Kohinoor Impex Pvt. Ltd. Vs. Collector of Customs - Court Judgment

Excerpt:
1. m/s kohinoor impex pvt. ltd., 1/25, asaf ali road, new delhi, has filed an appeal being aggrieved from the order passed by collector of customs, bombay. simultaneously, a stat application duly supported with an affidavit was also filed. a notice of hearing dated 6th february, 1991 was issued, listing the matter for hearing on 29th march, 1991.when the matter was called on 29th march, 1991, shri a.s. sunder rajan, learned consultant, made a request for adjournment on the ground that he wanted to file balance-sheet, and the other side did not oppose the request. on the request of the learned consultant, the matter was adjourned to 1lth april, 1991; and on 11th april, 1991, it was pointed out that the revenue authorities were pursuing recovery proceedings and it was also pointed out that since the stay application was pending, the revenue authorities should not have resorted to recovery proceedings. in support of the applicant's plea, decisions were cited and the bench had again pointed out that there was no balance-sheet, trial balance, profit & loss account and other information and in the absence of this information, the financial position of the applicant could not be ascertained. the learned consultant, shri a.s. sunder rajan, requested for the grant of time for the filing of the same, but pleaded that interim stay may be granted.after hearing both the sides, in the interest of justice, interim stay was granted and the matter was adjourned to 7th may, 1991, and it was ordered that the recovery proceedings shall not be pursued till the next date of hearing, and both the sides were at liberty to file necessary evidence in support or against the stay application. when the matter again came up for hearing on 7th may, 1991, the revenue laid reliance on the telex which was objected to by the learned consultant on the ground that it was in the nature of instruction from the addl.collector to the chief departmental representative, and as such, the same could not be produced, and the revenue made a prayer for grant of time for the filing of the papers and in the interest of justice, again the matter was adjourned to 10th june, 1991, and it was further ordered that the interim stay granted by the tribunal shall continue till the next date of hearing. on 10th june, 1991 when the matter was again called, the bench had pointed out that there was no balance-sheet, and for the proper disposal of the stay application, up-to-date balance-sheet were very essential and the bench had enquired from the appellant that how much time he will take in preparing balance-sheet and we were told by the appellant that it will take about one and a half month, and in the interest of justice, time was granted and the matter was adjourned for today.2. today when the matter was taken up for hearing, at the outset of the hearing, shri a.s. sunder rajan, learned consultant, stated that the appellant cannot prepare the balance-sheet as he has got instruction, and he does not plead any financial hardship, and as such, he is not filing any balance-sheet and the tribunal may proceed on the basis of the material available on record. shri a.s. sunder rajan, learned consultant, pleaded that duty amount in the present matter of rs. 1,02,495/- and penalty of rs. 9 lakhs has been imposed, and the applicants has already deposited the duty amount. shri sunder rajan pleaded that the applicant's financial position is bad, and prima facie the applicant has got a good case on merits, and the applicant is not in a position to pay any amount and the penalty amount be dispensed with and stay be granted.3. shri s.k. roy, learned sdr, who has appeared on behalf of the respondent, stated that prima facie the revenue has got a good case on merits. he drew the attention of the bench to page 3 of the statement of facts. shri roy pleaded that the applicants had imported thin walled bearings and he stated that the applicant is an export house and the total cif value of the licence dealt by the applicant is to the tune of about rs. 45 crores, and the value of the present consignment is about rs. 26,21,947/-. shri roy pleaded that the applicant is not a manufacturer and is an export house and had made the importation against advance licence and had imported thin walled bearings in semi-finished form as per the description given on the bill of entry, but actually these were finished thin walled bearings and the goods were required to be treated as finished ball bearings only. in support of his argument, he drew the attention of the bench to para no. 61 of the order-in-original which appears on the internal page 23 of the paper book. shri roy pleaded that the only thing had to be done by the applicants was oiling, cleaning, putting in sets and thereafter packing, and by no stretch of imagination these to be treated as semi finished thin wall bearings. shri roy pleaded that the turnover goes to the tune of crores of rupees and the applicants had made a profit of about rs. 26 lakhs in this consignment as per observations of the collector in para no. 70 appearing on internal page 27 of the order-in-original. he also stated that there was misdeclaration in the bill of entry by the appellants and also referred to pages 21, 22 and 23 of the paper book and the physical examination of the goods clearly shows that the sample drawn and examined clearly would be that these goods were representative of the present consignment and were not in a semi-finished bearings at all. he referred to para nos. 54,55,56 and 61 of the order-in-original. shri roy pleaded that no substantial manufacturing activity was involved. shri roy pleaded for the rejection of the stay application.4. in reply, shri sunder rajan, id. consultant, pleaded that the applicant is a manufacturer and exporter and no case has been booked against the applicant in the fifteen consignments mentioned in the statement of facts. shri sunder rajan also pleaded that the revenue has also relied on the report of prof. somasundaram and stated that in spite of the applicant's request, no cross objection was permitted.shri sunder rajan pleaded for the acceptance of the stay application and stated that whatever the bench directs, the applicant shall try to comply with the order.5. during the course of arguments shri roy also drew the attention of the bench as to the committing of forgery by the customs house agents and referred to para no. 73 appearing on page 27 of the impugned order and again pleaded for the rejection of the stay application.6. we have heard both the sides and have gone through the facts and circumstances of the case. as discussed in the forementioned paras, no financial hardship is pleaded before us. we have looked into the prime facie merits of the case as per observation of the hon'ble delhi high court in the case of uptron powertronics v. collector of central excise . the tribunal, had given repeated adjournments and had granted time from 27th march, 1991 till date and the applicant has not taken slightest care in filing the necessary information as to the filing of the balance-sheet, profit & loss account and other connected papers. only few certificates as to the credit/debit balance from the banks have been filed. we have looked into the same. the certificates, so cited, cannot lead us to any inference as to the financial position of the applicant. hon'ble supreme court in the case of spencer and co. v. union of india which was followed by the tribunal in the case of synodyne television co. v.cce calcutta had held in relevant we are in agreement with the contention of the counsel for the petitioner that the expression 'undue hardship' occurring in the proviso to section 35f of the central excises & salt act, 1944, would include consideration, inter alia, of the aspect of liquidity possessed by the assessee. we are not inclined to take the view that the impugned order gives any indication that aspect has been completely ignored as was contended by counsel. with these observations, the special leave petition is dismissed.there is no information as to the financial position of the applicant.the applicants apparently appear to have imported duly finished thin wall bearings. further observations by us at this stage will not be proper as the matter is sub judice. the customs house agent is an agent of the applicant and the factum of the forgery has been duly admitted by the customs house agent, and any negligence or offence committed by the agent, the liability goes to the principal. it has been so observed by the court in the case of francis v. cockrell reported in (1870) l.r.5 q.b. 501. there it was held that: the plaintiff had purchased a ticket for a stand on the defendant's racecourse. during the race the stand collapsed and this resulted in injuries to the plaintiff. the responsibility for the defect lay not personally with the defendant, but an independent contractor implied by him for construction. all the same, the defendant was held liable upon the basis of his implied warranty.there are no observations by the collector in his order as to the liability of the applicant for forgery. however, keeping in view the penalty proceedings, in the matter before us, the applicant has paid the full duty amount. penalty proceedings are quasi-criminal proceedings. while fixing the quantum of penalty, the gravity of the offence has to be looked into. hon. supreme court in the case of a.m.sinha v. a.k. biswas & ors. had held as 10 the broad principle that punishment must be proportioned to the offence is or ought to be of universal application save where the statute bars the exercise of judicial discretion either in awarding punishment or in releasing an offender on probation in lieu of sentencing him forthwith. the words of section 4(1) of the probation of offenders act are wide and would evidently include offences under the customs act and the gold control rules.before we part with this matter, we would like to observe that the interim stay granted by us on 11th april, 1991 and 7th may, 1991 stands vacated. keeping in view the totality of the facts and circumstances of the case, we are of the view that if the applicants are desired to deposit the penalty amount of rs. 9 lakhs, it will amount to undue hardship. we dispense with the pre-deposit of the same on the condition of the applicants depositing rs. 6 lakhs (rupees six lakhs) in cash and also furnishing a bank guarantee for the balance amount of rs. 3 lakhs (rupees three lakhs) within 12 weeks from today. in case the applicants fail to comply with the terms of this order, the stay order shall stand automatically vacated. we further order that during the pendency of the appeal, the revenue authorities shall not pursue the recovery proceedings for the balance penalty amount. the applicants to submit compliance of this order to the registry within 14 weeks from today and the matter be listed for mention on 14th november, 1991.

Judgment:
1. M/s Kohinoor Impex Pvt. Ltd., 1/25, Asaf Ali Road, New Delhi, has filed an appeal being aggrieved from the order passed by Collector of Customs, Bombay. Simultaneously, a stat application duly supported with an affidavit was also filed. A notice of hearing dated 6th February, 1991 was issued, listing the matter for hearing on 29th March, 1991.

When the matter was called on 29th March, 1991, Shri A.S. Sunder Rajan, learned Consultant, made a request for adjournment on the ground that he wanted to file balance-sheet, and the other side did not oppose the request. On the request of the learned Consultant, the matter was adjourned to 1lth April, 1991; and on 11th April, 1991, it was pointed out that the Revenue authorities were pursuing recovery proceedings and it was also pointed out that since the stay application was pending, the Revenue authorities should not have resorted to recovery proceedings. In support of the applicant's plea, decisions were cited and the Bench had again pointed out that there was no balance-sheet, trial balance, profit & loss account and other information and in the absence of this information, the financial position of the applicant could not be ascertained. The learned Consultant, Shri A.S. Sunder Rajan, requested for the grant of time for the filing of the same, but pleaded that interim stay may be granted.

After hearing both the sides, in the interest of justice, interim stay was granted and the matter was adjourned to 7th May, 1991, and it was ordered that the recovery proceedings shall not be pursued till the next date of hearing, and both the sides were at liberty to file necessary evidence in support or against the stay application. When the matter again came up for hearing on 7th May, 1991, the Revenue laid reliance on the telex which was objected to by the learned Consultant on the ground that it was in the nature of instruction from the Addl.

Collector to the Chief Departmental Representative, and as such, the same could not be produced, and the Revenue made a prayer for grant of time for the filing of the papers and in the interest of justice, again the matter was adjourned to 10th June, 1991, and it was further ordered that the interim stay granted by the Tribunal shall continue till the next date of hearing. On 10th June, 1991 when the matter was again called, the Bench had pointed out that there was no balance-sheet, and for the proper disposal of the stay application, up-to-date balance-sheet were very essential and the Bench had enquired from the appellant that how much time he will take in preparing balance-sheet and we were told by the appellant that it will take about one and a half month, and in the interest of justice, time was granted and the matter was adjourned for today.

2. Today when the matter was taken up for hearing, at the outset of the hearing, Shri A.S. Sunder Rajan, learned Consultant, stated that the appellant cannot prepare the balance-sheet as he has got instruction, and he does not plead any financial hardship, and as such, he is not filing any balance-sheet and the Tribunal may proceed on the basis of the material available on record. Shri A.S. Sunder Rajan, learned Consultant, pleaded that duty amount in the present matter of Rs. 1,02,495/- and penalty of Rs. 9 lakhs has been imposed, and the applicants has already deposited the duty amount. Shri Sunder Rajan pleaded that the applicant's financial position is bad, and prima facie the applicant has got a good case on merits, and the applicant is not in a position to pay any amount and the penalty amount be dispensed with and stay be granted.

3. Shri S.K. Roy, learned SDR, who has appeared on behalf of the respondent, stated that prima facie the Revenue has got a good case on merits. He drew the attention of the Bench to page 3 of the statement of facts. Shri Roy pleaded that the applicants had imported thin walled bearings and he stated that the applicant is an export house and the total CIF value of the licence dealt by the applicant is to the tune of about Rs. 45 crores, and the value of the present consignment is about Rs. 26,21,947/-. Shri Roy pleaded that the applicant is not a manufacturer and is an export house and had made the importation against advance licence and had imported thin walled bearings in semi-finished form as per the description given on the Bill of Entry, but actually these were finished thin walled bearings and the goods were required to be treated as finished ball bearings only. In support of his argument, he drew the attention of the Bench to Para No. 61 of the Order-in-Original which appears on the internal page 23 of the paper book. Shri Roy pleaded that the only thing had to be done by the applicants was oiling, cleaning, putting in sets and thereafter packing, and by no stretch of imagination these to be treated as semi finished thin wall bearings. Shri Roy pleaded that the turnover goes to the tune of crores of rupees and the applicants had made a profit of about Rs. 26 lakhs in this consignment as per observations of the Collector in para No. 70 appearing on internal page 27 of the Order-in-Original. He also stated that there was misdeclaration in the Bill of Entry by the appellants and also referred to pages 21, 22 and 23 of the paper book and the physical examination of the goods clearly shows that the sample drawn and examined clearly would be that these goods were representative of the present consignment and were not in a semi-finished bearings at all. He referred to para Nos. 54,55,56 and 61 of the Order-in-Original. Shri Roy pleaded that no substantial manufacturing activity was involved. Shri Roy pleaded for the rejection of the stay application.

4. In reply, Shri Sunder Rajan, Id. Consultant, pleaded that the applicant is a manufacturer and exporter and no case has been booked against the applicant in the fifteen consignments mentioned in the statement of facts. Shri Sunder Rajan also pleaded that the Revenue has also relied on the report of Prof. Somasundaram and stated that in spite of the applicant's request, no cross objection was permitted.

Shri Sunder Rajan pleaded for the acceptance of the stay application and stated that whatever the Bench directs, the applicant shall try to comply with the order.

5. During the course of arguments Shri Roy also drew the attention of the Bench as to the committing of forgery by the customs house agents and referred to para No. 73 appearing on page 27 of the impugned order and again pleaded for the rejection of the stay application.

6. We have heard both the sides and have gone through the facts and circumstances of the case. As discussed in the forementioned paras, no financial hardship is pleaded before us. We have looked into the prime facie merits of the case as per observation of the Hon'ble Delhi High Court in the case of Uptron Powertronics v. Collector of Central Excise . The Tribunal, had given repeated adjournments and had granted time from 27th March, 1991 till date and the applicant has not taken slightest care in filing the necessary information as to the filing of the balance-sheet, profit & loss account and other connected papers. Only few certificates as to the credit/debit balance from the banks have been filed. We have looked into the same. The certificates, so cited, cannot lead us to any inference as to the financial position of the applicant. Hon'ble Supreme Court in the case of Spencer and Co. v. Union of India which was followed by the Tribunal in the case of Synodyne Television Co. v.CCE Calcutta had held in relevant We are in agreement with the contention of the counsel for the petitioner that the expression 'undue hardship' occurring in the proviso to Section 35F of the Central Excises & Salt Act, 1944, would include consideration, inter alia, of the aspect of liquidity possessed by the assessee. We are not inclined to take the view that the impugned order gives any indication that aspect has been completely ignored as was contended by counsel. With these observations, the special leave petition is dismissed.

There is no information as to the financial position of the applicant.

The applicants apparently appear to have imported duly finished thin wall bearings. Further observations by us at this stage will not be proper as the matter is sub judice. The customs house agent is an agent of the applicant and the factum of the forgery has been duly admitted by the customs house agent, and any negligence or offence committed by the agent, the liability goes to the principal. It has been so observed by the court in the case of Francis v. Cockrell reported in (1870) L.R.5 Q.B. 501. There it was held that: The plaintiff had purchased a ticket for a stand on the defendant's racecourse. During the race the stand collapsed and this resulted in injuries to the plaintiff. The responsibility for the defect lay not personally with the defendant, but an independent contractor implied by him for construction. All the same, the defendant was held liable upon the basis of his implied warranty.

There are no observations by the Collector in his order as to the liability of the applicant for forgery. However, keeping in view the penalty proceedings, in the matter before us, the applicant has paid the full duty amount. Penalty proceedings are quasi-criminal proceedings. While fixing the quantum of penalty, the gravity of the offence has to be looked into. Hon. Supreme Court in the case of A.M.Sinha v. A.K. Biswas & Ors. had held as 10 The broad principle that punishment must be proportioned to the offence is or ought to be of universal application save where the statute bars the exercise of judicial discretion either in awarding punishment or in releasing an offender on probation in lieu of sentencing him forthwith. The words of Section 4(1) of the Probation of Offenders Act are wide and would evidently include offences under the Customs Act and the Gold Control Rules.

Before we part with this matter, we would like to observe that the interim stay granted by us on 11th April, 1991 and 7th May, 1991 stands vacated. Keeping in view the totality of the facts and circumstances of the case, we are of the view that if the applicants are desired to deposit the penalty amount of Rs. 9 lakhs, it will amount to undue hardship. We dispense with the pre-deposit of the same on the condition of the applicants depositing Rs. 6 lakhs (Rupees six lakhs) in cash and also furnishing a bank guarantee for the balance amount of Rs. 3 lakhs (Rupees three lakhs) within 12 weeks from today. In case the applicants fail to comply with the terms of this order, the stay order shall stand automatically vacated. We further order that during the pendency of the appeal, the Revenue authorities shall not pursue the recovery proceedings for the balance penalty amount. The applicants to submit compliance of this order to the Registry within 14 weeks from today and the matter be listed for mention on 14th November, 1991.