ORDER
Moheb Ali M., Member (T)
1. These four appeals have been filed before the Tribunal in terms of Section 129A of the Customs Act by the four captioned appellants. They arise out of the same Order No. 18/Collr./1986, dated 21-4-86 under reference F. No. VIII/10-12/Collr./85 passed by the Collector of Customs, Ahmedabad. They involve common points of law and hence they were heard together and are being disposed off by this common order.
2. The brief facts necessary for the consideration of these appeals are that M/s. L.D. Textiles Industries Limited obtained two advance licences under the Duty Exemption Scheme envisaged in Appendix 19 of the 1983-84 Import Policy. These licences were 2962655, dated 5-8-83 for 512.50 M/Ts of man-made fibres and 2963408, dated 4-6-84 for 2050 M/Ts of man-made fibres with duty exemption benefit within the overall limits of 550 and 2200 M/Ts respectively. One of the conditions of these licences was that the licence holders should export 500 M.T. of man-made spun yarn of Rs. 75 lakhs of fob value and 2000 M.Ts. of man made spun yarn valued at US $ 29,00,000/- as envisaged by the DEEC Scheme. Against the first import licence M/s. L.D. Textile Industries Limited imported 2050 bales of manmade fibres of net weight 512.50 M.Ts. valued at Rs. 82,71,459/- under Bill of Entry No. 63, dated 30-3-84 per M.T. Stratjfyne at Veraval Customs House and cleared the same for home consumption. The representative sample of the goods from the consignment was drawn by the Veraval Custom House and was tested in the Custom House Laboratory at Kandla which gave the result that the goods were wholly manmade fibres of cellulosic origin (viscose). The consignments were cleared free of duty under Customs Notification No. 117/8, dated 9-6-78 as amended. For availing of exemption under this Notification, the importers were issued the Duly Exemption Entitlement Certificate (DEEC) Book No. 5088/Kandla, dated 6-8-83. This import entailed the export obligation of shipping 500 M/Ts of yarn spun out of imported manmade fibres of British counts 15s ranging to 60s of f.o.b. value of Rs. 75,00,000/-. However, the importers could not fulfil the export obligation and they by their letter dated 26-2-85 signed by Shri Yogesh Mehra addressed to the Superintendent of Customs, Veraval, initimated that due to our non-ability to comply with the export obligation, forced by factors beyond our control, since there was an illegal strike at our factory at Ankleshwar, which lasted more than 90 days, we were not in a position to manufacture and ship our goods on time. They thus paid the duty of Rs. 62,84,656.54 by bank draft drawn in favour of Veraval Customs.
3. Against the second licence No. 2963408, dated 4-6-84, M/s. L.D. Textile Industries Limited imported two consignments of 3100 and 3000 bales weighing 812 M/Ts and 750 M/Ts valued at Rs. 1,51,09,6317- and Rs. 1,30,30,0047- respectively per m.v. Strathfyne and cleared them under Bills of Entry No. 22, dated 30-10-84 and 23, dated 30-10-84 respectively. The samples were drawn from these two consignments and sent to the Kandla Customs House for test. The test reports revealed that the goods were dull white entangled mass of short staple fibre (discontinuous) wholly made of manmade fibres of cellulosic origin (viscose). These two consignments were also cleared free of duty vide the Duty Exemption Entitlement Certificate Book 7003/Kandla 4-6-84 and in terms of the aforesaid Customs Notification No. 117/78, dated 9-6-78 as amended. These two imports entailed export of 2000 M/Ts. of spun yarn made out of manmade fibre valued at US$ 29 lakhs within a period of six months from the date of clearance of first consignment in India against the advance licence.
4. Prior to 13-3-85 the Customs Authorities of Ahmedabad Collectorate received information that M/s. L.D. Textiles Industries Limited, Ankleshwar had imported large quantities of polyester staple fibres under the advance licence scheme and they were selling the same in the open market through misdeclara-lion of goods as non-cellulosic synthetic waste. The information further indicated that the goods sold were being sent to trucks under cover of fictitious consignees. On 13-3-85, a specific information was received that one truck containing 40 bales of polyester staple fibre was leaving Ankleshwar for Ahmedabad. Thereafter, the truck driver was given fictitious documents describing 40 bales as non-cellulosic synthetic waste and he was directed to take the lot to Bhiwandi via Bombay and hand over the goods near a petrol pump to a person who would produce a copy of the said consignment note. This was done and the said 40 bales were handed over and transferred to another truck having Kerala registration.
5. These facts confirmed the information received against M/s. L.D. Textile Industries Limited that they were selling the goods imported by them under the advance licence scheme. Accordingly, the Headquarters Preventive party was sent to Ankleshwar on 14-3-85 to check the stock and accounts of M/s. L.D. Textile Industries Limited of the fibre imported by them in terms of the Duty Execution Export entitlement scheme. The check of the accounts revealed that their books of accounts showed Nil balance of the raw materials imported by them. Therefore, their godown was searched and the search yielded 2275 bales of polyester fibre of different makes. These bales included 365 bales of polyester staple fibre imported by M/s. L.D. Textile Industries Limited in April, 1984. All these 2275 bales were seized under Panchnama dated 15-3-85 as the same were liable to confiscation. Further inquiries revealed that the importers were having another godown outside their factory premises in Shed No. A-l/7307. On search of this godown, it was found that it contained 1837 bales of Korean polyester staple fibre of brand “Eslon”. These 1837 bales were also seized under a panchnama dated 15-3-1985. The Customs officers also seized records relevant to the enquiry, recorded statements and conducted investigations. The scrutiny of the seized documents revealed that M/s. L.D. Textiles Industries Limited sold or transferred 1978 bales to different parties including the other captioned appellants. The investigations further confirmed that these 1978 polyester fibre bales were the same as imported under Bills of Entry No. 63, dated 30-3-84 and Nos. 22 and 23, dated 30-10-84.
6. After the investigations were completed the Collector of Customs, Ahmedabad issued the show cause notice dated 22-5-85 held the enquiry and passed the impugned adjudication order dated 21-4-86 under which he ordered absolute confiscation of 4486 bales plus one bale in loose condition of polyester fibres seized on 15-3-85,15-4-85 and 3-5-85 from the possession of M/s. L.D. Textile Industries Limited. He also confiscated absolutely 49 bales of polyester staple fibre seized from M/s. P.G. Textile Mills Limited on 16-3-85 and also 171 bags of yarn seized from them on 18-4-85. Similarly he ordered absolute confiscation of 5 bales of PSF seized from M/s. Arunoday Mills Limited and 6 bales of polyester fibre seized from M/s. Jayashree Textiles Limited. He demanded duty amounting to Rs. 4,20,88,370.16 in respect of Bill of Entry No. 63, dated 30-3-85 for 2050 bales of polyester fibre after giving the credit of the duty already deposited by M/s. L.D. Textile Industries Limited through the bank draft in favour of Veraval Customs House with draft in favour of Veraval Customs House with their letter dated 26-2-85 and the amount of duty paid by them after the search of their premises in March, 1985. The Collector also demanded interest at 18% on this amount of duty from the date of clearance of the imported consignments through Veraval Customs House till the actual date of payment of duty. He further demanded duty of Rs. 6,99,91,236.08 in respect of Bill of Entry No. 22, dated 30-10-84 for 3100 polyester fibre bales with interest at 18% on this amount from the date of clearance of the goods through Veraval Customs House till the date of actual payment of duty. In addition, the Collector of Customs, demanded Customs duty amounting to Rs. 6,32,60,298.30 in respect of Bill of Entry No. 23, dated 30-10-84 covering 3000 bales of Polyester Staple fibre bales with 18% interest on the amount from the date of clearance of the goods till the date of payment of duty.
7. The Collector further held that the interest was determined with reference to para 21 of Appendix 19 of the Import Policy for 1984-85. He observed that the duty figures as shown in the show cause notice had not been challenged in the proceedings. He further held that the demands had been ordered under Section 28 as well as under Section 143A of the Customs Act. The demands for the duty in respect of Bills of Entry Nos. 22 and 23, dated 30-10-84 were made after the provisional assessments of the goods covered by these two Bills of Entry was finalized by the Collector under his impugned order. The order of confiscation and levy of duty was made as part adjudication without prejudice to the action for levy of penalty on the importers and other respondents as mentioned in the show cause notice. Feeling aggrieved by the aforesaid decision of the Collector the four appellants have approached the Tribunal by way of appeals.
8. We have heard both sides extensively. Learned Advocate Shri Sridharan appeared for M/s. L.D. Textile Industries. Shri Chandrasekharan, senior Advocate, for the Revenue.
9. During the course of argument, Shri Sridharan raised the following issues:-
(a) The Collector who adjudicated the case has no jurisdiction to do so;
(b) Section 28 is not invokable when the assessments were provisional;
(c) Section 143A invoked by the Collector was not notified in the official gazette hence not invokable at the relevant time;
(d) The allegation of misdeclaration of goods at the time of import is misplaced. There was no misdeclaration whatsoever. Larger period of limitation cannot be therefore invoked in respect of the goods cleared under Bill of Entry No. 63;
(e) Duty is not demandable when goods are absolutely confiscated.
10. On behalf of the other appellants from whose possession PSF was absolutely confiscated along with a quantity of polyester yarn, it was argued :-
(a) The goods are not liable to confiscation as no nexus has been shown between the goods confiscated and the ones imported by M/s. LDT. The evidence adduced by the Department is not enough to connect the goods with the imported goods.
11. We have taken the rival contentions and deal with them in the same sequence as stated above. Jurisdiction :
12. The question of jurisdiction goes to the root of the matter and therefore can be raised at any time, we are told. We heard the various pleas in this regard even though the Commissioner who adjudicated the case was not subjected to any such pleas. Our only comment is that the lawyers and consultants would do well to raise the issue of jurisdiction initially and save everyone’s time instead of sprinning surprises on the unsuspecting Appellate Authorities who after hearing elaborate pleas for the first time on the subject remand the matters with monotonous regularity to the lower authority with directions to have the adjudication done by a proper authority. Such colossal waste of time. But then, time has lost its sense long ago.
13. It is argued that Collector of Customs, Gujarat has no jurisdiction to adjudicate the case. It is however not argued that the Collector has no jurisdiction to issue a show cause notice asking the appellants to show cause to him as to why so and so punishments should not be inflicted on them and why such and such demands should not be raised against them. Show cause notice issued thus, appears to be fine; the consequent adjudication is not. The ld. Advocate filed considerable case law to suggest that show cause notices issued by the officers not competent to issue are not valid. Indeed. But it is difficult to comprehend how these learned legal pronouncements are relevant when the appellants do not question the validity of the show cause notice issued by the Collector of Customs, Gujarat. We may let if pass.
14. The Central Government by virtue of powers conferred on it under Section 4 of the Customs Act, 1962 installed, the Collector of Customs, Gujarat under Notification No. 250-Cus., dated 27-8-83 under the said Notification whose empire extended to whole of State of Gujarat, the territories of Daman and Diu of the Union Territory (U.T.) of the Goa, Daman and Diu and the UT of Dadra and Nagar Haveli. The Central Government, however, kept KFTZ and the area within a radius of 8 Kms all around the zone, strictly outside Collector of Customs Gujarat’s rather expansive empire. This Notification does not call him Collector of Customs (Preventive). It simply calls him Collector of Customs, which only means what it says.
15. Without as much as referring to this Notification, the Central Government issued another Notification No. 252-Cus. under the same powers referred to above appointing Collector of Central Excise, Rajkot as Collector of Customs within his own jurisdiction. This was again on 27-8-83.
16. Now we have a situation where there were two Collectors of Customs for the same area i.e. Rajkot Collectorate, Collector of Customs, Gujarat and Collector of Customs, Rajkot. Two swords in the scabbard is not a very brilliant idea.
17. From 1st September, 1983, by a mere letter signed by the Under Secretary to the Government of India (without specifying whether it is under any particular powers conferred on any particular authority) someone re-designated Collector of Customs, Gujarat as Collector of Customs (Preventive) Gujarat and assigned him anti-smuggling work through the length and breadth of Gujarat, UT of Goa, Daman Diu Dadra Nagar Haveli. The letter however does not say whether KFTZ and the area within a radius of 8 Kms. all around the zone, comes within the jurisdiction of this newly designated Collector of Customs (Preventive) Gujarat.
18. To complete the narration we may mention another communication dated 30-8-83. This time the CUS IV of the Board’s office communicated that Customs work other than anti-smuggling work will be looked after by Collectors of Central Excise, Ahmedabad, Baroda and Rajkot within their respective jurisdiction. Another feature of this communication is that it speaks of Collector of Customs and Excise, Ahmedabad as the one who would take of anti-smuggling work in the entire State of Gujarat. It does not speak of Collector of Customs, Gujarat. If all this is confusing, it is not our making.
19. A couple of questions do arise. Though when Notification No. 250-Cus., dated 27-8-83 issued by the Central Government under Section 4 of the Customs Act appointing an officer as Collector of Customs, can someone with unspecified authority re-designate and appoint him as Collector of Customs (Preventive) Gujarat? If for some reason it is done, does he cease to be a Collector of Customs Gujarat? In our opinion ‘No’.
20. The point is that Notification Nos. 250/83 and 252/83 empowered both the Collectors (Collector of Customs, Gujarat and Collector of Rajkot) act as Collectors of Customs with concurrent jurisdiction over Veraval a port through which the impugned goods were imported and brought to Baruch. Both could have exercised the powers of Customs Collector and both the them did at different points of time in respect of the same goods, when the goods were imported later when they were confiscated. We see no infirmity insofar as Collector of Customs, Gujarat action to adjudicate the case, which were seized in his jurisdiction.
21. The ld. Advocate relied on the decision of the Tribunal in the case of Orient Arts & Crafts – , wherein the Tribunal held that when Officers have concurrent jurisdiction the Officer who is seized of the matter first, will have ousted the other officers jurisdiction in regard to that particular matter. Fair enough. It is argued that the goods were cleared through Veraval Port (Out of three Bills of Entry presented for clearance two were provisionally assessed and one finally at that Port and further the bonds etc. were executed by the appellants for due performance of certain acts under Notification No. 117/78-Cus. as amended, with the Customs Authority at Veraval) and therefore the Customs authorities having jurisdiction over Veraval were seized of the matter. In such an event the jurisdiction of the Collector of Customs Gujarat is ousted.
22. We are not convinced. The case cited supra deals with a situation where the imported goods were not cleared and were still in the custody of the Bombay Customs Officers when the officers of M & P wing of Collector of Customs (Prev.) of Bombay thought it fit to interfere with the goods instead of passing on whatever information they have to collect to the Collector of Customs, Bombay. The Tribunal’s decision has to be read in that context. In the present case the diversion of imported material without fulfilling the export obligation has taken place much after the clearance of goods and the Officers having jurisdiction, conducted the investigation. The doctrine of ‘Committee of Courts’ referred to in the decision cited supra would have been applicable had both the Rajkot Collectorate and Gujarat Collectorate were seized of the same matter of diversion of goods.
23. The learned Advocate for the appellants argued that the Collector of Customs (Prev.) is assigned the work relating to anti smuggling and not relating to assessment.
24. The ld. Senior Counsel appearing for the Department rightly pointed out that the appellant’s attempt to redefine “anti-smuggling work” as one that constitutes only rummaging COFEPOSA town seizures dock intelligence etc. is erroneous. He argued that granting without conceding that Collector of Customs, Gujarat has only Preventive functions, in the present case, where the goods have become liable to confiscations under Section 111(o) of the Customs Act and so he has rightly exercised his jurisdiction by seizing the goods in Baruch and proceeding against them. Simply because he demanded the duty involved, it does not become an assessment function. The show cause notice already invokes Section 111(o) of the Customs Act. Smuggling in relation to any goods means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113. The ld. Senior Counsel submitted that the Collector was acting within the mandate given to him when he was stopping smuggling in his jurisdiction. We are in agreement with him.
25. On the subject of jurisdiction we may observe that there is no gainsaying the fact that Collector of Customs (Prev.) had jurisdiction over the Veraval port at the relevant time. The contention that the Collector (Prev.) did not have administrative contra over the officer at Veraval is unleviable so long as the Collector (Prev.) had jurisdiction over Veraval port.
26. The ld. Advocate for the appellants then argued that Section 28 of the Customs Act is not invokable when the assessments were provisional. It is a fact that out of three Bills of Entry presented at Veraval, two were provisionally assessed. The show cause notice issued by Collector of Customs, Gujarat seeks to demand duty under Section 28.
27. A similar question arose in the case of Reliance Industries Limited v. Union of India – . M/s. RIL cleared goods under Project Import Regulations, which were assessed provisionally. Without finalizing the Bills of Entry a show cause notice was issued alleging misdeclaration and demanding differential duty. This was challenged before the Hon’ble Bombay High Court. It was argued before the court that once the goods were cleared under Section 47 of the Customs Act, there is no scope to issue a show cause notice as such a step would amount to reviewing an order without going through the procedure laid down in Section 130 of the Customs Act. The Court rejected this contention after referring to the decisions in the Jain Sudh Vanaspati , Popular Dye Chem etc. stating “these decisions have no application to a provisional assessment and clearance, as in the present one, which has been granted under the Project Contract Regulation. By the very nature such assessments of goods are provisional”. The Hon’ble High Court therefore held that a show cause notice can be issued under Section 124 even without finalizing the assessment. This Single Judge decision was upheld by the Division Bench which observed that clearances made under Project Import Regulations are under Section 143 of the Customs Act. Continuity Bonds have been executed by the importers at the time of clearances. The situation in the present case is similar if not identical. The allegations in the show cause notice are two fold. The appellants misdeclared the goods at the time of import and secondly the appellants have not observed the conditions of the Notification under which duty free clearance was accorded thereby rendering the goods liable to confiscation. The appellants executed a bond at the time of clearance as in the case of RIL cited supra. If a show cause notice in the case of RIL can be held to have been rightly issued there is no reason as to why in the present case it should not be held to be so.
28. While on the subject we may also refer to the case of Paharpur Cooling Towers Pvt. Ltd. – . The Tribunal after distinguishing the decision in Union of India v. Godrej Boyce Manufacturing Company – 1989 (44) E.L.T. 3 (Bom.) and relying on Duncan Agro Industries v. Union of India – later affirmed by the Supreme Court, held that “an adjudicating authority cannot keep the issue and confirmation of demand hanging in the air to be quantified on the finalisation of the provisional aspects of the assessments”. The Tribunal held that it is perfectly in order to arrive at the quantum of duty while adjudicating a case even when the initial assessments were provisional. We are aware that this decision and the one in Duncan Agro are in the context of provisional assessments made under Central Excise Act. We have merely referred to these decisions to indicate that both in the Customs Act as well as in the Central Excise Act, action to proceed against the offending goods can be started and concluded even when the assessments were provisional. In the present case two Bills of Entry were provisionally assessed and one finally.
29. Much has been made out by the ld. Advocate that the Collector invoked Section 143A of the Customs Act while demanding duty in addition to Section 28 of the Customs Act. Section 143A even though was printed in bold letters in all the texts of Customs Act, it was not gazetted by way of issuing a notification at the relevant time. It is beyond anyone’s comprehension why it was not done. The fact remains that it was not. Fortunately, the Collector invoked Section 28 of the Customs Act as well while demanding duty. The fact that in addition he relied on a non-existing Section (143A) should not vitiate the whole proceedings which are in order otherwise. There are decisions of this Tribunal as well as the Court to suggest that wrong quoting of a Section does not vitiate the proceedings themselves. It would have been another matter had the Collector arrived at the quantum of duty foregone solely relying on Section MSA. He seemed to have relied on this non-existing Section (for all practical purposes) for added emphasis. We therefore, do not consider it as an infirmity of a nature which calls for rejecting the adjudication order.
30. The ld. Advocate argued that the allegation of mis-declaration/suppression thereby invoking extended period of limitation in so far as the demand for differential duty in goods cleared under Bill of Entry No. 63, which was finally assessed, is misplaced.
31. Briefly recapitulating the events, we may point out that Advance Licence for import of Man Made Fabric (MMF) permits import of all Man Made Fabrics. The appellants declared MMF on the Bill of Entry. MMF fell under 56.01 of the Customs Tariff. The appellants claimed the benefit of exemption under Notification No. 117/78-Cus., dated 9-9-78 as amended while seeking clearance of the goods. The Notification in question exempts goods from Basic and countervailing duty when imported under an Advance Licence subject to the conditions specified in the said Notification (appended to this order). The appellants admit that what they imported under the said Advance Licence is polyester fibre; that the labels on the goods, the brand name and other details along with the value of the goods have been correctly indicated in the documents filed along with the Bill of Entry to show that what has been imported was MMF of polyester origin; that the Department cannot allege misdeclaration particularly in view of the fact that the appellants executed a bond for the duty involved before the Licensing authorities binding themselves to pay duty applicable to polyester fibre in case they fail to fulfil the export obligation and that the charge of misdeclaration of the description of goods is baseless and therefore extended period of limitation cannot be invoked to demand the differential duty in respect of the goods finally cleared under Bill of Entry No. 63.
32. We have perused the declaration made under Bill of Entry No. 63. It reads : “Description : MMF, CTH 56.01, Notification No. 117/78 as amended by 56/84 Customs”. The importer claims that the import is made against advance licence No. “so and so” and DEEC Book No. “so and so” issued by Chief Controller of Imports.
33. Notification No. 117/78 as amended has several conditions. For the purpose of our discussion on whether or not there is misdeclaration we may quote condition (a) “The materials imported are covered by a DEEC (Certificate) granted by the Committee in the form specified in the Second Schedule of this Notification in respect of value, quantity, quality description as specified in Part C of the said Certificate”.
34. The Certificate which consists of two parts, one for filling in details of imports made and the other for filling in details of exports, has to be presented along with the Bill of Entry for claiming exemption. We have perused the certificate in Part C. MMF it is mentioned therein. Part D consists of particulars of imports. The importer described the goods as MMF. In the next column the tariff heading under which the goods fall was furnished along with the Notification 215/80 under which viscose staple fibre was accorded a concessional rate of duty of 40% ad valorem whereas polyester staple fibre attracts 145% ad valorem plus Rs. 9/- per Kg. under Notification 33/83-Cus., dated 1-3-1983. The importer also indicated that the duty involved on the said goods is Rs. 62,84,456.54 which is applicable to Viscose Staple Fibre. Thus what was imported was PSF but what was indicated in the DEEC which was presented along with the BE was VSF which tantamounts to misdeclaration.
35. Later, as the events disclosed, the importers, L.D. Textiles, paid the abovesaid amount towards duty claiming that they would not be able to utilize ‘Viscose Staple Fibre’ imported under the said Bill of Entry in the export product and thus would not be fulfilling the export obligation.
36. The appellant’s claim that there was no mis-declaration/supper-ssion on their part has to be examined in the light of these facts.
37. The appellants repeatedly claimed before us that they declared the correct quality, value and other particulars of the goods at the time of import; that they always contracted for Polyester fibre and made no secret of this fact; that Polyester fibre is MMF as described by them; that they had a Licence for importing MMF and they did import only MMF; that they always wanted to export twisted yarn made out of the imported material and that they could not do so because of reasons beyond their control; such a failure on their part cannot be construed as an attempt to defraud the Government; that failure to export the goods had necessitated payment of duty not paid initially; that they had done so; that the test reports indicating that polyester fibre was imported were not communicated to them; that the Officers who were supposed to have connived with them in suppressing the fact that polyester fibre was imported were not even proceeded against; that on their part they made all necessary declaration and that no allegation of suppression or misdeclaration can be alleged against them.
38. The ld. Senior Counsel for the Revenue argued that larger period of limitation is invocable in this case as the importers while declaring the product under import as MMF deliberately held back the fact that what was under import was polyester fibre and not Viscose Fibre; that the importers knew all along that they had contracted for was polyester fibre; that a declaration in the context of imports under DEEC includes the declarations made in the DEEC book; that in the DEEC the importers did indicate that they imported Viscose staple fibre while what they imported was polyester fibre and that they never had any intention to export the goods made out of the import material and thus their declaration that the imported goods were meant for export itself was a false declaration. He argued that it is immaterial whether others involved in the fraud/collusion are proceeded against or not; that the importers attempted to defraud the Government by stating that they imported Viscose while all along they were aware that what was under import were polyester fibre.
39. We examined the rival contentions.
40. The appellants imported goods under Advance Licence scheme claiming duty free clearance under Notification 117/78 as amended. Any claim for duty free import under this Notification is valid only when DEEC (certificate) is produced. The particulars given by the importer in part ‘D’ of the said certificate also form part of declaration made in the Bill of Entry. This is because exemption under Notification 117/78 as amended, can be granted only when DEEC is granted by the licensing authority. The appellants were aware, as they themselves admit, that they imported polyester fibre. However, in part D of the certificate submitted along with the B/E the appellant claimed the benefit of Notification 215/80 which is meant for viscose fibre. Thus what was imported was PSP but what was indicated in Part D was VSP. The appellants even indicated the duty involved on the imported goods as if the goods concerned were viscose staple fibre. They paid duty as indicated in Part ‘D’ when they failed to fulfil the export obligation. In a diabolic scheme the importers all along exhibited cunning and mischief. Giving an incomplete description in the Bill of entry and complete one in the DEEC Part ‘D’ and presenting both the documents at the time of import was not exactly funny. It is done with an intention to evade payment of full duty in case the importer failed to fulfil the export obligation. The conduct of the importers tantamounts to misdeclaration and suppression.
41. Granting without conceding that there is no suppression/misdeclaration, we observe that the appellant paid duty of Rs. 62,84,656.54 purported to be the duty payable on the imported goods on 26-2-1985. The Collector of Customs Ahmedabad issued a show cause notice demanding differential duty [Duty payable on Polyester fibre minus the duty paid as if the goods under import were viscose fibre (Rs. 62,84,656.54)] on 22-5-1985. This notice, we observe, is within the time of six months prescribed in Section 28 of the Customs Act when reckoned from the date of payment of duty of Rs. 62,84,656.54 either erroneously or deliberately. Section 28(3) defines relevant date. Sub-section (d) says that relevant date for computing six months or 5 years in certain cases, is from the date of payment of duty or interest. The Appellant’s case does not fall under (a) or (b) or (c) of the above sub-section. It therefore falls under (d). Reckoned from the date of payment of duty in this case the show cause notice was issued within the normal period of limitation. Even in the case of erroneous refund the relevant date is the date of such refund and not the date on which a bill of entry is assessed under Section 17. We observe that the notice for differential duty is not barred by limitation. In any case, a notice under Section 28(1) can be issued within six months from the date of payment of part duty within six months from such date of part payment. The Department’s allegation all along has been that the appellants did not pay full duty on the imported goods when they failed to fulfil export obligations. A show cause notice in this regard was issued on 22-5-85. It is in time. In regard to other two bills of entry the question of time bar does not arise as they were provisionally assessed.
42. Thus the show cause notice survives on both counts.
43. A point was made on behalf of M/s. L.D. Textiles that the Collector confiscated 4476 bales of PSF absolutely and still demanded duty on it. It is argued that under Section 125 of the Customs Act duty is liable to be paid only when goods are redeemed on payment of fine; that when no option is given to redeem the goods and goods are absolutely confiscated liability to duty does not arise; that the Collector erred in demanding duty on the confiscated goods under Section 28 of the Customs Act. On absolute confiscation, the property lies with the Government; that the Government cannot have the goods and the duty too. It is argued that goods having been imported under a valid licence are not liable to absolute confiscation under Sections lll(m) and (o) of the Customs Act. It is also argued that the Collector erred in not according an option to the importer to redeem the goods on payment of redemption fine.
44. The ld. Counsel for the Revenue argued that there is nothing in Section 125 which says that duty cannot be demanded when the goods are absolutely confiscated. Duty under Section 28 of the Customs Act is demandable irrespective of the fact that the goods are absolutely confiscated. Duties are chargeable on all imported goods under Section 12 of the Customs Act. That Section does not become inoperative simply because the goods are absolutely confiscated.
45. We have carefully considered the rival submissions in this regard.
46. The appellant company, L.D. Textiles imported in all 8150 bales of PSF under two different Advance Licences and filed three Bills of Entry for their clearance – Bill of Entry No. 63/30-3-84 – 2050 bales, 22/30-10-84 – 3100 bales and 23/30-10-84 – 3000 bales. The first one was finally assessed and the next two provisionally. The Collector absolutely confiscated 4486 bales (the show cause notice speaks of 4476 bales only) seized from M/s. L.D. Textiles, Ankleshwar, under Sections lll(m) and (o) of the Customs Act. He also confiscated absolutely 49 bales found in the premises of P.G. Textiles under the same Section. In addition, he confiscated, again absolutely, some 171 bags of yarn weighing 8550 Kgs. found in the same premises under the same Section read with Section 120 of the Customs Act. His conclusion in this regard is that the yarn in question is made out of the Polyester fibre which was liable to confiscation. He then absolutely confiscated 5 and 6 bales seized from M/s. Arunodaya Mills and M/s. Jayashree Textiles respectively under the same Section. The Collector in his ‘absolute confiscation’ spree confiscated in all 4536 bales totally weighing 1169.575 MT of polyester fibre and deprived the ownership of this quantity to various persons/firms mentioned above. But all the same demanded duty on the entire quantity of 8150 bales cleared under the three Bills of Entry mentioned above.
47. It is hotly contested that the Collector erred in ordering absolute confiscation and demanding duty on the same quantity under Section 28 and Section 143A (the latter section has no legal standing). In a recent decision in the case of Union of India v. Shri Harkishandas Narottam Hospital (W.P. No. 388 of 2005), dated 13-4-2005 the DB of Hon’ble High Court of judicature at Bombay ruled thus “If the appellant were not interested in redeeming the goods, then, the Customs Act does not create liability to pay the Customs duty”. If that were to be the legal position in regard to goods not redeemed it is equally so in respect of goods absolutely confiscated. We apply the ratio laid down by the Hon’ble High Court to the facts of the present case. What the Hon’ble High Court has laid down is that he who possess the goods shall bear the liability to duty. In other words, if the goods are absolutely confiscated it is the Central Government who would possess the goods. Liability to pay duty on absolutely confiscated goods does not shift to the person who either imported the goods or to the person from whose possession the goods were seized. The demand for duty on 4536 bales weighing 1169.575 needs to be set aside. Their confiscation under Sections 111(m) and (o) has to be upheld as the goods in question were misdeclared and the conditions under which the goods were imported were violated. We have already discussed as to how the goods were misdeclared in regard to PSF imported under Bill of Entry No. 63. In regard to the goods cleared under Bills of Entry Nos. 22 and 23 we observe that while declaring the imported goods as MMF the appellants claimed the benefit applicable without mentioning the notification number in the same manner. The appellants imported admittedly PSF but by claiming the benefit of Notification 215/80 as amended they made the officers believe that the imported goods were VSF. This constitutes misdeclaration and suppression. Another significant feature in regard to clearances under Bills of Entry 22 and 23 is that in DEEC Part ‘D’ the importers have not indicated the notification applicable to VSF even though they mentioned the duty applicable to VSF. The modus operandi was the same. In case the appellant failed to fulfil the export obligation they would pay duty applicable to VSF even when they imported PSF. The declaration made in the Bill of Entry read with the ones in the DEEC book would constitute misdeclaration with intent to evade duty. The goods are therefore liable to confiscation.
48. We have set aside the demand for duty on 4536 bales because these bales were absolutely confiscated. It is necessary to apportion this number of bales to the licences under which they were imported. Show cause notice gives some indication in this regard. At page 90 of the show cause notice it is stated that out of the quantity seized, 452 bales of PSF could be related to goods cleared under Bill of Entry No. 63/30-3-84. Under this Bill of Entry a total of 2050 bales were cleared. The appellant paid Rs. 62,84,656.54 towards duty on these bales applying the rate meant for Viscose Staple fibre. As the investigation revealed that what was cleared Bill of Entry No. 63 was Polyester Fibre the duty payable would be Rs. 4,20,88,370/- on 2050 bales. But out of 2050 bales the Commissioner confiscated 452 bales absolutely. No duty on this quantity is payable as we observed earlier. Thus duty as applicable to polyester fibre is payable only on 1598 bales (2050-452). Duty already paid will have to be deducted while determining the differential duty payable on the goods cleared under Bill of Entry No. 63/30-3-84. The demand to this extent on the goods cleared under Bill of Entry No. 63 is confirmed. The exact duty payable on 1598 bales be worked out.
49. We have seen that out of 4536 bales confiscated a quantity of 452 bales pertained to goods cleared under Bill of Entry No. 63. The balance therefore should be attributed to PSF cleared under Bill of Entry Nos. 22 and 23. Both these clearances took place under the same Advance Licence. It is not possible to attribute the quantity seized and confiscated to the Bills of Entry 22 and 23 individually unlike in the case of Bill of Entry No. 63. It is possible of course to relate the balance quantity that is 4536 – 452 = 4084 to the clearance made under Advance Licence used for clearing the goods under Bills of Entry Nos. 22 and 23.
50. Under the above said Bills of Entry a total of 6100 bales were cleared free of duty. The Collector demanded Rs. 6,99,91,236/- towards duty on the goods cleared under Bill of Entry No. 22/30-10-84 and Rs. 6,32,60,298.30 on the goods cleared under Bill of Entry No. 23/30-10-84. Since a quantity of 4084 bales were absolutely confiscated out of 6100 bales cleared under the above said Bills of Entry no duty is payable on them. In other words duty applicable on polyester staple fibre is demandable on a quantity of 2016 bales, which have violated the condition under which they were allowed to be cleared without payment of duty. The demand for duty be reworked out on the above basis. Since it is not possible to apportion the quantity confiscated to each of the Bills of Entry under question from the impugned order, this exercise if it is not possible at this distant date, the total duty liability be apportioned to each of the two Bills of Entry proportionately. No great legal hurdle can be envisaged since both the Bills of Entry pertained to the same Advance Licence.
51. The Commissioner also confiscated absolutely 171 bags of yarn weighing 85.50 kgs seized from P.G. Textiles under Sections 111(m) and (o) read with Section 120 of the Customs Act on the ground that the yarn is made out of PSF liable to confiscation. We are not aware how much of PSF has gone into the production of this quantity of yarn. Duty is however not demandable on the quantity of PSF that had gone into the production of 171 bags of yarn. From the total demand duty attributable to this quantity of PSF will have to be deducted. To sum up, the position emerges like this.
52. Demand for duty to the extent indicated above i.e. after giving allowance to the duty involved on the absolutely confiscated bales either Sections lll(m) and (o) or under Sections lll(m) and (o) read with Section 120 of the Customs Act is confirmed. The demand for the balance amount is set aside. While computing the duty liability the facts that the appellants paid Rs. 62,84,656/- be taken into account. Interest as applicable is payable on the duty reworked in terms of the policy then. The policy speaks of interest on the duty foregone initially in case the export obligation is not completed.
53. As directed by the Collector the Bills of Entry Nos. 22 and 23 be finalized after re-computing duty in terms of this order. While doing so the officer will bear in mind that a part quantity cleared under these bills of entry was absolutely confiscated as no duty is payable on such quantity.
54. Confiscation of 4476 bales of PSF under Sections lll(m) and (o) is upheld in so far as L.D. Textiles is concerned. On the question whether they should be absolutely confiscated or not we observe that this action on the part of the Commissioner is seemed to have been prompted by the modus opemndi adopted by the appellants. Goods which have been imported under certain conditions laid down by the Licensing Authority, when not complied with do become prohibited goods. Further violation of condition of Notification No. 117/78 render the goods liable to confiscation as they become prohibited goods under Section 125 of the Customs Act option to redeem the goods shall be given by an adjudicating authority in case the goods are not prohibited from importation under the Customs Act or any other law for the time being in force. In the present case, goods are allowed to be cleared duty free under Notification issued under Section 25 of the Customs Act under certain conditions specified in the notification. When those conditions are violated, the goods become liable to confiscation. Further misdeclaration at the time of import, either description or value, will render the goods liable to confiscation. Since we hold that the goods in question have rendered themselves liable to confiscation it is perhaps academic at this distant date in the present case whether the adjudicating authority should have given an option to redeem them on payment of duty. We are not inclined to modify the order into one of the confiscation with an option to redeem as it serves no purpose. It is not also possible to set aside the order of confiscation adjudicated by the lower authority. We therefore, leave it at that.
55. Insofar as the goods confiscated from other appellants is concerned we observe that enough evidence exists that these appellants were in possession of goods, which are liable to confiscation under the Customs Act. The fact that these goods have been passed on by the owner to the appellants on consideration does not make them less liable to confiscation. Offending goods no matter in whose possession they are, are liable to confiscation. Since the Collector absolutely confiscated them, he did not demand any duty from the appellants who were in possession of the offending goods. He also did not impose any penalty on them.
56. It is now well settled that mens rea on the part of the person from whose possession offending goods are seized and confiscated is not necessary to render them liable to confiscation though such a state of mind is necessary for penalty under Section 112 of the Customs Act. The Department is able to adduce enough evidence in the form of statements of transporters, owners and other documentary evidence as brought out in the show cause notice that the goods seized from the appellants in Appeal Nos. 487, 395 and 503 did emanate from M/s. L.D. Textiles. These goods were cleared duty free under certain conditions which were later found to have been not observed. The very fact that they have been removed from the premises of the importer without permission from the appropriate authorities rendered the goods liable to confiscation. We therefore do not see any infirmity in the order in so far as confiscation of the goods in the hands of these appellants is concerned. These appeals are accordingly rejected.
57. Appeal No. 494/86 (M/s. L.D. Textiles) is partially allowed in the above terms.
58. Appeal Nos. 487, 395 and 503/86 are rejected.
Appeal No. C/494/86-C in L.D. Textile Industries v. CC, Ahmedabad
S.S. Sekhon, Member (T)
59. I have had the benefit of perusal of the ld. Member Technical’s order prepared in this case. However I am not able to reconcile myself to agree with the findings arrived at by ld. Brother, though I find as regards the facts of the case as recorded by him I cannot do better. I therefore do not repeat the same. I am proceeding therefore to record this difference as regards the findings on issues involved and required to be decided in this case:
(a) The imported goods in this case can be and are admittedly related to BEs cleared and finally assessed and under provisional assessment with the proper officer of Customs at Veraval Customs House;
(b) Relying upon the Supreme Court’s decision in the case of Union of India v. Ram Narayan Bishwanath -1997 (96) E.L.T. 224 (S.C.) wherein it has been recorded in Paras 2 to 4 as follows :
“2. The goods imported by the respondents were cleared at the Paradip Port in the State of Orissa. The goods were then transported to Howrah in the State of West Bengal and were seized there by the Customs authorities in West Bengal on the ground that they had been imported on the strength of fictitious licences. In proceedings consequent upon the seizure it was held that the goods had been imported on fictitious licences and were liable to confiscation. The Customs, Excise and Gold (Control) Appellate Tribunal, in the order under appeal, held that the Customs authorities in West Bengal had no jurisdiction to pass such order.
3. There had also been certain proceedings in the Calcutta High Court, with which we are not here concerned, except to note that the High Court had ordered the appellants to refund the amount of Rs. 50 lakhs paid to them by the respondents in connection with the aforesaid proceedings before the West Bengal Customs authorities with interest. When leave to appeal was granted, this Court directed that the respondents would be entitled to the said refund provided they furnished adequate security to the satisfaction of the Registrar, Calcutta High Court, on the Original Side, for repayment of the refunded amount.
4. It seems to us, having regard to the facts set out above, clear that it was for the Customs authorities at Paradip to initiate proceedings against the respondents on the ground that the goods had been imported on fictitious licences and not for the Customs authorities in West Bengal to do so.”
Being bound by this decision, the question of jurisdiction has to be decided, following the same. Further, the instructions issued vide Ministry of Finance, Department of Revenue, F. No. 437/4/83-Cus. IV, dated 30-8-1983 to the effect ‘(c) Collector of Customs, Ahmedabad, has been given administrative jurisdiction over the entire State of Gujarat. He will however handle anti-smuggling operations & other related work in the entire State, for the present, Customs Work (other than anti-smuggling work) will be looked after by Collectors of Central Excise, Ahmedabad, Baroda & Rajkot within their respective jurisdictions. They have been notified as Collectors of Customs within their respective jurisdictions through a separate, notification’, would lead to find force in the argument advanced by the ld. Advocate for the Appellant that Collector of Customs, Gujarat at Ahemdabad has no jurisdiction to finalise the provisional assessments made on Bills of Entry Nos. 22 & 23, dated 30-10-34 as those Bills of Entry have been filed in the Custom House, Veraval, then under the jurisdiction of Collector, Rajkot. The jurisdiction of ‘proper Officer’, at Veraval Port, cannot be usurped by Collector of Customs, Gujarat at Ahmedabad. The order is therefore to be set aside and the matter remitted back to the appropriate authorities in-charge of Veraval Custom House to do the needful in the facts of this case.
(c) The Larger Bench in the case of JTC Ltd. v. CCE, Mumbai – deciding a similar issue under the Central Excise Act, 1944, after considering the Supreme Court’s decision, have held that Show Cause Notice issued, before the finalization of assessment, was not sustainable, as also the material available to Revenue, could be used, while proposing finalization of assessment. I find no reason to disagree with this proposition of law under the Customs Act, 1962. This would reinforce the findings of the matter to be remitted back to the ‘proper officer’ at Veraval to proceed further in the matter.
(d) Since I am directing a remand to the appropriate authority in charge of Veraval Custom House, with the liberty to rely on all the material in this case, I do not propose to arrive at any findings on the merits of the demands and other consequences, if any, in this case and keep these issues open for both sides, except as the question of confiscation of the seized goods, which was not pressed by the ld. Advocate and therefore no orders as regards the said confiscation are required to be arrived at.
60. In this view of the matter I would order the setting aside of the impugned order and allow the appeal as regards finalization of the assessment and duty demands thereafter, if any, in case of all these 3 Bills of Entry to be redeter-mined by the proper officer in charge of Veraval Custom House.
MAJORITY ORDER
61. In view of the majority opinion, the appeals are disposed off in terms of the order prepared by the learned Member (Technical), Shri Moheb Ali M.