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TMI Blog2024 (5) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... n the consignment of M/s Creative Sales and M/s Unique Impex could not have been less than any conceivably actual value and, more particularly, as these were found to be second hand upon examination. The value of declared goods have not been demonstrated as meriting re-valuation. We are also unable to fathom the discrimination in determination of the duty liability of M/s Ghare Impex, whose goods were almost entirely confiscated and ordered for destruction, while not effecting the same exercise for the other two importers similarly situated. The value of undeclared goods are not relevant to the proceedings except for imposition of penalty owing to absolute confiscation as well as to the only plea of appellants that goods may be allowed to be re-exported. There is no requirement for duty to be levied in either contingency. Nonetheless, the rigour of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is not to be discarded merely because there is no intent to levy duty as the definition of value in section 2 does not offer scope for such dilution. Furthermore, the notice, as well as the impugned order, is bereft of any discussion, in relation to the declared and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - MR C J MATHEW, MEMBER (TECHNICAL) AND MR AJAY SHARMA, MEMBER (JUDICIAL) Shri J C Patel, Advocate for the appellants Shri S K Hatangadi, Assistant Commissioner (AR) for the respondent ORDER Each of these seven appellants, all individuals in such capacity or as individuals representing proprietorships, before us have challenged one or more of aspects absolute confiscation of goods subject to prohibition on import without recourse to option for re-export and imposition of penalty under section 112, section 114AA or section 117 of Customs Act, 1962 - in the impugned order [order-in-original no. 02/AK/C/CUS/2023 dated 31st January 2023] of Commissioner of Customs, Nagpur which concerns proceedings in relation to goods not only not entered for import in the manner prescribed by section 46 of Customs Act, 1962 but also either counterfeit or importable only against authorization from Directorate General of Foreign Trade, against compliance with quality prescriptions of Bureau of Indian Standards (BIS) or against appropriate permission from the licencing authority under Drugs and Cosmetics Act, 1940. In addition, some of the impugned goods were held as liable to enhanced duty from reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... makes no reference thereof and the adjudicating authority, for reasons best known to himself and in contrast with the other two consignments, did undertake responsibility for determining duty liability. Besides seeking imposition of penalties on individuals concerned, including Shri Sagar Jalinder Ghare as proprietor of the importing entity, the notice dated 10th June 2022 proposed absolute confiscation, and destruction, of those in breach of prohibitions and confiscation of others under section 111(d), 111(f), 111(l) and 111(m) of Customs Act, 1962 while revising the assessable value upwards for the entire consignments under rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 after resorting to rule 12 therein for rejection of the declared values for levy of duty of ₹ 10,13,312/- and ₹ 10,00,123/- respectively on goods to be redeemed and for quantification of penalty on the whole. 4. The imports of M/s Creative Sales and M/s Unique Impex, against bills of entry no. 651227/03.12.2021 and no. 651227/03.12.2021 declaring computer cabinet with SMPS and accessories valued at ₹ 34,24,560/- and ₹ 34,61,343/- respectively, were, on e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on payment of fine of ₹ 89,657/- and ₹ 66,725/-. It is against these several detriments that the appellants are before us. 6. From the submission of Learned Counsel for the appellants and of Learned Authorized Representative, it is common ground that a substantial portion of the four consignments were in excess of declarations in the corresponding bills of entry and, therefore, liable to confiscation under section 111(l) of Customs Act, 1962. It is also common ground that goods prohibited for import, viz., e-cigarettes and those not complying with prescribed standards in the consignments of M/s Ghare Impex and cosmetics / pharmaceuticals in the consignments of M/s Creative Sales and M/s Unique Impex that were in breach of the Drugs and Cosmetics Act, 1940 could not be offered for redemption and clearance for home consumption after confiscation under section 111(d) of Customs Act, 1962. 7. At this stage, we may do worse than examine two puzzling aspects in the impugned order: destruction of confiscated goods and recourse to section 111(f) of Customs Act, 1962. Nowhere does Customs Act, 1962 even refer to willful destruction of goods under any circumstances and, indeed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lved on notice and after scrutiny of such documents. The absence of such notice as well as the lack of reference to any documentary evidence to that effect in a notice answerable only by those concerned with the next stage in the import procedure puts paid to its validation as recourse to confiscation. 8. Furthermore, there appears to be an implicit proposition in the impugned order that section 111(m) of Customs Act, 1962 is to be invoked even when goods declared under section 46 are not a part of the consignment which appears to have prompted the adjudicating authority from forbearing to even venture in enumeration the goods actually imported by M/s Ghare Impex. The breach therein is of any goods not corresponding in respect of value or any other particular with the entry made under this Act which, upon concatenation with (2) ..shall include all goods mentioned in the bill of lading in section 46 of Customs Act, 1962, must, admittedly, absolve absence of any goods from the scope of confiscatory jurisdiction. That would leave any inaccuracy, relating to value, weight or any other particular that may have the effect of incorrect assessment and levy of duty, beyond the pale of Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on beneficiary importer. 10. Learned Authorized Representative contended that investigation had unearthed the depth and breadth of the conspiracy to import restricted and prohibited goods which was contrary to public policy and national interest. It was further contended that the absolute confiscation accompanied by destruction was the only logical course of action to deter such blatant violation of law. It was pointed out that imposition of penalty on the several persons was justified in the circumstances. According to him, there was no merit in the appeal which could have only one outcome, i.e., dismissal, thereof. 11. As we have pointed out supra, the impugned order has, after recourse to rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, arrogated the authority, under rule 3(4) of the said Rules to proceed with sequential application of the several alternative transaction or other value for assessment. There is no doubt that section 2(41) of Customs Act, 1962 does set out the meaning thereof, including as determined under section 14 of Customs Act, 1962, but we see no justification in the impugned order to conclude that such exercise is prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods) Rules, 2007. Any deviation, if overlooked for circumstantial ease and in larger interest , will be affirmation of authority to act according to the will and pleasure of an investigation which is repugnant to taxation law. Furthermore, the notice, as well as impugned order, are bereft of reasons for adoption of the particular formula for computation as also of the manner in which the computation is consonant with transaction value as intended by law. Reliance has been placed on a valuer who is neither a proper officer nor a tenable surrogate to whom the statute permits the proper officer to subordinate his application of mind and law to. 13. The finding in the impugned order that 18.4 In this instant case, it appears that the beneficial owners importing goods on different IEC's has contravened the provisions of the Customs Act, 1962 and Rules made there under, in as much as the value of the goods have been grossly mis-declared/undeclared with an intention to evade payment of appropriate customs duty. The undervaluation has also been accepted by the beneficial owners (Shri Ismail Tambawala and Shri Abdul Wahab) in their statement recorded under Section 108 of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laration in respect of valuation of goods or description, value must be determined with respect to valuation of goods by following Customs Valuation Rules. deprives the re-appraisal of statutory authority and erodes credibility of the finding even insofar as the declared goods are concerned. There is no finding that the value of the declared goods in the consignments of M/s Ghare Impex had been subjected to the requirements of rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 or that rule 3(4) therein was operable. It is clear that the declared value of the declared goods in the consignment of M/s Creative Sales and M/s Unique Impex could not have been less than any conceivably actual value and, more particularly, as these were found to be second hand upon examination. The value of declared goods have not been demonstrated as meriting re-valuation. We are also unable to fathom the discrimination in determination of the duty liability of M/s Ghare Impex, whose goods were almost entirely confiscated and ordered for destruction, while not effecting the same exercise for the other two importers similarly situated. The value of undeclared goods are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, or agent of such owner, of intellectual property rights to abuse government machinery for serving the inevitable desire to reap consequence of monopoly commerce and the manner in which the exercise of ascertainment, as well as the determination of counterfeit has been undertaken, has detracted from the commercial neutrality and sanctity of sovereign interest implicit in empowerment of customs administration. The Hon ble High Court of Bombay did have occasion, in NBU Bearings Pvt Ltd Anr v. Union of India Ors [writ petition (L) no. 3371 OF 2021 order dated 12th March 2021], to review the responsibility and statutory obligation devolving on customs matters thus 10.2. The IPR Rules do not confer any new intellectual property rights. They prescribe a remedy to prevent importation of goods that infringe intellectual property rights recognized and defned under the parent statutes relating to copyright, patent, trademarks, designs and geographical indications. 10.3. The above position can be understood from a reading the defnitions under Rules 1(a) to 2(d) of the IPR Rules. Rule 2 of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 defnes goods infringing inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. which places the confiscation of these goods in extreme jeopardy. These have also been sought to be re-exported. 16. There is no doubt that goods, which, by law, are impeded by prohibition from being brought into India, are liable to confiscation under Customs Act, 1962 and it is improbable that these may be so regularized by such confiscation as to be permitted to be cleared for home consumption; the only options are absolute confiscation or, at the instance of owner, to be re-exported. The import of e-cigarettes and of goods non-compliant with quality standards , as well those covered by Drugs and Cosmetics Act, 1940, are in this sphere. There is a specific plea for re-export on the claim that these appear to have been shipped in ignorance and even in the absence of any agreement with the supplier for such shipment. In re Global Enterprises, it has been held that 6. As the imported goods, though required to be, are not compliant with the standards, they fail to overcome the bar of prohibition at the threshold. Hence the question of duty liability, differential or otherwise, will not arise. This is in conformity with the decision of the Hon ble Supreme Court in re Sewpujanra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht available to an importer which cannot be overlooked by the department; the importer should have been allowed to exercise the option to re-export the goods, as prayed for. It would sound more logical and legal to follow the said procedure prescribed under Rule 131(3) of the Drugs and Cosmetics Rules,1945, in absence of any contrary provisions under the Customs Act, 1962, which has not been cited before us. At the cost of repetition, it appears that the imported cosmetics are considered as prohibited at the threshold of its import, being not supported by the Registration Certificate issued under Drugs and Cosmetics Act, 1940 and the rules made thereunder. Therefore, the issue of under valuation of the goods and contravention of other provision of Customs Act,1962 would arise thereafter, to dispose the goods accordingly. This Tribunal dealing with disposal of imported goods not in compliance with the Bureau of Indian Standards, expressed more or less similar view in the case of Global Enterprises v. Commissioner of Customs 2019 (369) ELT 1596 (Mum. - Trib). xxxx 17. We also set aside the penalties imposed on all the individual appellants viz. Shri Sunil Yadav - Director, Shri Siddi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing liability to confiscation with potential for invoking of the penal provisions to the extent that section 112 of Customs Act, 1962, and which does not differentiate between actual confiscation and liability to be confiscated, does allow. To the extent that punitive fine under section 125 of Customs Act, 1962 is not an option to be considered, no especial purpose is served by absolute confiscation. In these circumstances, the impugned order is modified to the extent that the goods absolutely confiscated therein are held to be liable for confiscation and, in acceptance of request for such by the importers, are permitted to be re-exported without being entailed by any other detriment under section 125 of Customs Act, 1962. 19. There is no finding on the manner in which section 114AA of Customs Act, 1962 was relevant to the import or the manner in which penalty under section 112 is liable to be fastened on the several entities and individuals. The adjudicating authority has merely asserted that 197. As regards submission by Shri Sanjay Thakker, Customs broker representing M/s Shree Sai Shipping Agency that he was only facilitating clearance of the impugned goods and was not concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e importers M/s Ghare Impex, M/s Creative Sales M/s Unique Impex. I find that the voluntary statements of all these persons are corroborative with the evidences of the money transactions found in the accounts of these persons. Therefore, I find penalty proposed under section 114AA of the Customs Act, 1962 to be correctly imposed on them. in the impugned order to proceed with imposition of penalty thereon which has not addressed the role of these individuals in submission of the documents that could, conceivably, have pulled wool over the eyes of the proper officer designated for section 17 of Customs Act, 1962. Though section 117 of Customs Act, 1962 enables imposition of penalty in the absence of prescription elsewhere in the statute, it does not empower conceiving of contraventions and breaches not elsewhere specified. It is intended to be invoked for breach of statutory stipulations that must be enumerated before recourse can be had to imposing detriment. The narration of 199. Further, I find that Shri Sagar Jalinder Ghare, Shri Mubin Mohd Asif Sheikh, and Shri Sachin Kantian Patel had provided their IEC code intentionally to Shri Ismail Tambawala, Shri Abdul Wahab, Shri Manish ..... X X X X Extracts X X X X X X X X Extracts X X X X
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