IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:11.11.2009 CORAM: THE HONOURABLE MR.JUSTICE F.M.IBRAHIM KALIFULLA AND THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM C.M.A.No.1028 of 2007, M.P.No.1 of 2007 and M.P.No.l of 2009 Commissioner of Customs(Exports) Custom House Chennai 600 001 ..Appellant vs 1.M/s Ishwar Impex rep.by its Proprietor Sunil Khemka No.38, S.N.S.Plaza, 3rd Floor No.41, Kumara Krupa Road Bangalore 560 001 2.Customs Excise & Service Tax Appellate Tribunal South Zonal Bench Sashtri Bhawan Annexe 1st Floor, 26, Haddows Road Chennai 600 006 ..Respondents Civil Miscellaneous Appeal is filed against the impugned Final Order No.908/2006 dated 21.09.2006 passed by the 2nd respondent, Chennai. For appellant : Mr.P.Mahadevan Senior Standing Counsel For respondents : Mr.Joseph Prabakar (for R1) JUDGMENT
(Judgment of the Court was made by F.M.IBRAHIM KALIFULLA,J.)
The Commissioner of Customs (Exports) is the appellant. The challenge is to the Final order No.908/2006 of the CESTAT dated 21.9.2006 passed in Appeal No.C/145/2006.
2. (a) The brief facts which are required to be stated are that one M/s Sandip Exports Limited who is holder of advance licence imported 3061.82 Kgs of “Mulberry Raw Silk” from China under Bill of Entry No.39260 dated 08.09.2003 and Invoice dated 08.08.2003 where the value of goods was mentioned as 37507 US$. The advance licence is dated 22.3.2002. It prescribed for the benefit of duty exemption under Customs Notification No.48/99 dated 29.04.99. The Bill of Entry declared the value of the goods as 39803.66 US$. The assessable value of the goods in Indian Rupees was Rs.18,49,278/-. The importer, however, did not come forward to clear the goods for a long time. The consignment was seized by the officers of SIIB on 01.10.2004 and was liable for confiscation under the Customs Act. Be that as it may, the investigation by DRI revealed that M/s Sandip Exports Limited was a continuous defaulter and was misusing the import licence dated 22.03.2002 on very many aspects. Therefore, a show cause notice was issued to M/s Sandip Exports Limited by the Commissioner for recovery of duty of Rs.20,34,882/- which was covered by the above referred to Bill of Entry. M/s Sandip Exports Limited did not respond to the show cause notice nor did they appear for the personal hearings before the Commissioner.
(b) In the abovestated background, the first respondent herein made a representation on 28.03.2005 contending that the supplier (Chinese party) had recalled the original documents from the bank and issued revised documents in the name of the first respondent in their letter dated 12.12.2003 and on that basis requested the Commissioner for amending the import documents. A similar claim had already been made in the first respondent’s letter dated 31.07.2004. Since there was no response from the Commissioner, the first respondent approached this Court by way of Writ Petitions, in W.P.No.29860/2004 and W.P.No.1827/2006. A common order came to be passed in the said Writ Petitions on 31.03.2006 wherein while directing the Commissioner to adjudicate on the show cause notice dated 11.02.2005 issued to M/s Sandip Exports Limited and in the said proceedings to permit the first respondent herein to participate and prove its claim. The Commissioner passed the order in Original No.5094/2006 dated 04.05.2006 wherein the Commissioner passed the following order:
“1. I order the denial of benefit of duty exemption claimed under Customs Notification No.48/99 dated 29.04.1999 for the consignment covered under the Bill of Entry No.39260 dated 08.09.2003.
2. I demand the differential duty of Rs.20,34,882/- for the goods covered under the Bill of Entry No.39260 dated 08.09.2003 be paid by them along with interest applicable as per Sec.28 AB of Customs Act, 1962.
3. I order the confiscation of goods totally valued at Rs.18,49,278/- under Section 111 (m)and 111(o) of the Customs Act 1962. However I give the option to M/s Sandip Exports Ltd, Kolkata to redeem the goods on payment of fine of Rs.30,00,000/- (Rupees Thirty lakhs only).
4. I impose a penalty of Rs.8,00,000/-(Rupees Eight Lakhs only)under on M/s Sandip Exports Ltd, Kolkata under Section 112(a) of the Customs Act, 1962.
5. I repudiate the claim of request for change of title made by M/s Ishwar Impex, Bangalore in respect of the subject goods.”
Aggrieved against para 5 of the said order, the first respondent herein preferred an appeal before the second respondent herein. It is relevant to note that the original importer, namely, M/s Sandip Exports Limited was not impleaded as a party to the said appeal.
(c) By the order impugned in this appeal dated 21.09.2006, the Tribunal after holding that undisputedly the first respondent had retired the relevant shipping documents (revised by the Chinese party in their favour) from the bank and produced the same before the adjudicating authority and also having undertook to pay the appropriate customs duty and redemption fine, they are entitled to claim ownership of the goods. The Tribunal by following its own earlier order passed in Order-in-Original No.3567/2005 dated 21.3.2005 relating to one M/s Adani Exports Limited and by reducing the redemption fine for obtaining the release of the goods from the level of Rs.30 lakhs to Rs.2 lakhs, directed the appellant to release the goods in favour of the first respondent.
3. At the time when this appeal was entertained the only question of law framed was “Whether the Tribunal is right in reducing the penalty, under the facts and circumstances of the case?” In the grounds of appeal, however, the appellant had raised yet another question as to the ownership of the goods.
4. Having heard Mr.P.Mahadevan, learned standing counsel for the appellant and Mr.Joseph Prabakar, learned counsel for the first respondent we are of the opinion that the other question of law raised by the appellant as to the ownership has also got to be examined in this appeal for the proper disposal of the appeal. The said question which is also to be examined is as under:
“Neither the Steamer Agents applied for amendment of IGM nor M/s Sandip Exports relinquished the title as per the available records. The 1st respondent have no right to claim the seized goods for release/reexport when he is not at all party in this case.”
5. On the above questions of law when we heard Mr.P.Mahadevan, learned standing counsel for the appellant, the learned counsel submitted that mere participation of the first respondent in the adjudication proceedings by itself did not recognize his right to seek for release of goods and on the other hand, it was incumbent upon the first respondent to establish his right vis-a-vis the original importer, namely, M/s Sandip Exports Limited. The standing counsel therefore submitted that the Tribunal failed to consider the said question in the proper perspective and therefore, it calls for interference. The learned counsel also submitted that the reduction of redemption fine was not justified and therefore, on that ground as well the impugned order should be set aside and the Order-in-Original should be restored.
6. As against the above submissions Mr.Joseph Prabakar, learned counsel for the first respondent contended that the first respondent was only aggrieved against para 5 of the ultimate order of the adjudicating authority dated 04.05.2006 and therefore, there was no necessity for the first respondent to implead the original importer M/s Sandip Exports Limited, that when once the supplier, recognised the first respondent as the buyer and necessary change in IGM were carried out, the right of M/s Sandip Exports Limited as an importer automatically ceased and therefore, the Tribunal was fully justified in having recognised the status of the first respondent as importer of the goods under confiscation and consequently, the release of the same on payment of differential duty of Rs.20,34,882/- as well as the reduced redemption fine of Rs.2 lakhs was well justified. The learned counsel therefore contended that the order impugned in this appeal does not call for interference.
7. Having heard the counsel for respective parties we find that the order is liable to be set aside substantially on two grounds. In the first place, we are of the view that the Tribunal ought not to have passed the impugned order in the absence of M/s Sandip Exports Limited. Therefore, for non-impleading of the proper party, the order impugned is liable to be set aside. We say so because when we peruse the Order-in-Original we find this question as to the entitlement of the original importer to the goods imported has been considered by the original authority who has found that there was no relinquishment of the goods by the original buyer of the title to the goods, that it can never relinquish the title to the said goods inasmuch as the goods have already been seized by the Customs Authority for infringement of the conditions of advance licence, that in law, the supplier had not recalled the documents in respect of the said goods, that the socalled amendment of manifest by the overseas supplier was after the efflux of time, that too after the seizure of the goods and that the recalling of the documents by the overseas supplier from the importer’s bank could have been made only on the advise of the importer on the ground that the importer relinquished the title to the goods. That apart, the original authority, while passing the order in original had imposed the penalty of Rs.8 lakhs apart from the additional duty and redemption fine for the release of the goods of M/s Sandip Exports Limited. As far as the first respondent is concerned, the first respondent would seek for release of goods on payment of the additional duty along with the redemption fine. If that be so, for the recovery the penalty of Rs.8 lakhs the appellant will have to look upon the original importer, namely, M/s Sandip Exports Limited. In the said circumstances, we are of the view that the presence of M/s Sandip Exports Limited as a party to the proceedings before the Tribunal was imminent. Though the learned counsel for the first respondent would contend that M/s Sandip Exports Limited did not appear before the original authority and therefore, no useful purpose would be served by impleading him as a party, it will have to be stated that the impleading of the party to the proceedings on the principle as to whether such a party is a necessary party or not to the proceedings cannot be determined based on the party’s option to avail the opportunity to participate in the proceedings. Therefore, the said contention of the learned counsel for the first respondent cannot be accepted.
8. After impleading the original importer in the appeal proceedings before the Tribunal it is for M/s Sandip Exports Limited to either avail the opportunity or to abstain itself from participating in the proceedings. But so long as the said party is a necessary party to the proceedings, the disposal of the appeal in its absence i.e., without even being impleaded as a party, in our considered opinion would vitiate the very proceedings. We therefore hold that M/s Sandip Exports Limited ought to have been impleaded as a party to the appeal proceedings before the Tribunal.
9. As far as the merits of the issue which has been decided in the impugned order is concerned since at the instance of the first respondent the only question raised before the Tribunal was as regards his entitlement to get the goods released and as to what rate of redemption fine such relief should be ordered, we find that the Tribunal has not dealt with the said issue in the proper perspective.
10. We find that when the question as to the ownership of the goods imported is substantially in issue, as such, the decision on that issue will have far reaching consequences for the determination of the release of the goods, the levy of duty, the levy of redemption fine in lieu of confiscation and for the levy of penalty for improper import. The Tribunal ought to have examined the question as to the rights of the original importer, namely, M/s Sandip Exports Limited and the present claim of the first respondent who seeks to virtually subrogate itself to that of the original importer based on certain documents stated to have been obtained from the overseas supplier.
11. That apart, as pointed out by the original authority in the Order-in-Original where very many circumstances relating to the role to be played by the original importer for the purpose of transfer of ownership of the goods imported, the consequences of the seizure of the goods etc., are very vital factors which should have been examined by the Tribunal before ordering its release.
12. On a perusal of the Tribunal’s order, we find that it is not solitary occasion where M/s Sandip Exports Limited has committed a default which had occasioned the first respondent to claim for release of the goods imported in its place. The order relied upon by the Tribunal was also related to the very same importer (viz)M/s Sandip Exports Limited where also one M/s Adani Exports Limited came forward to get the goods released and was also successful in getting the goods released. Therefore, we feel that the Tribunal ought to have examined those issues with little more care and caution before considering for the release of the goods.
13. Having regard to the above circumstances, while answering the questions in the affirmative, we set aside the order impugned in this appeal. However, the matter is remitted back to the second respondent Tribunal for deciding the appeal afresh. Before passing final orders in the appeal, the Tribunal shall implead
1.M/s Sandip Exports Ltd.,
Flat 5, II Floor,
220, A.J.C.Bose Road,
Kolkata-17.
2.M/s Sandip Exports Ltd.,
No.16A, Amrita Banerjee Road,
Kolkatta -700 026.
The Tribunal shall dispose of the appeal within two months from the date of its service of notice on the newly impleaded party.
14. The learned counsel for the first respondent placed reliance upon two other documents which emanated from the office of the Customs Department, namely, from the Assistant Commissioner of Customs, SIIB and Assistant Commissioner of Customs, (GR-7B) dated 19.4.2007 and 11.1.2008. The learned counsel also placed before this Court Bill of Entry No.458810 dated 11.5.2007 and TR6 Challan dated 21.5.2007. By referring to the above documents, the learned counsel for the first respondent contended that the right of the first respondent to get the goods released was fully established inasmuch as in the letter dated 11.1.2008 the Assistant Commissioner of Customs himself called upon the first respondent to take steps for implementation of the order of the Tribunal. According to the learned counsel, when the office of the first respondent themselves have accepted the order of the Tribunal, no interference is called for in this appeal. We are not in a position to accept the said submission of the learned counsel.
15. It is true that the above referred two letters which have emanated from the office of the Assistant Commissioner of Customs gives an impression as though the first respondent can be allowed to get the goods released as per the order of the Tribunal dated 21.9.2006, but when substantial issues and rights of the first respondent to claim the release of the goods in its favour are the subject matter of consideration in this appeal, we are at a loss to understand as to how the subordinate officers of the appellant could write such communications to the first respondent. It only shows lack of coordination amongst the officers of the appellant themselves while dealing with such matters where issues are pending consideration before the higher forum. We are not therefore persuaded to accept the submissions of the learned counsel for the first respondent. It is however open to the first respondent to raise all contentions available to it before the Tribunal after the remittal under this order and put forth his claim and it is for the Tribunal to consider the claim of the first respondent and pass orders in accordance with law.
16. This appeal is allowed with the above direction to the second respondent. No costs. Consequently, connected pending miscellaneous petitions are disposed of.
(F.M.I.K.J.) (T.S.S.J.)
11-11-2009
index:yes
internet:yes
sal
To
1.M/s Ishwar Impex
rep.by its Proprietor Sunil Khemka
No.38, S.N.S.Plaza, 3rd Floor
No.41, Kumara Krupa Road
Bangalore 560 001
2.Customs Excise & Service Tax Appellate Tribunal
South Zonal Bench
Sashtri Bhawan Annexe
1st Floor, 26, Haddows Road
Chennai 600 006
F.M.IBRAHIM KALIFULLA,J.
and
T.S.SIVAGNANAM,J.
(sal)
C.M.A.No.1028/2007
& M.P.No.1/2007
& M.P.No.1/2009
11-11-2009