Full Judgment
2. The matter was kept for early hearing and stay was heard on 4.9.2003. However, the orders on the stay applications could not be passed, since one of the learned Member (Technical), who was presiding over the Bench had since superannuated, the matters were listed for rehearing and after grant of early hearing on 2.1.2004 heard for final orders on 12.1.2004.
3. After hearing both sides and considering the materials on record, and also the fact that the subject imports were made in the month of September 2000, it is found and held as follows: (a) No notice for confiscation of the goods under Section 111 (d) of the Customs act was issued. As regards the misdeclaration, it was found by the Commissioner that in the Import General Manifest (IGM) the consignee details of the subject consignments were shown as "TO ORDER" which was changed to M/s Ayesha Exports, New Delhi. However, M/s Ayesha Exports, vide their letter dated 8.11.2000 wrote to the Shipping Agents that the consignments belonged to M/s R.T. & Co, New Delhi. A letter dated 4.11.2000 was received ostensibly from M/s R.T. & Co that the three consignments belonged to them. However, the address of M/s R.T. & Co was found to have been utilised by some other importer to misdeclare similar imported fabrics at Ludhiana.
The Bill of Lading, on scrutiny, indicated that the instance of the supplier of the consignment i.e. M/s Kabul Textiles Ltd., the shipping company M/s Maersk Sealand issued switched Bills of Lading at Dubai by altering the description of the consignments to "Polyester Knit Fabrics" in place of initial description of "Polyester Nicky Velour P/D (240/Gms/Yard)" which attracts higher rate of duty. All these commissions and omissions on the part of various individuals were found by the learned adjudicator to indicate the attempt and effort to misclassify the fabrics adopting modus operandi similar to one adopted by M/s Ayesha Exports and M/s Kazal Impex and after finding that M/s R.T. & Co., New Delhi ought to have approached for the clearance of the fabrics within a reasonable time and they have not done so and the fact that the present appellant, the supplier of the fabrics, had asked for reshipment only on 1.4.2001 i.e. after a lapse of seven months since the arrival of the shipment at Marmagoa port and explanation of the appellants that the despatches were made at the instance of a broker named Daulat, who was not traceable, and they are not having details of any such despatches earlier, in support of their explanation the Commissioner found that it was not prudent act to entertain and send consignment on the word of an undependable individual in the course of international trade and therefore relying on the Supreme Court's decision in Sampat Raj Dugar 1992 (58) ELT 163 (SC), Grand Prime Ltd v. UOI 2000 (126) ELT 390 (Cal), Bharat Forge 2000 (122) ELT 169, Savitri Electronics C 1992 (62) ELT 395 and Pacific International Writ Petition No. 2146 of 2001, he concludes that the thrust of the Hon'ble Supreme Court s decisions were towards only bona fide unmanipulating by senders of goods and since the present appellant had taken unusual steps of selling the goods through a broker without any sales contract/purchase order/LC and also went along with the importer/broker to the extent of changing the description of the goods which were original shipped from Shanghai to hide the "velour" characteristic of the fabrics which went to the root of the matter of the classification and rate of duty and that such an act was not to be performed by a prudent/genuine exporter who would not have waited for seven months, and would have come forwarded to claim the goods after the documents were returned without payment. He held that the present appellants were also a party to the mala fide intention to evade Customs duty in connivance with the Indian importer and therefore since the importers were not traceable and has not co-operated with the investigation proceedings carried out by D.R.I. and there is no objection from the importers for reexport and disowning the imported goods, and that no Bills of Entry were filed and that declaration of the description of the goods subsists only in the Bill of Lading and invoices, and observing that textile are freely imported but misdeclared, textiles were not freely importable. He held that the goods misdeclared were prohibited goods and liable to be confiscated. The appellants were liable for penalty since the Bill of Lading, Invoice and manifest were misdeclared.
"(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof." The word "entry" in the Customs Act, 1962 vide Section 2 (16) is defined as follows: " "entry" in relation to goods means an entry made in a bill of entry, shipping bill or bill of export and includes in the case of goods imported or to be exported by post, the entry referred to in Section 82 or the entry made under the regulations made under Section 84;" Novations and notations made on the manifest by the Shipping Agent and amendments thereof sought and granted by the proper officer under Sections 301 & 302 of the Customs Act, 1962 are not the "entry" envisaged to be made under Section 111 (m) of the Act. Since it is not an 'entry' made or altered on a Bill of Entry. Therefore, even if mala fides exist in altering the description on the invoice issued by an exporter abroad, and on the Bill of Lading at the port of loading discharge in the manifest filed, as found by the adjudicator, that ipso facto will not cause and call for a confiscation liability of the goods under Section 111 (m) of the Customs Act, 1962, especially when there is no Bill of Entry filed under the provisions of that Act and declaration made therein.In Union of India v. Sampat Raj Dugar 1992 (58) ELT 163 (S.C) the full Bench of the, Apex Court, after finding that the title of the first respondent (the supplier abroad) in that case remain free of any cloud, ordered reshipment as sought for by the exporter abroad. In that case, the second respondent (the alleged importer) had refused to pay and clear the documents and abandoned his claim having taken no steps to clear the goods by filing a Bill of Entry as are the facts in this case also. Merely because some action has been taken against certain importers of fabrics at Ludhiana as relied upon by the learned Commissioner, in the adjudication order, the present appellant who is the exporter of the goods from abroad cannot be assumed to be part of a conspiracy to import these goods at Goa. The reliance of the adjudicator on the act of the exporter abroad being imprudent inasmuch as no order for shipment was obtained in writing and/or 'Daulat' the broker was not being found are in the nature of commercial risk in business. Business Deeds do go away, a botched up deal on risk taken is not necessarily an attempt to defraud Customs, especially in the liberal import regime, when it is nobody's case that the actual goods were not freely importable. The Apex Court in the case of Northern Plastics (1998 (108) ELT 495 (S.C) has held that ineligible claim, is a mere claim of a benefit of exemption which really did not apply to the imported goods will not lead to an inference that the importer had intentionally fried to evade payment of Customs duty. In that case, an illegible claim was found to have been made on the Bill of Entry.
Being bound by this decision, it cannot be held that an alteration got made on documents like Invoices, Bill of Lading and Import Manifest after obtaining the permission of the proper officer cannot and do not call for coming to a conclusion as arrived at in the impugned order. Therefore, relying on the case of Sampat Raj Dugar 1992 (58) ELT 163 (S.C) the appellants are to be allowed reshipment of the goods since their title to the ownership is not in doubt or under any cloud.
(d) As regards the liability to confiscate under Section 111 (d) of the Customs Act, 1962, no prohibition on the import of actual goods as found in this case or has been shown to be existing under the Exim Policy. In fact, no reasons have specifically been arrived at by the adjudicator for liability to confiscation under Section 111 (d). The Show Cause Notice issued also has no such proposal to invoke the confiscation liability under Section 111 (d). Therefore, the confiscation arrived at under Section 111 (d) cannot be upheld. The arguments of the learned D.R. notwithstanding on this subject of a misdeclaration being made on the amendment on the IGM filed not withstanding.
(e) Since confiscation is not upheld, there can be no cause for penal action under Section 112 of the Customs Act, 1962. Penalty as imposed has to be set aside.
(f) There is force in the plea made by the learned advocate for the appellants that the benefit of the decision of Pacific International Traders v. Union of India 2002 (142) ELT 544 (Bom) on very same facts as in this case permitting reexport of the imported goods in view of the fact that the SLP filed by the Union of India against this order of the Hon'ble Bombay High Court has been dismissed reported in 2002 (143) A-188 has to be accepted. There is therefore no reason not to follow this binding decision which covers the facts in the present imports. The learned advocate's submission that the decision in the case of CC, Kolkata v. Grand Prime Ltd. 2003 (155) ELT 417 (S.C) would not be applicable to the facts herein since in that case the goods imported were banned and the import was contrary to law inasmuch as mat was being made without an import licence. No such case exists in this case. The differentiation made by the learned advocate about the applicability of the Grand Prime's case has to be upheld. The case of Om Prakash Bhatia v. CC, Delhi 2003 (155) ELT 423 (S.C) does not assist the Revenue's case since no prohibition to import the goods under consideration has been established by the adjudicator and valuation of export goods and draw back are not the issues involved in this case. The export of the imported goods is therefore allowed unhindered.
5. Order of confiscation set aside and export of the goods allowed to the appellant.
1. In view of the fact that the mis-declaration subsists in bill of lading, invoice, manifest and the invoice has been prepared by the appellant and the other documents have been prepared, at the instance of the appellant, the appellant has done or emitted to do acts which have rendered the goods liable to confiscation under Section 111.
Consequently, the appellant is liable to penalty under Section 112 of the Customs Act, 1962. Incidentally, I would like to point out that in the order of the learned Member, (Technical) at page 5 in 7^th and 8^th line from the bottom, it is recorded that there is no objection from the importers for re-export and disowning the imported goods, I could not locate any such no objection from the available records. The appellants in any case are liable for the penalty imposed on them and other legal charges which may be due against them.
2. Subject to the above, I agree with the order of the learned Member, (Technical).
The matters were heard on 12.01.2004 and the orders prepared and referred to learned Member (Judicial) for consideration on 20.1.2004.
File along with the proposed order has been received back to day. From the order enclosed at page 11, it appears that there is a difference of opinion and the question of the difference has not been framed by the learned Member (Judicial). The same may kindly be framed and send at an early date.
1. File received on my return from leave on 8.04.2004. In view of the fact that mis-declaration subsists in bill of lading, invoice, manifest, and the invoice has been prepared by the appellant and the other documents have been prepared at the instance of the appellant, the appellant has done or omitted to do acts which have rendered the goods liable to confiscation under Section 111.
2. Consequently, the appellant is liable to penalty under Section 112 of the Customs Act, 1962, in addition to other legal charges which may be due against them. Since there is difference of opinion between the Member (Technical) and Member (Judicial), the following question is formulated for reference to the Third Member by the Hon'ble President: - "Whether in view of the facts and circumstances of the case the appellants are liable to penalty under Section 112 of the Custom Act, 1962 as imposed by the Commissioner vis-a-vis other legal charges as may be due against them while allowing the appeal.
I have heard both sides on the difference of opinion referred to me.
The facts of the case are already set out by the Referring Bench and hence are not being repeated here.
Learned Member (Technical ) has held that the provisions of Section 111(m) invoked in the show cause notice are not attracted as no Bill of Entry has been filed and declaration made therein. He has also held that the provisions of Section 111(d) which have not been invoked in the show cause notice are not attracted as the goods are not prohibited goods. On the other hand, learned Member (Judicial) has held that the goods are liable to confiscation under Section 111 in view of the misdeclaration in Bill in Lading, invoice and manifest. As regards Section 111(m) of the Customs Act, 1962, the expression "Entry" has definite connotation, namely, an entry made in a Bill of Entry, Shipping Bill or Bill of Export, Entry referred to in Section 82 or Entry made under the regulations, made under Section 84. In the present case, there is no such entry of the goods imported. Section 111(m) speaks of entry made under the Customs Act which has been defined in Section 2(16) of the Act. Since there is no such entry within the meaning thereof, in the present case, I agree with the view expressed by the Learned Member (Technical) that the provisions of Section 111(m) are not applicable. My view finds support from the decision of the Tribunal in the case of Dynacast Industries v. CC(P), Mumbai 1999 (113) ELT 524 (T), wherein it has been held that Section 111(m) is attracted when there is a difference between the value or other material particularly declared in the bill of entry and what is determined and that difference cannot arise where no declaration is made in the relevant bill of entry. The plea of the leaned DR that the learned Member (Judicial) has held that the goods are liable to confiscation under Section 111 which includes Section 111(d) which is attracted for the reason that the goods are prohibited goods and non mention of Sub-clause. (d) of Section 111 is not fatal to the case of the Revenue, is not tenable, on an accumulative reading of the finding of the learned Member (Judicial)? who has held that the goods are liable to confiscation under Section 111 view of the fact that misdeclaration subsists in Bill of Lading, Invoice and Manifest and the invoice has been prepared by the appellants. I, therefore, do not agree with the learned DR that reference to Section 111 by Member (Judicial)? includes 111(d) and I agree with the learned counsel for the appellants that the reference to Section 111 by Member (Judicial) is only to Section 111(m).
In the light of the above, I concur with the findings of the learned Member (Technical) that the appellants are not liable to penalty under Section 112 of the Customs Act, 1962 as the order of confiscation cannot be sustained.
In view of the opinion expressed by Ld Member (Judicial) Ms Jyoti Balasundaram, these appeals are to be allowed in terms of the findings of Member (Technical) Shri S.S. Sekhon hereinabove.