Escorts Herion Ltd. Vs. Commissioner of Customs - Court Judgment

Excerpt:
1. appellant imported a consignment of used and second hand machinery declared to be valued at rs 1.00 crores approximately, with the intention of putting it to use in the manufacture of hydraulic valves, but on being advised by the supplier that the machine was no longer commercially viable for that purpose, asked for its reshipment. the custom house issued notice proposing confiscation of the goods on various grounds such as that they were under valued and that they were more than seven years of old import of which was prohibited by the policy and that formalities relating to execution of bank guarantee etc., had not been carried out. in the order impugned in the appeal, the collector found in favour of the importer on the charge of under valuation; he found that the charges relating to bank guarantee were technical in nature; he found that the customs clearance permit had also been issued for this machine and that therefore objection with regard to this acquire more technical than substantive. therefore, he passed orders permitting re-export of the machine on payment of redemption fine of rs 5.00 lakhs holding that liable for confiscation.the appeal is against this fine of rs 5.00 lakhs.2. mr. sharad, manager (legal) of the appellant contends that once the collector found contravention to be technical, there was no question of confiscation or imposition of fine. he further relies upon the tribunal's decision in padia sales corporation v. c.c. -1992 (61) e.l.t. 90 to say that there is no power under the law empowering the collector to order re-export of goods on payment of redemption fine.3. the departmental representative adopts the reasoning in the impugned order.4. the collector has found the contravention in the case not to be significant: this however does not mean that there was no contravention at all. the goods were not imported under the earlier customs clearance permit which was granted, but in terms of the open general licence (ogl). hence the contention of the age of the machine would apply. he was therefore correct in ordering confiscation of the goods.5. the other contention is not of any significance to the fact of the present case. by applying the ratio of the decision in padia sales corporation v. c.c. all that would happen is that the permission granted for re-export to be set aside. the goods in other words would have to be cleared on payment of fine for home consumption. we are however told that the goods have already been exported. apart from this, we do not find it possible to say that there is no provision in the law to permitting goods to be re-exported subsequent to their confiscation.6. section 125 of the act does not specifically provide that an option may be given to redeem the goods for re-export. it empowers an adjudicating officer in case of goods the import of which is not prohibited and directing him, in the case of other goods, to give the owner of the goods, or where the owner is not known to the person from whose possession or custody the goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit.the section applies equally to export goods as well as imported goods.where goods which have been tendered for export are ordered to be confiscated and an option to redeem them is given under that section, it would follow that option is for the export of the goods. this is no doubt different from re-export. however, re-export is a facility permitting export of goods which have already been permitted to be imported. except in cases where export is prohibited by any law, those goods which have been imported may be permitted to be exported. the formal procedure of filing a shipping bill and observing other formalities relating to export of goods would have to be followed.there is nothing in the law prohibiting the collector from permitting re-export of goods. this long standing practice only simplifies the procedural requirement of a complex and time consuming requirement.therefore, when an adjudicating authority after ordering confiscation of imported goods permits their re-export the goods he is in effect first ordering the redemption for home consumption and thereafter permitting them to be re-exported. each of these two actions is permitted by law. an order whereby both are combined therefore is not contrary to law.7. the order of the collector is in law therefore correct. however, having regard to the gravity of the offence, we reduce the redemption fine to rs. 2.50 lakhs. consequential relief.

Judgment:
1. Appellant imported a consignment of used and second hand machinery declared to be valued at Rs 1.00 crores approximately, with the intention of putting it to use in the manufacture of hydraulic valves, but on being advised by the supplier that the machine was no longer commercially viable for that purpose, asked for its reshipment. The Custom House issued notice proposing confiscation of the goods on various grounds such as that they were under valued and that they were more than seven years of old import of which was prohibited by the policy and that formalities relating to execution of bank guarantee etc., had not been carried out. In the order impugned in the appeal, the Collector found in favour of the importer on the charge of under valuation; he found that the charges relating to bank guarantee were technical in nature; he found that the Customs Clearance Permit had also been issued for this machine and that therefore objection with regard to this acquire more technical than substantive. Therefore, he passed orders permitting re-export of the machine on payment of redemption fine of Rs 5.00 lakhs holding that liable for confiscation.

The appeal is against this fine of Rs 5.00 lakhs.

2. Mr. Sharad, Manager (Legal) of the appellant contends that once the Collector found contravention to be technical, there was no question of confiscation or imposition of fine. He further relies upon the Tribunal's decision in Padia Sales Corporation v. C.C. -1992 (61) E.L.T. 90 to say that there is no power under the law empowering the Collector to order re-export of goods on payment of redemption fine.

3. The departmental representative adopts the reasoning in the impugned order.

4. The Collector has found the contravention in the case not to be significant: this however does not mean that there was no contravention at all. The goods were not imported under the earlier Customs Clearance Permit which was granted, but in terms of the Open General Licence (OGL). Hence the contention of the age of the machine would apply. He was therefore correct in ordering confiscation of the goods.

5. The other contention is not of any significance to the fact of the present case. By applying the ratio of the decision in Padia Sales Corporation v. C.C. all that would happen is that the permission granted for re-export to be set aside. The goods in other words would have to be cleared on payment of fine for home consumption. We are however told that the goods have already been exported. Apart from this, we do not find it possible to say that there is no provision in the law to permitting goods to be re-exported subsequent to their confiscation.

6. Section 125 of the Act does not specifically provide that an option may be given to redeem the goods for re-export. It empowers an adjudicating officer in case of goods the import of which is not prohibited and directing him, in the case of other goods, to give the owner of the goods, or where the owner is not known to the person from whose possession or custody the goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit.

The section applies equally to export goods as well as imported goods.

Where goods which have been tendered for export are ordered to be confiscated and an option to redeem them is given under that section, it would follow that option is for the export of the goods. This is no doubt different from re-export. However, re-export is a facility permitting export of goods which have already been permitted to be imported. Except in cases where export is prohibited by any law, those goods which have been imported may be permitted to be exported. The formal procedure of filing a shipping bill and observing other formalities relating to export of goods would have to be followed.

There is nothing in the law prohibiting the Collector from permitting re-export of goods. This long standing practice only simplifies the procedural requirement of a complex and time consuming requirement.

Therefore, when an adjudicating authority after ordering confiscation of imported goods permits their re-export the goods he is in effect first ordering the redemption for home consumption and thereafter permitting them to be re-exported. Each of these two actions is permitted by law. An order whereby both are combined therefore is not contrary to law.

7. The order of the Collector is in law therefore correct. However, having regard to the gravity of the offence, we reduce the redemption fine to Rs. 2.50 lakhs. Consequential relief.