Full Judgment
2. The respondents imported a consignment of rough diamond, filed a bill of entry for its clearance. Rough diamonds are exempt from payment of duty under notification 36/96-Cus. The goods were in the negative list of imports of 1992-97 policy. The importer had a valid licence to import the goods though.
3. The declared weight of the diamonds is 5344.50 carats. On examination, the officers found only 2786.18 cts. The parcel was in tact, there was no sign of tampering, the size of the parcel itself was such that 5344.50 cts. could not have been packed in it - mysterious.
Some surveyors were pressed into service. These sleuths found the shortage to be slightly less than what the Customs found it to be. The surveyors after carefully examining the attendant circumstances concluded that it was either a case of wrong declaration of weight or error in packing. Left it wide open then. Both the shipper and the importer by then wanted the goods to be reshipped back to its destination. The shipper wanted to take it up with his Bankers in Antwerp. This 'error in packing' theory was rejected by the Commissioner who considered it a case of wrong declaration, held the goods liable to confiscation under Section 111(m) of the Customs Act, confiscated them but allowed them to be redeemed for re-export on payment of a fine of Rs. 1,50,000/-. No penalty is imposed on any one.
4. The Commissioner observed that the diamonds found short were not available for confiscation. In the first instance, if they are available in the parcel, the whole controversy would not have started.
No point regretting that the diamonds found short were not available for confiscation. The Commissioner in the impugned order held that it is the shipper who misdeclared the goods and rendered the goods liable to confiscation under Section 111(m) and therefore was punishable under Section 112 of the Customs Act. Now, all declarations, insofar as one knows, have to be made in the bill of entry by the importer or his agent. The shipper sitting in Antwerp could not have made any declaration or misdeclaration in the bill of entry. Nor would he be allowed to do so. However, the Commissioner finds the shipper responsible for misdeclaration. But then, stranger things have happened.
5. The Revenue's grouse is that the Commissioner is wrong in not imposing the penalty on the importer and secondly should not have held the shipper responsible of misdeclaration. The Revenue was almost pleading the case of the shipper. It says, we quote "Section 1(2) of the Customs Act defines extent in respect of the applicability of the Customs Act, 1962 which mentions that 'it extends to the whole of India'." Scope and extent of the Act is confined to the limits of India. According to the Revenue, the adjudicating authority was wrong in imposing redemption fine on shipper, it should have been imposed on the importer who are owners of the goods". The Revenue doesn't seem to be making any distinction between fine and penalty. We hold that fine is not imposed on a person but on goods.
6. We are not privy to any information leading to the conclusion that the importer in this case, as contended by the Revenue, is the owner of the goods. An owner is one who pays for the goods. Till that event takes place, the ownership rests with the shipper only. In this case it appears that the ownership has not passed on to the importer. As otherwise it would not have happened that both the importer and the shipper were asking for re-export of the goods. In regard to the plea that the shipper is a foreigner and so the provisions of the Customs Act do not extend beyond the territorial waters etc., we hold that the shipper was represented before the Commissioner in India and was the one who requested for reshipment. The Customs Act applies to all foreigners who happen to visit India and can be proceeded against if they render the goods liable to confiscation under Section 111 of the Customs Act.
7. So then, both the pleas - foreigner and the ownership - should be rejected. The Revenue seems to be pleading the right thing for the wrong reasons. It is true that the goods should not have been confiscated on the ground that the shipper misdeclared the goods. He hardly made a declaration sitting in Antwerp.
8. But then, the Commissioner had difficulty in adjudicating the case.
He could not have accused the importer of misdeclaration because he made all declarations in accordance with the documents he received from the shipper. The department could not establish that the importer had knowledge of the fact that some diamonds had gone missing from the parcel. So it was not possible to hold that the importer misdeclared anything. Safety lies in accusing the shipper, which is what was done! The Revenue's plea that penalty should have been imposed on the importer for no fault of his, is also rejected.
9. In fact the diamonds should have been allowed to be reshipped without accusing the shipper of misdeclaration. The shipper seemed to have paid Rs. 1,50,000/- redemption fine imposed by the Commissioner.
What is such a small sum in diamond trade!