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TMI Blog2021 (8) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... of Entry, request for the goods to be deposited in the warehouse or even relinquish his title to the goods and thereby escape his liability to pay Customs duties. Merely saying that I have a purchase order which says X but my supplier sent me Y cannot be an excuse as the only person in India who has knowledge about the imported consignment is the importer. If he has doubts, there are sufficient safeguards in the Act itself. Can the importer s argument that they had placed an order for some other goods and the overseas supplier had sent the wrong goods and therefore, they have no liability, be accepted? - Is the imposition of penalty under section 112 (a) upon the CB valid? - HELD THAT:- The importer s assertion that the overseas supplier has sent different goods cannot be accepted. On the other hand, as far as the CB is concerned, he filed the Bill of Entry as per the documents provided by the importer. There is nothing on record to show that any act or omission on his part has rendered the goods liable for confiscation under section 111. In fact, the only allegation in the SCN is that he failed to discharge his obligations under the CBLR 2013 and such a failure, even if correct, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 138B has been followed with respect to the statements relied upon. It is found necessary to remand it to the original authority to complete the procedure under section 138B with respect to each of the statements which has been relied upon in the SCN and decide afresh on the confiscations and penalties. Petition disposed off. X X X X Extracts X X X X X X X X Extracts X X X X ..... rest under section 28AA of the Act and Customs duty already deposited to be appropriated against the demand. d) Confiscation of 211 pairs of counterfeit shoes (valued at ₹ 1,04,902/-) under section 111 (d) of the said Act; e) Confiscation of 733 shoes (valued at ₹ 2,31,505-) under section 111(I) and 111(m) of the said Act.; f) Customs duty demand amounting to ₹ 65,253/- involved on seizure of 733 pairs was demanded under section 28(4) along with interest under section 28AA of the Act. g) Penalty under section 114A/112 of the Act. This Show Cause Notice also proposed imposition of a penalty under section 112(a) upon the Customs Broker for failing to discharge their obligations under the Customs Brokers Licensing Regulations (CBLR). 5. The Ld. Adjudicating Authority passed the Order-in-Original No. 20/2016 dated 31.03.2016, the operative part of which is as follows: "35. In view of above, I pass the following order:- i) The declared value of ₹ 13,13,371/-declared in the Bill of Entry No. 6773535 dated 16.09.2014 is rejected under Rule 12 o the CVR 2007 and the values of the impugned goods are re-determined under Rule 7 of the CVR-2007 and the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shoes seized at shop of the importer; viii) Penalty of ₹ 10,00,000/- is imposed on the Importer under Section 112 (a) of the Customs Act, 1962 with reference to seizure of 2346 pairs of shoes seized at ICD, Tughlakabad, New Delhi having re-determined value of ₹ 5,81,738/- ; ix) Penalty of ₹ 25,000/- is imposed on M/s. Evershine Customs (C&F) Pvt. Ltd. under section 112(a) of the Customs Act, 1962 for the various acts of omission and commission. " 6. Aggrieved, the appellants filed an appeal before the Commissioner (Appeals) who passed the Order-in-Appeal dated 12.4.2019 [5] dismissing the appeals and upholding the order of the adjudicating authority. 7. Being aggrieved, the importer as well as CB filed the instant appeals. 8. We have heard Shri Arjit Chakeravarty and Shekhar Vyas, learned Counsel for the Appellants and Shri Rakesh Kumar and Shri Sunil Kumar, learned Authorised Representatives for the Department. 9. It is submitted on behalf of the appellants that order under challenge has violated the principles of natural justice as no opportunity of being heard was given to either of the appellants. It is submitted that none of the notices as mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the importer as the CB was responsible only for the clearance of consignment. The CB was not the beneficiary of the imports. The CB is not required to examine the nature of goods before filing the Bill of Entry. There is nothing brought on record by the Department to prove involvement of the appellant CB. The penalty as also been imposed upon the CB only on the ground of failing to discharge obligations under CBLR 2013 which is an incorrect allegation. Even if there is a violation of the obligations, no penalty can be imposed under section 112 for the purpose. There are provisions in the CBLR itself for imposing penalty for not discharging the obligations. The penalty is accordingly prayed to be set aside. 13. Rebutting these arguments, learned Departmental Representatives submitted that it is a case of import where importer mis-declared the quantity as well as quality of shoes in the Bill of Entry No. 677535 dated 16.9.2014 filed by the CB on behalf of the importer. The declaration made thereunder was for unbranded shoes whereas on examination, branded shoes were found. There were 14 fewer cartons than declared but the number of shoes was much more than declared. Descriptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther goods and the overseas supplier had sent the wrong goods and therefore, they have no liability, be accepted? c) Can a differential duty can be demanded under section 28(4) on the goods even before the goods have been cleared for home consumption? d) Can differential duty be demanded on under section 28(4) on goods which were seized from the shop of the importer, i.e., those goods which had been imported in the past? e) Is DRI competent to issue the SCN in this case in the light of the judgment of the Hon'ble Apex Court in the case of Cannon India? f) Is the confiscation of the seized goods valid? g) Is the imposition of penalty under sections 114-A on the importer is valid? h) Is the imposition of penalty under section 112 (a) upon the CB valid? i) Have the principles of natural justice been violated? 17. On the first question identified, it is undisputed that on receiving specific information, the imported goods were examined and were found to be of a different quality and quantity than what was declared in the Bill of Entry. The Bill of Entry was prepared by the CB based on the papers given by the importer. The goods were examined in the presence of the CB und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 57 without warehousing the same. (2) Save as otherwise permitted by the proper officer, a bill of entry shall include all the goods mentioned in the bill of lading or other receipt given by the carrier to the consignor. (3) The importer shall present the bill of entry under sub-section (1) before the end of the day (including holidays) preceding the day on which the aircraft or vessel or vehicle carrying the goods arrives at a customs station at which such goods are to be cleared for home consumption or warehousing: Provided that the Board may, in such cases as it may deem fit, prescribe different time limits for presentation of the bill of entry, which shall not be later than the end of the day of such arrival: a bill of entry may be presented at any time not exceeding thirty days prior to] the expected arrival of the aircraft or vessel or vehicle by which the goods have been shipped for importation into India: Provided also that where the bill of entry is not presented within the time so specified and the proper officer is satisfied that there was no sufficient cause for such delay, the importer shall pay such charges for late presentation of the bill of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs that any imported goods have been lost (otherwise than as a result of pilferage) or destroyed, at any time before clearance for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs shall remit the duty on such goods. (2) The owner of any imported goods may, at any time before an order for clearance of goods for home consumption under section 47 or an order for permitting the deposit of goods in a warehouse under section 60 has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon; Provided that the owner of any such imported goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force. 21. Thus, the importer cannot escape his responsibility of making a true and accurate and complete declaration of the imported goods in the Bill of Entry. If the importer has any doubts about the goods, there are sufficient safeguards which enable him to examine the goods before filing the Bill of Entry, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter back to the Assessing Officer. Once the assessment is complete, the importer will have to pay the duty. If the duty as assessed is paid and if the goods are not prohibited goods, an order permitting clearance of goods for home consumption is issued under section 47 by the proper officer who is usually called as 'out of charge' officer. 24. Once the order permitting clearance of goods for home consumption is issued under section 47, it results in the following: a) The goods cease to be imported goods [Section 2(25) "imported goods" means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption]; b) The person who imported them ceases to be the importer [Section 2 (26) "importer", in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner, beneficial owner or any person holding himself out to be the importer;] c) The imported goods cease to be dutiable goods [Section 2 (14) "dutiable goods" means any goods which are chargeable to duty and on which duty has not been paid;] d) Thereafter, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses, the import manifest and the bill of entry having been filed before the Collectorate of Customs (Imports) Mumbai, the same having been assessed and clearance for home consumption having been allowed by the proper officer on importers executing bond, undertaking the obligation of export, in our opinion, the Collector of Customs (Preventive), not being a "proper officer" within the meaning of Section 2(34) of the Act, was not competent to issue show cause notice for re-assessment under Section 28 of the Act. 29. It was further explained by the Hon'ble Supreme Court in Canon India Ltd. that the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import, is broadly a power to review the earlier decision of assessment. Such a power is not inherent in any authority. Indeed, it has been conferred by Section 28 and other related provisions. The power has been so conferred specifically on "the proper officer" which must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods i.e. the Deputy Commissioner Appraisal Group. Relevant extract of this judgment is as follows: 9. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccessor in office or any other officer authorised to exercise the powers within the same office. In this case, anyone authorised from the Appraisal Group. Assessment is a term which includes determination of the dutiability of any goods and the amount of duty payable with reference to, inter alia, exemption or concession of customs duty vide Section 2 (2) (c) of the Customs Act, 19624 . 12. The nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import, is broadly a power to review the earlier decision of assessment. Such a power is not inherent in any authority. Indeed, it has been conferred by Section 28 and other related provisions. The power has been so conferred specifically on "the proper officer" which must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods i.e. the Deputy Commissioner Appraisal Group. Indeed, this must be so because no fiscal statute has been shown to us where the power to re-open assessment or recover duties which have escaped assessment has been conferred on an officer other than the officer of the rank of the officer who initially took the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 28 can only arise after the goods have been cleared for Home Consumption and not before. This is because a demand under section 28 is in the nature of review of the assessment already done under section 17 by the proper officer. Without the assessment under section 17 being completed, there cannot be review under section 28 and the relevant date under section 28 for reckoning the time limit has not yet arisen. For this reason, the demand under section 28 in respect of the goods which have not yet been cleared for home consumption cannot be sustained and the answer to the question (c) which we raised is 'No demand under section 28 can be issued unless the goods have been cleared for home consumption and hence the demand does not sustain'. 33. The question (d) raised by us is regarding whether a demand under section 28 can be raised in respect of goods seized from the shop of the importer. These goods have evidently been cleared for home consumption and hence a demand can be raised under section 28. This, however, leads to the related question as to whether DRI can issue a SCN under Section 28. 34. The decision of Hon'ble Apex Court in the case of Canon India Ltd. vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case, anyone authorised from the Appraisal Group. Assessment is a term which includes determination of the dutiability of any goods and the amount of duty payable with reference to, inter alia, exemption or concession of customs duty vide Section 2 (2) (c) of the Customs Act, 19624 ." 35. It is further observed that in Canon India Ltd. case Hon'ble Supreme Court has held as follows: "14. It is well known that when a statute directs that the things be done in a certain way, it must be done in that way alone. As in this case, when the statute directs that "the proper officer" can determine duty not levied/not paid, it does not mean any proper officer but that proper officer alone. We find it completely impermissible to allow an officer, who has not passed the original order of assessment, to re-open the assessment on the grounds that the duty was not paid/not levied, by the original officer who had decided to clear the goods and who was competent and authorised to make the assessment. The nature of the power conferred by Section 28 (4) to recover duties which have escaped assessment is in the nature of an administrative review of an act. The section must therefore be construe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding officers of DRI) as proper officers under section 17. Thus, now there are several 'proper officers' having jurisdiction over the same type of goods in the same area. Firstly, there is the AC/DC of the Appraising Group of the Custom House. Then there are officers of DRI, Customs Preventive, etc. who usually have a large territorial jurisdiction which overlaps with that of the Custom Houses. The validity of this amendment was under challenge in the case of Mangli Impex Ltd. vs. Union of India reported in [2016 (335) ELT 605 (Del) before the Hon'ble High Court of Delhi and it has been held that the retrospective application of this sub-section is ultra vires. The judgment and order of the Hon'ble High Court of Delhi was stayed by the Hon'ble Supreme Court in Union of India vs. Mangali Impex Ltd. reported in [2016 (339) ELT A 49 (SC)]. Thus, as on date, the Section 28(11) is still on the statute book and is valid. This sub-section was not brought to the attention of the Hon'ble Supreme Court in the case of M/s. Canon India (supra). However, even if it is considered that the officers of DRI are 'proper officers' under Section 17, an SCN under Section 28 can be issued only by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of investigation. Such statements are relevant for either prosecutions or for other proceedings (such as quasi-judicial proceedings) under the Act subject to some conditions under section 138B which reads as follows: SECTION 138B. Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall, so far as m ..... 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