 (1)(c) the amount of duty will be much lower. 30. In reply to this submission Shri Sanjeev Srivastava, ld. DR submitted that for purpose of rate of duty and Tariff c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modification. Section 90 sets out concessions in respect of imported stores for Navy. In the instant case we find that an application was made for warehousing the goods. In the Bill of Entry the goods were declared as 'ship stores' fraudulently. The goods were cleared on presentation of shipping bills as being taken on Board of a Naval ship or a foreign going vessel but in actual practice the goods were diverted to local market and sold there. Thus, there has been a contravention of Section 60 inasmuch as Section 60 was contravened because fraudulently permission was obtained to warehouse, the goods incorrectly declaring them as 'ship stores'. There has been a violation of Sections 88 and 90 inasmuch as the goods were not supplied as 'ship stores' or stores for the Navy but were disposed of in the local market by diverting them. Therefore, the contention of the appellant that there was no contravention of Section 60 read with Sections 88 and 90 is not tenable. Ld. Counsel submitted that Section 111(j) shall also not be attracted particularly when the goods were cleared with the permission of a proper officer whereas Section 111(j) refers to such conditions which are required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... soon as the investigating officers contacted M/s. Montana Valves & Compressors, Shri Bhavesh Gandhi disclosed all transactions not only about their firm but also about the affairs of M/s. Sea King Marine Service and M/s. Fairlon Engg. Pvt. Ltd. He submitted that within a short period the amount of duty calculated under Section 15(1)(b) was paid. He submitted that this showed the co-operation of the appellants and therefore, there should have been no penalty imposed. It was also contended that there was no repetition subsequently, therefore, penalty was not warranted. He referred to the Circular No. 685/17/20-694 issued by the Central Board of Direct Taxes clarifying that to encourage immediate voluntary compliance the Board has decided that proceedings under Sections 221 and 271(c) for levy of penalties and proceedings under Section 276(b) for prosecution need not be initiated in cases where an employer voluntarily comes forward and pays the whole of the tax due under Section 192 alongwith interest liability under Section 201(1)(A) on or before July 31, 1994. He submitted that in case of Bhavani Mills Ltd. the Hon'ble Madras High Court held that although there was no indication as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablished from the shipping bills themselves because the goods were neither stores under Section 90(3) nor had been delivered on Board a vessel of the Indian Navy; that this fact was known to the Customs authorities which is obvious from the endorsements on the shipping bills as also from the description of the goods. It was, therefore, contended that the demand was time barred. 40. Ld. DR submitted that Section 124 of the Customs Act read with Section 110 of that Act provides for issue of SCN. He submitted that Section 124 of the Customs Act does not lay down any time limit for issue of SCN; that time limit laid down under Section 110 of the Customs Act is for notice regarding seizure and does not limit the power under Section 124 of the Customs Act. In support of his contention he cited and relied upon the decision of the Apex Court in the case reported in 1997 (94) E.L.T. 459. 41. We have perused the rival submissions on limitation. We note that for purpose of demanding duty, Section 28 is the relevant section. Section 28 contemplates issue of notice for payment of duty not levied, short levied etc. and thus in the instant case, the notice should have been given as r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied to both. Thus the cases are distinguishable. 45. Having regard to the above facts we note that SCN was properly drawn as valid document. The objection of the appellant that the SCN was not valid is, therefore, rejected. 46. Ld. Counsel for the appellant also submitted that the Order-in-Original was not valid inasmuch as it was not signed by the Commissioner, except mention of Sd/also bearing attestation by Assistant Commissioner of Customs that the Order-in-Original is available in the Departmental adjudication file, DFA is written on the top that it is undated un-numbered prepared by the AC adjudication and not by the Commissioner; that it is only initialed by Commissioner and not signed that there are numerous corrections that these corrections are noted having been made in different language. 47. We have heard these contentions of the ld. Counsel. We find that nothing has been brought on record that the corrections, cuttings etc. were made subsequent to the signing or initialling of the order. From the copy of the order placed on record, we find that the order issued is numbered date is given, the order indicates the name of the parties. The order does ..... 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