ORDER
R. Jayaraman, Member (T)
1. This is an appeal against the order-in-appeal No. S/49/156/94 – 452/94-BCH, dated 15-6-1994 rejecting the appeal of the appellants and confirming the order of the Asstt. Collector refusing to amend the import manifest to substitute the name of the appellants as the consignee in the place of the original consignee figuring in the manifest in the name of M/s. Marvel Impex Pvt. Ltd. This order has been passed by the Asstt. Collector by refusing to permit amendment under Section 30(3) of the Customs Act. The relevant findings of the Asstt. Collector for refusing to permit the amendment of the manifest are reproduced below:
“I have carefully gone through the case records and submissions made by the party. The issue involved in this case is the amendment in the name of consignee. Section 30(3) of Customs Act provides that if the proper officer is satisfied that the import manifest or import report is in any way incorrect or incomplete and there was no fraudulent intention, he may permit it to be amended or supplemented. The amendment is permissible in the IGM wherein there is no fraudulent intention. In the instant case the B/L for subject item were issued in the name of M/s Star Wires and Gable Industries and the same were subsequently changed in the name of M/s. Marvel Impex Pvt. Ltd. and accordingly an IGM was filed in the name of M/s . Marvel Impex Pvt. Ltd. M/s. Star Wires & Cable Industries and M/s. Marvel Impex Pvt. Ltd. are appearing in the list of fictitious benami firms of Didwania Group. Investigations were also conducted as to ascertain ownership of the supplier M/s. Donal McCarthy and it was found that it is also a firm owned by Didwania Group. M/s. Star Wire & Cable Industries and M/s. Marvel Impex Pvt. Ltd. are non existent firms and not having any importer code No. Therefore, any consignment booked through them is an ITC violation. The B/L in the case is dated 9-7-1993 whereas the invoice raised in the case is on 26-11-1993 date which is subsequent to the investigation initiated against M/s. Marvel Impex Pvt. Ltd. The same is an afterthought and attempt to bail the earlier consignee out of customs investigation with a fraudulent intention.”
2.1 Dr. Kantawalla, the Id. Advocate, appearing for the appellants does not dispute the following facts :
The goods were consigned and manifested in the name of M/s. Marvel Impex Pvt. Ltd. notified party being M /s. Star Wire & Cable Industries. (The Id. SDR however points out that though originally M/s. Star Wire & Cable Industries were shown as the consignee, on a communication from the shipping agency before filing the manifest, the B/L was amended and hence the manifest bore the name of M/s. Marvel Impex Pvt. Ltd. as the consignee). The date of B/L issued in the name of M/s. Marvel Impex Pvt. Ltd. is 9-7-1993. The goods were shipped on sight draft basis to M/s. Marvel Impex Pvt. Ltd. which arrived in Bombay in the month of Aug., 1993. No B/E was filed by M/s. Marvel Impex Pvt. Ltd. and the documents were also not retired by M/s. Marvel Impex Pvt. Ltd. Since the appellants have entered into a contract with the foreign supplier (who sent the goods to M/s. Marvel Impex Pvt. Ltd.), for monthly supply of quantity of 40.42 M. tonnes of copper rods, which they were regularly getting, the suppliers asked the appellants to take over the goods sent under the B/L to M/s. Marvel Impex Pvt. Ltd. Accordingly, the suppliers transferred the documents in the name of the appellants and under their instruction, the shipping agents also filed an application for amendment of the manifest to change the name of the consignee from M/s. Marvel Impex Pvt. Ltd. to in the name of the appellants. The B/L was also amended to show the name of the appellants in October 1993. The invoices were transferred in their name on 26-11-1993. It is also admitted that even in their case, the documents were transferred on sight draft basis leaving the choice to the appellants to accept the documents or otherwise.
2.2 On the basis of the aforesaid undisputed facts, the Id. Advocate makes the following submissions :
(i) Referring to the correspondence with the foreign supplier, he points out that the appellants have got supplies of the same material prior to this consignment and also subsequently. In this context, he has prepared a chart showing details of 7 consignments covered by the invoices dating from 29-6-1993 to 28-12-1993. In all these cases the Customs Department have not raised any objection and they have cleared the goods though emanating from the same suppliers. Only in regard to this consignment, they are refusing to entertain their B/E, by suitably amending the manifest to substitute the name of the appellants. There is no dispute that the documents are not retired by M/s. Marvel Impex Pvt. Ltd. and hence the title of the goods vests with the supplier. In these circumstances, the supplier is at liberty to transfer the title over the goods to the appellants, who have already entered into contract with the supplier, for monthly supply of 40/42 M. Tons. There is no allegation that the appellants are in any way connected with the Didwania group or in any way involved in fraudulent transactions with the supplier. Even the alert circular dated 24-3-1993 only refers to under invoicing aspect in respect of the consignment from the suppliers to some fictitious companies of Didwania group. In this case, since the values are based on LME prices, even this allegation cannot be sustained.
(ii) The goods can be imported by all since they are not in the negative/canalised lists. Hence there cannot be any violation of ITC provision.
(iii) The ratio of the decision of the Madras High Court in the case of J.B. Trading Corporation -1990 (45) E.L.T. 9 (Mad.) cannot be applied in this case for the following reasons :-
(a) The judgment of the Madras High Court was not in the context of Section 30(3) of the Customs Act;
(b) There, B/E has been filed in the name of M/S. Continental Silk House and the B/E was not cancelled. Here in this case, no Bs/E have been filed by M/s. Marvel Impex Pvt. Ltd. They have not cleared the documents, necessitating the supplier of the goods to find out another buyer.
(c) In the case dealt with by the Madras High Court, invoice is prior to the date of B/L, whereas, in this case, invoice is after the B/L amended in the name of the appellants.
(d) the case dealt with by the Madras High Court is a case, where the import was under forged documents and also there was an attempted fraud, where as in this case, barring allegation that the foreign supplier being related to Didwania Group supplying the goods in the name of fictitious importers and M/s Marvel Impex Pvt. Ltd. is also one of the fictitious importers figuring in the list of suspected Didwania Group of Importers in India, there is no allegation of fraud against the appellants.
(iv) In view of the aforesaid consideration, the ratio of the judgment of the Madras High Court cannot be made applicable in this case. On the contrary, the decision of the Tribunal in the case of Savitri Electronics Co. – 1992 (62) E.L.T. 395 (Tribunal) would be applicable. In this judgment, the North Regional Bench have held that the foreign supplier cannot be party to the fraud and ownership of the goods continues to vest in the foreign supplier and he is entitled to resell the goods to another Indian customer. Such customer is entitled to clear the goods against a valid licence. In that view they have held the person, who has re-purchased the goods as the importer in the context of Section 2(26) of the Customs Act and set aside the order of confiscation passed under Section 111(d) of the Customs Act. This judgment of the Tibunal is based on the decision of the Supreme Court in the case of Sampat Raj Dugar – 1992 (58) E.L.T. 163 (SC). Hence, this decision of the Tribunal based on the judgment of the Supreme Court would be binding on this Bench and should be preferred to the judgment of the Madras High Court in the case of J.B. Trading Corporation, which is also distinguishable as aready pointed out.
(v) In this case, when the goods came to india there was no importer, since the allegation is that the import is against a fictitious name not having any import code number. Hence, when the appellants, having the import code number and are also a bonafide actual user, have purchased the goods in terms of the contract with the foreign suppliers, they could be construed to be the importer and allowed clearance by permitting filing of B/E. Moreover, no action has been taken under Section 48 of the Customs Act in regard to the goods which have arrived in the name of M/s. Marvel Impex Pvt. Ltd. No proceedings for confiscation of the goods has also been initiated against M/s. Marvel Impex Pvt. Ltd. Hence, it is not open for the Department to bar the appellants to file the B/E, especially, when the documents transferred in their name have been retired and the title of the goods presently vests with them.
3. Shri Misra, the Id. SDR, for the Department, makes the following submissions in reply:-
(i) Section 30 (3) of the Customs Act indicates that proper officer should be satisfied that the import manifest is in any way incorrect or incomplete, then only amendment to the manifest can be permitted, in this case, manifest has been correctly filed in the name of M/s. Marvel Impex Pvt. Ltd. who are the consignee as per the suppliers. The manifest was filed correctly on the date of presentation of the same. Since, the manifest with regard to the particular entry covering all details of the goods including the name of the consignee as per the B/L has been filed, it cannot be said to be either incorrect or incomplete. He, therefore would plead that there is no cause for amendment of the manifest, because the manifest filed is neither incorrect nor incomplete.
(ii) Even assuming that a view is taken that because of the original buyer not retiring the document, the name of the importer has to be corrected in favour of another buyer, this could be done only when there is no fraudulent intention. The fraudulent intention need not be having nexus only with the buyer on resale. If the fraudulent intention has nexus even with the supplier and the original buyer, amendment need not be permitted. What is required to be looked into is, whether there has been any fraudulent intention in changing the name of the importer. Going by this principle laid down in Section 30(3) of the Customs Act, the pertinent question to be asked in this case is, whether there is any fraudulent intention. The allegation confirmed by the Adjudicating authority is that the foreign supplier has links with certain bogus fictitious Didwania Group of firms in India and goods are being supplied to persons not having import code number. As per the provisions of Section 7 of the Foreign Trade (Development and Regulation) Act, 1992 -no person shall make any import or export except under an Importer-exporter Code Number granted by the Director General or the Officer authorised by the Director General in this behalf, in accordance with the procedure specified in this behalf by the Director General. In this case, as against the confirmed allegation by the adjudicating authority to the effect that the goods have been supplied to M/s. Marvel Impex Pvt. Ltd., who do not have any import code number, no evidence has been produced by the appellants, who claims to have purchased the goods in bona fides from the supplier to point out that M/s. Marvel Impex Pvt. Ltd. is a bona fide eligible importer in India. In fact, though a paper book has been filed, there are no correspondence from the supplier to point out that the goods were earlier supplied to the bona fide eligible importer in India and because of their backing out by refusing to retire the documents, the supplier is reselling the goods to the appellants. The appellants’ previous clearances as well as the subsequent clearances have been rightly allowed by the Customs Department only because of the fact that the goods were consigned to an eligible importer having import code number and is also an actual user. This itself shows that the objection taken in this case is valid, mainly because the goods, having been unauthorisedly imported are sought to be legalised by substituting the name of the importer from a fictitious firm to another person having the import code number. Such an attempt has been dismissed by the Madras High Court by relying on the judgment of the Calcutta High Court. Hence, the ratio of judgment of the Madras High Court would be squarely applicable in this case.
(iii) Even in the case of Sampat Raj Dugai, which has been relied upon by the North Regional Bench in the case of Savitri Electronics, the Supreme Court has clearly held that they are not considering a case, where the import is contrary to law. Here in this case, the goods have been shipped by the supplier to a person not having any import code number and hence not eligible to import the goods. On this ground itself the goods are liable to confiscation for contravention of the provisions of Section 7 of the Foreign Trade (Devleopment & Regulation) Act, 1992 read with Section 111(d) of the Customs Act. Hence, when the import is contrary to the provisions of law, the proceedings of confiscation are permissible under Section 111 of the Customs Act. Hence, such goods cannot be permitted to be cleared by another person by substituting the name of the importer in the import general manifest and permitting him to file a B/E. In such a case the observations of the Calcutta High Court, which were relied upon by the Madras High Court in the case of J.B. Trading Corporation are squarely applicable. The Calcutta High Court held that if such a position is accepted, whenever any consignment is liable for confiscation for some violation, the importer could be substituted by some person to file the B/E for clearance. He would therefore, plead that the ratio of the decision of the Madras High Court based on the decision of the Calcutta High Court and also the decision of the Supreme Court in the case of FEDCO Pvt. Ltd. – AIR 1960 SC 415 would be squarely applicable. He would therefore, plead for dismissal of the appeal.
(iv) He also seeks to rely on the decision of the South Regional Bench in the case of J.B. Trading Corporation -1989 (44) E.L.T. 171, wherein the South Regional Bench in similar circumstances, particularly relating to the amendment of the manifest, have upheld the contention of the Department that where unauthorised imports are sought to be legalised by substituting the importer, such a request can be refused Under Section 30(3) of the Customs Act.
4.1 After hearing both the sides, we find that there is a positive allegation, which is confirmed by the adjudicatng authority to the effect that the goods supplied by the foreign supplier were consigned to a fictitious firm of Didwania Group and the foreign supplier is also associated with this Didwania Group. We find that there are no evidences either from the supplier of the goods or from the appellants to rebut this finding. On a perusal of the contract and the correspondences, we find that there are no documents filed in the Paper Book particularly with regard to this consignment, where the goods are said to have been bonafidely resold to the appellants, on account of non retirement of documents by M/s. Marvel Impex Pvt. Ltd. If the supplies have been made in the course of normal international trade, the foreign supplier would have shipped the goods to an eligible importer having import code number. In this case, M/s. Marvel Impex Pvt. Ltd. are alleged to be a fictitious firm having no import code number. This finding of the adjudicating authority is not rebutted in any way by the appellants in the form of supplier’s letter to show that the goods originally supplied to a bona fide importer who has backed out from the commitment. The correspondence only show that the suppliers will be shipping certain quantity of copper rods to the appellants and the other 7 consignments are consigned in the name of the appellants and has been allowed clearance, because they are shipped to a bona fide importer and not to a fictitious firm, as in this case.
4.2 In this case, we are not considering the penal liability of the appellants. We are only considering the question whether there is a proper exercise of descretion vested with the officer for disallowing the amendment of Import General Manifest, under Section 30(3) of the Customs Act. For this purpose, it is relevant to reproduce the provisions of Section 30(3) of the Customs Act:
“If the proper officer is satisfied that the import manifest-or import report is in any way incorrect or incomplete, and there was no fraudulent intention, he may permit it to be emended or supplemented”, Though there is a considerable force in the argument of Shri Misra that only when there is an incorrect or incomplete manifest filed originally, amendment can be permitted, we are not solely going by this argument. The manifest is required to be filed based on the particulars of B/L, which is the document showing the goods having been received on board the vessel and the B/L is also a document enabling the consignee to clear the goods after discharging the obligations under the Customs Law. Here the admitted position is that when the goods are landed in Bombay, the B/L was in the name of M/s. Marvel Impex Pvt. Ltd. and they had to clear the goods by filing the B/L. The allegation in this case is that M/s. Marvel Impex Pvt. Ltd. is a fictitious firm having no import code number. As per Section 7 of the Foreign Trade (Development & Regulation) Act – “No person shall make any import or export except under an Importer-exporter code number granted by the Director General or the officer authorised by the Director General in this behalf, in accordance with the procedure specified in this behalf by Director General.”
4.3 In view of the specific provisions of the aforesaid Act, which has been enacted in the place of Import & Export (Control) Act, 1947, import can be effected only by recognised importer having been allotted a code number by the prescribed authority. Here, the urirebutted factual position is that the import has been made by a fictitious party having no import code number. It is, therfore, immaterial to consider whether the goods are figuring in the negative list or otherwise. It is not as though import could be made by anyone, even if he is an actual user. The import can be made only by a person having been recognised as an eligible importer by allotting a code number by the prescribed authority. Any contravention of this Act can also be construed to be a contravention under Section 11 of the Customs Act and hence would attract the provisions of Section 111 of the Customs Act. In view of this position, the goods, when they were imported into the country are to be construed to be as unauthorised imports attracting the provisions of Section 111(d) of the Customs Act.
4.4 Viewed in the context of the aforesaid legal provision, we now look into the case laws cited before us by both the sides. In the case of J.B. Trading Corporation – 1990 (45) E.L.T. 9 (Mad.), the main plea of the Id. counsel on behalf of the petitioner was as follows :-
“(i) The definition of an Importer is found under Section 2(26) of the Act having regard to the same, if the petitioner, before the goods are cleared for home consumption, would hold itself out to be the importer, it has every right to clear the goods. The petitioner is an importer under law since the documents have been transferred to it and the bank documents, the bills of lading, invoices etc. are all in the name of the petitioner. Further, it has the requisit import licences specifically endorsed for the import of the goods now lying in the Madras Harbour. As to who is an importer has come to be laid down in J.V. Gokal & Co. v. Assistant Collector of Sales Tax (AIR 1990 S.C. 595). Therefore, the stand of the Customs Department is untenable.
(ii) Under Section 46 of the Customs Act, all that the Importer has to do is to file a bill of entry. Accordingly, the clearing agents of the petitioner wanted to file the bills of entry. But strangely the Department is not accepting the two bills and on the third bill, no action had been taken so far. Under law, all that is required is to examine the bills of entry to find out whether the goods are not prohibited. If the same is established, there is no other option available to the Officer concerned except to release the goods on payment of duty; more so when the goods are covered by a valid licence.
(iii) It is one thing to say that the bills of entry filed by M/s. Continental Silk House had been obtained by fraud or mis-representation and yet another thing to say that the petitoner who has valid licence and as an importer is prepared to pay the necessary duty could be denied the benefit of import. By allowing the import in favour of the petitioner, the Department is not in any manner prejudiced. Still, whatever action could be taken against M/s. Continental Silk House, that can be taken. Therefore, the denial of the benefit of import is nothing but arbitrary, violative of Articles 14 and 19 (1) (g) of the Constitution.
All the above 3 contentions were rejected by the Madras High Court holding that the original consignee can only be construed to be the importer of the goods and when the goods are subject to investigation by the CBI and R.C. has already been registered, if any one attempted to clear the goods, that would nullify any proceedings under the Customs Act in regard to the goods. For arriving at this conclusion, they have also relied on the decision of the Calcutta High Court. The relevant para of the judgment of the Madras High Court is reproduced below:
“If the contention of the petitioner is to be accepted, whenever any consignment is liable for confiscation for some violation, the importer could be substituted by some other person to file the bill of entry for clearance. It is almost certain that having come to know of the proceeding, the petitioner, with a view to circumvent the same, is claminig itself as ‘importer’ in order to set at naught the adjudication proceedings and the confiscation of goods. It is rather surprising that when the petitioner has accepted that it’s payment is against S/P basis instead of refusing to retire the documents, it is making ingenious attempts to clear the goods which have been illegally imported into India by a fictitious firm on the strength of forged documents, concerning which R.C. No. 19 of 1986 is pending. There is absolutely no scope for the petitioner to claim the right of Importer, more so, after the first information report came to be filed on 2-12-1986, while the invoices of the petitioner bear the dates 15-12-1886 and 16-12-1986. Fraud is infinite in its variety and this is one such variety”.
4.5 In the case before us, the counsel has taken pains to point out certain factual differences for urging that the said case law would not be applicable in this case. We have carefully looked into the differences pointed out by the Id. counsel. However, we are unable to agree that the ratio of the decision will, in any way get affected, if applied to this case, on account of the differences pointed out, for the following reasons :-
Though in this case, a B/E has not been filed, it has not been rebutted that the goods have been supplied by an interested foreign supplier, who had knowingly or in any case, without due verification, sent the goods to the fictitious firm not having any import code number. Because of the commencement of investigation, no B/E appears to have been filed. That can not make any differences for applying the ratio of the Madras High Court Judgment. If the goods have been sent to a bona fide purchaser in India, either the supplier would have approached the customs authorities with all the details of the importer to claim the reshipment or for transfer by way of resale to another party in India. The supplier has not even chosen to raise any such contention and no correspondences from the suppliers are produced before us in this regard. The unrebutted position is that the supplier has a nexus with some bogus firms floated by Didwania Group, to whom the goods have been shipped. Having noticed that investigations in to that import have commenced, it looks apparant that the supplier is seeking to retrive the goods by putting another eligible importer in the front. Such an action has been found to be unacceptable by the Madras High Court. In this case, investigation in to the status of the importer and his relationship with supplier lead to the conclusion that the goods have been imported in unauthorised manner by a fictitious firm having no import code number. In the context of liberalisation, when all the goods, other than those figuring in the Negative list or canalised list, could be imported, the Government have thought it necessary to make such imports available to only those bona fide importers, who are allotted the code numbers by the prescribed authorities. When the supplier found that the goods could not be cleared by the fictitious firm not having any code number he has put the appellants as a front for regularising the illegal import. This is how the factual position in this case emerges. When it is viewed in this background, the conclusion drawn by the authorities below that there is a fraudulent intention in changing the name of the importer and hence permission cannot be granted, cannot be faulted. We find that the ratio of the Madras High Court judgment would be squarely applicable in this case in the context of the factual position as discussed above.
5. We also looked into the decision of the North Regional Bench in the case of Savitri Electronics Co. citied by the Id. counsel. We find in Para 9 of the aforesaid judgment, the North Regional Bench have extensively quoted the decision of the Supreme Court in the case of Sampat Raj Dugar reported in 1992 (58) E.L.T. 163 (S.C.). In the case of Sampat Raj Dugar, the Supreme Court considered a case where the goods were supplied originally to an importer holding a DEEC licence. The importer, after clearing the goods against DEEC licence, is alleged to have diverted the goods and mis-utilised the licence and hence when the investigation commenced in regard to imports he did not choose to clear the goods. Then the supplier sought to resell the goods to another person, the claim of the buyer was rejected and the goods were held liable to confiscation. In the context of the above factual position, the Supreme Court held that the person who has cleared the goods by way of resale could be construced to be an eligible importer. While arriving at this conclusion, the Supreme Court have specifically observed in (…) as below:
“(We may reiterate that we are speaking of a case where the import is not contrary to law.)”
From this specific observation of the Supreme Court, it is clear that the Apex Court has taken the shipment by the supplier as a bona fide one against the existing DEEC licence. The supplier could not be aware of the fact of diversion of the goods previously imported. Hence, the Supreme Court held that the supplier, having effected the shipment of the goods to a bona fide eligible importer holding a licence cannot be made to suffer the loss, by an order of confiscation. With all respects to the North Regional Bench, we find that the said observation of the Supreme Court (extracted in the bracket above) seems to have been lost sight of, because in the case of Savitiri Electronics, supplies are found to have been made to a fictitious firm, where in our view the case of Sampat Raj Dugar decided by the Supreme Court may not be applicable, because of the aforesaid observations of the Supreme Court extracted by us. Be that as it may, even otherwise, the decision of the North Regional Bench would not be available in this case; because the Tribunal held that the supplier is not at fault and not a party to any fraud. On the contrary, in this case before us, the allegation is that the foreign supplier, who is a party to the shipment to a fictitious firm of Didwani Group, has nexus with Didwania Group stands un-rebutted. In the circumstances, when this allegation against suppliers stands unrebutted, the case of Savitri Electronics could not come to the rescue of the appellants. We also find that the South Regional Bench in the case of J.B. Trading Corporation, reported in 1989 (44) E.L.T. 171 have held the same view as we have taken in this case.
6. We are also not persuaded to accept the contention of the Id. counsel that since the goods have not been disposed of under Section 48 of the Customs Act and no proceedings for confiscation of the goods have been initiated by way of show cause notice, the manifest can be amended. Amendment of the manifest is not linked up with these factors. It is mainly linked up with the question of fraudulent intention. Such a fraudulent intention can be on the part of the suppliers or on the part of the original consignee or on the part of the person in whose name the documents are subsequently transferred. Section 30(3) of the Customs Act would stand attracted for refusing amendment, when there is a fraudulent intention for amending the manifest. It may be to regularise the unauthorised import as in this case or to get the benefit of lower rate of duty not legitimately due. When such an intention is discernable, the proper officer can refuse to amend the manifest.
7. In the result, we dismiss the appeal. The interim order of restraint against confiscation/disposal of goods stands vacated.