ORDER
P.K. Kapoor, Member (T)
1. This is an appeal against the order passed by the Additional Collector of Customs, Air Cargo Unit, New Delhi. Briefly stated the facts of the case are that the appellants filed Bill of Entry No. 230304 dated 22-5-1990 for the clearance of Computer Peripherals and Hard Disk Drives collectively valued at Rs. 23,06,693/- imported against Import-Export Pass Book Licence No. 0000684 dated 17-10-1999. In their letter dated 30-7-1990 the appellants informed the Assistant Collector that on checking the items imported in the consignment with reference to the list attached to the licence, they had discovered that even though in terms of quantity the imported H.R. Monitors valued at Rs. 4,77,126/- were covered by the list appended to the Import-Export Pass Book, the value of imported Monitors was in excess of the balance available against the relevant entry in the list attached to the pass-book.
2. On 13-9-1990 the Assistant Collector, Air Cargo Unit issued a show cause notice to the appellants pointing out various discrepancies in debiting the Pass Book and requiring them to show cause as to why duty should not be demanded on certain goods which were not covered by the Import-Export Pass Book. The show cause notice also alleged that import duty was recoverable on 3 Nos. H.D./F.D. Controller Cards and 78 Nos. High Resolution Monitors totally valued at Rs. 4,83,786.21 not being covered by the Import-Export Pass Book were liable to confiscation under Section 111(d), (1) and (m) of the Customs Act, 1962 read with clause 3 of Imports (Control) Order, 1955. The appellants were also asked to show cause as to why penalty should not be imposed on them under Section 112(a) and (b) of the Customs Act, 1962. In their reply to the show cause notice and also during the course of the personal hearing before the adjudicating authority, the appellants denied the charges and claimed that they had suo moto detected the clerical mistake in making the debit and credit entries in the list appended to their Import-Export Pass book, and the concerned Customs officers who were required to check each entry had also failed to detect the errors which resulted on incorrect balance being reflected in respect of certain items. They contended that the number and value of items which had been found to be in excess of the quantity/value covered by the Import-Export Pass Book was insignificant as compared to the overall quantity and value of the goods which they were permitted to import. However, in the impugned order the Additional Collector held that the appellants had failed to monitor their import requirements according to the quantity and value specified in respect of the various items by the Licensing authority. While dropping the demand for duty in respect of certain past clearances, he held that 78 Nos. H.R. Monitors and H.D./F.D. Controller Cards collectively valued at Rs. 3,42,229/- as liable to confiscation under Section 111(d) and (m) of the Customs Act, 1962. He also held that the appellants as liable to penalty under Section 112 of the Customs Act. He gave the appellants the option to redeem the goods on payment of a fine of Rs. 5 lakhs and imposed a penalty of Rs. 1 lakh on the importer.
3. On behalf of the appellants, the learned Consultant Shri A.S. Sunder Rajan appeared before us. He stated that the adjudicating authority had erroneously invoked sub-sections (m) and (1) of the Customs Act, 1962 since admittedly there was no mis-declaration on the part of the appellants and no excess goods were found in the consignment. He further contended that the appellants had themselves found certain discrepancies with regard to the quantity and value debited against certain entries in their Import-Export Pass Book and in their letter dated 30-7-1990 addressed to the Assistant Collector, while pointing out the errors which had resulted in certain excess goods having been ordered they sought the permission to re-export the excess quantity of 78 Nos. H.R. Monitors valued at Rs. 4,77,126/-. Shri Sunder Rajan contended that the concerned Customs Officers who were required to check each and every debit and credit entry in the licence, were equally responsible for discrepancies in regard to the entries relating to certain imports. He added that having regard to the overall face value of the Import-Export Pass Book which was of the order of Rs. 10 crores, and the fact that the licensing authority would have amended the licence to cover goods required for export-production no penalty was warranted. He stated that the appellants were prepared to re-ship the excess goods to the supplier and repatriate the foreign exchange equivalent to their cost. He stated that the appellants still had a balance of Rs. 50 lakhs for imports of other goods. On these grounds he pleaded that the impugned order imposing redemption fine to the tune of Rs. 5 lakhs and penalty of Rs. 1 lakh on the importers may be set aside.
4. On behalf of the Revenue the learned S.D.R. Shri Ashok Mehta stated that even though the concerned Customs Officers are required to check the debit entries made in the import licence from time to time, it is the importer who has to ensure that any goods ordered for import are covered by the licence. He contended that the goods in question were admittedly not covered by the licence held by the appellants since 10% flexibility was not permissible when quantity was specified in the licence in respect of the goods in question. He argued that foreign exchange having been remitted towards the cost of the goods in question there would be no case for acceding to the appellant’s request for re-export of the goods. He pleaded for the rejection of the appeal on the grounds that the offending goods were not covered by the licence held by the appellants and they had also not taken any steps to get the licence amended.
5. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that the appellants have not, disputed that 78 Nos. H.R. Monitors and 3 Nos. H.D./F.D. Cards collectively valued at Rs. 4,83,786.21 were in excess of the balance in terms of quantity/value in respect of these items available in the Import and Export Pass Book issued to the appellants. The appellants have claimed that against the relevant Import-Export Pass Book No. 0000684 they were permitted to import personal computer system peripherals of a value – of over Rs. 9 crores and they were expected to export goods valued at over Rs. 19 crores manufactured out of the imported components. They have stated that against the licence numerous consignments were imported and the licence was also amended on a number of occasions by the licensing authority. On account of the imports effected against the licence and the amendments made by the licensing authority from time to time numerous debit and credit entries had to be made and the balance available against the licence in terms of quantity and value had to be worked out on each occasion. Thus appellants case is that the excess goods which are the subject matter of this appeal were imported on account of a bona fide error on account of certain discrepancies having crept in the debit and credit entries made from time to time and incorrect balances having been struck out. They have claimed that they had on their own detected the error and addressed a letter on 30-7-1970 to the Assistant Collector seeking permission to re-export the excess goods.
6. It is seen that the appellants do not dispute that 77 Nos. H.R. Monitors and 3 Nos. H.D./F.D. cards collectively valued at Rs. 4,83,786.21 were not covered by the import and export pass book held by them. We are not impressed by the appellants’ argument that they could not be held responsible for the import of the disputed goods since the entries made in the Import-Export Pass Book in respect of imports effected from time to time and the available balance were being checked by the concerned customs officer. In our view, it is entirely the responsibility of the importer to ensure that licenceable goods are imported against appropriate licence. Hence we do not find any infirmity in the order passed by the Additional Collector holding that the goods in question had been imported in contravention of clause 3(2) of Import (Control) Order, and rendering them as liable to confiscation under Section 111(d) of the Customs Act, 1962. We, however, do not agree with the finding of the adjudicating authority that the goods were liable for confiscation under Section 111(m) of the Customs Act, 1962, since there is no finding that the imported goods were misdeclared either in respect of quantity or description in the Bill of Entry filed under Section 46 of the Customs Act, 1962.
7. The appellants have argued that the adjudicating authority should have acceded to their request for re-export of the offending goods since the foreign supplier had agreed to take back the goods and re-patriate the foreign exchange. In this regard, it is seen that para 118 of the Hand Book of Procedures, April 1990 – March, 1993 (Import and Exports Promotion) reads as follows :-
“The fine/penalty imposed in respect of unauthorised imports is likely to be heavy and may lead to even confiscation of the goods. In special circumstances the importers/owner of the goods may be allowed to re-ship the goods, but in such cases the importer/owner of the goods will be liable to pay fine/penalty etc. Therefore, the importers should, in their own interest, ensure that what is being imported by them into the country is in strict conformity with the licence description in every respect and the consignment is neither in excess of the licenced value or quantity limitations nor different in any form what is authorised to be imported.”
Having regard the provisions of para 118 of the Hand Book of Procedures April, 1990 -March, 1993 (Import and Export Promotion) and taking into account the fact that the cost of the goods in terms of foreign exchange has been remitted we are of the view that the decision of the adjudicating authority not to exercise the option to permit the re-export of the offending goods cannot be questioned.
8. Even though we have held the offending goods as liable to confiscation under Section 111(d) of the Customs Act, 1962 we are of the view that the appellants had placed the order on the foreign supplier for the goods in question on the bona fide belief that there was adequate balance available in their Import-Export Pass Book to cover the goods. It is seen that the appellants were permitted to import goods valued over Rs. 9 crores against their Import-Export Pass Book. They imported a large number of consignments against the Pass Book and while debiting the quantity and value of the goods imported from time to time certain discrepancies had crept in as a result of which when the disputed goods were ordered the appellants were under the impression – that the balance available in the Pass Book both in terms of value and quantity was adequate to cover the goods. In the case of
Akbar Badmddin Jiwani v. Collector of Customs, reported in 1990 (47) E.L.T. 161
, the Honourable Supreme Court has observed that discretion to impose penalty must be exercised judicially since penalty is ordinarily imposable when a party acts deliberately in defiance of law or is guilty of contumacious or dishonest conduct. Para 59 of the said judgment is reproduced below :-
“59. We refer in this connection the decision in
Merck Spares v. Collector of Central Excise & Customs, New Delhi
;
Shama Engine Valves Ltd., Bombay v. Collector of Customs, Bombay
and
Madhusudan Gordhandas & Co. v. Collector of Customs, Bombay
wherein it has been held that in imposing penalty the requisite mens rea has to be established. It has also been observed in
Hindustan Steel Ltd. v. State of Orissa -1978 (2) E.L.T. (J 159) (S.C.)
by this Court that :-
‘The discretion to impose a penalty must be exercised judicially. A penalty will ordinarily be imposed in cases where the party acts deliberately in defiance of law, or is guilty of contumacious or dishonest conduct, or acts in conscious disregard of its obligation; but not, in cases where is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute.'”
9. In the instant case, as observed by us earlier, the appellants had placed the order for the offending goods in the bona fide belief that the balance available in their Import and Export Pass Book was adequate. Hence, we hold that imposition of penalty under Section 112 of the Customs Act, 1962 on the Appellants was not warranted.
10. In view of the above discussion the impugned order confiscating the goods only under Section 111 (d) of the Customs Act, 1962 is upheld. However, having regard to the facts and circumstances of the case, we reduce the redemption fine to Rs. 2,50,000/-(Rupees Two lakhs fifty thousands only). We also set aside the order imposing the penalty of Rs. 1,00,000/- (Rupees one lakh) on the appellants.
11. The appeal is disposed of in the above terms.