9911796707
TMI Blog2024 (8) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in COMMISSIONER OF TRADE TAX, UP. VERSUS SS. AYODHYA DISTILLERY AND OTHERS (OTHER APPEALS) [ 2008 (12) TMI 394 - SUPREME COURT ] . The issue that arose before the Supreme Court was whether paddy husk can be treated as rice husk . The Supreme Court held that when two expressions have been used in the same Notification, two different meanings should be assigned thereto. The order dated 24.01.2022 passed by the Additional Commissioner, that alone has been made the basis for cancelling the License issued to the appellant, does not penalise the appellant for an offence under the provisions of the Customs Act. Only a penalty has been imposed upon the appellant for contravention of the provisions of section 46 of the Customs Act. The order dated 17.08.2023 passed by the Commissioner, therefore, cannot be sustained - impugned order set aside - appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ) or Chapter V of Finance Act, 1994 (32 of 1994). IV. Has not been declared of unsound mind by a competent Court." 5. The appellant was granted a License on 11.01.2023, and a letter was sent to the Directorate of Revenue Intelligence for verification of the antecedents of the appellant. 6. The Deputy Director, Commercial Intelligence in the Directorate of Revenue Intelligence addressed a letter dated 08.02.2023 to the Commissioner of Customs Export and informed him that two cases were pending against the appellant at the stage of show cause notice and in two cases closure reports had been filed. The relevant portion of the said letter dated 08.02.2023 is reproduced below: "To, The Commissioner of Customs (Export), Air Cargo Export, New Custom House, New Delhi-110037 Ma'am/Sir Sub: Antecedent Verification for granting a new license for Public/Private/Special Bonded Warehouse under section 57/58/58A and permission for manufacturing & other operations under section 65 of Customs Act, 1962 - reg. xxxxxxxxxxx 4. In this context, it is informed that as per offence database of this Directorate, the Zonal Units of DRI and field formations have booked case ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btaining special bonded warehouse under section 58A of the Customs Act, 1962. He has given undertaking of having never been penalized under the Act with the sole purpose of obtaining the said license fraudulently." (emphasis supplied) 9. The appellant filed a detailed reply dated 15.05.2023 to the aforesaid show cause notice dated 17.04.2023. The appellant pointed out that in terms of regulation (3)(2)(c) of the Public Warehouse Licensing Regulations, 2016 [the 2016 Regulations], the License of the appellant could be cancelled if the appellant had been penalized for an offence under the Customs Act, the Central Excise, 1944 or Chapter V of the Finance Act 1994 [the Finance Act], but as 'offence' and 'contravention/violation of the provisions' are different and the appellant had not been penalized for an offence either under the Customs Act or the Central Excise or Chapter V of the Finance Act, the License cannot be cancelled. The appellant also pointed out the order dated 24.01.2022, only imposes a penalty of Rs. 1.5 lacs on the appellant under section 112 of the Customs Act for contravention of the provisions of section 46 of the Customs Act read with rule 11 of the 1993 Fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.6. Though there are two other Show Cause Notices which had been issued by DRI but as the same are yet to be adjudicated hence, penalising or not for violation of Customs Act is yet to be decided in these two cases. xxxxxxxxxxx. It would have been even better that even these two Show Cause Notices had been brought to the notice of the licensing authority for taking a comprehensive view though they may not have been required to do so going strictly by the wordings of SWLR, 2016. However, as SCNs are yet to be decided, hence I find that this does not fall foul with the declaration given by the applicant to obtain the license." (emphasis supplied) 11. It is this order that has been assailed in this appeal. 12. Shri Arjun Raghvendra M., learned counsel for the appellant submitted that the appellant had not been penalised for any offence under the Customs Act and, therefore, the License could not have been cancelled. According to the learned counsel, the terms 'contravention' and 'offence' as used in the Customs Act are not synonymous. Learned counsel, therefore, submitted that as the appellant had not made any mis-declaration either in the 'declaration' or the 'undertaking', th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 58 or section 58A: PROVIDED that before any licence is cancelled, the licensee shall be given a reasonable opportunity of being heard. (2) The Principal Commissioner of Customs or Commissioner of Customs may, without prejudice to any other action that may be taken against the licensee and the goods under this Act or any other law for the time being in force, suspend operation of the warehouse during the pendency of an enquiry under sub-section (1). (3) Where the operation of a warehouse is suspended under sub-section (2), no goods shall be deposited in such warehouse during the period of suspension: PROVIDED that the provisions of this Chapter shall continue to apply to the goods already deposited in the warehouse. (4) Where the licence issued under section 57 or section 58 or section 58A is cancelled, the goods warehoused shall, within seven days from the date on which order of such cancellation is served on the licensee or within such extended period as the proper officer may allow, be removed from such warehouse to another warehouse or be cleared for home consumption or export: PROVIDED that the provisions of this Chapter shall continue to apply to the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be, is satisfied that- (i) the site or building of the proposed public warehouse is not suitable for secure storage of dutiable goods; (ii) the site or building of the proposed public warehouse is not suitable for general supervision by officers of customs; (iii) bankruptcy proceedings are pending against the applicant ; or (iv) criminal proceedings are pending against the applicant and the offences involved are of such nature that he is not a fit person for grant of licence." (emphasis supplied) 19. The issue that arises for consideration in this appeal is as to whether the 'undertaking' and the 'declaration' given by the appellant that he had not been penalised for an offence under the Customs Act or the Central Excise Act or Chapter V of the Finance Act is correct or not. This is for the reason that the order dated 17.08.2023 cancels the License issued to the appellant only for the reason that the appellant had been penalised for an offence under the Customs Act as penalty had been imposed on the appellant under section 112 of the Customs Act. 20. The order dated 24.01.2022 imposes a penalty of Rs. 1.5 lacs upon the appellant under 112(a) of the Customs Act fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the time being in force. 22. Section 112(a) of the Customs Act provides that any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, shall be liable (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, subject the provisions of section 114A, to a penalty not exceeding ten percent of the duty sought to be evaded or five thousand rupees, whichever is higher. 23. Learned counsel for the appellant submitted that as the appellant had not been penalised for any offence under the Customs Act, the cancellation of the License of the appellant cannot be sustained. According to the learned counsel, the terms 'contravention' and 'offence', as occurring in the Customs Act, are not synonymous. 24. Chapter XIV of the Customs Act deals with 'confiscation of goods and conveyances and imposition of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but also in the notification dated 5-6-1985 paddy husk is not mentioned. By reason of notification dated 6-6-1996 'paddy husk' was inserted. Even then, the rice husk was not deleted. No explanation was offered therefor. Both rice husk and paddy husk, thus, found place in the notification. Indisputably, therefore, paddy husk was subjected to for the first time by reason of the said notification dated 6-6-1996. Yet again, while giving a purported new look to the entry in the notification dated 15-1-2000, the words 'rice husk' and 'paddy husk' have respectively been mentioned. Even then no attempt was made to issue any clarification. Two expressions having been used ordinarily two different meanings should be assigned thereto. If by reason of a notification, taxes are sought to be imposed upon a new commodity applying Heydon's Rules (3 Co. Rep: 7a; 76 E.R. 637), it must be held that the mischief was sought to be remedied thereby. It is, therefore, difficult to agree with Mr. Gupta that rice husk and paddy husk denote the same commodity." 31. The Supreme Court made the same observations in Union of India vs. Kumho Petrochemicals Company Limited [2017 (351) E.L.T. 65 (S.C.)] and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risonment for a term which may extend to two years or with fine or with both. Section 133 also provides that any person intentionally obstructs any officer of customs in exercise of any powers conferred under Customs Act shall be punishable with imprisonment for a term which may extend to two years or with fine, or with both. Likewise, other sections like section 134 and 135 also deal with punishment of imprisonment or with fine or both. Section 104 of the Customs Act deals with power to arrest. It provides that if an officer of customs has reason to believe that any person has committed an offence punishable under section 132 or section 133 or section 135 or section 135A or section 136, he may arrest such person and every person arrested shall without unnecessary delay, be taken to a magistrate. On the other hand, provisions for 'contravention' of the provisions of the Customs Act generally impose a penalty in terms of money. It cannot, therefore, generally be said that any 'contravention' would amount to an 'offence' under the Customs Act. 35. Regulation 3(2)(c) of the 2016 Regulations provides that the Principal Commissioner of Customs shall not issue a licence to an applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r attempts to introduce or causes or abets introduction of any such goods within the Union Territory of Delhi, upon which payment of terminal tax due on such introduction, has neither been made nor tendered, shall be punishable with fine which may extend to ten times the amount of such terminal tax." 39. The Supreme Court observed that the Chapter deals with two categories of matter. One relates to 'offences' and the other to 'penalties'. The Scheme of the Chapter indicates that so far as the 'offences' are concerned, they could only be tried by a competent criminal court, whereas 'penalties' could be imposed by the taxing authority itself. The Supreme Court, therefore, drew a clear distinction between 'offences' and 'penalties'. The relevant portion of the judgment of the Supreme Court is reproduced below: "4. xxxxx Learned counsel for the respondent on the other hand contended that the language used at the heading of the Chapter which starts with Section 461 itself indicates that this Chapter deals with two types of matters (i) where offences are alleged to have been committed and (ii) where only penalties could be imposed and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to Rs. 1,000 whereas under Section 464 neither there is any reference to a conviction nor any reference to the Court of a Magistrate and the only penalty provided is monetary which may extend to ten times. It is therefore clear that Section 463 refers to a criminal offence if committed, could only be tried by a competent criminal court and on conviction alone the punishment could be imposed but Section 464 is in the nature of a revenue provision where non-payment of tax could be remedied by imposition of penalty and the limit of penalty has been prescribed at ten times of the tax which is payable. In view of different language used in the two sections and also the language used in the marginal note it is clear that the two cannot be said to be same or similar. 8. Even the heading of the Chapter talks of "Offences and Penalties". It therefore clearly appears that this chapter deals with two categories of matters; (i) 'offences' and the other 'penalties' and the scheme of this Chapter indicates that so far as offences are concerned they could only be tried by a competent criminal court and punishment could only be awarded after conviction whereas so far as penalties ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
