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TMI Blog2005 (10) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... legal position in regard to goods not redeemed it is equally so in respect of goods absolutely confiscated. The ratio laid down by the Hon ble High Court is applied to the facts of the present case. What the Hon ble High Court has laid down is that he who possess the goods shall bear the liability to duty. In other words, if the goods are absolutely confiscated it is the Central Government who would possess the goods. Liability to pay duty on absolutely confiscated goods does not shift to the person who either imported the goods or to the person from whose possession the goods were seized. The demand for duty on 4536 bales weighing 1169.575 needs to be set aside. Their confiscation under Sections 111(m) and (o) has to be upheld as the goods in question were misdeclared and the conditions under which the goods were imported were violated. Another significant feature in regard to clearances under Bills of Entry 22 and 23 is that in DEEC Part D the importers have not indicated the notification applicable to VSF even though they mentioned the duty applicable to VSF. The modus operandi was the same. In case the appellant failed to fulfil the export obligation they would pay duty applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the person from whose possession offending goods are seized and confiscated is not necessary to render them liable to confiscation though such a state of mind is necessary for penalty under Section 112 of the Customs Act. The Department is able to adduce enough evidence in the form of statements of transporters, owners and other documentary evidence as brought out in the show cause notice that the goods seized from the appellants - These goods were cleared duty free under certain conditions which were later found to have been not observed. The very fact that they have been removed from the premises of the importer without permission from the appropriate authorities rendered the goods liable to confiscation. There are no infirmity in the order in so far as confiscation of the goods in the hands of these appellants is concerned. These appeals are accordingly rejected. As per S.S. Sekhon, Member (T) The setting aside of the impugned order is ordered and the appeal is allowed as regards finalization of the assessment and duty demands thereafter, if any, in case of all these 3 Bills of Entry to be redetermined by the proper officer in charge of Veraval Custom House. MAJORIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... British counts 15s ranging to 60s of f.o.b. value of ₹ 75,00,000/-. However, the importers could not fulfil the export obligation and they by their letter dated 26-2-85 signed by Shri Yogesh Mehra addressed to the Superintendent of Customs, Veraval, initimated that due to our non-ability to comply with the export obligation, forced by factors beyond our control, since there was an illegal strike at our factory at Ankleshwar, which lasted more than 90 days, we were not in a position to manufacture and ship our goods on time. They thus paid the duty of ₹ 62,84,656.54 by bank draft drawn in favour of Veraval Customs. 3. Against the second licence No. 2963408, dated 4-6-84, M/s. L.D. Textile Industries Limited imported two consignments of 3100 and 3000 bales weighing 812 M/Ts and 750 M/Ts valued at ₹ 1,51,09,631/- and ₹ 1,30,30,004/- respectively per m.v. Strathfyne and cleared them under Bills of Entry No. 22, dated 30-10-84 and 23, dated 30-10-84 respectively. The samples were drawn from these two consignments and sent to the Kandla Customs House for test. The test reports revealed that the goods were dull white entangled mass of short staple fibre (discontin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further inquiries revealed that the importers were having another godown outside their factory premises in Shed No. A-1/7307. On search of this godown, it was found that it contained 1837 bales of Korean polyester staple fibre of brand Eslon . These 1837 bales were also seized under a panchnama dated 15-3-1985. The Customs officers also seized records relevant to the enquiry, recorded statements and conducted investigations. The scrutiny of the seized documents revealed that M/s. L.D. Textiles Industries Limited sold or transferred 1978 bales to different parties including the other captioned appellants. The investigations further confirmed that these 1978 polyester fibre bales were the same as imported under Bills of Entry No. 63, dated 30-3-84 and Nos. 22 and 23, dated 30-10-84. 6. After the investigations were completed the Collector of Customs, Ahmedabad issued the show cause notice dated 22-5-85 held the enquiry and passed the impugned adjudication order dated 21-4-86 under which he ordered absolute confiscation of 4486 bales plus one bale in loose condition of polyester fibres seized on 15-3-85, 15-4-85 and 3-5-85 from the possession of M/s. L.D. Textile Industries Limited. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aggrieved by the aforesaid decision of the Collector the four appellants have approached the Tribunal by way of appeals. 8. We have heard both sides extensively. Learned Advocate Shri Sridharan appeared for M/s. L.D. Textile Industries. Shri Chandrasekharan, senior Advocate, for the Revenue. 9. During the course of argument, Shri Sridharan raised the following issues :- (a) The Collector who adjudicated the case has no jurisdiction to do so; (b) Section 28 is not invokable when the assessments were provisional; (c) Section 143A invoked by the Collector was not notified in the official gazette hence not invokable at the relevant time; (d) The allegation of misdeclaration of goods at the time of import is misplaced. There was no misdeclaration whatsoever. Larger period of limitation cannot be therefore invoked in respect of the goods cleared under Bill of Entry No. 63; (e) Duty is not demandable when goods are absolutely confiscated. 10. On behalf of the other appellants from whose possession PSF was absolutely confiscated along with a quantity of polyester yarn, it was argued :- (a) The goods are not liable to confiscation as no nexus has been shown between the goods confiscated and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not call him Collector of Customs (Preventive). It simply calls him Collector of Customs, which only means what it says. 15. Without as much as referring to this Notification, the Central Government issued another Notification No. 252-Cus. under the same powers referred to above appointing Collector of Central Excise, Rajkot as Collector of Customs within his own jurisdiction. This was again on 27-8-83. 16. Now we have a situation where there were two Collectors of Customs for the same area i.e. Rajkot Collectorate, Collector of Customs, Gujarat and Collector of Customs, Rajkot. Two swords in the scabbard is not a very brilliant idea. 17. From 1st September, 1983, by a mere letter signed by the Under Secretary to the Government of India (without specifying whether it is under any particular powers conferred on any particular authority) someone re-designated Collector of Customs, Gujarat as Collector of Customs (Preventive) Gujarat and assigned him anti-smuggling work through the length and breadth of Gujarat, UT of Goa, Daman Diu Dadra Nagar Haveli. The letter however does not say whether KFTZ and the area within a radius of 8 Kms. all around the zone, comes within the jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raval) and therefore the Customs authorities having jurisdiction over Veraval were seized of the matter. In such an event the jurisdiction of the Collector of Customs Gujarat is ousted. 22. We are not convinced. The case cited supra deals with a situation where the imported goods were not cleared and were still in the custody of the Bombay Customs Officers when the officers of M P wing of Collector of Customs (Prev.) of Bombay thought it fit to interfere with the goods instead of passing on whatever information they have to collect to the Collector of Customs, Bombay. The Tribunal s decision has to be read in that context. In the present case the diversion of imported material without fulfilling the export obligation has taken place much after the clearance of goods and the Officers having jurisdiction, conducted the investigation. The doctrine of Committee of Courts referred to in the decision cited supra would have been applicable had both the Rajkot Collectorate and Gujarat Collectorate were seized of the same matter of diversion of goods. 23. The learned Advocate for the appellants argued that the Collector of Customs (Prev.) is assigned the work relating to anti smuggling and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng through the procedure laid down in Section 130 of the Customs Act. The Court rejected this contention after referring to the decisions in the Jain Sudh Vanaspati [1982 (10) E.L.T. 43 (Del.)], Popular Dye Chem etc. [1987 (28) E.L.T. 63 (Bom.)] stating these decisions have no application to a provisional assessment and clearance, as in the present one, which has been granted under the Project Contract Regulation. By the very nature such assessments of goods are provisional . The Hon ble High Court therefore held that a show cause notice can be issued under Section 124 even without finalizing the assessment. This Single Judge decision was upheld by the Division Bench which observed that clearances made under Project Import Regulations are under Section 143 of the Customs Act. Continuity Bonds have been executed by the importers at the time of clearances. The situation in the present case is similar if not identical. The allegations in the show cause notice are two fold. The appellants misdeclared the goods at the time of import and secondly the appellants have not observed the conditions of the Notification under which duty free clearance was accorded thereby rendering the goods li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave relied on this non-existing Section (for all practical purposes) for added emphasis. We therefore, do not consider it as an infirmity of a nature which calls for rejecting the adjudication order. 30. The ld. Advocate argued that the allegation of mis-declaration/suppression thereby invoking extended period of limitation in so far as the demand for differential duty in goods cleared under Bill of Entry No. 63, which was finally assessed, is misplaced. 31. Briefly recapitulating the events, we may point out that Advance Licence for import of Man Made Fabric (MMF) permits import of all Man Made Fabrics. The appellants declared MMF on the Bill of Entry. MMF fell under 56.01 of the Customs Tariff. The appellants claimed the benefit of exemption under Notification No. 117/78-Cus., dated 9-9-78 as amended while seeking clearance of the goods. The Notification in question exempts goods from Basic and countervailing duty when imported under an Advance Licence subject to the conditions specified in the said Notification (appended to this order). The appellants admit that what they imported under the said Advance Licence is polyester fibre; that the labels on the goods, the brand name and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F which tantamounts to misdeclaration. 35. Later, as the events disclosed, the importers, L.D. Textiles, paid the abovesaid amount towards duty claiming that they would not be able to utilize Viscose Staple Fibre imported under the said Bill of Entry in the export product and thus would not be fulfilling the export obligation. 36. The appellant s claim that there was no mis-declaration/supper-ssion on their part has to be examined in the light of these facts. 37. The appellants repeatedly claimed before us that they declared the correct quality, value and other particulars of the goods at the time of import; that they always contracted for Polyester fibre and made no secret of this fact; that Polyester fibre is MMF as described by them; that they had a Licence for importing MMF and they did import only MMF; that they always wanted to export twisted yarn made out of the imported material and that they could not do so because of reasons beyond their control; such a failure on their part cannot be construed as an attempt to defraud the Government; that failure to export the goods had necessitated payment of duty not paid initially; that they had done so; that the test reports indicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... staple fibre. They paid duty as indicated in Part D when they failed to fulfil the export obligation. In a diabolic scheme the importers all along exhibited cunning and mischief. Giving an incomplete description in the Bill of entry and complete one in the DEEC Part D and presenting both the documents at the time of import was not exactly funny. It is done with an intention to evade payment of full duty in case the importer failed to fulfil the export obligation. The conduct of the importers tantamounts to misdeclaration and suppression. 41. Granting without conceding that there is no suppression/misdeclaration, we observe that the appellant paid duty of ₹ 62,84,656.54 purported to be the duty payable on the imported goods on 26-2-1985. The Collector of Customs Ahmedabad issued a show cause notice demanding differential duty [Duty payable on Polyester fibre minus the duty paid as if the goods under import were viscose fibre (Rs. 62,84,656.54)] on 22-5-1985. This notice, we observe, is within the time of six months prescribed in Section 28 of the Customs Act when reckoned from the date of payment of duty of ₹ 62,84,656.54 either erroneously or deliberately. Section 28(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiscated. Duties are chargeable on all imported goods under Section 12 of the Customs Act. That Section does not become inoperative simply because the goods are absolutely confiscated. 45. We have carefully considered the rival submissions in this regard. 46. The appellant company, L.D. Textiles imported in all 8150 bales of PSF under two different Advance Licences and filed three Bills of Entry for their clearance - Bill of Entry No. 63/30-3-84 - 2050 bales, 22/30-10-84 - 3100 bales and 23/30-10-84 - 3000 bales. The first one was finally assessed and the next two provisionally. The Collector absolutely confiscated 4486 bales (the show cause notice speaks of 4476 bales only) seized from M/s. L.D. Textiles, Ankleshwar, under Sections 111(m) and (o) of the Customs Act. He also confiscated absolutely 49 bales found in the premises of P.G. Textiles under the same Section. In addition, he confiscated, again absolutely, some 171 bags of yarn weighing 8550 Kgs. found in the same premises under the same Section read with Section 120 of the Customs Act. His conclusion in this regard is that the yarn in question is made out of the Polyester fibre which was liable to confiscation. He then abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutes misdeclaration and suppression. Another significant feature in regard to clearances under Bills of Entry 22 and 23 is that in DEEC Part D the importers have not indicated the notification applicable to VSF even though they mentioned the duty applicable to VSF. The modus operandi was the same. In case the appellant failed to fulfil the export obligation they would pay duty applicable to VSF even when they imported PSF. The declaration made in the Bill of Entry read with the ones in the DEEC book would constitute misdeclaration with intent to evade duty. The goods are therefore liable to confiscation. 48. We have set aside the demand for duty on 4536 bales because these bales were absolutely confiscated. It is necessary to apportion this number of bales to the licences under which they were imported. Show cause notice gives some indication in this regard. At page 90 of the show cause notice it is stated that out of the quantity seized, 452 bales of PSF could be related to goods cleared under Bill of Entry No. 63/30-3-84. Under this Bill of Entry a total of 2050 bales were cleared. The appellant paid ₹ 62,84,656.54 towards duty on these bales applying the rate meant for Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce. 51. The Commissioner also confiscated absolutely 171 bags of yarn weighing 85.50 kgs seized from P.G. Textiles under Sections 111(m) and (o) read with Section 120 of the Customs Act on the ground that the yarn is made out of PSF liable to confiscation. We are not aware how much of PSF has gone into the production of this quantity of yarn. Duty is however not demandable on the quantity of PSF that had gone into the production of 171 bags of yarn. From the total demand duty attributable to this quantity of PSF will have to be deducted. To sum up, the position emerges like this. 52. Demand for duty to the extent indicated above i.e. after giving allowance to the duty involved on the absolutely confiscated bales either Sections 111(m) and (o) or under Sections 111(m) and (o) read with Section 120 of the Customs Act is confirmed. The demand for the balance amount is set aside. While computing the duty liability the facts that the appellants paid ₹ 62,84,656/- be taken into account. Interest as applicable is payable on the duty reworked in terms of the policy then. The policy speaks of interest on the duty foregone initially in case the export obligation is not completed. 53. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession they are, are liable to confiscation. Since the Collector absolutely confiscated them, he did not demand any duty from the appellants who were in possession of the offending goods. He also did not impose any penalty on them. 56. It is now well settled that mens rea on the part of the person from whose possession offending goods are seized and confiscated is not necessary to render them liable to confiscation though such a state of mind is necessary for penalty under Section 112 of the Customs Act. The Department is able to adduce enough evidence in the form of statements of transporters, owners and other documentary evidence as brought out in the show cause notice that the goods seized from the appellants in Appeal Nos. 487, 395 and 503 did emanate from M/s. L.D. Textiles. These goods were cleared duty free under certain conditions which were later found to have been not observed. The very fact that they have been removed from the premises of the importer without permission from the appropriate authorities rendered the goods liable to confiscation. We therefore do not see any infirmity in the order in so far as confiscation of the goods in the hands of these appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to the facts set out above, clear that it was for the Customs authorities at Paradip to initiate proceedings against the respondents on the ground that the goods had been imported on fictitious licences and not for the Customs authorities in West Bengal to do so. Being bound by this decision, the question of jurisdiction has to be decided, following the same. Further, the instructions issued vide Ministry of Finance, Department of Revenue, F. No. 437/4/83-Cus. IV, dated 30-8-1983 to the effect (c) Collector of Customs, Ahmedabad, has been given administrative jurisdiction over the entire State of Gujarat. He will however handle anti-smuggling operations other related work in the entire State, for the present, Customs Work (other than anti-smuggling work) will be looked after by Collectors of Central Excise, Ahmedabad, Baroda Rajkot within their respective jurisdictions. They have been notified as Collectors of Customs within their respective jurisdictions through a separate, notification , would lead to find force in the argument advanced by the ld. Advocate for the Appellant that Collector of Customs, Gujarat at Ahemdabad has no jurisdiction to finalise the provisional asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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