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TMI Blog2002 (8) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Calcutta High Court in matter No. 285 of 1985 vide order dated 13-8-1986 vide para (g) had directed the appellant to file the appeals against the adjudication order passed by the Collector of Customs, Calcutta within one month from 13-8-86. The appellant had again approached the Hon'ble Calcutta High Court for the extension of time for the filing of appeal and vide order dated 12-9-86 the Hon'ble Calcutta High Court had extended the time for the filing of appeals till 31-10-86. Thus both the appeals filed in the tribunal are well within period of limitation prescribed under the Act. In terms of the provisions of Section 129A(3) the last date for the filing of the appeals was 8-11-86. 2. In view of Hon'ble High Court's directions the appellant had paid a sum of ₹ 22 lakhs in cash and had further furnished bank guarantee of ₹ 5 lakhs. In para (h) the Hon'ble Calcutta High Court vide its order dated 13-8-86. It was ordered that the deposit of ₹ 22 lakhs and furnishing of the bank guarantee for ₹ 5 lakhs in pursuance of the Hon'ble High Court's order may be treated as a deposit in terms of Section 129E of the Customs Act, 1962. Accordingly we treat the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d signatures of the Controller of Imports & Exports, Shillong were seen on the said licence : - (i) The endorsement "Transferable" deleted and endorsed "Not Transferable". (ii) Below that a fresh endorsement "This licence is transferred in favour of M/s. Agrico Industries, G.S. Road, Garikhana, Shillong - 793002" was there. (iii) The description of goods "F.1.3. O.T.S. containers" deleted and instead the endorsement "as per list attached" was made. (iv) On the reverse of the licence the following additional endorsements was made. "Para 140 is replaced by Para 148 of the Import-Export Policy 1984-85. This licence is valid for import of items appearing in Appendix 5, Part A of A. M. '85 Policy as per list attached and shall be subject to the condition that the items to be imported are those as are required by the transferee in his own unit and the entire production shall be exported in terms of provisions in Para 148 of Import Policy A.M. '85". M/s. Agrico Industries, G.S. Road, Garikhana, Shillong, Meghalaya executed a legal undertaking to the effect that their entire production of select products would be exported within 18 months from the date of import of the first consig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 80793, dt. 7-12-84 opened by M/s. G.S. Overseas Corporation that the importations were initially arranged against the following Import Trade Control licences : - 1. P/K/3074559, dt. 4-12-84 2. P/L/3075031, dt. 12-11-84 3. P/L/3075036, dt. 12-11-84 4. P/L/3075038, dt. 12-11-84 5. P/L/3074530, dt. 12-11-84 6. P/L/3074525, dt. 12-11-84 7. P/L/3074553, dt. 12-11-84 8. P/L/3074561, dt. 4-12-84 9. P/L/3074557, dt. 3-12-84 10. P/L/3074551, dt. 3-12-84 11. P/L/3074555, dt. 3-12-84 12. P/L/0487782, dt. 10-10-84 Though all the 3 importations were arranged against the aforesaid licences M/s. G.S. Overseas Corpn. did not submit these licences along with the B.Es and instead sought clearance of the consignments against licence No. P/L/3012892/C, dated 17-10-1984 in the name of Agrico Industries. The Bills of Entry in question were presented for appraisement along with the import licence No. P/L/3012892/C, dt. 17-10-1984 to the Customs House on 16-2-1985. On the presumption that the import licence and other documents are genuine, these were accepted and the goods were assessed to duty. During the course of assessment of the value at the rate of ₹ 2025.94 per M.T. for CRCA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para 148 of AM 85 policy was made on the said licence by him or by his office in the name of Agrico Industries, Shillong. He also confirmed his statement by swearing in an affidavit with the 1st class Magistrate, Shillong. The Investigation Officers with the help of local Customs Authorities tried to trace out the firm under the name and style of M/s. Agrico Industries, Shillong and the inquiries conducted appeared to establish that there was no firm in the name and style of M/s. Agrico Industries at G.S. Road, Garikhana, Shillong. One Shri S.K. Agarwal, a local businessman dealing in iron and steel items also confirmed the above in a statement dated 13-3-85 given under Section 108 of the Customs Act 1962. On a reasonable belief that the endorsement of Para 148 of AM 85 Policy was fake and thus the entire licence appeared to be forged. Further investigations were made. The Revenue authorities had received another information that one Shri S.N. Agarwal carrying on business in the name and style of M/s. Kailash Industries, 40 - Princep Street, Calcutta was connected with the firm M/s. Agrico Industries. During the search in the office and residential premises of Shri S.N. Agarwal, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Partner of M/s. Sita Casting, Kalyan Udyog and Ram Narayan Biswanath stated in his statement given under Section 108 of Customs Act, 1962 that he had procured few such licences from one Shri S.N. Agarwal of M/s. Agrico Industries. In the meantime it was understood that one bank account was being operated in the name of M/s. Agrico Industries in the Shyambazar Branch of the New Bank of India. On enquiries it was understood that the said account was operated by one Mr. Toshi Loya of Agrico Industries at their recorded address at 13/1D, Balaram Ghosh Street, Calcutta - 4. The said account was introduced to the Bank by another account holder of the same Bank Branch M/s. Krishna Udyog recorded address also at 13/1D, Balaram Ghosh Street, Calcutta. On further investigation it was understood that the premises at 13/1D, Balaram Ghosh Street is owned and occupied by the Board of Trustees of Sri Sri Iswar Sreedhar Jew Trust Estate and they confirmed that there were no firms like Agrico Industries or Krishna Udyog at the said address. From the above and recovery or blank letter heads of M/s. Agrico Industries and M/s. Krishna Udyog from the premises of Shri S.N. Agarwal it appeared that both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for some other party. Shri G.R. Agarwal deposed vide his statement dated 1-4-85 pursuant to the summons dated 28-3-85 that he will appear for further statement required by the Customs authorities. In his statement dated 6-4-85 Shri Agarwal stated that he procured the letter of authority from one Satyanarayan Agarwal who is known in the trade as the man of M/s. Agrico Industries. The goods in question were imported by M/s. G.S. Overseas Corporation in terms of order dated 15-11-84 stated to have been placed by them with M/s. Surinbel, Belgium as appearing on the relevant invoices. The Bank through which documents were negotiated was Bank of Baroda, International Business Branch, Calcutta. On the reverse of the relevant bills of entry M/s. G.S. Overseas Corporation gave a declaration to the effect that (i) the goods were imported on behalf of the licensee and the same would be delivered to them after clearance, (ii) that necessary information as provided under Para 73(3) had been furnished to the canalizing agency regarding importation of this consignment. The licensee in the instant case is M/s. Agrico Industries. From the letter of authority issued to M/s. G.S. Overseas Corpn i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be open to the licence-holder to decide upon his own form of letter of authority. But the functions of the holder of such letter of authority shall be limited to place orders, to open letter of credit, to make remittance of payment for importing the goods, to arrange movements and to clear the same through the Customs having regard to Section 147 of the Customs Act, 1962, on behalf of the licensee and other related matters connected with the operation of the licence in question BUT NOT ITS OWNERSHIP. In view of the above provisions, M/s. G.S. Overseas Corpn cannot claim ownership of the goods. Since M/s. Agrico Industries appeared to be a fictitious firm and the licence in question being fake/forged, not valid for import of the goods in question, the entire import was unauthorised and the goods are liable to confiscation under Section 111(d) of the Customs Act, 1962 read with section 3(2) of the Imports and Exports (Control) Act, 1947 (as amended). From the records of investigation and the statements furnished by S/Shri S.N. Agarwal, G.R. Agarwal, Santosh Kanoria, Sushil Kayan it transpired that Shri S.N. Agarwal introduced one Mr. Toshi Loya to Shri G.R. Agarwal. However, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) That no enquiry has been made at Arunachal Pradesh about the existence of M/s. Agrico Industries; (vi) That copy of statement of Satyanarayan Agarwal and Shri S. Kanoria had not been furnished to them. They also contended that they were not allowed to replace another valid import licence as was done in the case of A.S.C. Engineers Works. The importers were allowed to take inspection of different records and statements relied upon in the show cause notice. The importer represented by Shri G.R. Agarwal Shri N.P. Agarwal, Advocate and Shri B. Das, Advocate took inspection of various documents including statements and affidavits. After the inspection the above named persons appeared before me for a personal hearing on 5-8-86 and submitted their oral submissions. During the hearing they contended that none of the affidavit has been identified by anybody verifying the signature of Mr. Kharmawlong or in presence. They submitted that original letter of New Bank of India was not shown to them and photocopy was shown to them and on the photocopy rubber seal of the Bank was not there. The ld. Collector did not accept the contentions of the importers and had held that the importer M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid for import of items appearing in Appendix 5, Part A of A.M'85 Policy as per list attached and shall be subject to the condition that the items to be imported are those as are required by the transferee in his own unit and the entire production shall be exported in terms of provisions in Para 148 of Import Policy A.M. 85". M/s. Agrico Industries, G.S. Road, Garikhana, Shillong, Meghalaya executed a legal undertaking to the effect that their entire production of select products would be exported within 18 months from the date of import of the first consignment, as required under Para 148/X A.M. 85 Policy." All the five consignments were as per invoice supplied by M/s. A.P. Landowski - Samis, Paris. The ld. Collector's findings and observations are similar to the observations in Appeal No. C-305/86-Cal. The ld. Collector had confiscated the goods valued at ₹ 25,75,787.74 CIF under Section 111(d) of the Customs Act, 1962 and had allowed the importers to redeem the goods on payment of fine of ₹ 21 lakhs and had also imposed penalties under Section 112 of the Customs Act, 1962 at ₹ 4, lakhs on Shri G.R. Agarwal and at ₹ 4 lakhs on Shri S.N. Agarwal. Being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority had issued a notice under Section 108 of the Customs Act, 1962 and the appellant had challenged the same before the Calcutta High Court and on the directions of the Hon'ble Calcutta High Court the goods were kept in the Customs Bonded warehouse. Shri Sen has argued that the statement of Shri S.N. Agarwal and Shri Kharmalong were taken in the absence of the appellant and no opportunity of cross-examination was afforded to the appellant and the affidavits dated 10-6-85, 14-6-85 and 23-4-85 were not sworn in accordance with law. Shri Sen has argued that Shri G.R. Agarwal, the present appellant, had filed the writ petition on 18-3-85. He has argued that the assessment was completed under Section 17(4) of the Customs Act, 1962. He states that after the completion of the assessment the proper course for the Revenue should have been to take recourse to provisions of Section 129D of the Customs Act ,1962. Since the Collector did not review the order passed by an officer subordinate to him in terms of the provisions of Section 129D of the Customs Act, 1962 where a proper assessment under Section 17 was made. It was not open to him to re-adjudicate the matter himself. In support of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment and if at all the Revenue proposes to challenge that assessment, the Revenue should have taken recourse to the provisions of Section 129D of the Customs Act, 1962 or if there was less charge proceedings under Section 28 of the Customs Act, 1962 should have been started. He has argued that as per observations of the Hon'ble Bombay High Court in para No. 16 of the case cited by him, the appellants case is fully covered by that and since the Revenue has not chosen to resort to the provisions of Section 129D of the Customs Act, 1962, the Collector cannot suo motu exercise powers. The learned Collector had passed the order after about 1½ years from the date of the filing of the bills of entry, and that too he had allocated the case to himself, and had passed the order. The proper course for the Collector was that he should have reviewed the order and filed an application in terms of the provisions of Section 129D of the Customs Act, 1962 before the Collector (Appeals) and after the insertion of Section 129D of the Customs Act with effect from 11-10-82 the Collector of Customs, Calcutta becomes a party to the matter. In support of his argument he has referred to the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat when the goods were imported, they were imported under a valid licence and therefore it is not possible to say that the goods imported were those prohibited or restricted by or under Chapter IV of the Act within the meaning of clause (8) of Section 167 of the Sea Customs Act. He has further referred to a judgment of the Bombay High Court in the case of Vasanji Ghela and Co. v. Commissioner of Sales Tax reported in 1977 (40) STC 544, where the Hon'ble High Court had held that if a party makes a request to be allowed to cross-examine a person who made a statement for the purpose of meeting the statement or with a view to commenting thereon such a request cannot save in exceptional or special cases, be denied without violating the principles of natural justice. He has also referred to another judgment of the Punjab and Haryana High Court in the case of Pahar Chand and Sons v. State of Punjab reported in 1972 (30) STC 211 where the High Court had held that an opportunity of cross-examining a witness should have been given to the assessee. He stated that the goods were imported by the appellant as a letter of authority holder on behalf of M/s. Agrico Industries head office and facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Ghosh had argued that there are 8 Bills of Entry and the first bill of entry was filed on 16th February, 1985 and these were supported with two licences. Assessments were made from 26th February, 1985 to 6th March, 1985 and the assessments were made before the actual arrival of the goods. The two import licences on the basis of which the importations were made were originally REP licences. One licence was issued by the Controller of Imports and Exports, Madras. The other licence was issued by the Controller of Imports and Exports, Cochin for open tin containers. He has argued that in one licence the word 'transferable' was deleted from the licence and the endorsements on the licences are forced ones. He has referred to departments paperbook filed in appeal No. C-306 and has stated that the photostat copies of the import licences appear on pages 80 to 82. In particular he has referred to Import Licence No. 0432104 which appears on page 80 of the paperbook. Shri Ghosh has argued that a simple look at the photostatcopy of the licence will show that the endorsement on pages 81A and 82 are with different typewriters. He has argued that on 12th March, 1985 the Custom House has rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Aggarwal and M/s. Agrico Industries. M/s. Agrico Industries did not file any reply to the SCN and did not pursue the matter as Agrico Industries never existed. Shri G.R. Aggarwal, the present appellant before the Tribunal had paid the money in these cases. Shri Ghosh, the learned advocate has argued that Shri Aggarwal is the letter of authority holder and he does not become the owner of the goods and as such he has no right to file the appeals as he was not the owner. He has again referred to the order-in-original and has laid special emphasis on the findings of the Collector. Shri Jatin Ghosh has referred to the provisions and the scheme of the Customs Act, 1962. He has stated that Section 12 of the Customs Act is the charging section. Section 14 relates to goods, 15 relates to the date for determination of rate of duty and tariff valuation of imported goods, Section 17 relates to the assessment of duty, Section 46 deals with entry of goods on importation, Section 47 relates to the clearance of goods for home consumption and Section 49 relates to storage of imported goods in a Warehouse pending clearance. Shri Ghosh, the learned Advocate has argued that in the matters before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced. He has referred to page 61 of the appellants paperbook, para No. 2.2 of the Order-in-Original. The appellant had presented the licences along with the bills of entries for clearance. Secret information was received by the Customs authorities. Investigations were made. The details are in para Nos. 4.1 to 4.4. Summons were issued under Section 108 of the Customs Act on 16th March, 85. Served on Shri G.R. Agarwal on the same date and desiring him to appear at 3.30 P.M. The summons were served on him at 12.05 P.M. The goods had arrived at Calcutta Port on 26th March, 85 and on 28th March, 85 the Hon'ble Division Bench of the Calcutta High Court had directed that the goods should be warehoused under Section 49 of the Customs Act. The Writ Petition was filed on 18th March, 85. He has referred to page 7 of the paper book which contains details of the Hon'ble High Court's directions and with the consent of the parties the following judgment was passed : - "The Court : Learned Advocate for the Revenue prays for leave to initiate adjudication proceedings against the petitions. It appears that there was no order restraining them from initiating adjudication proceedings at any ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on pages 25 to 27 of the department's paperbook and states that these statements were recorded on 13th March, 1985. He has again referred to the affidavit of Shri Kharmawlong and in the affidavit there is a mention of the import licence in dispute. He has again referred to the Import Licence the photostatcopy of which appears from pages 80 to 82 of the department's paperbook. He has referred to the New Bank of India's reply to the Revenue's investigation Agency in response to summons under Section 108 of the Customs Act which appears on pages 77 and 78 of the paperbook. He has again referred to the following :- (1) The statement and affidavit of Shri Kharmawlong (2) Statement of Shri Nirmal Kumar Takrewal (3) Statement of Shri G.R. Agarwal Shri Ghosh has argued that Shri S.N. Agarwal has not filed any appeal. He has again referred to the AM Policy Handbook 1984-85 page 72, para 363. He has referred to the following judgments :- (1) 1986 (26) E.L.T. 108 - Narinder Kumar v. Collector of Central Excise (2) 1987 (29) E.L.T. 853 - Assistant Collector v. Dharma Pal Jain Shri Ghosh has argued that the following judgments relied upon by Shri Bhola Nath Sen do not help him: ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24-10-81 and this registration is for the purpose of import policy for registered exporters and these were duly attached with the reply to show cause notice. Shri Sen has also referred to the application for registration (page 52 of the appellant's paperbook) dated 24-10-81 in which Shri Toshi Loya has been shown as Proprietor with head office of Agrico Industries at Post Office Kanubari Tirup, Arunachal Pradesh with branches at Jobra Canal Road near rice mill Cuttack and G.S. Road, Garikhana, Shillong. He has also stated that M/s. Agrico Industries had done exceptionally well in the export work and in support of the same he has referred to the certificate of export performance issued by the Chief Controller of Imports and Exports on 21-3-84 (page 58 of the paper book) and as per that certificate the book value of production was ₹ 98,67,386/- for the year 1982-83 and percentage of export was 100%. He states that the genuineness of these 3 certificates referred to by him has not been doubted by the Revenue authorities. He has also referred to the withdrawal circular dated 22-12-84, issued by the Dy. Chief Controller of Imports and Exports and at Sl. No. 7 it has been duly men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has argued that the statement of Shri Kharmalong is at the instance of the Revenue authorities and as such no reliance should be placed on the same. While Shri Sen was replying to arguments of Shri Jatin Ghosh he stated that Shri Jatin Ghosh has accepted that one licence was with the appellant. Shri Sen has stated that the statement of Shri Kharmalong was recorded at the instance of Mr. Nair, Dy. Collector and the other licence No. P/L/3012892, dated 17-10-84 was seized from the appellant on 15-3-85 and also stated that no panchnama was made in respect of the documents taken from the clearing agent. Shri Sen has argued that licences were returned to the appellant on 6-3-85. He has also argued that there was denial of principles of natural justice. In support of his arguments he has referred to the following judgments :- (1) 1984 (18) E.L.T. 547 - Markandi Prasad v. CC, Calcutta - denial of principles of natural justice. (2) AIR 1973 S.C. 834 at pp. 839 and 840 (last lines) State of Punjab v. K.R. Erry (3) AIR 1982 S.C. 1550 at page 1552 Raj Restaurant v. Municipal Corporation. Order is void where there is denial of principles of natural justice. Shri Sen has further argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of Shri Santosh Kumar (pages 59 to 62 and 83 to 84 of the paperbook). During the course of arguments Shri Jatin Ghosh pleaded that in case his arguments are not acceptable, his alternative plea is that the matter may be remanded. During the course of arguments there were certain queries from the Bench and in reply to the queries the appellant has filed reply-cum-written arguments to Bench's queries and the respondent has filed written arguments and the reply to the queries from the Bench. In reply Shri Bhola Nath Sen, the learned Senior Advocate briefly read the written arguments filed by him. He stated that he very much opposes the request of the advocate on behalf of the respondent for the remand of the case and there is no justification for the remand of the case. We have heard both the sides and have considered the oral, written arguments and replied to the queries from the Bench and the judgments cited by both the sides. During the course of hearing Shri Jatin Ghosh, learned Sr. Advocate, had challenged the locus standi of the appellant for filing of the appeal. Shri G.R. Aggarwal, sole Proprietor of M/s. G.S. Overseas Corporation and G.S. International is the letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, we overrule the objections of Shri Jatin Ghosh and hold that the appellant is aggrieved and had locus standi to file the appeals. Now we proceed to go into the merits of the appeal. First we shall deal with the argument of the learned Sr. Advocate that whether the Revenue authorities should have resorted to the provisions of Section 129D or Section 28 of the Customs Act, 1962. For proper appreciation of the legal position and the scheme of the Act, we reproduce below the following Sections : - "Section 12. Dutiable goods. - (1) Except at otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the [Customs Tariff Act, 1975 (51 of 1975)]; or any other law for the time being in force, on goods imported into or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government]. Section 17. (4) Notwithstanding anything contained in this section imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rehouse or in a private warehouse if facilities for deposit in a public warehouse are not available; but such goods shall not be deemed to be warehoused goods for the purpose of this Act, and accordingly the provisions of Chapter IX shall not apply to such goods." Section 12 relates to the charging of the Customs duty and sub-section (4) of Section 17 relates to the assessment by the proper officer of the imported goods on the basis of the statement made in the Bill of Entry and documents furnished in terms of the provisions of sub-section (3) the appellant had duly filed the bill of entry supported by the letter of authority and the import licence in respect of the Bill of Entry and these were duly assessed to duty after the due satisfaction of the assessing authority. The second part of sub-section (4) of Section 17 relates to the reassessment of the goods. In case subsequently on examination of the goods or otherwise any statement in such entry or documents or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may without pre-judice to any other action may be reassessed to duty. In the matter before us there is no misdec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have given careful thought to the arguments of ld. Sr. Advocate. We would like to observe that in the matter before us there had been no clearance of goods for home consumption in terms of the provisions of Section 47 of the Customs Act. Section 47 provides that where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if not assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption. The goods were further ordered to be stored in a warehouse pending the clearance of the goods. The appellant had paid the customs duty only after the adjudication by the Collector and there has been no clearance of goods for home consumption under Section 47 of the Customs Act, 1962. We hold that it was not necessary for the Collector to resort to the provisions of Section 28 of the Customs Act, 1962 or Section 129D of the Customs Act. The goods could have always been reassessed. Provisions of sub-section (4) of Section 17 of the Customs Act are very noteworthy - "If it is found subsequently on exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries and whether the material and evidence available on record establishes that there was any forgery as to the endorsement on the import licence and if so, to what extent the appellant is liable for the alleged forgery. The learned Collector has solely based his order on the non-existence of the concern M/s. Agrico Industries and the alleged forged endorsement on licence No. P/L/3012892/C, dated 17-10-84 and P/L/0432104/C, dated 30-11-84 on the basis of secret information that a group of importers at Calcutta had purchased fake import licence from the market in the name of M/s. Agrico Industries and were clearing canalised items of steel like G.P. Sheets, CRCA Sheets, tin plates waste etc. against the fake and forged trade control licence. A team of officers visited the office of Controller of Imports and Exports at Shillong on 13-3-85. Inquiries at Shillong were conducted as to the existence of M/s. Agrico Industries, G.S. Road, Garikhana, Shillong. In this regard statement of Shri S.K. Agarwal S/o Shri R.S. Agarwal, Orange Cottage, Hill Road, Shillong with factory at 2-B, Industrial Estate, Shillong was recorded. In his statement, in response to summons under Section 108 of Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of authority has been issued. It is to be noted that the actual users licence has to be sent by registered post to the factory address of the licence holder and it can be safely presumed that the same procedure has been followed in respect of the actual user licence mentioned hereinabove. Copies of the aforesaid documents were duly attached with the reply to show cause notice which appear at pages 52 to 58 of the paperbook. The ld. adjudicating authority did not take sufficient care to verify the genuineness of the documents attached along with the reply to show cause notice (pages 51 to 58 viz. registration-cum-membership certificate issued by the Distt. Industries Centre, Import Licence, dated 4-9-84 in the name of Agrico Industries (53 to 56) withdrawal circular dated 26-9-84, export performance certificate dated 21-3-84 (page 58). The Revenue has solely relied on the statement of Shri Santosh Kumar Agarwal and Shri S. Kanoria and Sushil Kayan and also inquiries from Bank and inquiries as to premises No. 13/1D, Balram Ghosh Street, Calcutta. The appellant in support of the existence of the concern Agrico Industries, Shillong had relied on documentary evidence which was duly at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the entire production shall be exported in terms of provision in para 148 of Import Policy of A-M/85. M/s. Agrico Industries, G.S. Road, Garikhana, Shillong, Meghalaya have executed a Legal Undertaking to the effect that their entire production of select products will be exported within 18 months from the date of import of the first consignment, as required under Para 148/X of April-March/85 Policy" on the reverse and a sheet attached with the aforesaid licence indicating the list of items to be imported as "List of items to be imported - All second/second grades/defective cuttings/circles of sheets/ plates/coils/strips in any shape section/form not elsewhere stated in coated/plated or uncoated condition including tin/zinc aluminium/ aluminium alloy coated/plated and commodity marketed as tin free steel in the descriptions above stated. Tin plate waste waste" with marks of attestation by Shri L. Kharmawlong, Controller of Imports and Exports. Shillong including a rubber stamp impression of Controller of Imports and Exports, only Shillong and a metal seal mark indicating Sl. No. 118 of the office of A.C.I & E, Shillong have been shown to me. I have carefully examined the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his own unit and the entire production shall be exported in terms of provision in para 148 of Import Policy of A-M/85. M/s Agrico Industries, G.S. Road, Garikhana, Shillong, Meghalaya have executed a Legal Undertaking to the effect that their entire production of select products will be exported within 18 months from the date of import of the first consignment, as required under para 148/X of April-March/85 Policy" on the reverse of the said I.T.C. Licence was not given from this office. (k) That the impressions of metal seal, rubber stamp and signature referred to paras (h), (i) and (j) above and also seen in the list attached with the I.T.C. Licence No. P/L/3012892/C/XX/93/E/ 84, dated 17-10-84 are not of this office and not signed by me. (l) That the endorsement "List of items to be imported - All seconds/ secondgrades/defectives/cuttings/circles of sheets/ plates & coils/ strips in any shape section/form not elsewhere stated in coated/ plated or uncoated condition including tin/ zinc/aluminium/ aluminium alloy coated/plated and commodity marketed as tin free steel in the descriptions above stated. Tin plate waste waste" in the list attached with the aforesaid I.T.C. lic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p/Pol/85/110, dated 22-4-85 issued by me to the Customs Authorities at Calcutta are true and correct. 3. That no endorsements under Para 148 of Import & Export Policy 1984-85 have been made by me on the Import Trade Control Licences No. P/L/3012677/C/XX/92/E/84 F.1.3, dated 14-8-84 No. P/L/3013046/ C/XX /95/E/84. G.30 & G.2/1, dated 10-12-84, No. P/L/3055601/C/XX/ 93/B/83, dated 15-10-84 and No. P/L/0432194, dated 30-11-84. Solemnly affirmed on this day of Tenth June Nineteen Hundred Eighty-five". Affidavit of Shri Kharmawlong dt. 14-6-85 : "I, Shri Leastarwell Kharmawlong son of Shri Stenley Syiemlich aged about 34 (thirty-four) years working as Controller of Imports & Exports, Government of India, Ministry of Commerce, Shillong solemnly affirm and say as follows : 1. That I am the Controller of Imports & Exports, Shillong and have been working here since February, 1984 and on additional charge (tour basis) from November, 1980. 2. That no endorsement under para 148 of Import and Export Policy, 1984-85 have been made by me on the following import Trade Control Licences : 1. P/L/0431609 dated 10-11-84 2. P/L/0431640 dated 9-11-84 3. P/L/0431620 dated 9-11-8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from that mentioned in the letter of credit since the need for the material by M/s. Agrico Industries was urgent; (iv) That no reliance should be placed on the statement of Shri L. Kharmawlong by the adjudicating authority since it was a procured one; (v) That no enquiry has been made at Arunachal Pradesh about the existence of M/s. Agrico Industries; (vi) That copy of statement of Satyanarayan Agarwal and Shri S. Kanoria had not been furnished to them." Shri G.R. Agarwal, the present appellant, had filed a writ petition before the Hon'ble Calcutta High Court challenging the summons issued by the revenue authorities under Section 108 of the Customs Act, and during those proceedings both the sides had filed affidavits before the Hon'ble High Court. Copies of those affidavits have been filed before us during the course of arguments. Shri Kishori Mohan Mandal, the Assistant Collector had filed a very detailed and comprehensive affidavit before the Hon'ble High Court on behalf of the revenue. Para Nos. 5, 6 and 7 of the said affidavit relate to the disputed import licences. The said paras are reproduced below :- '5. On or about February 16, 1985 the clearing agent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter "A". 7. The Special Investigation Branch of the Customs House received an information from its intelligence source that the special endorsements made on the licence in favour of M/s Agrico Industries, were not genuine. On the basis of the said information a team of Customs Officers were sent to Shillong to verify the authenticity of the endorsements made on the said licence by the Controller of Imports & Exports, Shillong. On enquiry Shri L. Kharmawlong, Controller of Imports & Exports, Shillong confirmed that his office had not made any special endorsement under para 148 of the Import & Export Policy April/March 1985 on the licence bearing No. P/L 3012392, dated 17-10-1984. He further confirmed that the metal seal impression and rubber stamp impressions of the Controller of Imports & Exports, Shillong and his signature as appearing on the said licence are fake.' Shri Krishna Kumar Pradhan, Assistant Collector had also filed an affidavit before the Hon'ble High Court in July, 1986 and in para 9 had referred to the alleged forged licence. Para No. 9 from the said affidavit is reproduced below :- "9. With reference to paragraph 19 of the said application, I deny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Controller appearing thereon before assessment of the Bill of Entry. In fact the customs authorities of Bombay after verifying the genuineness of import licence makes an endorsement on the reverse of the licence that signature has been verified and licence checked. As a specimen two of such import licence verified by Bombay customs is annexed hereto and marked with the letter 'A'. The Customs Authorities at Calcutta do not put such endorsement on the reverse of import licence as done by the Bombay Customs Authorities. I have reason to believe that Calcutta Customs to check and satisfy themselves about the genuineness of the signature appearing thereon which is their duty also. Had the customs authorities told me that they had any reason to suspect the genuineness of import licence before issuing the order for clearance of the goods on 23rd February, 1985, I would have immediately, asked the holder of the import licence to arrange for submission of another import licence for clearance of the goods. By issuing the order of clearance on 23rd February, 1985 unconditionally the customs authorities led me to believe that all documents presented in connection with the said consignment we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been given by the Controller of Imports & Exports, Shillong. The alleged statement is obviously procured and significantly not on oath. I deny and dispute the correctness of the purported statements which is not in any event inadmissible. I have not other import licence signed by Shri L. Kharmalong about which there has been no dispute whatsoever and against which goods have been cleared without any demur. As a specimen, I am enclosing some of such import licence in Annexure 'B'. In view of the doubt now expressed in this affidavit I have taken the opinion of handwriting expert regarding the signature now sought to be disputed which I crave leave to produce at the time of hearing. I had no reason to doubt or inspect the genuineness of the special endorsement appearing on the said import licence and the signature of the controller. I deny that any doubt really exists in the minds of customs authorities of Calcutta. I have reason to believe that this case is an after thought in an attempt to humiliate and harass me. It is most curious that immediately after K.M. Mondal got transferred to Special Intelligence Branch of Customs the alleged doubt regarding signature and endorsemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sen, ld. Sr. Advocate as to the denials of principles of natural justice in not allowing the cross-examination of Shri Kharmalong and other witnesses. In support of his arguments he had referred to the following judgments :- (1) CC v. D. Bhoormal - 1983 (13) E.L.T. 1546 (S.C.) = AIR 1974 SC 859 [Para 30] (2) Kanungo case - 1983 (13) E.L.T. 1486 (S.C.) = AIR 1972 SC 2136 (3) K.R. Tripathi v. State of Bombay - AIR 1984 SC 273 [Para 41] where it was held that it depends on the facts and circumstances of each particular case whether there was denial of principles of natural justice or not and the Hon'ble Supreme Court had held that the rules of natural justice are flexible and cannot be put to any rigid formula. In order to sustain a complaint of violation of principles of natural justice on the ground of absence of an opportunity of cross-examination, it has to be established that prejudice has been caused to the party concerned by the procedure followed. Neither cross-examination nor the opportunity to lead evidence by the delinquent is an integral part of the quasi judicial adjudications. Shri Ghosh had argued that there was no infirmity in the order passed by the Collecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder will be passed by the 8th August, 1986 before 12 noon. These applications are adjourned till 8th August, 1986 and will be taken up at 3 p.m. when the orders will be passed. It is further ordered that the order of adjudication will abide by the decision of this Court. The adjudication order will not be given effect to without further orders of this Court." Both the sides complied with the order passed by the Calcutta High Court and adjudication was completed by the respondent as per time schedule ordered by the Hon'ble Calcutta High Court. In the writ proceedings affidavits were filed by S/Shri K.K. Pradhan and K.M. Mondal, Assistant Collectors on behalf of the respondent and the appellant had filed an affidavit in response to the affidavit filed by Shri K.M. Mondal relevant extracts of which have already been reproduced above. Shri Bhola Nath Sen the learned Sr. Advocate had referred to a judgment of the Bombay High Court in the case of Glaxo Laboratories v. A.V. Venkateswaran reported in AIR 1959 Bom. 372. In para No. 16 Hon'ble Mr. Chagla, Chief Justice, speaking on behalf of the court, had observed as under :- "It would have been open to us to take the view that the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be filled up or removed or any other difficulty in rendering the judgment on the material already available before the court. Instead it felt that the prayer for adducing additional evidence had been made merely to fill up gaps on the basis of some revenue record which had been found by the revenue authorities to be spurious. We feel that both the sides have placed sufficient evidence on record in the form of affidavits before the Hon'ble Calcutta High Court in the writ proceedings and we take note of the same and proceed to decide the matter. Shri L. Kharmalong in his statement recorded on 13-3-1985, which has already been reproduced above, has stated that the endorsements in licence No. P/L/3012892/C/XX/ 93/E/84, dated 17-10-84 issued by the Dy Chief Controller of Import and Exports, Cochin are forged ones and the metal stamp impressions and the rubber stamp impressions were not of his office and that he also had not signed on the endorsements on the import licence. Shri Kharmalong had further confirmed the contents of his statement dated 13-3-85 in his affidavit dated 23-4-85 sworn before First Class Magistrate, Shillong. S/Shri K.K. Pradhan and K.M. Mondal, Assistant Colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the totality of the facts and circumstances of the case we are of the view that Shri G.R. Agarwal, the appellant before us, had acted as a letter of authority holder in good faith and the forged endorsements in favour of M/s. Agrico Industries do not confer any title on M/s. Agrico Industries. Since Shri G.R. Agarwal had acted as a letter of authority holder and had filed the bill of entry on behalf of M/s. Agrico Industries, we feel that the fine and penalty imposed are highly excessive. The learned Collector of Customs has not given any basis of calculation for levying the fine in lieu of confiscation and personal penalty. Fine and penalty should be imposed keeping in view the gravity of the offence. Hon'ble Supreme Court in the case of Arvind Mohan Sinha v. Amulya Kumar Biswas and others reported in AIR 1974 SC 1818 in para No. 10 of their judgment had held as under :- 'We are unable to accept the appellant's contention that the Probation of Offenders Act can have no application to offences consisting of the contravention of the Customs Act or the "Gold Control Rules contained in Part XII-A of the Defence of India Rules, 1962. True, that these offences are fundamental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial), I am unable to agree with the order passed by him. My analysis of the case and my order is as follows :- 7. I find that in these cases a number of interesting and important points are involved. 8. First and foremost among them is the question of jurisdiction and the propriety of these proceedings. 9. Since this is a threshold point, a decision in this respect is necessary before proceeding further in the matter. 10. The appellants have in this connection challenged the issue of Show Cause Notice under Section 124 of the Customs Act, 1962 and questioned the jurisdiction of the Collector of Customs to adjudicate and pass an Order-in-original. 11. I find in this connection that the appellant's main contention is that the assessment having been completed and an order having been passed by the Assistant Collector, the matter could be reopened only by way of recourse to either Section 28 or to Section 129D(4) of the Customs Act and filing an appeal before the Collector (Appeals). 12. On the other hand, the department has contended that although the assessments had been completed it was not necessary to resort to Section 28 or Section 129D(4) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that prior to their examination or testing of the goods the duty may be assessed (that is to say, classification, valuation and rate of duty may be indicated) on the basis of the declaration of the importer but this action is subject to the examination of goods. In other words, it is tentative or provisional in character and, therefore, if as a result of examination of goods any modification is required to be done such 're-assessment' could be carried out straightaway by the Group Appraiser/Assistant Collector; (And Section 27 or 28 do not come in picture at this stage). In the instant cases, apparently, the examination of goods had not been conducted till the aforesaid indication of rate of duty etc. i.e., the process of assessment had not been concluded, till then and orders under Section 47 had not been passed, till the issue of show cause notice. Therefore, the department was free to take recourse to Section 124 and was not required to resort to Section 129D(4). (Or to Section 28 for that matter). 21. These cases were, therefore, distinguishable from the cases cited by the learned Counsels for the appellant including [1986 (26) E.L.T. 873 (Tribunal) Ajay Exports & Anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case. 25. In view of this position, it was not necessary to go into the question regarding the nature of orders obtained fraudulently or on the basis of forged or fake documents and the controversy regarding void or voidable character of such documents at this stage. 26. It was apparent that the department was justified in issuing a notice under Section 124 and the Collector was the proper authority to adjudicate the case. 27. The next important point is the department's contention that the appellants had no locus standi to file the appeal before the Tribunal and the petition before the Bench was not maintainable. 28. This is a rather strange argument inasmuch as, indisputably, orders been passed by the Collector against the petitioners and the petitioners were aggrieved persons and any aggrieved person could move the Tribunal in terms of Section 129A. 29. The learned Counsels for the appellants have, in this connection, rightly drawn our attention to the fact that they had filed the bills of entries and the licences in question before the Customs as Letter of Authority holder and the present proceedings had been initiated and the impugned orders had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list of the documents seized. It was not enough to indicate that 104 documents were seized and it was desirable to indicate the nature and types of the documents which were so acquired; All the more so, when the case was suspected to be that of forged documents, and when the documents seized not only included correspondence and invoices etc. (as initially made out) but 'other licenses,' as well (as subsequently stated during the proceedings). To my mind, the departmental officers have erred in not draining a detailed or exhaustive panchnama in these circumstances and the department will do well to instruct and ensure that proper panchnamas are drawn in all cases. Further, in respect of the so called 'resumption' of bills of entries from the Clearing Agents also, the position is not clear inasmuch as in the above context it is rather unusual to take over documents from Clearing Agents in this fashion. Actually, the proper course for the officers was to take recourse to Section 107 of the Customs Act, 1962, issue summons and demand production of these documents or in the alternative to conduct a proper search and seizure and draw a panchnama. It is not clear as to why the departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regards the second licence (No. P/L 0432104, dated 30-11-84) both the sides have accepted before us that the licence was returned to the appellants before doubts arose and remained throughout in the appellant's possession. However, Shri Kharmalong does not say in so many words in any of his statements that he had seen this licence and his affidavits are obviously based on his knowledge derived from official records. 35. This brings us to the main questions required to be considered by us - (1) Whether the endorsements on the licences in question had been forged and if so whether appellants were a party to the conspiracy and liable to action and (2) Whether M/s. Agrico Industries was a fictitious firm and Shri Toshilaya was a fictitious person. In this connection, we find that the department's case rests, inter alia, on their enquiries and the statements of Shri L. Kharmawlong, Controller of Imports and Exports, Shillong. 36. Taking up first the point of endorsement on the licences it is observed that the department has relied heavily on the statements of Shri Kharmalong, but admittedly, Shri Kharmalong had not seen the licence No. P/L 0432104, dated 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usal of the order of the Collector also shows that the learned Collector has also not paid any attention to this aspect. 40. It is also not clear as to why the learned Collector did not allow cross-examination of Shri Kharmalong, which was all the more important in the above circumstances. 41. It may be observed in this respect that while cross-examination is not an essential or intregal part of the process of adjudication before Customs authorities, (at the same time), it is the established practice to allow cross-examination in suitable cases. In other words, allowing or disallowing cross-examination in adjudication proceedings was a matter of discretion with the adjudicating authority; And the authority was required to act judiciously in exercising this discretion. It was, therefore, expected to allow cross-examination whenever it was necessary or essential to do so in the interests of justice. 42. I consider that the argument as to whether the cross-examination was a part of procedural justice or natural justice was merely of an academic value in the above context. I hold that in the instant cases, it was necessary to allow cross-examination particularly when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue : Why the department chose not to do so is not very clear. 47. It is, however, abundantly clear that the appellants had submitted photocopies of official documents showing that this firm was in existence during the period 1981-84. The documents submitted by the appellants include a Registration-Cum-Membership Certificate issued by the Deputy Director of Industries and General Manager, District Industries Centre, Tirup District, Khonsa dated 24th October, 1981. This certificate bears the signatures of Mr. Toshilaya, proprietor and shows the address of Head Office as Kanubari, Dist-Tirup, Arunachal Pradesh and of Branch Offices in Cuttuck and Shillong; An Export Performance Certificate No. 715 dated 29-3-84 issued by the Chief Controller of Imports & Exports. This document shows as address P.O. Kanubari, Dist-Tirup (Arunachal Pradesh) and refers to the period 1982-83…... Licence No. 1945969, dated September, 1984; And a Withdrawal…… No. 1/84-85/GAD, dated 24-12-84 issued by the Deputy Chief Controller of Imports & Exports, Rajgarh Road, Gauhati. 48. I consider the last document as most important of all as it shows that it was an order withdrawing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will not be appropriate or advisable to leave the matter in doubt and a definite finding was called for. The charges of floating a fictitious firm, forgery and conspiracy to commit fraud are very serious charges of criminal nature and the evidence is required to be put to a severe test before any verdict could be pronounced. It is also essential to remember that the cases before us are basically those of importation of goods on the basis of licences whose validity was in question. Therefore, the Collector was duty bound to examine all aspects of validity of these licences and to record a clear and specific finding after a thorough enquiry. 53. I am convinced that the cases have not been fully and properly examined and the Collector has not taken all the relevant facts and circumstances into account. He has not recorded his findings with reference to all the submissions made by the appellants and the appellants have succeeded in showing that the principles of natural justice have not been duly observed. Therefore, consider that the matter is required to be examined by the Collector. I note in this connection that while initially it is the appellants side which was emphasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (J)]. - The following Difference of Opinion between Member (Judicial) and Member (Technical) has been referred to me as a Third Member :- (i) Whether in the facts and circumstances of the case, a conclusion could be drawn that the licences were forged ? (ii) Whether in the facts and circumstances of the case, a conclusion could be drawn as to the existence of Agrico Industries ? (iii) Whether in view of the submissions made by both the sides during the course of hearing and the facts and evidence on record, there was sufficient justification for coming to a conclusion on merits or there was a sufficient justification for remanding the matter to the adjudicating authority for de novo consideration in accordance with law ? 56. The case under dispute has a chequered history. The dispute pertains to the importations made by the appellants during the year 1985 and relates to the genuineness of the import licence and the endorsement made therein in the name of M/s. Agrico Industries. As the detailed facts of the case have been numerated in the order passed by the Member (Judicial), I am not reproducing the same here. It is seen that ultimately the matter was adjudicated and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant have suffered a lot and they do not want to pursue remedy of de novo adjudication in terms of order of Member (Technical). He submits that the case being almost seventeen years old, the records and the documents referred to in the order of Member (Technical) would not be available by this time and it would be futile exercise to remand the matter to the adjudicating authority level. He submits that the appellants have already paid the entire amount of redemption fine and penalty and has suffered financially on account of non-settlement of the issue at the Tribunal level. As such, he prays that the order proposed by Member (Judicial) be concurred with. 60. Shri T.K. Kar, ld. SDR appearing for the Revenue leaves the matter to the discretion of the Bench. 61. After giving my careful consideration and taking into account the submissions made by the appellants, I agree with them that the remand at this stage will not serve any useful purpose and would be in the nature of an empty formality. The appellants are not aggrieved with the findings of the Member (Judicial) which are to the effect that the licences were forged but has reduced the redemption fine and penalty. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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