| SooperKanoon Citation | sooperkanoon.com/7033 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai |
| Decided On | Sep-20-1993 |
| Reported in | (1994)(72)ELT392Tri(Mum.)bai |
| Appellant | Hi Lingos Co. Ltd. |
| Respondent | Collector of Customs |
2(1) The appellants are reported to be a trading concern in Taiwan.
They have shipped six containers each declared to contain 102 M.T. of S.T.P.P. from Keelung, under Bill of lading dated 21-9-1992 issued by N.Y.K. Lines. The notified party in India as per the B/L is declared to be M/s. U.K. Paint Industries, Delhi. As per the export manifest filed by the shippers for export of this consignment through Keelung Customs, the same description is given as also the markings and other particulars as given in the Bill of lading. The goods are declared to be of Taiwanese origin. The destination port as per B/L is Bombay. The individual bags containing the material also bore the labels S.T.P.P. (Lot No. 05) - (Specimen of label given at page 46 of paper book filed by the S.D.R.). The vessel M.V. Paithoon carrying this cargo arrived in Bombay on or about 12-10-1992. The agents of the vessel prepared the Import General Manifest and delivered to Customs through the main agents M/s.
Samrat Shipping Ltd. In the said manifest, the cargo in question was figuring at item No. 79 but found deleted, though the total of the items remained the same for discharge at Bombay and this item was also not figuring in the list of items as same bottom cargo.
2(2) It, therefore, appeared to the Department that though the cargo as per the B/L and the manifest prepared was meant for discharge at Bombay and remained on board the vessel arrived at Bombay, the deletion of this item was made to make it appear that the cargo was not meant for discharge at Bombay. Information was earlier received by the C.I.U. of Bombay Customs that M/s. U.K. Paint Industries, New Delhi and some other firms closely connected with them were indulging in unauthorised import of chemicals and petrochemical items by misdeclaration of description and value and hence they were keeping watch over receipt of such consignments. As these consignments manifested for discharge at Bombay with consignees M/s U.K. Paint Industries but the item was found deleted in the manifest filed with Customs, the Customs Department requested the master of the vessel to unload the above six containers at Bombay (vide letter dated 12-10-1992 of A.C., Customs, Bombay). The master of the vessel in his letter dated 14-10-1992 confirmed the presence of these six containers said to contain S.T.P.P. and indicated that he would be discharging them at Bombay, since he had no communication with any party with regard to change of destination of the said cargo.
2(3) On 19-11-1992, the appellants sent a letter to the Collector of Customs, Bombay seeking permission to allow reshipment of this consignment of six containers. However, no reasons seeking for reshipment were given in the letter. On 1-12-1992, the appellants again wrote a letter to the Collector of Customs stating that they have authorised one Shri N.H. Shah, Advocate to represent their case in respect of reshipment of the six containers. Thereafter, the Assistant Collector, C.I.U. sought for certain information with regard to goods imported and about the shipment from the appellants.
This letter was transmitted through the steamer agents. The steamer agents informed the Customs that the shippers (appellants) were unwilling to forward any information/documents required by the Customs (vide steamer agent's letter dated 2-12-1992). M/s. U.K. Paint Industries, New Delhi (Notified party as per B/L) were also asked to furnish details about this import consigned in the same.
One more consignment of 15 containers which had arrived by another vessel consigned to M/s. U.K. Paint Inds., New Delhi was also detained and hence the Customs asked M/s. U.K. Paint Inds. to file the B/E for clearance of the goods in accordance with proper procedure, failing which the Customs would examine the said goods and proceed with matter as per law. M/s U.K. Paint Inds., New Delhi in their letter dated 30-10-1992 stated that cargo in this case did not belong to them and they did not have any right, title or ownership of the cargo and hence requested the Customs to deal with the cargo as deemed fit. On 4-12-1992, the advocate authorised by the appellants wrote a letter claiming that the appellants are general merchants and traders in Taiwan and on account of bona fide mistake and lapse on their part, they have shipped Poly Vinyl Alcohol (P.V.A.) instead of declared description, S.T.P.P. As both the items are in the form of white powder, this mistake has occurred. S.T.P.P. was intended for M/s. U.K. Paint Inds., New Delhi and after shipment of the goods, the appellants realised that mistake and accordingly instructed their shippers not to unload the said goods at Bombay. The goods are not claimed by anyone in India and they, being exporter of the goods, and also the owner, should be restored the goods by allowing reshipment. Thereafter, the advocate, on behalf of the appellants appeared on 18-12-1992 and indicated that the appellants would furnish replies to the queries raised earlier by the Department with regard to the goods.
2(4) On 29-12-1992, the appellants sent a fax in reply to the question posed, in which they admitted that there are no written purchase orders placed by M/s. U.K. Paint Industries and as per the practice they did not insist on the same. There are no correspondences exchanged with M/s. U.K. Paint Inds. in regard to the consignment in question and they have no particulars about import licence or the details of the Bank through which payment for the goods were to be made on receipt of documents by the importers.
The goods were purchased in the open market and not from any manufacturer and hence, they do not know the name of the manufacturer. Since the goods were purchased in the open market, they do not have any purchase order for the purchase of the goods.
Since the consignee refused to accept P.V.A., after being informed and they made some attempt to search the other buyers for P.V.A. in India and, therefore, explored the possibility of diverting the goods from Bombay to Kandla or to reship the goods back. Since the goods have been shipped wrongly, they would seek for reshipment.
They also submitted copies of various telex messages and letters with steamer agents.
2(5) The documents submitted by the appellants alongwith their reply are the following: (i) Telex No. 18473 FA 360 dated 6-10-1992 sent by the appellants to F.F.C., Bombay. In this telex, it is indicated that due to some licence problem, the buyers in India requested the shippers to divert all the six containers to Kandla port.
(ii) Telexes from Singapore to F.F.C., Bombay dated 9-10-1992 stating that they had collected original B/L from the appellants for the consignment.
(iii) Letter dated 13-10-1992 from M/s. N.Y.K., Singapore requesting for faxing the instructions given by C.I.U. of Bombay Customs and also original manifest and the revised manifest.
(iv) Telex dated 16-10-1992 from F.F.C., received by the appellants intimating the details of letters received from Bombay Customs and also reporting about the detention of the containers.
(v) Letter dated 13-10-1992 from M/s. Hi Lingos Co. Ltd. to N.Y.K., Singapore asking them not to unload the six containers in Bombay and if unloaded, the steamer agents would be responsible for all consequences.
(vi) Letter dated 14-10-1992 from F.F.C. to the appellants that it is their statutory duty to comply with Customs directions and if the goods are not offloaded, the Customs has full powers to execute the action for arresting the ship.
The admitted position even till date is that no documents for their claim of purchase of S.T.P.P. in Taiwan for supply to M/s. U.K. Paint Inds. in pursuance of their order is available.
2(6) The Customs Department also recorded the statement of one Shri Bhaskar Shivaram Ghaisis (Executive) of M/s. F.F.C., Bombay. In this statement, he admits having handed over the B/L for the consignment to Customs , officers on 7-10-1992. He also stated that on 8-10-1992, his office received a fax message from M/s. N.Y.K., Singapore for awaiting further instructions regarding discharge of the six containers in Bombay. Taipe officer of M/s. N.Y.K. sent ; a telex stating that due to the import licence problem, the consignee of the goods requested the shippers to divert the cargo from Bombay to Kandla and if not possible, to retain the cargo on board the vessel and bring back to Singapore and then ship to Kandla. Samrat shipping agents were informed by the Singapore principal not to unload the cargo at Bombay and this information was conveyed to them on 9-10-1992. The goods were indicated under item No. 79 in the manifest prepared by their office as per B/L. However, on the basis of telex dated 8-10-1992 from M/s. Lien Co. Ltd., that the shippers have given guarantee details, the item was deleted by them.
2(7) The goods offloaded were examined and found to be as per the details in B/L with regard to marks and numbers and the individual bags were found to be bearing labels indicating them as S.T.P.P. made in Taiwan. Samples drawn from the consignment were also sent to Customs chemical laboratory.
2(8) Personal hearing was extended to the authorised advocate, where he pleaded for waiver of written Show-Cause Notice. After hearing the advocate and considering the above evidences, the Collector rejected the contention of the appellants that it is a case of a bona fide erroneous shipment, but a part of their design to facilitate import of high valued and high duty chemicals in the guise of S.T.P.P. for evading duty and the appellants were privy to this scheme and passed the impugned order.
3. Heard the elaborate arguments of Shri VS. Nankani, the ld. advocate.
He does not dispute the factual position recorded above. After narrating the sequence of events and taking us through the correspondence with the shipping lines and agents in Bombay by the appellants, he made the following propositions for our consideration : 3(1) There is actually no import of the goods into India. Hence confiscation of goods and imposition of penalty on the appellants are without jurisdiction. Though the Bombay High Court have dismissed the writ petition on the question of lack of jurisdiction, the Apex Court have left the issue open for decision by the Tribunal independently. Elaborating on the proposition, he points out that on 6-10-1992 itself, the steamer agents were informed not to unload the goods at Bombay and to explore the possibility of offloading at Kandla or to bring back to Singapore and then take to Kandla. On 9-10-1992, the steamer agents confirmed the arrangement for retention of cargo on board and bringing back to Singapore. Vessel arrived at Bombay on or about 12-10-1992 and the Import Manifest was filed on 15-10-1992. Since even before the arrival of the vessel an I.G.M. was filed with the Customs, export of that consignment to India was countermanded by the appellants and hence there is no import into India. In short, the character of the goods is that in transit. Section 2(23) of the Customs Act, defines 'import' as that unless the context otherwise required, bringing of goods into India from a place outside India. Merely because the vessel with the cargo loaded entered into Bombay or the territorial waters of India, such a cargo cannot be said to have been imported into India, because of the fact that in this case, even before the vessel touched Bombay Port, and I.G.M. filed, export has been countermanded by the appellants and they have called back the goods. Non-mention of these goods as in transit or as in same bottom for discharge at Singapore cannot be a vital factor for confiscating the goods, especially when the evidences in the form of their correspondences with shipping line agents and the acceptance for retention of cargo clearly indicate the character of cargo as intransit. Even if it is construed an omission, it is not on account of the fault of the appellants but possibly due to mistake on the part of the local agents at Bombay, who prepared the manifest for submission to Customs Department or due to communication gap with the master of the vessel. When the character of the goods as in transit is known, there was no need to get them offloaded at Bombay, when the goods were not for discharge at Bombay. The goods came to be discharged at Bombay not on their own but due to compulsion and under direction by Bombay Customs. Provisions for amending the manifest as laid down under Section 30 of the Customs Act would apply only after the I.G.M. has been filed. Since the I.G.M. was filed only on 15-10-1992, and even before that date, the appellants' contract with shipping lines for carriage of goods to Bombay has been altered as evident from the various telexes before that date, there was no requirement to seek for permission to amend the I.G.M. Hence, he would plead that the goods are to be considered in transit and since the goods are under O.G.L. and can be imported by all, there is no prohibition under Section 11, which could be applied for transit of goods as per provisions of Section 53 of the Customs Act.
3(2) The appellants are not a party to any conspiracy. He referred to the observation of the Collector in para 25 page 62 of the order, wherein the Collector has alleged a conspiracy to import high valued chemicals to be cleared duty free under the D.E.E.C. licence. The Collector in his findings has recognised the long standing business relationship of the appellants with M/s. U.K. Paint Inds. as is evidenced from previous imports by M/s. U.K. Paint Inds. from the appellants. Hence the absence of written purchase order etc. cannot be a factor for sustaining such an allegation. Their contract was oral based on long standing business relationship. It is also on record that the appellants had supplied the same S.T.P.P. to M/s.
U.K. Paint Inds. and the lot number of S.T.P.P., previously cleared is the same as the present ones. Possibly because of the same lot numbers of the previous consignment of S.T.P.P. the present confusion in shipment might have occurred. Hence there is no mala fide in the appellants' declaration in export documents and for obtaining Bill of lading. This is a case of bona fide wrong shipment of goods due to the fact that both S.T.P.P. and P.V.A. are in white powder form and both the previous consignment of S.T.P.P, and the present consignment of P.V.A. had same lot numbers, the bona fide mistake in wrong shipment has occurred. This cannot be construed as a conspiracy. The previous consignment of S.T.P.P. has been cleared without any allegation of misdeclaration. Hence, in the absence of any evidence, it cannot be alleged that the appellants were supplying high valued P.V.A. misdeclaring it as S.T.P.P. in their documents. The appellants' initial attempt to divert the consignment to Kandla was with a view to finding any other Indian buyer for P.V.A. and Kandla, being cheaper with regard to port charges for detention. In any case, their countermanding of exports or for diverting to Kandla was not after investigation by Customs. The Customs commenced their enquiry only on 7-10-1992 with the shipping agents and this was not also within the knowledge of the appellants.
The appellants came to know of this for the first time only on 13-10-1992. Hence their instructions to the shipping lines for retention of cargo or for diversion to Kandla, having been initiated as early as on 6-10-1992, are not to be construed as an effort to retrieve the cargo after commencement of the Customs investigation.
Hence the ratio of the Apex Court decision in M/s. Sampatraj Dugar's case - 1992 (58) E.L.T. 163 (S.C.) would be applicable and the goods should be allowed to be reshipped to the appellants without fine.
Similar approach has also been adopted by the Tribunal - vide 1991 (53) E.L.T. 29,1989 (38) E.L.T. 388,1992 (58) E.L.T. 268.
3(3) His third proposition is that confiscation under Section 111(d), (f) and (g) is not legally sustainable.
(i) Section 111(d) is not attracted, because the goods can be imported under O.G.L. by any person. Hence, there is no prohibition or restriction in import of the goods attracting Section 111(d).
(ii) Section 111(f) is applicable to dutiable or prohibited goods required to be manifested but not manifested. Here, the goods are not dutiable because they are in transit and hence as per provisions of Section 53 of the Customs Act, no duty is attracted on such goods. Hence even if they are not figuring in the manifest, they do not attract Section 111 (f).
(iii) Section 111(g) is applicable to dutiable or prohibited goods unloaded from the vessel in contravention of the provisions of Section 32. Here the goods were not meant to be unloaded but were offloaded only at the compulsion of Customs Department. Hence Section 111(g) is not attracted.
3(4) The fourth proposition is that when reshipment is allowed, even if it is held that the goods are liable for confiscation, fine cannot be nearly double the C.I.F. value, which is only Rs. 52 lakhs. The fine cannot be linked up with any margin of profit or duty involved because the goods are not going into consumption in India. The fine can only be nominal and cannot be punitive to the extent of Rs. 1 crore, especially when the order is for reshipment and not for home consumption in India.
3(5) Even if it is held that the Collector has jurisdiction to order confiscation of goods, penalty (proceedings in personam) against the appellant are beyond his jurisdiction. Appellant is a foreign supplier of goods and the provisions of the Customs Act extends to India only. Hence penalty can not be imposed on a foreigner, who has neither come to India nor committed any offence under the customs law abroad, resulting in confiscation of goods. In this context, he seeks to rely on the decision of the South Regional Bench in the case of Shri Kunhahammed v. Collector of Customs, Cochin -1992 (62) E.L.T. 146 (Tribunal).
4(1) Shri Mondal, the ld. S.D.R. ably refuted each of these contentions. He took us through the various documents filed in the paper book filed by him and also cited by the other side to appreciate the chronological events. He also pointed out the inconsistent stand reflected in their earlier telexes with shipping line where they claimed that they wanted to bring back the goods to Singapore on account of Import licence problem without making a whisper about wrong shipment of the goods and their belated attempt to claim it as a wrong shipment, their initial refusal to answer any queries by Customs, though they wanted the Customs to allow reshipment. He also points out that their final replies to Customs queries clearly indicate that there were no documents at all with the appellants in the form of purchase order, the particulars of packing, from where the materials were procured in Taiwan, how wrong despatch has occurred. They were not even aware of the bank through which the documents are to be sent. Even the sale invoice has not been produced by them. Their claim that goods valued over Rs. 50 lakhs were purchased in the open market without any documents and were shipped wrongly with labels bearing description S.T.P.P. instead of P.V.A. without offering any details as to where they were packed and how wrong shipment has been effected, does not carry any credibility. This admitted position itself speaks volumes about their mala fides.
4(2) Shri Mondal points out that the explanation called for by the Customs was refused by the appellants initially, though they sought for reshipment of the goods without stating the reasons for claiming reshipment. Their subsequent explanation indicating that the goods valued over Rs. 50 lakhs have been shipped by them without any documents and without any arrangement for recovering the value of export through any bank and without even preparing any invoice for the consignment clearly indicate that this is not a genuine transaction in the course of normal international trade, but a serious challenge to the Government of India by attempting to send goods with a false description to hoodwink the Customs for clearing them at lower duty or nil duty against D.E.E.C. licence. The ld. Counsel claims that licence problem and wrong despatch of the goods are two sides of the same coin; because the goods were shipped against D.E.E.C. licence and because of wrong shipment, the said licence being not valid for P.V.A., M/s. U.K.Paint Industries have refused to take delivery of the goods. Going by the plea, it is conceded by the ld. Counsel that the goods were shipped against duty-free D.E.E.C. licence and P.V.A. is not covered by the licence; hence it is a prohibited item sought to be supplied against D.E.E.C. licence with a false description S.T.P.P, while the item supplied was only P.V.A. Hence even if it is held that it is in transit, Section 53 cannot be available for transit, since these are prohibited goods attracting provisions of Section 11 of the Customs Act. He also refers to the itinerary of the vessels carrying the cargo in question. First the goods were loaded at Keelung per vessel ACX Lily, which arrived at Keelung on 20-9-1992 and departed on 21-9-1992.
It arrived at Singapore on 26-9-1992. Goods were transhipped at Singapore from ACX Lily to Vessel Paithoon. The said vessel Paithoon left Singapore on 28-9-1992 and arrived at Bombay on 12-10-1992. He posed the question if the appellants really had sent the wrong shipment and faced consequent licence problem, the appellants would have stopped the consignment at Singapore itself on 26-9-1992, since the transhipment took place between 26-9-1992 to 28-9-1992. Viewed in this background, his waiting till 6-10-1992 for initiating telexes with shipping lines itself indicates that the appellants had got the news of the watch being kept over the consignment imported by M/s. U.K. Paint Industries and just prior to the vessel discharging the cargo at Bombay, they made frantic efforts to retrieve the cargo sought to be smuggled in with a false description. Hence, such an attempt is nothing but mala fide. Their attempts at keeping the cargo on board the vessel and preventing its discharge at Bombay and frantic effort to divert it to Kandla are to be viewed in this perspective. Hence mere deletion of the item from the manifest even without any information to Bombay Customs or to the master of the vessel and without even showing it as same bottom cargo is nothing but a ploy to retrieve the cargo sought to be smuggled in with a false description, which otherwise would have been cleared by M/s. U.K. Paint Inds. against D.E.E.C. licence, had the Customs not kept a watch over such consignments imported by M/s. U.K.Paint Inds. for detailed scrutiny.
4(3) The character of the goods remain as for import into India. Going by the itinerary of the vessel, only goods for Karachi - next port of call after Bombay can be construed to be goods in transit. Even if the appellant had sought for retention of cargo on board for carrying back to Singapore, it only amounts to reshipment of the goods back to Singapore, from where the goods have come by vessel Paithoon, on transhipment at Singapore. Hence such a reshipment is permissible only on making a request before the Bombay Customs and the same being allowed on a proper satisfaction about the bonafide nature of the claim. Here a fraudulent attempt is made to hoodwink the customs by not allowing the goods to be discharged at the port of destination, because of fear of detention by the Customs. Because of these fraudulent attempts, the character of the goods cannot be changed from 'import' to transit, by mere deletion of the item in the import manifest before filing the same. Hence the Department is well justified in directing the master of the vessel to offload the goods, to which the master also has no hesitation in acceding because he was kept totally in dark about the change of destination mooted by the appellants. Had it been a bonafide case of wrong supply, the appellants would have, in the first instance, approached Taiwan Customs for correcting their export declaration and through Tai . an Customs, approached Bombay Customs for allowing reshipment. Here they entered into correspondences with shipping line to coerce them to retain the cargo on board and to delete the item in the I.G.M. behind the back of both the Customs authorities at Taiwan as well as in India. Hence, their plea that the goods are in transit to Singapore is bereft of any merit.
4(4) He also countered the arguments of the ld. counsel by stating that export cannot be countermanded once the goods have left the territorial waters of Taiwan. He cited the decision of the Apex Court in 1988 (35) E.L.T. 241 (SC) in the case of Collector of Customs v. Sun Industries.
HeGramophone Co. of India v. Shri Birendra Bahadur Pandey - AIR 1984 SC 667 to urge that the term 'import' is not limited only to import for commerce and it includes importation for transit across the country. He also refers to the decision of the Apex Court in the case of Shri Radhakrishan Bhatia -1984 ECR 497 (SC) to urge that commission of the offence must be at a stage prior the completion of the illegal import into the country and the offence of illegal importation is complete, once the goods have crossed the Customs frontier.
4(5) Here not a shred of paper excepting B/L about the export of goods valued over Rs. 50 lakhs is produced, though the appellant takes pains to produce their correspondence with the shipping lines. No invoice is available. No bank is indicated for retirement of documents. No Letter of Credit has been opened by the importer. Even though contract may be oral, such oral contracts are normally noticed in the case of purchase of items from the shop for daily needs by the consumer and even in those transactions, cash bills are issued. These are not items of vegetables or grocery supplied on oral contract based on longstanding relationship. These are high valued chemicals valued over Rs. 50 lakhs, for which the admitted position is that no documents even for purchase at Taiwan exist. No one can be sure of their claim that as per the oral contract, they are to supply S.T.P.P. against which, by mistake, they supplied P.V.A. Only, their word is to be believed, especially when M/s. U.K. Paint Inds. have stated that they have nothing to do with this consignment. Contract is between two parties. It can be proved, if the written contract is produced. If it is claimed to be oral, unless the other party admits the existence of such an oral contract, the burden is on the appellants to establish this. Here not a shred of evidence is produced for the existence of such an oral contract. The longstanding association claimed by the appellants with M/s. U.K. Paint Inds. can only be construed to be for the purpose of sending goods with false description and if they are successfully landed, prepare documents to facilitate clearance. If they are caught or likely to be caught, a show is to be made of wrong shipment and to resort to retrieve the goods by way of reshipment, so that it can be again sent for smuggling in. Such an attempt can never be construed bona fide and the appellants, by any standards, cannot be said to have shipped the goods under a bona fide contract for supply of S.T.P.P. entered into in the course of international trade. Hence the plea of innocence is to be rejected outright.
4(6) Shri Mondal also contends that since the goods were not manifested and the item is deleted from the manifest even without showing it as same bottom cargo, they are liable for confiscation under Section 111(f). Such a predicament has been created only because of the desperate efforts of the appellants to retrieve the cargo even without informing Customs, when they came to know of the watch being kept over the cargo by Bombay Customs. It is not on account of act of omission committed either by the master or by the steam agents on their own.
Hence their plea that the omission cannot be held against the appellants is not sustainable. The goods, as per their claim, have been shipped against D.E.E.C. licence held by M/s. U.K. Paint Inds. and not under O.G.L. This licence allowed the goods free of duty. Hence when the goods imported are not covered by this licence, they are liable for confiscation under Section 111(d) of the Customs Act.
4(7) On the question of redemption fine, he personally feels that this is a case where absolute confiscation is justified. Since the Collector has allowed redemption and no appeal has been filed by the Department, he cannot plead against redemption order. But the Collector, having realised the evil designs of the appellants, is well justified in imposing fine of a deterrent nature so that they do not resort to such dubious exports to India with false description and to facilitate in getting them cleared by their counterparts in India. He, therefore, pleads that fine imposed should not be modified.
4(8) On the question of jurisdiction of the Collector of Customs for imposing penalty on foreign national, he refers to the article written by Shri Raghavachari, erstwhile Member (Judicial) of the Tribunal in Excise Law Times dt. 15th April, 1993, wherein the view taken by South Regional Bench in the case of Shri Kunhahammed cited by the ld.advocate,, has been seriously contested. He would like to adopt those arguments in that article. Since in this case the entire import has been engineered by the appellants by misdeclaring the description and once having got the scent of the Customs investigation, their attempt is to retrieve the goods by hook or crook. Hence their action clearly comes within the mischief of Section 112 of the Customs Act. Moreover in this case, in the absence of M/s. U.K. Paint Inds. claiming the goods and the appellants' attempt to divert the goods to Kandla in the hope of finding out another person to lend name to clear the goods, indicate in all probability that they are also the importers, even though they are in foreign country.
5. Shri Nadkarni, in reply, stated that certain consignments landed per vessel Elizabeth were detained by Customs for investigation are relied upon for sustaining conspiracy theory against the appellants. Out of this, one consignment of P.V.C. imported by M/s. Gujarat State Export Corporation detained, has been ultimately released by Customs Department. In this context, he referred to the B/E and order of release filed as additional evidences. On query by the Bench, he admits that the second consignment of 15 containers to M/s. U.K. Paint Inds.
supplied by another party have been confiscated and the appeal is now pending before the Tribunal. However, he is not aware of the fate of other consignments imported by M/s. U.K. Paint Inds. referred to in page 14 of the order. However, in this case, even on 7-10-1992, the parties to the contract of shipment by the vessel have agreed to change the Bill of Lading for discharge of cargo at Singapore and the B/L was taken over by Bombay Customs from Mr. Ghasis, Executive of the shipping line at Bombay only on 7-10-1992, by which time contract with shipping line has been changed. Hence he reiterates his claim for treating it as in transit cargo, not meant for discharge at Bombay. The letter of the master of the vessel is belied by Mr. Ghasis's statement to the effect that when I.G.M. was given, the item was deleted. If Samrat Shipping Co. have failed to give instruction to the master, because of communication gap, it does not change the character of goods as in transit to Singapore. Master of the vessel is only an agent of the shipping company. When the Principals have accepted the change of destination of cargo, agents' version cannot be taken. The initial claim of the appellants of licence problem with the importers and the subsequent claim of wrong shipment are only two sides of the same coin and are not inconsistent with each other. Even if the goods are held liable to confiscation, the case laws cited by the ld. S.D.R. do not confer jurisdiction for imposing penalty. Section 1(3) of F.E.R.A.specifically confers extra territorial jurisdiction. Likewise Indian Penal Code also confers jurisdiction extending beyond India. The Customs Act only extends to the territory of India and not beyond.
Hence any act of omission or commission done outside India by a foreigner though rendering the goods liable for confiscation in India, no penalty can be adjudicated for want of jurisdiction under the Act, which confirms itself in application only to India. Jurisdiction cannot be conferred or acquired, merely because the appellants have submitted to adjudication. Even that submission is only with regard to their claim for reshipment of the goods and not for agreeing to be imposed with a penalty. If, per se, under the Act, jurisdiction beyond India is not given, the order imposing penalty on a foreigner for acts done abroad, suffers from lack of jurisdiction.
6.1 Before considering the five propositions put forth by the ld.Counsel Shri Nankani, we would first consider the bonafides of their claim for reshipment on the ground of wrong shipment. Since these propositions revolve around this claim, it has become necessary to get the position clear in the first instance. Moreover, any application of case law or appreciation of legal position cannot be done in abstract; but in the context of the factual position emerging. Apart from the Apex Court's decision in Sampatraj Dugar case, there are many judgments of the Tribunal as well as some of the High Courts allowing reshipment of goods to the foreign suppliers without invoking penal provisions under the Customs Act. But in all these cases, the underlying principle discernible is that the goods have been shipped by the foreign suppliers in accordance with law and the normal course of international trade, but the importer in India backs out from clearance on his own and there are no malafides on the part of suppliers. Even in the case of Sampath Raj Dugar, the facts before the Apex Court were that the goods supplied were against a valid import licence at the time of shipment, but licence was cancelled later and the importer did not pay for the goods. There was no fault on the part of the foreign supplier in shipping the goods in accordance with the law. The Apex Court interpreted the provisions of law in that context and specifically observed that it is a case of import, which is not contrary to law and their decision is also confined only to such a situation. Hence any application of these citations without proper consideration of the bonafides and lawful shipment, would lead to distorted results. Hence we choose to deal with this aspect first, before considering the five propositions set out by the ld. counsel.
6.2 In the case before us, the following facts are not disputed. The foreign supplier has previously supplied certain goods and STPP to M/s U.K. Paints, Delhi and claims to have business relationship with them and hence goods in the present case were supplied by them on the basis of oral contract, without any purchase order in writing and without any written confirmation of contract and without insisting on L.C. The oral contract was to supply STPP in six containers to M/s. U.K. Paints and by mistake, they have shipped P.V.A. Hence even before the vessel reached Bombay they have sought to get the goods back by surrendering the Bill of Lading and by mutual agreement with shipping line, the cargo was retained on board the vessel for onward carriage to Singapore, if not possible to send to Kandla. Hence they plead bonafides. On the face of it, this defence looks attractive but for the following adverse factors staring at the defence : (i) Goods valued about Rs. 52 lakhs have been sent without cover of any document, even invoice, test certificate, packing slips. The method of retiring the documents through the Bank, (even if L.C. condition is waived because of standing business relationship) has been given a go-by. There is no document showing acquisition of STPP at Taiwan by the appellants before shipment.
(ii) The appellants even do not know the particulars of licence and their importability into India by U.K. Paints. Their claim is that STPP was supplied by them to U.K. Paints and they have gone by oral contract. This could possibly find acceptance, if as per the verbal contract, the goods supplied were found to be STPP. The admitted position is that it is only P.V.A. In the circumstance, their plea of oral contract and the theory of wrong supply are to be approached with due caution. That is what we propose to do.
(iii) Though contracts can be orally agreed upon between the contracting parties, the burden of establishing that there was a valid contract existing for performance of legally permissible act, is on the party affirming the existence of such a contract, especially when the other party clearly indicates that he is not having any concern with the goods supplied in pursuance of such a contract. In this case before us, such a burden squarely falls on the appellants. They have not produced a piece of evidence, excepting pointing out certain findings of the Collector that he also recognises previous imports by U.K. Paints from the appellants and thereby establish longstanding business relationship with U.K. Paints. Even for the sake of argument, we are led to believe that because of previous suplies to U.K. Paints, they have exported the present consignment on a verbal contract, still we are not satisfied that such a contract is for performance of an act sanctioned under the law namely for supplying STPP to U.K. Paints. A contract, which can be enforced in any court, should be one for performance of acts legally sanctioned and not for illegal acts. Here, in the context of the admitted position, we find that as against the verbal contract claimed to be for shipment of STPP, the goods shipped were P.V.A. They have not produced any evidence to show that they acquired this much of quantity of STPP from various sources in Taiwan and instead of shipping it, they shipped P.V.A. wrongly. Here their claim' of having purchased STPP from market in Taiwan itself is not supported by evidences and this is the admitted position. Hence we are led to believe that the appellants have not acquired STPP claimed to be covered by this shipment from any sources in Taiwan. Their claim, that since it was open market purchase, there is no purchase order, is also found to be difficult to digest. Because, the enormity of the quantity and its value involved rule out such an acquisition without any document. Hence we are led to believe that the appellants have not acquired STPP for shipment and hence the question of shipping STPP in pursuance of verbal contract does not arise. They have shipped only P.V.A. knowingly under the false description STPP and this could only be the purpose and content of the verbal contract claimed to be in existence. Hence such a contract executed verbally for an illegal act, being not legally enforceable against the other side, they now apparently choose to retrieve the goods by putting forth the theory of wrong shipment.
Such a theory being not supported by any piece of evidence regarding acquisition of STPP for shipment and their packing, mistake in shipment, cannot find acceptance by us, however much we are persuaded by the tempting and persuasive arguments of Shri Nankani.
In the result, the factual position discussed above indicates that even if we assume the existence of a verbal contract, that contract apparently is for sending P.V.A. by declaring the goods as STPP for illegal import into India against duty-free import licences. This conclusion is inescapable, because of the admitted position that the appellants do not have any evidence of acquisition of STPP, their packing simultaneously with P.V.A. causing wrong shipment. On the contrary, the Department's allegation that previous consignment of STPP bearing same batch number also could have been P.V.A., because of the same batch number indicated in that, cannot be ruled out.
However, we do not propose to give a finding on this possibility, because no other tangible evidences have been led by the department with regard to the previous consignment cleared. All the same, this gives support to the Department's claim for keeping a watch over imports by U.K. Paint Industries receiving goods under misdeclared description based on information, which has led to this case. It is also not disputed that prior to the detention of this consignment, some other consignments of U.K. Paints have also been detained, one of which has also been adjudicated, as revealed by the ld. counsel.
The two parties to the verbal contract (as claimed by the appellants) should be presumed to have free access verbally. It cannot therefore be ruled out that M/s. U.K. Paints verbally alerting the suppliers about the watch being kept by Bombay Customs over their imported consignments, telling them to divert the goods to Kandla for clearance there or in any case for not allowing the goods to land at Bombay. In pursuance of such a verbal talk, the appellants apparently have been alerted and they started the correspondence with the shipping line on 6-10-1992. The could have stopped the goods at Singapore itself between 26-9-1992 to 28-9-1992 when the goods were in transhipment from one vessel to another vessel for onward carriage to Bombay, if their claim of wrong shipment or licence problem was genuine. Hence we are led to believe that all is not well with the alleged bonafide of the appellants and the entire transaction looks to be bereft of bonafides. Though the Collector's findings leading to the same conclusion are somewhat on different lines, we are led to the above line of thinking on carefully appreciating the same set of evidences placed before the Collector as well as before us.
(iv) There is also considerable force in the contention of Shri Mondal that their earlier stand in the correspondences with the shipping line was that due to licence problem, they are calling back the consignment. The Customs Department sought for replies to their queries, when the appellants sought for reshipment without stating any reason. At that time, they refused to give any explanation. Only at a belated stage and apparently on legal advice they put forward the theory of wrong shipment. Had it been a case of wrong shipment, they would have, in the first instance pleaded this not only before the shipping line but also sent an intimation to Bombay Customs explaining the position, seeking for allowing reshipment. Their refusal even to explain the reasons while claiming reshipment before Customs also hits at their claim of bonafides. Only subsequently, when they found that the goods have been detained for examination, they apparently have come forward with this theory, on legal advice.
The ld. Counsel's plea that both explanations are two sides of the same coin does not convince us, especially when we find the coin itself is a counterfeit one, not being acceptable by looking into either side.
6.3 With this detailed analysis on their alleged claim of bonafide wrong shipment against verbal contract, we now proceed to look into the five propositions put forth by the ld. counsel.
7.1 Proposition (1) : Character of goods being in transit and not for import into India, there is lack of jurisdiction for confiscating the goods.
Main thrust of the argument of Shri Nankani on the proposition is that since the appellants have revised their contract with the shipping line by surrendering the Bill of Lading and by giving a guarantee letter to retain the goods on board the vessel and to bring back to Singapore, even before the vessel arrived at Bombay on 12-10-1992 and I.G.M. filed on 15-10-1992, the goods are to be treated as in transit notwithstanding the fact that the shipping lines have deleted the entry in the manifest without placing it in the list of same bottom cargo.
Amendment of I.G.M. with the permission of Customs would arise only after delivery of the manifest and hence no permission is called for to delete the entry and to place it as same bottom cargo for carriage to Singapore. This argument on the face of it is no doubt attractive, but for the following glaring adverse factors. Here the admitted position is that bill of lading for the consignment has been taken over by Bombay Customs from Mr. Ghasis on 7-10 1992 for investigation and the shipping lines and their agents are aware of this. Hence if they have chosen to delete this item from the manifest, when the subject consignment meant for discharge at Bombay is under customs investigation they cannot unilaterally alter the manifest to be filed by deleting the item based only on the appellants request for revision of their contract for carriage of goods. Irrespective of the permission required to be obtained under Section 30(3) of the Customs Act, there is a necessity in such a situation to get Customs clearance by the shipping line. Be that as it may, even otherwise the itinerary of vessel in that particular voyage ends up with Karachi. Hence the cargo with destination Bombay is to be treated as sought to be retained for reshipment, which can be done only with the permission of Bombay Customs whether it is offloaded or retained. We therefore answer the first proposition against the appellants.
7.2 The second proposition is that the appellants are not a party to conspiracy and the Collector's observation in Para 25 at page 62 of the order based on certain detention is also not found to be in order in view of the subsequent release of one of the consignments detained.
This is a case of bona fide wrong shipment. Hence the Apex Court's decision in Sampat Raj Dugar case is applicable. Since we have already discussed elaborately on this proposition, while considering their alleged claim of bona fide wrong shipment, we do not deem it necessary to repeat them here. In the context of our detailed analysis including the distinction made with regard to Sampat Raj Dugar case, we are to answer this proposition also against the appellants.
7.3 The third proposition is that confiscation under Section 111(d), (f) and (g) is not legally sustainable. As for 111(d) the ld. counsel mainly points out that the goods are not prohibited and are allowed import under OGL and can be imported by all. If that be so, there was no reason for them to plead licence problem. This itself goes to show that they had sought to send the goods against D.E.E.C. licence of U.K Paints. This is also their claim. Going by this claim when the PVA misdeclared as STTP have landed and the importer backs out because his licence does not cover this item, it attracts the provisions of Section 111(d). It is not their claim that they shipped the goods for stock and sale in India, because the goods are under OGL. Hence when the goods have been loaded for discharge at Bombay and the subject goods are subject to investigation by Indian Customs at Bombay, the shipping line could not have unilaterally agreed for revising the contract for onward carriage to Kandla or Karachi or back to Singapore, without a clearance from Customs. The admitted position is that B/L for the consignment was taken over by Customs from the shipping line Agents at Bombay on 7-10-1992. We cannot persuade ourselves to agree to the proposition to treat these goods as in transit either to Kandla or Karachi or back to Singapore; viewed from any angle. The goods have come to Bombay correctly as per the bill of lading issued at Keelung. If they are sought to be taken back, it will only be a case of reshipment of goods, which the Customs might not allow, if the bonafides of the claim are not satisfied.
We are able to reach the conclusion based on the admitted facts without even taking the assistance of the citations made by either side for and against proposition. There cannot be any dispute that contract for carriage of goods is also required to be in respect of goods legally permissible to be transited through or transported to a foreign country. When the legality of import of the goods manifested for Bombay but later deleted on the appellants plea for revision of shipping contract is under investigation and on such an investigation, it is found that the goods carried were totally different from the ones declared to be carried, such a revision cannot be binding on the Customs Department. Their claim to find a buyer for PVA in Kandla is also not convincing because no one would go on shifting the goods from one port to another and make a bid to find a suitable buyer. In the international trade, goods are shipped normally based on firm contract and not sent on a fishing expedition to find a buyer after their shipment and that too prepaying the freight. Hence viewed in this context, the goods wrongly declared as STPP, but on investigation found to be P.V.A., and disowned by the notified party in India to whom they were claimed to be shipped under a duty free licence, are goods attempted to be imported contrary to the prohibition. They therefore, attract the provisions of Section 111(d). As for their liability to confiscation under Section 111(f), in view of our findings with regard to revising the contract with shippers being for non-bonafide reasons, the deletion of the entry in the manifest at the instance of the appellants, was to thwart the ongoing investigation into this import, after the goods have reached Bombay. Hence in this context, the goods not figuring in the manifest, cannot be dismissed as one of omission on the part of shipping line Agents. Confiscation under Section 111(f) can well be justified in such a case. As regards Section 111(g) we agree that the act of off-loading in this case was on the direction of Customs. It is not the case of the Department that it was unloaded by the master. Hence we would prefer to ignore this Section 111(g) for confiscation of the goods.
7.4 Their fourth proposition is that fine for redemption for reshipment in any case is excessive. Such a fine can only be nominal and cannot be adjudged on the basis of profit margin in India, because the goods are to be reshipped to a foreign country and not to be cleared for home consumption in India. We agree that there is some force in this contention. But we find that there is total lack of bonafides in this shipment of the goods with a false description to facilitate their clearance against duty-free licence leading to huge evasion of duty, apart from violating the prohibition. In view of this overt act in deliberate misdeclaration, as held by us in our detailed analysis, even if we do not adopt the margin of profit for fixing the quantum of fine, it should be deterrent for preventing repetition of such an attempt.
While accepting the proposition partly that levy of redemption fine for reshipment cannot be adjudged in terms of margin of profit likely to be earned; because the goods are not passed for home consumption in India, in a case like this, we are of the view that the fine has to be commensurate and deterrent for preventing such a deliberate act of misdeclaration of goods supplied by the foreign supplier. He cannot be restored the goods on a nominal fine or without fine. The quantum of fine should have regard to the gravity of the offence but at the same time, it should be a real offer for redemption and not an illusory offer, which remains on paper. If the confiscation had been absolute ( which could well be justified in a case like this) such a consideration would be redundant. But when the Collector has offered redemption, it has to be real having regard to the value of the goods shipped. Hence such a fine for re-export should not exceed the c.i.f value of the goods, which is reported to be Rs. 52 lakhs. Allowing a margin for the likely expenses towards detention charges etc. we would deem it proper to reduce the fine to Rs. 47 lakhs only. Strictly speaking, even the allowance for detention charges (which are their own making) is not called for; but is given only to make the offer realistic.
7.5 On the last and fifth proposition, challenging the jurisdiction of Collector under the Customs Act for imposing penalty on a foreigner for acts done abroad, when the Customs Act extends only within India, I, speaking for myself, have the following views to express: (i) Customs Act, 1962, as per the statement of objects and reasons for enactment, is an act to consolidate and amend the law relating to customs. The essential function of Customs in any country is to clear the goods for import or export of goods having regard to the prohibition and restrictions applicable in that country and to levy and collect duties of customs on such goods as may be imposed from time to time. Viewed in this context, Customs Law can be construed to be one dealing with customs clearance of goods and not of persons. It mainly deals with goods; but when persons seeking to clear the goods in contravention of the provisions of the law, they attract penal provisions. Only in this context, Section 112 or 114 are to be viewed. Hence, against this background, the provisions of Section 1(2) stating that it extends to the whole of India, is required to be interpreted. This provision can be held to be applicable to goods imported into or exported from India. When such goods imported into India offend the provisions of the Customs Act by an act of commission or omission deliberately done abroad by a foreigner, he cannot escape the mischief of the penal provisions.
The question to be looked into is whether the goods have come into India including territorial waters of India and whether any act of omission or commission rendering the goods liable to confiscation and in that act of omission or commission, whether any foreign hand or Indian hand aids or abets such an act be it from abroad or in India, a person, irrespective of nationality or place of commission of such an abetment, he would render himself liable to penalty, so long as such an act results in confiscation of the goods on the soil of India.
(ii) Though a case law cited by the ld. counsel decided by the South Regional Bench by a Single Member takes a contrary view, the issue appears to have not been considered in the above perspective and no such arguments appear to have been advanced before that Bench. Even the law of England recognises that where offence initiated abroad terminates in England, the person initiating the offence though abroad can be tried in England.
(iii) The special provision made for extra territorial jurisdiction in certain Acts like I.P.C. or F.E.R.A. are for specific purposes.
In the case of trial by courts, the persons to be tried are to be physically produced in the court of law before commencement of trial. If they are abroad or they are foreigners, they are to be secured by extradition proceedings. The statute must enable the Government to initiate such proceedings by conferring jurisdiction to the courts beyond the territory of India. In the case of adjudication under the Customs Act, the person, even if he resides abroad, can be issued the Show Cause Notice under Section 124 for the acts committed resulting in confiscation of goods under Customs Act. After following the laid down procedure under Section 124, he can be imposed a penalty. The question is only that of recovery of penalty. It is likely that in many cases, where no tangible property is held in India, penalty imposed could not be recovered. But on that ground, I cannot subscribe to the view that Customs Act per se is not applicable to foreigner or will be applicable only, if he is physically present in India, while committing the offence or he cannot be penalised for acts of omission or commission done abroad rendering the goods liable to confiscation in India.
(iv) In F.E.R.A. specific provisions are made for conferring extra territorial jurisdiction because it is mainly intended for repatriation of earnings abroad by resident Indians. Hence stashing away such earnings abroad by resident Indian has to be tackled in the proceedings extending to such money held abroad. Hence special provisions were called for conferring extra-territorial jurisdiction in that Act.
(v) In this case, in view of our findings that the appellants have despatched the goods knowingly under wrong description, penalty could well be justified. But I find that the department have not carried the investigation to logical conclusions to pin down M/s.
U.K. Paints or the person behind import against whom they had information and hence consignments were kept under their watch. They have been let off only on the basis of their letter that they have no concern with the goods. No investigation either in regard to their past import or with regard to their present import seems to have been done. Hence, I would not like to project a view abroad that we are only harsh with foreigners and let off the Indian collaborators, who are the main beneficiary. This is not the image to be projected. In this view of the matter, though I would not like to accept the theory that the Collector has no jurisdiction for imposing penalty, I would deem it proper to remit the penalty on the appellants.
8. While on the question of penalty, I would also like to add a suggestion. Deliberate mis-declaration of the export goods before Taiwan Customs (or for that matter before any Customs) would be an offence punishable under Taiwan Customs Law. The appellants are held by us as having knowingly misdeclared the description of the goods exported to India. They, on their own, without any knowledge of Taiwan Customs, appear to retrieve the goods and keep them in Singapore.
Hence, I would deem it proper that Indian Customs should inform the Taiwan Customs of the results of investigation against the appellants, for such action as deemed necessary by the Customs authorities in Taiwan rather than taking upon ourselves the act of reforming their citizens.
9. We have considered the citations made by us and discussed some of them in our findings. To set at rest any possible doubts on this score, we would also give below the gist of our consideration of these citations, not specifically covered by our earlier discussion.British India Steam Navigation Ltd v. Shanmuga Vilas Cashew Industries. This decision relates to interpretation of the B/L in the context of the Indian Carriage of Goods by Sea Act and the jurisdiction of the courts in dispute between the shipper and the carrier. In this decision, B/L is held to be the primary evidence regarding receipt of goods by carrier and when it is not repudiated, by either of the two contracting parties, it was held by the Apex Court that the High Court ought not to have accepted the submission of the first respondent that some clause in the B/L offends the provision of Carriage of Goods by Sea Act. In the case before us it is pleaded that original B/L was surrendered to the shipping line and the contract was sought to be amended for withholding discharge at Bombay by mutual agreement between the two parties and hence the goods are to be regarded as in transit. Our analysis indicates that even if it is assumed that both the parties have agreed as above, when the goods as per the W/L have reached the destination and the said B/L has been taken over for investigation by Customs, unilateral amendment of B/L without clearance by Customs is not binding on Customs Department, more so when no such revised Bill of Lading has been issued for reshipment of goods from Bombay to Singapore (via) Karachi before the vessel entered the territorial waters of India.
(ii) A.I.R. 1971 SC 1898 - Giant Mahtani v. State of Maharashtra 1984 (18) E.L.T. 21 (Tribunal) M/s. Vikas Watch Mfg. Industries.
This decision is about appreciation of evidence and known principle that prosecution must prove the offence beyond doubt. We have, held on proper appreciation of the evidences particularly from their own admission and in the light of the explanations furnished to Customs in the form of fax message that the appellants have no evidence for purchase of STPP at Taiwan, which they contracted to supply and hence what has been acquired by them and supplied was only P. V. A. knowingly under wrong description. This is not a case built on suspicion but on careful consideration of their own explanation. The other citation is also on appreciation of evidence holding that negative evidence in examination reports cannot be conclusive.
However in this case, when the goods are claimed to have been shipped wrongly and the verbal contract was to supply STPP; we have held that existence of such a verbal contract and their plea of wrong shipment are to be established by them, since this is their claim and explanation and such a claim was found to be hollow based on their own explanation.
(iii) Other citations relating to allowing re-export without fine have been considered already in our findings at the appropriate place. In all these decisions, the underlying principle, which runs through, is the absence of malafides on the part of shippers, which is absent in the case of the appellants before us.Gramophone Co. of India v. Birendra Bahadur Pande. Though this decision is in the context of Copyright Act, it is with regard to import of goods violating copyrights for transist to Nepal. The Apex Court held that the word 'import' would convey not only import for commerce in India but also for transit to Nepal. Though this has some relevance to the issue before us, since it is in the context of import of goods for transit to a land locked state under Indo-Nepal treaty, we could not draw much assistance.Shri Md. Omer v. Collector of Customs, Calcutta : In this decision, the Suprme Court have held that prohibition would also include restriction, subject to which the goods are cleared. In this case before us, since the goods are claimed to have been shipped against D.E.E.C. licence as per verbal contract and the goods supplied are P.V.A. not sought to be cleared by the licence holder, its import is prohibited, especially when the appellants's claim is not one of supply of goods to India for stock and sale. Hence we accept the case law to be relevant for considering the applicability of prohibition.
(vi) The other two citations : Radhakrishna Bhatia v. Union of India -1984 E.C.R. 497 (SC), State of Maharashtra v. Mayor Hans George - AIR 1965 (SC) 722 made by Shri Mondal relate to the jurisdiction for imposing penalty. These are not directly on the issue before us.
Only the Single Member decision of South Regional Bench in the case of Kunhamed cited by Shri Nankani was found to be direct on the issue, on which my views have been set out already.
10A. In the result, while upholding the order of confiscation and allowing redemption on payment of fine for re-export, we reduce the fine to Rs. 47 lakhs (rupees forty seven lakhs only). Option is to be exercised within two months from the date of receipt of this order, failing which the Department is at liberty to dispose of the goods in accordance with law. Penalty imposed by the Collector on the appellants is remitted.
11. I have the privilege of going through the order as proposed by my Learned Brother R. Jayaraman. Though I am in agreement with the final conclusion that the goods are liable to confiscation, but re-export be permitted and also agree to fixing of the fine amount to Rs. 47.00 lakhs and that no personal penalty be imposed, and as such, what follows need not be taken as dissenting order, I have not been able to persuade myself to endorse to all what has been observed by my learned brother, and hence, what follows is my approach to the appeal.
12. The case history and the arguments advanced on both the sides have been dealt with at length in the order as proposed by my learned Brother and does not call for any repetition.
13. What is strikingly surprising, is that the departmental authorities have accepted the say of M/s. U.K. Paints that they are not concerned with the subject consignment, as gospel truth and have not made them the party to the adjudication proceedings, though some of the facts are glaringly staring against them. Undisputedly the subject consignment is in their name, and the plea of the appellants is that the consignment was despatched in view of the oral order/contract. Thus existence of contract (even if oral) is pleaded, and no effort seems to have been made to probe in depth in that regards. Further, even in the first Telex dated 6-10-1992 from the appellants, it is mentioned that "due to import licence problem", the consignment was required to be diverted.
The licence problem is always at the consignee's end and it could only be they, who, aware of the contents of the consignment coupled with investigation already going on in relation to their other import, must have communicated to the suppliers, the probability of the checking of this consignment, landing them in some difficulty. From the record, it is seen that M/s. U.K. Paints were working under DEEC Passbook scheme, and could not have imported P.V.A. thereunder, even though during the said Policy Period, P.V.A. was importable under OGL, and it could only be they who, having contrived to import PVA under misdeclaration as STPP, could land themselves into trouble. If the despatch was without their connivance, there could be no need to be panicky about it and to prevail upon the suppliers to make such desperate attempts to divert the consignment. The supplier would have known of the apprehended danger only if they were informed of such licensing problem by the consignee. This clearly indicates that the consignees not only were the privy to the contract, but were fully aware of what was being sent to them under misdeclaration. Some correspondence must have been exchanged before 6-10-1992. However, no indepth investigation seems to have been done in that regards. It is also established that the goods were sent under misdeclaration, and there would have been an evasion of duty to a substantial extent, and the beneficiary would only be the consignee.
Thus M/s. U.K. Paints, as Indian firm located in India, ought to have been the prime suspect, but regretably, the investigating agency have not taken steps to further probe into the matter, exposing them to a legitimate criticism of overlooking what was obvious, and permitting the main culprit to go unscathed, have bounced upon a foreign supplier, who in all probability, only followed the instructions from the Indian firm, whose unconvincing stand could also have put the right thinking person to an alert and make detailed probe at consignee's end. We as the Appellate Tribunal, have, however, merely to assess the situation as is projected in the adjudication proceedings and can do no more than feel sorry over the position.
13A. The appellant has come forward with the defence that the consignment was erroneously despatched and that there was a mistake on their part. One however fails to appreciate as to how such a type of mistake in despatching such a huge quantity could take place. There is no evidence whatsoever brought on record how such mistake came to occur and if such mistake occurred, how and when it come to be detected. The consignment had already been shipped from the port of despatch on 21-9-1992 and was even transhipped at Singapore between 26-9-1992 to 28-9-1992 and it is obvious that if at all there was any bonafide mistake and such a huge quantity of different item had gone, it would not have been taken them much time to detect the same. The very fact that they have not detected such alleged mistakes even within a week after the despatch leads to presume that there was no mistake. Had then they all of a sudden realised the mistake, when the consignment was on the high seas and there was no scope for verification, remains a mysterious one, and only probable explanation is that both the consignor and consignee having known the contents, and the consignee having realised the probable detection, continued to raise a false plea of wrong despatch, and that too at a much later stage, as the telex dated 6-10-1992 does not even whisper about wrong despatch, though ordinarily, if what is now pleaded was true, the same would have been clearly projected. The theory of mistake in despatch therefore sounds highly inconvincing. Even the subsequent defences raised by the appellants also do not corroborate their plea of wrong despatch.
14. Some legal issues have been raised, of the nature that, because the consignment was deleted from IGM, and was, by the time the ship carrying the same entered into Indian Territorial waters, taken as a transit cargo, and hence there was no import as contemplated under the Customs Act, 1962, and as such not liable to confiscaton under the provisions of the said Act.
15. Vide Section 2(23) of the Customs Act, import means bringing any goods into India from outside India, and as such any goods which are brought into Indian' territorial waters are deemd to be imported into India and whatever is imported into India, becomes subjected to applicability of the provisions of the Customs Act, 1962, and all other allied enactments. Visualising the difficulty that could arise for those carriages of goods which touch various countries and carry goods for each one of them, for such of the goods which enter Indian territory but are not meant to be off-loaded, specific provisions have been made in Chapter VIII of the Customs Act, 1962, and vide Section 53 of the Act, such goods have to be specifically declared in the import manifest as for transit in the same vessel or aircraft. This type of declaration is made mandatory under the rules, and non-compliance thereof, could lead to hold that the goods were not the bonafide in transit goods. Here, though the subject goods, though initially consigned for landing at Bombay, and included in the Import General Manifest for Bombay, but subsequently deleted therefrom, were not entered into the same bottom cargo declaration and unless and until that is done, the cargo could not get the benefit of Section 53 of the Act. It is also significant to note that the ship carrying the subject consignment was on its voyage which was to terminate at Karachi via Bombay, It did not and could not have any cargo for Singapore from where the voyage had originated. Even assuming that some extraordinary circumstances had developed and the entire consignment was to be taken back to Singapore, then the Customs officials at Bombay ought to have been pre-informed of the exigencies that developed during the voyage.
Here that it is not done, nor the said consignment is entered into declaration for same bottom cargo, and mere deletion thereof from Import General Manifest for Bombay, cannot be construed to mean that the subject cargo was meant to be "in transit" cargo. As per the provisions of the Customs Act, the subject cargo would become an import cargo, and could justifiably be ordered confiscation, as soon as it enters the Indian territorial waters.
16. The issue as to the jurisdiction of the Collector to adjudicate upon and to order confiscation as also to impose personal penalty has to be examined from two different angles, one in relation to the goods, and second in relation to the party, 17. So far as the goods are concerned, the confiscation is ordered vide Section 111 of the Act, and the powers invested thereunder have been exercised in relation to the goods found within the Indian territorial waters and also within his own territorial jurisdiction. The goods are held to be not same bottom cargo, and hence have to be taken as brought in contravention of the provisions of the Customs Act, and allied laws, as also the relevant policy provisions, and with goods being physically lying within the jurisdiction of the concerned Collector and are held as liable to confiscation vide Section 111 of the Customs Act, the jurisdiction of the Collector for passing any order in relation to such goods cannot be challenged and the objection raised therefore cannot be sustained.
18. It however requires to be considered as to whether personal penalty vide Section 112 of the Customs Act, could be imposed on the appellants, situated in Taiwan, for any act done by them in that country. Undisputedly that firm has no branch in India. It is also not on record that the same is owned by an Indian citizen. The issue, therefore, would be whether the Collector has the jurisdiction, while exercising powers under the Customs Act, 1962.
19. When Brother R. Jayaraman has also proposed that the penalty imposed on the appellant vide Section 112 of the Act be set aside, the issue remains to be only academic for this matter. However, because he has observed that in his considered opinion the Collector has powers to impose such penalty to which I am unable to endorse, I am placing my own views on the issue.
20. The appellants are the foreign firm, having no branch in India and none of acts have been committed by them within the Indian territory.British India Steam Navigation Co. v.Shanmughavilas Cashew Industries, 1990 (48) E.L.T. 481 (SC) while dealing with Private International Law, however made general observations as to the extent of applicability of the statutes enacted by the Indian Parliament and have observed: "In general, a statute extends territorially, unless a contrary is stated, throughout the country and will extend to the territorial waters and such places as intention to such places is shown." "Without anything more, Indian statutes are ineffective against foreign property and foreigners outside jurisdiction." 22. As because of afflux of time, the old journals are not available, but as is discussed in the commentary under Section 4 of the Indian Penal Code, 1860, in the books, "The Indian Penal Code 26th Edition 1987, by Ratanlal and Dhirajlal [and revised by (now late) Hon. Mr.
Justice M. Hidayatulla, the former Chief Justice of India] in Musst Kishan Kaur (1878 ) PR No. 20 of 1878 and Jameson (1896) 2 QB 425, it is held that the acts of a foreigner committed by him in territory beyond the limits of India do not constitute an offence against Penal Code and consequently, a foreigner cannot be held criminally responsible under the code by any Tribunal in India for acts committed by him beyond its territorial limits and in Pirtai (1873) 10 BHC (Cr.
C) 356 and Raj Bahadur (1918) PR No. 23 of 1918, it is further held that a foreign subject resident in a foreign territory instigating the commission of an offence which, in consequence, is committed in Indian territory, is not amenable to jurisdiction of an Indian court if the instigation has not taken place in India.
23. The Ld. SDR has however referred to an article, written by Hon. Mr.
V.T. Raghavachari, the Ex-Member of this Tribunal, as published in 1993 (64) E.L.T. - A128, where the ld. author has expressed the view, by referring to Halsbury's Law of England, and certain judicial pronouncements of the courts in England, that penalty could be imposed.
It may be observed that the said article has been published as a reaction to the order of the South Regional Bench of the Tribunal in C.K. Kunammed v. Collector of Central Excise & Customs, 1992 (62) E.L.T. 146 (Tri.) where the Single Member Bench has held that the Collector of Customs is not competent to try any person in respect of something committed in a foreign country. It may however be noted that the decisions given by the courts in England are based on the common law, whereas in India, the laws are codified and framed by Parliament and there could be no laxity availabe to go beyond what has been codified.
24. No distinction can also be drawn between the penal law of the land and other laws and that they all stand on the same footing so far as their applicability is concerned. The requirement of presence of the accused person at the time of trial, is merely a procedural requirement and is not interwoven in the statutes so as to differentiate the Penal Code from any other enactments of the Parliament.
25. The Customs Act, 1962, in Section 1(1) thereof specifically mentions that it shall extend to whole of India. No provision exists anywhere in the Act, to enlarge its applicability to the area beyond the territory of India. Significantly while enacting on allied Act namely Foreign Exchange Regulation Act, 1973, a special provision is made in Section 1(3) of the Act that it would apply to all citizens of India outside India and to branches and agencies outside India of companies or body corporate registered or incorporated in India. Thus, by special provisions, the said Act is made applicable to the persons residing outside India. Similar provisions however are not found in the Customs Act, 1962. Section 4 of the Indian Penal Code, also provides for extra-territorial jurisdiction to a limited extent and provides a clear indication that for making the provisions of Indian statute applicable to the persons outside the Indian territory specific provisions must exist in the Act itself and if such provisions are not incorporated in the Act, no action could be taken against a person/party outside the Indian territory.State of Maharashtra v. Mayer Hans George AIR 1965 Supreme Court 722, will not be relevant here, as in the said case, the foreign national was within the Indian territory, and has contravened the provisions of law while in India.
27. The terminatory theory also may not strictly be applicable in such cases. What the appellants have done, may, at the best be taken as an act of abetment in relation to contravention intended by the consignee and their abetment was complete as soon as the goods were despatched.
Their subsequent attempts to retrieve the goods may render them liable to any other financial liability in relation to those goods but could not be construed as acts done in furtherance to the abetment done in relation to the contravention of the Customs laws in India, so as to extend their penal liability in that regards. The act on their part, which could render them liable to penal action, if committed in India, is deemed to have ended as soon as they despatched the goods.
28. Thus, with Customs Act, 1962 having force only within the whole of India, and with no provisions incorporated therein to invest any extra territorial jurisdiction, and with codified law of the Indian Parliament having applicability only within India, the powers of the Collector exercising his jurisdiction under the provisions of the Customs Act, would not stand extended to impose any personal penalty on the party/firm/company who are beyond the territorial jurisdiction of India, for any acts done by them beyond the Indian territory.
29. As such, even on this ground, the personal penalty imposed on the appellants would have been set aside.
30. As indicated earlier, however, my Learned Brother has also proposed setting aside the order imposing personal penalty to which I endorse, there is no reason to refer the matter to the third Member on this ground.
31. In the result, I agree with the operative portion of the order as proposed by my Learned Brother.