9911796707
TMI Blog2019 (7) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption subject to the condition that the goods were actually used by the importer himself in the projects for which said goods are cleared. Undisputedly these pavers were never used by Appellant 1 in any of the above two referred projects thereby contravening the conditions prescribed by the exemption notification. On the contra these were transferred by the Appellant 1, in first instance for use in Delhi Gurgaon Project of Jaypee DSC Infrastructure. It is now settled position in law that exemption notification needs to be construed strictly and it is for the person claiming the exemption to satisfy that all the conditions prescribed by the notification are fulfilled. Thus, by transferring the imported goods cleared for use in particular projects to some other project, Appellant 1 had at that instance itself contravened the conditions of exemption granted subject to actual user condition. For the contraventions done by transferring these pavers to Delhi Gurgaon Project with using them in the projects for which the goods have been cleared, the goods had become liable for confiscation under Section 111(o). In view of the fact that Appellants had given an undertaking to use the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed in part. X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Act, 1962. Since the paver was liable for confiscation it was seized from the premises of buyer of the said goods i.e. M/s Gawar Construction Co. Statements of representatives of Appellant 1 and those of Gawar Construction Co (buyer) were recorded and also the sale and purchase documents in respect of the sale and purchase of the said paver finisher by the Appellant 1 to Buyer were also recovered. 2.5 A show cause notice dated 09.01.2009 was issued to the Appellant 1 asking him to show cause as to why the Custom Duty Exemption under Notification No 21/2002Cus earlier granted at the time of clearance be not denied, the paver finisher imported under B?E No 369860 dated 02.07.2003 should not be confiscated under Section 111(o) of Customs Act, 1962, the custom duty amounting to ₹ 55,52,528/- short paid by them should not be demanded under proviso to Section 28(1) read with Section 12 and Section 125(2) of the Customs Act, 1962 and interest under section 28AB ibid, the amount of ₹ 55,52,528/- voluntarily deposited by them should not be appropriated against the duty demanded and penalty should not be imposed on them under section 112(a) & (b) and/ or 114A ibid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsels submitted- i. Condition 40(b) of the Exemption Notification was not violated. The imported goods namely paver finisher was damaged in an accident and became totally unfit for use. So appellants lodged a claim with the insurance company. Thereafter insurance companies took over the salvaged goods and dispose them off, for settling the claim. The paver finisher was no longer the goods but only an salvage. The covenant in the insurance policy was not for transfer of goods but for transfer of salvage. ii. The condition of the notification which required the importer not to sell or otherwise dispose of the goods for a period of five years only refers to the active or voluntary act on the part of the importer for sale or disposal of such goods and cannot include such acts which vest by operation of law rather than a product express agreement. In other words, since the goods vested in the insurance company by the doctrine of subrogation, such vesting of right and title in goods was by operation of law and not by express agreement. Reliance is place on the decision of Apex Court in case of Economic Transport Organization Delhi Vs Charan Spinning Mills Pvt Ltd [2011 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elsewhere for execution of a contract of Delhi Gurgaon Road pertaining to a different company i.e. M/s Jaypee DSC Ventures Ltd awarded by NHAI vide concessionaire agreement dated 18.04.2002. M/s Jaypee DSC Ventures Ltd had sub contracted this project to the appellant by way of agreement dated 20.03.2003. Though this sub contract was available with the appellant 1 at time of clearance, they chose not to rely on the same at the time of clearance to circumvent the condition 40 of Notification 21/2002. As per condition 40(b) specifically for the sub contractors it has been mentioned that in such case the original contract with NHAI should include the name of sub contractor. Since the name of appellants was not in the original contract between the Jaypee DSC Venture and NHAI they misled the authorities by producing the contracts as referred in para I, supra. iii. In similar cases as follows the appeals filed by the party have been dismissed by the tribunal: a. Gammon India Ltd [2013 (298) ELT 740 (T-Mum)] b. Apco Infratech Ltd [Order No A/86750-86753/2018 dtd 8.6.18] c. Patel Engineering Ltd [2013 (295) ELT 243 (T-Mum)] d. Patel Engineering Ltd [2016 (338) ELT A35 (SC)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Gawar Construction (Buyer) as per the direction contained in the order of Bombay High Court dated 29.09.2009. (Para 13 of the additional written submissions filed by the Appellant Counsel vide their letter dated 8th February 2019). This order is reported at Gawar Construction Ltd [2009 (243) ELT 484 (Bom)]. In this case the importer is marked as third respondent in the matter. The relevant paras of the order are reproduced below: "Rule, by consent heard forthwith. The respondent no. 3 has not put any appearance though served. 2. By this petition, the petitioner seeks a mandamus or a direction or order directing the Union of India and the customs authorities to forthwith release the Hot Mix Paver Machine seized by them from the premises of the petitioner under the seizure memo dated 14th November, 2008. 3. The respondent no. 3 imported Hot Mix Paver Machine bearing model No. M/C-S-1800, Sl. No. 06681674 (for short "the machine") through WIRTGEN India Pvt. Ltd., Bangalore in the month of October, 2005 without payment of customs duty as an actual user in view of an exemption allowed to actual users. The machine was insured by it with ICICI Lombard General Insurance Co. for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal importer of the goods is enough or whether notice is also required to be issued to the person from whose custody the goods are seized." 5.3 Since Hon'ble Bombay High Court has already determined the issues in respect of breach of conditions of Exemption Notification and liability to confiscation of the imported goods, transferred/ sold by the Appellant 1, it is not prudent to dwell on this issue again. Since the decision of Bombay High Court has taken into account the transfer of the imported paver machine on account of damage and sale by the insurance company we do not dwell on the decision referred by the learned Counsel for the appellant in case of Economic Transport Organization Delhi Versus Charan Spinning Mills Private Ltd [(2010) 4 SCC 114]. Also the decision rendered by the Hon'ble Apex Court explaining the difference between "subrogation" and "assignment" [Para 24 relied upon by the counsel], in case of Consumer Protection Act, 1986, would not be applicable in the case of special statue as Customs Act, 1962. 5.4 From the facts as are available, it is admitted that Appellants had claimed the exemption in respect of the said pavers by producing the documents in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: "6.1 As regards the imports of stone crushing plant, the same was used for a project awarded by MMRDA. The issue, whether MMRDA is a road construction corporation as envisaged in Condition No. 40(a) of Notification No. 21/2002-Cus. was examined at length by this Tribunal in the case of Shreeji Construction (supra) and it was held that MMRDA is not a road construction corporation within the scope and context of Condition No. 40(a). This conclusion was arrived at after careful and detailed analysis of the constitutional and organizational architecture of MMRDA and on a critical analysis of the constitutional and generic statutory functions entrusted to MMRDA. Therefore, the appellant was not entitled ab initio for the benefit of the Notification No. 21/2002-Cus. 6.2 In the case of hot mix plant, the same was imported claiming that the same would be used in a contract awarded by the Government of Gujarat for construction of road in Surat. But the hot mix was never put to use in terms of the said contract and was used in respect of construction contract awarded by MMRDA which is not a specified organization. Both these machineries, after being put to use for about 1½ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pletion of five years, the same are liable to confiscation for violation of post-importation condition and, therefore, the provisions of Section 111(o) of the Customs Act are clearly attracted. Therefore, the confiscation of the goods cannot be faulted at all. The adjudicating authority has imposed a redemption fine of ₹ 54 lakhs and ₹ 33 lakhs respectively in respect of the machinery imported which is appropriately 15% of the value of the goods. This appears to be on the higher side. Accordingly, we reduce the redemption fine imposed to ₹ 35 lakhs and ₹ 22 lakhs respectively in respect of the two machineries mentioned above." 5.6 At the time of clearance of the goods under exemption Appellant 1 have given an undertaking binding himself, that the subject goods namely Electronic Paver Finisher imported by them and cleared by them under exemption, shall be actually used by them for construction of National Highway by the said importer. The undertaking specifically states "We M/s D S CONSTRUCTIONS LTD. Shall use the imported goods for the construction of National Highway and this not be sold or otherwise dispose of the goods, in any manner for the period of 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l justice. Even in the absence of such an explicit provision, a duty demand has to be proceeded by a notice. In the present case, such notices have been issued prior to issue of the impugned order. 12. As regards the time limits under Section 28, both sides have agreed that since the duty demand does not relate to short levy or non levy at the time of initial assessment on importation, but has arisen subsequently on account of failure to fulfil the post-importation conditions under the Notification No. 64/88, the said Section 28 has no application to a duty demand of this kind. We do not, therefore, wish to dwell further on the inapplicability of Section 28 to such demands. However, we note that since no specific time limit is prescribed under any other provision of the statute, the notice of demand in such cases cannot be subjected to any limitation of time. This view is supported by the ratio of the following two decisions of the Honourable Bombay High Court and the Apex Court :- (i) Prakash Cotton Mills Pvt. Ltd. v. S.K. Bhardwaj, A.C.C.E. - 1987 (32) E.LT. 534 (Bombay) (ii) Commissioner v. Raghuvar (India) Ltd. - 2000 (118) E.L.T. 311 (S.C.) 13. We find that while Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rued to cast continuing obligation on the part of all those who have obtained the certificate from the appropriate authority and on the basis of that to have imported equipments without payment of customs duty to give free treatment at least to 40% of the outdoor patients as well as would give free treatment to all the indoor patients belonging to the families with an income of less than ₹ 500/- p.m. The competent authority, therefore, should continue to be vigilant and check whether the undertakings given by the applicants are being duly compiled with after getting the benefit of the exemption notification and importing the equipment without payment of customs duty and if on such enquiry the authorities are satisfied that the continuing obligation are not being carried out then it would be fully open to the authority to ask the person who have availed of the benefit of exemption to pay the duty payable in respect of the equipments which have been imported without payment of customs duty. Needless to mention the Government has granted exemption from payment of customs duty with the sole object that 40% of all outdoor patients and entire indoor patients of the low income group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues. 18. It has been argued by the ld. Senior Counsel that in Paragraph 12 of Mediwell (supra), the Apex Court has not directed the Customs authorities to demand duty. A distinction is sought to be made between the DGHS who issued the certificates and Customs authorities who granted the exemption at the time of importation. We are of the view that DGHS and the Customs authorities are two branches of the same Government that has issued the exemption notification and Lady Amphthil (supra) has correctly concluded that the Customs authorities have jurisdiction for demanding of duty for violation of postimportation conditions by placing a reliance on the decision of the Apex Court in Sheshank Sea Foods Pvt. Ltd. v. UOI - 1996 (88) E.L.T. 626 (S.C.). We also note that this part of the order of the Larger Bench in Lady Amphthil (supra) is not under reference to us for reconsideration. 19. The learned senior Counsel argues that by implication, Mediwell (supra) requires duty to be demanded in accordance with Section 125(2) only and no duty is demandable under that Section, if the appellants do not redeem the impugned goods after confiscation. In this regard we observe the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e observation in Lady Amphthil (supra) that the period of limitation in such cases will commence from the date of issue of notice. Since the time limit prescribed under Section 28 has been held to be not applicable to such cases, and since there is no other specific time-limit prescribed under the customs law to cover such cases, we are of the view that the notice of demand will not be subject to any limitation of time in such cases of non-fulfillment of post-importation conditions casting a continuing obligation as noted by us in Paragraph 12 above." This decision of Larger Bench has been affirmed by the Bombay High Court as reported in [2006 (201) ELT 555 (Bom)] "6. On appeal filed by the assessee, a Division Bench of the CESTAT by its order dated 1st July, 2003 referred the matter to the President for constituting a Larger Bench. Thereafter, a Larger Bench, of CESTAT heard the matter and by its judgment and order dated 8th April, 2005 directed that the matter be placed before the President to constitute a five member Bench. Accordingly, the matter was heard by a five member Bench constituted by the President of the CESTAT. By its decision dated 3rd October, 2005 [2005 (188) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manded in terms of the undertaking given by the appellant 1, that they will in case of violation of post import conditions pay back the duty determined in respect of the said goods but for exemption, the duty demand has to be made from them only in terms of their undertaking. It is fact that notice proposing confiscation of goods should also have been issued to owner of the goods/ person from whose possession the goods have been seized. But once seized and power to seize such goods can be shown to exist the notice will have to be issued to the person who had contravened the provisions of law which have made the goods liable for confiscation. It is settled law that without any notice, no adverse order can be passed against the owner/ possessor of the goods from whose custody the goods have been seized. 5.9 In case of Kay Bee Spin Tex [2017 (349) ELT 451 (Guj)], Hon'ble Gujarat High Court has held as follows: 5.1 In the said form, the respondent-Unit had also declared that the said written bond shall continue to be in force, notwithstanding the transfer of goods to any other person or removal of goods from one warehouse to another. The said bond was also backed by an undertaking. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal ought to have held that the Adjudicating Authority ought to have imposed redemption fine in lieu of confiscation of the goods which were illicitly diverted in the open market, which were permitted to be warehoused on certain terms and conditions; including without making payment of Customs duty. 5.6 Now, so far as reliance placed upon a decision of Bombay High Court rendered in case of Finesse Creation Inc. (supra) and the subsequent decision of the said High Court in the case of National Leather Cloth Mfg. Company (supra) are concerned, on facts, the same shall not be applicable to the facts of the case on hand, since in the matters before the Bombay High Court, there was no bond/legal undertaking executed. The submission made on behalf of the respondent-Unit that unless and until the goods are first seized, there is no question of confiscation and consequently, there is no question of imposing the redemption fine in lieu of confiscation is concerned, considering the language used in Section 125 of the Customs Act, we do not agree with the same. As observed hereinabove, Section 125 of the Act shall be applicable in a case where confiscation of any goods is authorized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservance of the condition was sanctioned by the proper officer (clause o). 10. Thus, Section 111 of the Act has provided for a farreaching consequence of confiscation of the goods imported into India. Analysis of the various clauses contained under Section 111 of the Act, clearly brings out that the prohibited goods which are imported, are one such class of goods which are liable to be confiscated. Similarly, the goods which have been imported in excess of those mentioned in the import manifest, or not mentioned in the import manifest, are also liable to be confiscated. Similarly, any imported goods, which have been exempted from payment of duty, subject to any condition in respect of which the condition so imposed, was found to have been not observed, are also liable to be confiscated. Thus, in a variety of circumstances and contingencies, the goods which have been improperly imported into India, are liable to suffer confiscation under this Section. 11. The provisions contained in Section 111 are clearly directed against the goods. In juxtaposition to this, under Section 112(a) of the Act, any person, who in relation to any goods, does or omits to do any act, which act or omi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit : Provided that, without prejudice to the provisions of the proviso to sub-section (2) of Section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. Where any fine in lieu of confiscation of (2) goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges, payable in respect of such goods." 18. The principal contention that is canvassed before us is that the fine contemplated under Section 125 is a redemption fine and hence, the goods which are improperly imported, are liable to be cleared. In other words, Section 125 is considered as providing for a redemption fine, and therefore, the availability of goods is a pre-requisite for offering the redemption fine. The argument proceeds that when once the goods imported improperly are not available for redemption, the question of payment of fine would not arise. Where the goods are not physically available, the Department could not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letely frustrated or neutralised. Further, without levying the duty under the Customs Act, no clearance thereof can be granted under the Act, and when once certain goods are prohibited from being imported, the question of levy of duty thereon would not simply arise and hence, such goods cannot be cleared for home consumption." 5.11 In case of Bharat Bharad Ghanshyam [2017 (338) ELT (T-Mum)] following has been held: "2. Learned AR appearing for the Revenue has relied on various case laws cited in the Revenue's appeal. He especially highlighted the decision of the Tribunal in the case of Vibhuti Exports - 2006 (194) E.L.T. 195 (Tri.-Del.) and the decision of Hon'ble Apex Court in the case of Harbans Lal - 1993 (67) E.L.T. 20 (S.C.). Learned AR further pointed out that in this case the appellant had executed a Bond and Bank Guarantee in respect of imports made and the DEEC licence was subject to actual use and condition. He also relied on the decision of the Hon'ble Apex Court in the case of Weston Components Ltd. - 2000 (115) E.L.T. 278 (S.C.). 3. None appeared for the respondents despite notice. 4. I have gone through the submissions made by the learned AR and the records. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 125 or Section 112 and 114 of the Customs Act, 1962. In the present case Appellant 1 has by way of undertaking agreed to comply with the post import conditions, in case of non compliance with the same he could have been proceeded against even in absence of the goods. 5.13. Accordingly we uphold the order of Commissioner, demanding duty from appellant 1 and also the penalties imposed on Appellant 1. We also uphold the order of Commissioner, confiscating the goods and for imposition of redemption fine. But since the confiscation of goods and redemption are action in rem on the goods and not on the person, we are not in agreement with that part of order whereby commissioner states that option of redemption is given to Appellant 1. Also we find that the redemption fine imposed by the Commissioner is ₹ 21 lakhs, which is about 20 percent of the declared value of the goods. In our view since the salvage value of the goods was determined around ₹ 24 lakhs, in our view ends of justice will be met if the redemption fine is reduced to ₹ 2.5 lakhs. 5.14 Now coming to the penalties imposed on Appellant 1, Appellant 2, Appellant 3 and Appellant 4. Commissioner has in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods with exemption for and on behalf of the company and this will not make him liable to penalty as alleged in the show-cause notice. I find that not only has Shri N.S. Narulla abetted in claiming improper duty exemption, the condition 40 (b) of the Notification under which the undertaking was submitted itself has been violated with his firm knowledge who had undertaken to be bound by it. Thus, he is also liable to penal action under Section 112 of the Customs Act, 1962. 36.4. Finally, I come to the penal liability of Shri R.K. Agnihotri, Executive Dirctor of the notice-company. He has submitted that all his actions in the context of clearance of the goods and subsequent thereto are in the capacity as Executive Director of the notice-company. He has submitted that all his actions in the context of clearance of the goods and subsequent thereto are in the capacity as Executive Director of the notice-company; that none of his actions are distinguishable from the actions of the importing firm; that he has not done anything in his personal capacity to render the goods in question liable to consfication by his individual acts of omission or commission as contemplated under Section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
