Full Judgment
2. On behalf of the appellant, the following contentions ave been urged: 1. Clearance having been allowed by the competent Assistant Collector under Section 47 of the Act, the only remedy for the department is by invoking Section 129D of the Act and Section 124 of the Act cannot be invoked, the exception being case of short levy in which case Section 28 of the Act can be invoked.
2. When any consignment has been released taking a bond, adjudication proceedings will not lie and only course is to take steps to enforce the bond.
3. The value determined by the Collector is untenable. 4. Since there was no mens rea, penalty should not have been imposed.
3. According to appellant, on the Bill of Entry being presented, the Assistant Collector inspected the contents of the consignment, provisionally assessed the value and determined the duty payable and after it was paid, the consignment was cleared under Section 47 of the Act. Before it was cleared, the officers inspected and verified the consignment. Appellant does not dispute that actually the consignment contained not the machine shown in the Bill of Entry, invoice or other documents of import, but contained three machines as reported by the Director of Industries. Admittedly the assessment of valuation and duty was provisional and appellant executed provisional bond undertaking to produce such documents and furnish such information as may be called for by the proper officer and to pay differential duty. The amount secured by the bond was Rs. 25,000.00. The provisionally assessed duty was paid and consignment cleared under Section 47 of the Act. It is admitted what was declared was one machine of a particular description while the consignment actually contained three machines of different descriptions that could not be imported under OGL and appellant did not have any specific licence. It it contended that once there was an order and clearance under Section 7, the goods cannot be confiscated and penalty cannot be imposed. Both sides have relied on various decisions.
4. There are conflicting decisions in regard to the above controversy.
In Collector of Customs and Central Excise, West Bengal and Ors. v.Hindustan Motors Ltd. and Anr. - 1979 (4) E.L.T. (J 313) Calcutta High Court held that where the customs house permitted clearance of goods by mistake, the importer cannot be heard to say that under Section 47 of the Act steps cannot be taken against him in other provisions of the Act. In Euresian Equipment and Chemicals Ltd. and Ors. v. Collector of Customs and Ors. - 1980 (6) E.L.T. 38, which dealt with a case of export it was held by a full Bench of the same High Court that the accrued liability to confiscation is not wiped out merely because goods have actually been exported after obtaining necessary permission for clearance and even if actual confiscation is not practicable, personal penalty is imposable. A similar view was taken by the Calcutta High Court in the case of import in Chandrakant Seth v. Collector of Customs - 1993 (68) E.L.T. 289. It was held that proceedings under Section 24 or 128 of the Act could not amount to review of the order of release of goods under Section 47. The Madras High Court has taken a similar view in Madanlal Steel Industries Ltd. v. Union of India -1991 (56) E.L.T.705 and in Cannon Steels Pvt. Ltd. and Anr. v. Union of India and Ors.
- [1993] 41 ECC 161. We also notice the same view taken by some Benches of the Tribunal in N. Devidas and Company v. Collector of Customs, Bombay and R.K. Industries v. Collector of Customs and Central Excise -1989 (39) E.L.T. 316.
5. Perhaps the earliest decision which took a different view was that of the Delhi High Court in Jain Shudh Vanaspati Ltd. and Anr. v. Union of India and Ors. - 1982 (10) E.L.T. 43. The High Court held that an order under Section 47 is capable of being revised under Section 129D.Section 47 attaches finality to the satisfaction of the proper officer that the import of the goods in respect of which the order was passed was not prohibited and the finality cannot be disturbed, apart from such statutory review unless there was fraud or deliberate suppression.
On the facts it was held that there was no deliberate suppression, since the law as it stood at that time did not require disclosure of the nature of the material of the drums in which the oil was imported and, therefore, the proper officer's satisfaction that the goods were not prohibited items had reached finality by the clearance order and notice under Sections 28 and 124 of the Act amounted to review of the earlier order which was not permissible. The Punjab and Haryana High Court in Industrial Cables (India) Ltd. and Anr. v. Union of India and Ors. - 1986 (25) E.L.T. 33 held that an order permitting clearance of goods by proper officer under Section 47 of the Act must be presumed to be after due adjudication with regard to the fact whether or not the import of the goods was prohibited by the Act or any other law. Learned single Judge of the High Court followed an unreported judgment of the Division Bench of the High Court to the same effect. The Bombay High Court in Union of India and Ors. v. Popular Dychem - 1987 (28) E.L.T.63 held that since in the particular case the order of clearance was passed after physical verification of the goods and in view of the above decision of the Delhi High Court, goods cannot be confiscated except in contemplation of an order or in pursuance of an order passed in review under Section 129 of the Act. The Delhi High Court decision has been followed by the Tribunal in Ajay Exports and Anr. v. Collector of Customs, Madras -1986 (26) E.L.T. 873. The decisions of the Delhi High Court and Punjab and Haryana High Court have been followed by the Tribunal in Decor India and Ors. v. Collector of Customs, New Delhi - 1987 (31) E.L.T. 400.
6. It appears the above decision of the Delhi High Court was challenged before the Supreme Court. The Supreme Court dismissed the appeal by a judgment reported in 1992 (1) SCALE 34. The Supreme Court agreed with the view of the High Court that there was no short levy as the importer was not liable to pay any separate duty on the containers. As the import of edible oil in stainless steel containers was in accordance with international marketing practice, the containers were not liable to be confiscated. The Supreme Court, in that view, did not consider it necessary to express any opinion on the findings recorded by the High Court so far as the interpretation of Sections 28 and 47 of the Customs Act, 1962 was concerned.M/s. Madura Coats v.Collector of Central Excise, Bangalore, after considering the decision of the Supreme Court in M/s. East India Commercial Co. Ltd. v.Collector of Customs, Calcutta, AIR 1962 SC 1893, followed by the Bombay High Court in Commissioner of IncomeTax v. Smt. Godavaridevi Saraf, 1978 (2) E.L.T. 624 and that of a larger Bench of the Tribunal in M/s. Atma Steels Pvt. Ltd. and Ors. v. Collector of Central Excise, Chandigarh and Ors., "The Tribunal has to proceed in accordance with the decision in Atma Steels Pvt. Ltd. in the light of the decision of Supreme Court in East India Commercial Company case, where the jurisdictional High Court i.e. jurisdiction in respect of the authority which adjudicated the matter initially and the assessee, has taken a particular view on interpretation or proposition of law, that view has to be followed in cases within such jurisdiction. If the Jurisdictional High Court has not expressed any view in regard to the subject matter, and there is conflict of views among other High Courts, the Tribunal will be free to formulate its own view in the light of Atma Steel Pvt. Ltd. case." 8. The assessee in the present case and the authority which decided the matter originally function within the jurisdiction of the Madras High Court. Hence, the view of the Madras High Court, which agreed with the view of the Calcutta High Court, namely, that an order under Section 47 of the Act does not inhibit the jurisdiction under Sections 111, 112 and 113 of the Act, has to be followed.
9. Even if the view of the Delhi High Court in Jain Shudh Vanaspati Ltd. case is to be followed, the decision in the case will not be different. It is admitted that the goods actually imported in the present case consisted of three machines, one single colour offset printing machine and two two colour offset printing machine. It is also admitted that all the documents relating to the import declared only one four colour offset printing machine. It cannot be suggested that the appellant was ignorant of the fact that three machines had been shipped as against the invoice, Bill of Entry, Bill of Lading and other documents declaring import of only one unit. This is a clear case of deliberate suppression of true facts. It is equally clear that the machines were in semi knocked down condition. Unless the parts were set and erected, it was not possible for the proper officer to find out if the contents of the container constituted three machines and not one machine. It is not the practice in any customs house to scrutinise, examine and test every consignment. Only a fraction of the consignment are subjected to careful scrutiny, examination and test. There is no documentary material in the present case to indicate that the contents of the consignments were subjected to such scrutiny or verification, though the appellant has put forward such a case in the appeal.
However, such a case was not put forward in the reply to the show cause notice issued by the Collector except say that the containers were opened at ICD Coimbatore and verified before clearance. Even assuming that the contents of the containers were examined, since they were in semi knocked down condition, the proper officer could not have realised that the contents constituted parts of three machines and not of one machine as declared. This is clearly a case of deliberate suppression of facts by the parties connected with the import which led to mistake on the part of the proper officer. On this ground it has to be held that the order passed under Section 47 of the Act did not attach any finality to the "satisfaction of the proper officer" that the goods imported were not prohibited goods. In fact, this is a case where the proper officer did not and had no opportunity to apply his mind to the question whether the goods imported were or were not prohibited goods.
He went by the documents presented before him and accepted that there was only one machine of a particular variety imported without carefully scrutinising the contents of the container and without verifying whether the contents when erected would become one or more containers and in the latter case, whether there would be one colour or two colour or four colour type. While four colour type machine was importable under OGL, single colour and two colour types required specific licence. In such circumstances, the Collector could invoke Sections 28 and 124 of the Act even in the absence of invocation of Section 129D of the Act.
10. In the present case at the time of the provisional assessment and release, the proper officer took a bond from the importer for a sum of Rs. 25,000.00. The importer undertook within three months from the date of importation or within such extended period as the proper officer may allow, to produce such documents and furnish such information as may be called for by the proper officer and to pay to the President the difference between the duty finally assessed and the duty provisionally assessed. The bond stated that if such duty is paid, the bond would become void. It is contended on behalf of the appellant that in view of this bond, adjudication proceedings cannot lie and the only remedy for the Department is to take steps to enforce the bond. Reliance is placed on the decision of the Tribunal in Grauer & Well (India) Ltd. v.Collector of Central Excise, Baroda -1986 (25) E.L.T. 338. That was a case under the Central Excises and Salt Act, 1944 in which the manufactured goods had been removed for alleged captive consumption and it was found that goods were liable to confiscation, as the manufacturer was not entitled to duty exemption. Goods were provisionally released under a bond. The Tribunal sustained the penalty levied on the appellant as its mala fide intention was clear. It was found that the goods released were not physically available for confiscation and therefore, the Tribunal held that Collector could not have confiscated the goods or fixed redemption fine and in the circumstances proper course would have been to enforce the bond for breach of its provisions. Reliance was placed on another decision of the Tribunal in Karnataka Trading Co., Tiptur v. Collector of Customs, Patna reported in 1990 (47) E.L.T. 568 (Tri.). In that case goods which could not be validly exported were taken from the place of manufacture enroute Nepal. The goods were seized long distance from the border. It was held that there was no "attempt" to export contrary to law. On that ground itself the appeal had to be allowed. However, the Tribunal proceeded to consider the argument based on the bond and relying on the earlier decision in the case Grauer & Well (India) Ltd. v. Collector of Central Excise, Baroda - 1986 (25) E.L.T. 338 held that the goods could not have been confiscated and the proper course have been to enforce the bond. That was also a case evidently where the goods were not available for confiscation.
11. The facts in the present case are quite different. The appellant has no case that the goods are not available for confiscation. They were and are available and, therefore, the Department is not restricted to the remedy of enforcement of the bond.
12. The appellant challenged also the value as determined by the Collector. The machines imported did not bear any label, name plate or inscription. Appraisal report by an expert has estimated the age. The documents are of no use in view of the misdeclaration of description and units. The machines are reported to be reconditioned machines as seen from the letter dated 10-1-1986 written by the appellant. The value of single colour machine has been determined on the basis of the price list circulated by M/s. Indus Candia Erikson & Co., Sweden a copy of which was supplied to the appellant. The working sheet attached to the show cause notice shows the manner in which the value has been arrived at. Since the import documents are of no relevance, the Collector has assessed the value to the best manner possible. We find no reason to interfere with the same.
13. The challenge against the penalty is on the ground that no mens rea has been made out. From what we have indicated above, it is clear that having actually imported three machines (one single colour and two double colour), the appellant tried to deceive the customs house with import documents showing import of one unit of four colour machine.
Import of four colour machine is covered by OGL, while the import of the machines actually imported required specific licence. The deception involved the question of valuation also. It is difficult to accept that the supplier committed a mistake in supplying three machines instead of and different from the one ordered, but nevertheless sent papers relating to the one ordered. The conduct of the appellant is also eloquent. At least when the machines were erected, the appellant must have realised that the machines actually received did not tally with the description in the import documents. Appellant has no case that the matter was reported to the customs house. The customs house would have remained in ignorance but for the report made by the State Director of Industries. In the circumstances, there can be no escape from the conclusion that whatever was done was done by the appellant deliberately and with a view to deceive the customs house. The levy of penalty is justified.