9911796707
TMI Blog1992 (11) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... e formalities such as obtaining the allotment of Importers Code Number and applying to the Directorate General of Technical Development ('DGTD' for short) for registration and obtaining the registration number for the manufacture of Titanium Nitride Coating on metal cutting, metal working tools and wear parts the petitioner imported the machinery (the term 'machinery' would include the entire set up imported) referred above under concessional rate of customs duty invoking the provisions of Project Import (Registration of Contracts) Regulations, 1965. On the basis of the recommendation of the DGTD the import of the machinery was cleared. For this purpose bill of entry and invoice were filed with the Customs authorities on 16th February 1986 at Bangalore. When the customs duty was assessed at Rs. 35,87,557/- the machinery was kept in the warehouse since the petitioner was not in a position to pay the duty immediately. The machinery was de-bonded upon payment of duty of customs on 7th January, 1988. By that time the duty got increased to Rs. 67,29,416.97 ps and the concession under the Project Import Regulations came to be withdrawn and full rate of duty had to be paid. The machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 21st August 1989. This date is relevant because the respondents had filed their statement of objections on 12th June 1989 wherein they have specifically as- serted that the machinery did not qualify under OGL and that no electronic component or equipment was being manufactured by the petitioner by utilising the machinery. 4. In Annexure-N, show cause notice, inter alia it was pointed out that the machinery imported by the petitioner was not for the purpose of manufacturing any electronic component or equipment and that the petitioner was engaged only in the work of coating Titanium Nitride on steel tools and decorative articles on job work basis and that the petitioner was not engaged in the manufacturing activity but was only rendering the above said service. While importing, it is alleged, that the petitioner suppressed the function of the machinery. It is unnecessary to refer to the several aveements contained in the lengthy show cause notice. The charge against the petitioner is that there has been suppression of facts and willful mis-statement while importing the machinery. 5. The learned Counsel for the petitioner contended before us the following : (1) Action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile considering these contentions it is also necessary to consider the contention of the learned Counsel for the Central Government that the petitioner could as well participate in the proceedings in response to the show cause notice issued and that we should not interfere with the proceedings at this stage. We are inclined to accept this contention but the reasons would cover some aspects of the contentions advanced by the learned Counsel for the petitioner. Normally, every fiscal legislation has a provision to assess the tax levied and a machinery to collect the same. If there is any mistake or illegality, etc., in the order of assessment, it is usual to find a proper provision to reopen the assessment or to rope in the tax which has escaped earlier. The Act provides for the levy of and exemption from customs duty. Section 17 provides for the assessment of the duty; this is to be after an importer has entered in the imported goods, under Section 46. The assessment procedure involves examination and testing of the imported goods. The Proper Officer is empowered to require the importer to produce any document which he finds necessary. Sub-section (4) of Section 17 provides for a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods without payment of proper duty. Similarly if it is found that the goods were cleared under Section 47 on the assumption that they are not prohibited goods or they were imported validly but later if it is realised that there was some prohibition against importing the said goods, the goods are liable to be confiscated under Section 111 (d). In the instant case the show cause notice refers to Sections 111(d) and 111(m) under which the goods in question are liable to be confiscated. 9. The primary question is whether the goods cleared under Section 47 could be subsequently confiscated without the said order being reversed or set aside. The simple answer lies in Section 111(o)., according to which; "any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer," is liable to be confiscated. This shows that goods may be cleared on the basis of the exemption which in turn was granted subject to any condition. If the condition is violated or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for setting up of a project at Tumkur and that the Project Import under Heading No. 84.66 of Section XVI of the Customs Tariff Act, 1975 was recommended. The bill of entry, Annexure-D, also refers to P.V.D. coating machine, etc. It also refers to OGL Appendix-I, Part-B, Item 10(56) of TTC. Subsequently the bill of entry dated 7-1-1988 filed for de-bonding of the goods also refers to the same machinery. It is the contention of the respondents that the machinery imported by the petitioner is not for manufacture of electronic components and equipments and in fact there is no such statement any where made by the petitioner in the relevant documents. Therefore the goods could not have been imported and liable to be confiscated. In the course of the argument Mr. Chander Kumar contended that the process involved for which the machinery was imported and installed at Tumkur resulted in the manufacture of electronic components and equipments. However the respondents contended that the petitioner no where manufactures any article but performs only job work by treating the tools, etc. so that those tools could have better cutting performance, increased production, etc. etc. It was further co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se which the court already dealt with as above. The second ground was based on the clearance of the goods under Section 47. The Court observed on this aspect thus: "Considering Section 47 of the Customs Act in the light of the legislative history, we are clear that the section attaches finality to the satisfaction of the officer that the goods are not prohibited. The finality cannot be disturbed unless the Department successfully shows that there was fraud or deliberate suppression." We asked Mr. Chander Kumar, the provision under which the finality under Section 47 could be disturbed if fraud or deliberate suppression is established. The learned Counsel could not point out to any provision other than Section 28. In other words the decision of the Delhi High Court in no way establishes the principle that the clearance under Section 47 is absolutely final. But the finality alleged could be disturbed. If so, the ground for disturbing the finality are to be found in the very provision permitting its disturbance and when the Delhi High Court said that fraud or deliberate, suppression has to be shown for disturbing the finality, obviously the Court meant the various jurisdictional f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to restrict "dutiable goods" to "dutiable goods not yet assessed to duty". The suggestion that "warehouse" referred to in the clause should be understood to mean a warehouse to which goods are removed under Section 49 but not one to which goods are taken in pursuance of Section 59 is without basis and ignores the wide definition of that expression set out in Section 2(43) of the Customs Act." Proceeding further Supreme Court, again observed that, "... In a case where the goods are warehoused under Section 49 and they are clandestinely removed, there would be 'smuggling' as the duties payable thereon have been evaded altogether. But even in a case where the goods are assessed to duty and allowed to be warehoused under Section 59, a clandestine removal can result in loss of duty. No doubt, there is a provision in Section 72 for collection of the duty and forfeiture of the bond furnished to secure due payment of duty but these may not always be adequate cover to the Revenue if the goods are spirited away without permission. The mere fact that the goods have been ostensibly cleared, after assessment of duty, to a warehouse does not preclude the applicability of the concept of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The proceedings under Section 28 of the Act was affirmed. 17. In Gurupriya Tele Auto (P) Ltd. v. Superintendent of Central Excise [ILR 1992 Kar. 605 = 1992 (58) E.L.T. 361 (Kar.)] this Court was considering the scope of Section 11A of the Central Excises and Salt Act, 1944, which is similar to Section 28 of the Customs Act. It was held therein that even though the classification list was approved by the Department earlier, it did not preclude the initiation of proceedings under Section 11A in the appropriate cases; in other words the application of the mind of the authorities in approving the nature of the goods cannot be held to be final irrespective of the statutory provisions. A provision like Section 11A of the Central Excises and Salt Act was necessary so that tax which was not properly collected for reasons stated in the particular provision, could be collected. 18. The order of the Calcutta High Court in Rotoflex Industries v. Collector of Customs - 1992 (60) E.L.T. 379 (Cal.) - is an interlocutory order. Therefore any observation made therein cannot be considered as a precedent for any purpose by us. 19. In Kamath Packaging Ltd. v. Union of India [1991 (55) E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customs authorities. But if they have not left the custody of the customs authorities then the effect of the confiscation order would be automatically to reverse the clearance order which was passed ad hoc and pro tanto by the customs officer. Every order of clearance is conditional upon the goods not being liable to confiscation under any offence committed by the owner of the goods. The order in terms is not an absolute order which prevents the Collector from confiscating the very goods in respect of which he has authority to clear the goods, but that authority may cease to exist if there is liability upon the goods to be confiscated under any provision of the Sea Customs Act." 23. In view of the above we have no hesitation in declining to interfere with the proceedings initiated by the respondents. It is open to the petitioner to show cause in response to the notice issued to the petitioner. However, we record the statement made on behalf of the respondents that the petitioner will be permitted to utilise the machinery imported and installed at Tumkur to run the petitioner's factory during the pendency of the proceedings subject to the result of the said proceedings. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
