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TMI Blog2013 (9) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that:- Goods were not liable to confiscation - penalty cannot be imposed - the show cause notice did not propose confiscation u/s111(o) nor did the Commissioner in the order hold that the goods were liable to confiscation - observation of the Commissioner that the goods were liable to confiscation are wrong and penalty u/s112 can be imposed only when a person rendered the goods liable to confiscation – Following the judgement of Akbar Badruddin Jiwani vs. CC. [1990 (2) TMI 50 - SUPREME COURT OF INDIA] - the burden lies on the department to show that the assesse had acted dishonestly or contumaciously or with a deliberate or distinct object of breaching the law. Assesse’s imports cannot be considered to be against the policy at the time of import nor can be considered to have been prohibited - The relevant provisions which renders the goods imported by the appellant liable to be confiscation is Section 111(o) and according to which any goods exempted subject to any condition from duty or any prohibition in respect of the import thereof in respect of which condition was not observed unless the non-observance of the condition was sanctioned by the proper officer were liable to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r verification of the said certificates. Since the matter is quite old, we expect him to pass a fresh order within a period of four months from today. 8. As regards the two bills of entries covered by the export policy 1990-1993, as we have already remanded the matter, the Commissioner would examine the appellant's plea of bonafide in respect of the said bills of entries. The appellants are at liberty to place reliance on the evidence, as they think fit, in support of their plea of bonafide. Appeal is disposed off in above terms. As per these directions, impugned order has been passed wherein the Commissioner has considered the issue afresh and has imposed penalty of Rs. 7 Crores under Section 112A of Customs Act, 1962. 3. As regards the imports during the period 1990-1992, it was submitted that Directorate General of Technical Development (DGTD) had written a letter to Jt. Chief Controller of Imports and Exports on 15.8.1981, that Heptene and Nonene for importation of which the assessee had applied are covered under OGL and do not require import License. Further, the Jt. Chief Controller of Imports and Exports had clarified that Propylene Trimer / Nonene is under OGL vide lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited covered under OGL category as far as imports during the Policy period 1990-92. 6. The second issue relates to imports for the period covered by the policy 1992-97. During this period the Naphtha was under restricted category and nature of restriction was as under:- Import permitted without a license subject to the condition that the importer shall sell the return stream of naphtha to crude oil refineries only. The sale will be on commercial terms as may be settled between the importer and the refinery. However, the importer may use the return stream as an industrial feed stock for his own captive consumption, but the balance left, if any, shall be sold to crude oil refineries only.On 27.01.1993, IOCL had clarified to Hico products Limited that Propylene Trimer is not listed among the canalised products. On 25.3.1994, DGFT had clarified to Hico Products that Propylene Trimer and Tetramer are freely importable by actual users subject to actual user condition. BPCL and HPCL had replied to the assessee stating that product imported by them is not Naphtha as per guidelines of Ministry of Petroleum and Natural Gas and it is only Naphtha, if imported can be returned to the nearest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills of entries have been issued on 16.12.1998 are much later than the certificate issued. There is no indication whether appellant could have used/ used the by-product as feed stock or whether they have used. In the year 1995, the appellant had intimated the department that they are seeking permission of DGFT to use the by-product as fuel and they are installing burner for this purpose. On the other hand it was also submitted that Revenue has no proof to show that this feed stock has been diverted in the market by the appellant. In fact, the Commissioner has simply relied upon the fact that certificates issued in respect of each bill of entry certify only the quantity used as fuel and did not talk about feed stock at all. In any case, the certificate is required to be produced in view of the fact that policy has imposed restriction and the obligation is on the appellant. Under these circumstances, Commissioner cannot be found fault with for recording findings that the appellant has not accounted for the portion of bye-product. Further, the appellant have been claiming that they have not sold the bye-product and have used them for captive consumption only and there is no clear con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case that the show cause notice dated 04.11.96 (in Para 8) called upon the party to show cause why, since the goods are not (sic) available for confiscation, penalty should not be imposed upon them under Section 112 of the Customs Act, 1962. Apart from the fact that there is no reference to mala fides in the show cause notice, there is no suggestion of any mala fides even in the three adjudication orders which have been passed by the respective Commissioners in the present case, including the impugned order. 10. Another submission made by the learned Senior Counsel with which we find ourselves unable to disagree is that penalty cannot be imposed in lieu of redemption fine where the goods are not available for confiscation. This was the observation in the case of Universal Steel Agencies vs. Commissioner of Customs, Kandla 2003 (158) ELT 360 (Tri.) and this decision has been followed in the case of Agro Impex vs. Commissioner of Customs Mumbai - 2003 (158) ELT 705 (Tri.). This is another ground which supports the case of the assessee that no penalty could have been imposed in this case. 10. Learned Sr. Counsel also submitted that goods have been held liable to be confiscation ..... 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