ORDER
R. Jayaraman, Member (T)
1. This is an appeal directed against the order No. S/10-42/88-GP 3 dated 13-4-1988 passed by the Collector of Customs, Bombay confiscating 4 consignments of imported blended silk wool yarn and imposing penalty of Rs. 90,000/- against each of the Bs/E in respect of the 4 consignments.
2. The brief facts for the purpose of disposal of the appeal can be stated as under:-
The appellants imported 4000 kgs. of 120/2 MC blended silk wool yarn and filed four Bs/E for their clearance. The appellants claimed clearance of the goods against 3 REP duty free licences. The Customs however objected to the clearance on the ground that the licences produced are valid for import of only spun silk yarn as duty free import replenishment against REP licences as per App. 21 of 85/88 Import Policy where as the goods imported are blended spun silk yarn falling under entry No. (12) of Appl. 2B and hence the licences are not valid to cover the items imported and the duty exemption benefit is also not available. It was also alleged that the importers’ claim that they ordered only for spun silk yarn but wrong goods have been shipped by exporters, was not acceptable for the reason that the item claimed to be ordered viz. spun silk yarn 120/2 MC should have been in the price range of US $ 36 to 38 per kg. cif, whereas in this case it is only in the range of US $ 25 to 28 per kg. Hence the goods ordered also must have been blended silk yarn and the contention of the appellants regarding the wrong despatch was, therefore, alleged to be not correct. The appellants waived the requirement of show cause notice. The Collector, after giving personal hearing, adjudicated the case and held that there is a misdeclaration apart from the fact that the goods have been imported without a valid import licence. Accordingly, he ordered confiscation of the goods under Section 111(d) and (m) of the Customs Act. The 4 consignments which were ordered confiscation were, however, allowed redemption on payment of fine of Rs. 1.8 lakhs against each Bill of entry. The appellants were also imposed with penalty of Rs. 90,000/- against each Bill of entry. The present appeal is against the said order of the Collector (Appeals).
3. Shri Shroff, appearing on behalf of the appellants, took us through the following documents:
(i) Contract for the purchase of the imported yarn;
(ii) Bills of entry filed along with the copies of the invoices;
(iii) Copy of the telex from the suppliers; and
(iv) Copies of the letters addressed to the Asstt. Collector of Customs, Group III dated 2-3-1988, 6-3-1988 and 8-3-1988 urging him to allow the appellants to re-export the wrongly supplied goods.
It was his submission that all these documents go to show that there was no mis-declaration as alleged by the department. All the 4 Bills of entry clearly show the description as “blended silk wool yarn 120/2 MC”. The invoices annexed to the Bs/E also show the same description. In the context of these documents, the Collector’s finding that there had been a mis-declaration and they have knowingly done, is not sustainable. He also indicated that even before filing the B/E on 5-2-1988, they got a telephonic message from the suppliers that instead of spun silk yarn they have wrongly despatched blended silk wool yarn. Immediately, on getting this telephonic message, they instructed their Custom House Agents to file the Bs/E for proper description. Subsequently, they got the correct invoices for the imported goods viz. blended silk wool yarn which were also filed along with the B/E. In the context of these documents, no mis-declaration can be alleged. B/E is the only valid legal document on which a proper description and declaration is required to be made. There is no allegation that the B/E contained any wrong declaration or mis-declaration of description. The Collector’s finding is only based on a wrong comparison of the price range for spun silk yarn of different denier imported during the relevant period with the price of US $ 28 per kg in respect of the consignment imported. On this, he has jumped to the conclusion that they had placed order only for import of blended silk yarn knowing well that it is not covered by the REP duty free licence. This conclusion is not at all justifiable because of the fact that all the prices indicated in para 2 of the order in original, on the basis of which the Collector has come to the wrong conclusion, relate to deniers of 140/2; 210/2 and 60/2 whereas the goods for which the order has been placed relate to spun silk yarn of 120/2 deniers. Hence the comparison is not of prices of identical goods. Moreover, the appellant has got his own invoices where the spun silk yarn of 120/2 deniers has been imported in the price range of 28 US $ per kg. Hence this conclusion arrived at by the Collector, is not warranted. The appellants repeated this plea for re-export of the wrongly shipped goods but this has not been heeded to. They were confiscated and allowed redemption on a total fine of Rs. 7.2 lakhs apart from a penalty of Rs. 3.6 lakhs in toto.
4. Shri Mondal, appearing on behalf of the Collector, however, justified the order of the Collector. Though the description of the B/E is for blended silk wool yarn of 120/2 MC, they have deliberately claimed duty free import under REP licence to which they are not entitled. They had attempted to celar the consignments duty free. When they noticed that this was not possible, they have invented the story of wrong shipment, which should not be accepted. The document produced viz. the suppliers’ telex, cannot be relied upon to come to the conclusion that the consignments have been wrongly shipped. He also contended that the telex message does not talk about the telephonic conversation of 5-2-1988 in pursuance of which the telex message is reported to have been sent by the suppliers. He also contended that in this appeal, a question regarding valuation and rate of duty in terms of the exemption Notification No. 126/85-Cus. is involved and hence this Bench is not competent to hear this appeal. He also pleaded that in case the Bench is inclined to consider the request for re-export, it has to be done on suitable fine, for which the matter may be remanded.
5. Shri Shroff in reply contended that he is neither challenging the in-eligibility of their import under REP licence nor of exemption. On the contrary he concedes that the goods are not eligible for import duty free under the REP Licence during the material period. His challenge is only with regard to the order of confiscation for mis-declaration and import without valid licence and imposition of such penalty. Hence, he contended that this Regional Bench is competent to consider this appeal and pass suitable order. He also cited the decision of the Cegat reported in Peejay Nayar Exports v. Collector – 1988 (33) E.L.T. 383 and contended that if re-export is to be permitted no fine should be imposed as per the view held by the Tribunal in the aforesaid case.
6. After hearing both the sides and perusing the available records, we find that the main issues to be decided are as below:
(i) Whether there is a mis-declaration justifying confiscation of goods under Section 111(m);
(ii) Whether the goods are liable for confiscation under Section 111(d) of the Customs Act;
(iii) Whether the appellants are liable for imposition of penalty under Section 112 of the Customs Act; and
(iv) Whether the appellants can be allowed to re-export the goods without any fine.
7. It is observed that the conclusion arrived at by the Collector for holding that there was intention to import only blended silk wool yarn and not spun silk yarn, is based on the premises of comparison of contemporaneous prices of spun silk yarn which was normally higher, whereas in this case, the importers had ordered for spun silk yarn at a lower price of US $ 28 per kg. In support of this, the Collector relied on the prices of 140/2; 210/2 and 60/2 deniers of spun silk yarn. Evidently, these are not prices for identical goods. He has not cited any invoice of contemporaneous import for 120/2 deniers. Thus his conclusion arrived at on the basis of contemporaneous prices, is apparently in regard to the prices of different deniers. The appellants’ advocate Shri Shroff, has pointed out that the price range for 120/2 spun silk yarn imported by themselves is 28 US $ per kg. In view of this position, we are unable to agree with the findings of the Collector that there was an intention to import only blended silk wool yarn, which they tried to clear against invalid duty free licences and only after discovery, they have requested for re-export of the goods. In this case, the goods have been ordered confiscation under Section 111(m) of the Customs Act. Section 111(m) renders any goods, which do not correspond in respect of value or in any other particular with the entry made under the Act, liable for confiscation. Admittedly, and as seen from the Bs/E, the goods have been correctly declared as “blended silk wool yarn of 120/2 MC”. There is no allegation in the findings of the Collector that this description given on Bs/E is wrong or denier mentioned tharein is not correct. It is admitted that the goods imported are of this description only. Hence, when the Bs/E show the correct description of the goods, it is legally unsustainable to hold that they are liable for confiscation under Section lll(m). If the description of the goods on the Bs/E had been spun silk yarn, whereas the goods are found to be blended silk wool yarn, the order of confiscation under Section 111(m) would have been justified. No order of confiscation under Section 111(m) of the Customs Act can be sustained, when the goods have been declared correctly on the Bs/E. We, therefore, hold that the order of confiscation under Section 111(m) of the Customs Act is not sustainable and is required to be set aside.
8. Now coming to the issue regarding the liability of the goods to confiscation under Section 111(d) of the Customs Act, the appellants themselves concede that the licences produced are not valid to cover the goods imported. It is not their case that even the imported blended silk wool yarn is allowable under REP licences produced. Hence, they are liable for confiscation under Sec. 111(d) of the Customs Act read with Sec. 3 of the Import & Export (Control) Act, 1947. Collector’s order on this ground is sustainable.
9. Now coming to the third issue, as to whether the appellants are liable to penalty, in view of the findings with regard to the issue at Sl.No. (1) above, we do not support the Collector’s order of imposition of penalty on the ground of mis-declaration. However, the appellants are liable to penalty for importing goods without valid import licence. On this, for imposing personal penalty, mala fides should be established even at the time of filing the Bs/E. In this case, it is observed that the appellants had placed the order for spun silk yarn but they were supplied with blended silk wool yarn, on account of which the licences produced became invalid. We would have wholly accepted this plea but for the fact that even as per the version, they came to know of the wrong despatch even before filing the Bs/E and hence instructed their Agents to file the Bs/E for the correct description. If that be so, there is no reason for them to claim duty free clearance against those invalid licences. This does not speak well of their behaviour. We are, therefore of the view that penalty for their attempt at unauthorised import can be justified on this ground. However, since the main charge of mis-declaration has been held by us as not sustainable, we deem it proper to reduce the penalty to Rs. 5,000/- (Rupees five thousand) against each Bs/E as against Rs. 90,000/- imposed by the Collector.
10. As regards the request for re-export the goods without fine, the matter has been carefully considered by us. Admittedly, in this case, the goods have not been covered by a valid licence, and hence they are liable for confiscation under Section 111(d) of the Customs Act. Moreover, they were aware of the wrong despatch of the goods even at the time of filing the Bs/E, and hence they ought not to have attempted to clear the goods under invalid licences carrying duty free benefit. Once, the goods are held liable for confiscation, the goods can be confiscated or allowed redemption for home consumption or for export subject to such conditions as may be prescribed by the adjudicating authority. In this case, the goods have been imported under invalid licences, of which they were aware at the time of filing the Bs/E itself. Once, the goods are held liable for confiscation, if they are allowed to be redeemed, they can be subjected to such conditions as may be prescribed. One such condition may be to re-export the goods with suitable fine. The citation made by the learned Advocate is not on all fours applicable to the present case, where the goods imported are admittedly not covered by valid licences and they were aware of this at the time of filing the Bs/E. We, however, would deem it just and proper to allow the appellants to redeem the goods with a condition of re-export and on payment of fine of Rs. 50,000/- (Rupees fifty thousand) in respect of each of the four consignments.
11. The appeal is disposed of in the above terms.