ORDER
Shri S.S. Sekhon, Member(T)
1. Appellants are engaged in the manufacture and Export of ‘Pagers’ to all over Asia. In the course of their business activities they obtained Advance Licence under DEEC scheme, to import duty free components, raw material, for manufacture and export of this final product. For this purpose, they executed a Bond with the Customs Authorities Bangalore, undertaking to export to required quantity of final products for which the Advance Licences were obtained and exports made in respect of 19 such licences to the tune of Foreign Exchange equivalent of Rs 520 Crores. However for a solitary licence, from the score or so, such licences obtained ie. Licence No 07001273 dt 14.10.97, for an obligation to export 70,000 Nos of Pagers, for which they imported the martial, duty free, they could meet the export obligation only in respect of 39,502 Nos of pagers, due to inter national Business situation (Asian Currency Melt Down) cancelling export orders. They requested the Customs Authorities permission to Re-export the parts left back, which was refused. By letters dated 17.11.99 and 23.11.99, they sought from the Customs Details of their liability to pay duty and interest on their non-fulfillment of the Export obligation. However, A summon was issued on 1.12.99 to them, regarding the facts about the import under the said licence which was replied to vide letter dated 1.12.99.
2. A show cause notice was issued by the Assistant Commissioner of Customs, Bangalore dated 05.02.2000 demanding duty on the full licence value amounting to Rs 4,07,44,992/- which was replied on 21.02.2000, pointing out the facts that the demand made was not correct, since an amount of Rs 57,25,647/- and interest thereon, in respect of unutilised imported components has been paid, which was accepted by the said Assistant Commissioner, as intimated to him vide appellants letter dated 30.12.99. This also intimated the final closure of export obligation as per para 7.28 of EXIM POLICY 1997-2000 and the related DEEC book which was duly endorsed. Meanwhile, the licence issuing authority, Joint Director General of Foreign Trade Bangalore had issued a certificate dated 02.02.2000 discharging export obligation against the said licence and the Bond executed with the Customs was duly cancelled and discharged by the Assistant Commissioner of Customs and returned to the appellants on 26.02.2000, No order was received from the Assistant Commissioner of Customs pursuant to show cause notice dated 5.02.2000 and the reply sent.
3. However, the Commissioner, pursuant to an intelligence gathered by HQrs Preventive, indicating that the appellants had not fulfilled the export obligation and enquires conducted by them, issued a show cause notice dt 8.3.2000, demanding duty on unutilised duty free parts imported vide the same licence, proposing its confiscation, appropriating the equivalent amounts, being demanded and already paid against the demands along with interest under section 28 AB read with proviso to (iii) of clause (ii) of Notification No 30/97 dt 1.3.97 and proposing the appropriate the interest already paid and liability for penalty under section 112 of the Act.
4. After hearing, the Commissioner confiscated the goods, ordered a redemption fine of Rs 3,50,000/-; penalty of Rs 50,000/- on the appellant under Section 112 of the Customs Act 1962, demanded the duty and interest and ordered the appropriation of the amount as already paid. The present appeal is against this order.
5. After hearing the learned Advocate for the appellants and the DR for Revenue and considering the submissions and the material we find –
(a) From the facts of the case, one thing is emerging clearly, that there is utter chaos created by multiplicity of proceedings, due to deliberate or ignorant disregard of the Theory of Commity of Courts, which postulates that when there are concurrent jurisdictions, then the jurisdiction of all others is deemed to be excised qua the issue, when one of the authorities has taken cognisance of the same. The Supreme Court in the case of Siliguri Municipality & others – 1984 (146) ITR 624 SC have emphasised this law –
“…. We mean no disrespect to the High Court in emphasising the necessity for self imposed discipline in such mater in obeisance to such weighty institutional consideration like the need to maintain decorum and comity…”
Therefore, we find that when the Asst. Commissioner had issued a show cause notice dt 5.02.2000, demanding the duty and on examining the plea of the appellants that for the very same Advance Licence, the Assistant Commissioner had accepted the payment of duty and interest on the amended export performance and discharged the Bonds, therefore, there was no cause for the Commissioner to have taken cognisance of the very same non-fulfillment of export and issued this show cause notice dt 8.4.2000 and the impugned order now in appeal. We find that Calcutta High Court in the case of Mahananda Bannerjee – 1997 (103) CRL (J) 3676 CAL in para 28 thereof have extracted and followed, this passage from “LAW ON INJUNCTIONS” by LEWIS & SPELLING –
“Where a court having jurisdiction and having acquired jurisdiction will usually refuse to interfere by issuing second injection. There is no established rule of exclusion which would deprive a court of jurisdiction to issue an injection because of the issuance of an injection between the same parties pertaining to the same subject matter. And even where it is a case of one court having refused to grant an injection, while such refusal does not exclude the another co-ordinate court of judge from jurisdiction,yet the granting of the injection by a second judge may lead to complications and retaliatory action….”
When the Hon’ble Supreme Court in the case of Silliguri Municipality (1984) 146 ITR 624 (SC) emphasised the necessity for self imposed discipline in such matters in obeisance to such weighty institutional consideration like the need to maintain decorum and Comity. In Ram Lal Narang AIR 1979 SC 179, the Supreme Court observed –
“Interests of the Comity of various agencies and institutional entrusted with different stages of such administration, it would ordinarily be desirable that the Police should inform the Court and seek formal permission to make further investigation when fresh facts come to light”,
therefore when the show notice dt 05.2.2000 of the Assistant Commissioner on the very same facts and allegations was replied by the appellants on 21.2.2000 and the proceedings were not completed by the said Assistant Commissioner, the conduct of the Commissioner to have issued another notice on 8.3.2000, on the very same cause of non-fulfillment of export without any new material coming on record adverse to the importer, without adverting to the same in this pending show cause notice of Assistant Commissioner was not proper and permissible in law,
(b) The Assistant Commissioner has been upheld to be the proper officer to be performing the functions of monitoring the export obligations and the exemption from duty granted, by the Commissioner in para 24 of the impugned order where he has come to a finding –
“….It has been clarified by the Assistant Commissioner that on production of the discharge certificate from DGFT vide letter No 7/82/40/351AM 98 dt 2.2.2000, the show cause notice dt 5.2.2000 issued to M/s Motorola stands withdrawn. In this regard, I have to state that proceedings initiated in show cause notice dt 5.2.2000 in purely from the point view of monitoring he export obligation and recovery of duty, whereas, the action initiated by the officers of Hqrs Prev. is from the point of view of the violation on the part of M/s Motorola is not fulfilling the export obligation….”
A perusal of the notice issued by the Assistant Commissioner (as placed in paper book) indicates that the first paragraph of this notice reads –
“Whereas it appears that Custom duty amounting to Rs 4,07,44,922 (Rupees Four Crores seven lakhs fourty four thousand and nine hundred twenty two) was not levied in respect of the above Bill of Entry in view of bond No 514/3/98 dt 5.1.98 executed by you under Notification 30/97 Cus dated 1.4.97 and whereas you have failed to fulfill the condition of export obligation laid down under the said notification….”
Thus we find that the Commissioner is finding to establish a distinction without a difference with the sole intention to uphold the act of his “Patrician Guards the Hqrs Preventive Officers”. The “intelligence gathering” by them has either failed to gather essential data of the Assistant Commissioner’s actions initiated, or they have kept the same away from the Commissioner in their final analysis, and have got the notice issued. In both the cases, i.e. innocence of Assistant Commissioner’s notice and proceedings or and suppression of the same, the proceedings by Commissioner are vitiated ab-inito. We find, and are reinforced in our view of the Commissioner of being a captive of his Patrician Guards” the Hqrs Preventive Officers, since he finds in para 22 of his findings –
“….Their plea that they had voluntarily furnished all the details to the investigating officers and paid the duty amount along with interest on acceptance of the figures furnished by them, is not acceptable for the reason that it is only which the officers of the Customs Hqrs Preventive initiated action and started investigation in this regard that the notice came up with all facts & figures and admitted…..”
While this establishes the Commissioner ‘Reasons detere’ to hold the appellants liable is due to the conduct of the ‘Hqrs Preventive Officers’; he ignores the fact that the appellants had responded on 23 November 1999 to a telephone call and had informed that they could not export and sought Re-export and had taken up the matter with the DGFT authorities and were prepared to pay the determinations of duty and interest, one DGFT completes the proceedings on their request. From the facts of the data as brought out, we do not find the act of payment of duty and interest on the unexported component lying with the appellants to be out of a timorous reaction to Hqrs Preventive Officers operations. From the facts of the case as recorded in the impugned order, it is apparent that the Quantity permissible to be imported and actually imported and utilised for the goods exported as arrived in para 3 & 4 of the order would indicate that the quantity imported initially was much less than quantity permissible as per input output norms for almost all the items and they were using the items imported on earlier licences for export obligation requirements of their particular licence as is apparent by their request granted as recorded in para 6 of the order impugned. There is no finding of any diversions of the goods for domestic tariff area; there was a request made to re-export the components and a reference already pending with DGFT to scale down the export obligation as per policy, these positive acts indicate that the appellants had all along realised, that they may not meet the export commitments and they took all steps as per law, to meet the commitments. The acts of Hqrs Preventive Officers neither expedited the conduct for payment nor was it delayed otherwise. These findings of the Commissioner, appear to be partisian, if not, sufficient to set aside the order only on this ground.
(c) Commissioner has come to a finding in para 24 of the impugned order that the notice of the Assistant Commissioner has been withdrawn, without giving a date for withdrawal of the same. The appellants have submitted that they have not received any order. The date of withdrawal was required to be mentioned. If the notice is withdrawn, the reasons for the same are not known, is it that the Assistant Commissioner has accepted the compliance of payment of duty and interest and then discharged even the bond? or has he found no reason for the issuance of his notice? Whatever, it may be, the Commissioner should not have proceeded to re-determine duty and interest, once Assistant Commissioner has withdrawn his notice for the same demand of duty and interest. If the Asst Commissioner has withdrawn the notice on compliance of the demand of duty and interest, and finding no further short levy in the facts of the case and discharged the Bond, then course open for commissioner was to go and review the order of withdrawal of the notice and file an appeal before the Commissioner (Appeals). The proceedure established by law has not been followed. Therefore, the order of again a confirmation of demand and interest vide this order cannot be upheld.
(d) We have consideration the confiscation arrived at by the Commissioner and the redemption fine of Rs 3,50,000/- imposed by him. The finding besides negligence and conduct arrived at earlier, in para 25 of the impugned orders indicate the reason, as follow –
“….I hold that M/s Motorola have violated the condition of notification 30/97 dt 1.4.97 read with para 7.14 of the EXIM POLICY 1997-2002 and para 7.22 of Hand Book of procedures, thereby they have rendered the imported goods lying unutilised and totally valued at Rs 79,81,088/- liable for confiscation under Section 111 (O) of the Customs Act….”
On the date of issue of this notice i.e. 8.4.2000, there was no offence of Import Control Regulation as on that date the DGFT had issued the necessary waiver of Bond/LUT condition/Redemption of Bank Guarantee against the said licence on 2.2.2000 by issuing a certificate of discharge of the export obligation in full, after scaling down the export obligation. Therefore, on the date of issue of this notice, there was no export obligation outstanding as per the proper officer of the DGFT. Following their certificate, the Commissioner has observed in his finding that Assistant Commissioner has withdrawn the notice issued demanding duty on goods cleared on the Bills of Entry duty free as demanded vide his notice dated 5.2.2000. Assistant Commissioner is admitted by the Commissioner to be the ‘proper officer’ to monitor the Export in DEEC scheme of goods allowed exemption. Therefore, on 8.3.2000, the proper officers of DGFT ad Customs had permitted the relaxation of the export obligation under notification 30/97 Cus dt 1.4.97. Section 111(O) of the Customs Act 1962 reads as follows –
“(O) Any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer”.
When the non-performance of the obligation have been relaxed and settled by the proper officers as in this case, before 8.3.2000 it will be deemed to be sanctioned by the proper officer. Therefore, there was not cause for the Commissioner to have issued a Show Cause Notice on 8.4.2000 and confirmed the confiscation of the goods under section 111(O) of the Customs Act 1962, when duty and interest have been duly discharged. We therefore do not uphold the confiscation of the goods as arrived at by the Commissioner. Therefore, there is no cause to impose any redemption fine. The same is required to be set aside.
(e) For negligence as arrived at by the Commissioner, we find none to exist, therefore when bonafides of the appellant are found by us to exist, then the oft quoted decisions of the Supreme Court in Hindustan Steel Ltd. (AIR 1970 SC 253), Akbar Baddruddin Jiwani 1990 (47) ELT 161 (SC), Jain Exports (P) Ltd 1990 (47) ELT 313 (SC), D. Navinchandra & Co. 1987 (29) ELT 492 (SC), B. Vijay Kumar AIR 1987 SC 1794 which we follow to arrive at a finding that in the facts of the case when ‘contamacious conduct’ does not exist then penalty cannot be upheld. The learned Commissioner has also considered and taken into account the ‘Trading House’ status of exporter, that the appellants have and they have fullfilled export obligations and immediately after the investigation ‘started’ have paid the duty. He has taken a lenient view in determining the quantum of fine in lieu of confiscation and also penalty. In view of our findings that the appellants had already taken steps to meet the duty and interest obligation and delay was due to the ‘authorities’ and the payment is not consequent to investigations undertaken and no confiscation is called for, we do not find any reason for imposition of any penalty. Before we would part with the findings, we would like to observe, leniency another side for Mercy cannot be in half measures. We recall ‘Portias entreaties in Merchant of Venice’ – (Act IV, Scene I)
“The quality of mercy is not strained,”
– William Shakespere.
The Commissioner, while exhibiting need for Mercy, should not have held back his dispensation in full.
(f) We find that the order in original has not relied upon and or indicated any material as to what should be or could be the ‘Market Price’ of the goods under import. In absence of this vital material we cannot measure the adequacy or otherwise of the Redemption fine. Section 125 of the Customs Act 1962 provides the formula to determine the quantum of fine and that is based on Market Price less the duty chargeable therein; facts and circumstances of each case are thereafter to be considered along with bonafides of the import (M/s Jain Exports Pvt Ltd – 1990 (47) ELT 213 SC relying upon D. Navinchandra & Co. 1987 (29) ELT 492 SC and B. Vijay Kumar AIR 1987 SC 1794), however no hard and fast rule could be laid down. There is however no warrant for the proposition that the maximum penalty as per Market Price less duty chargeable therein as prescribed under section 125 as maximum is required to be imposed (Pradeep Vs. Addl Collector 1993 (68) ELT 525 Cal (DB). We could, therefore in the facts of this case, find the imposition of fine not in order. When the Adjudicator has not determined any ‘Market Price’ nor any evidence has been relied upon by the Revenue in appeal. We follow the catena of decision of the Tribunal. In Commissioner of Customs Bombay Vs Kamani Oil Industries 2001 (94) ECR 744 (Tribunal), the latest, wherein the Tribunal has not uphold the plea for enhancement of the Redemption fine. We find that no fine can be imposed without declaring the ‘Market Price’ by the adjudicator. Fine imposed is therefore not upheld.
(g) We find that admittedly the importers are a well known Actual user of the parts, under imports, are regular importers of the same. We would instead follow the decision in the case of Indian Sugar & General Egg Co. 1955 (77) ELT 907 (Tribunal) wherein considering the imports to be Actual Uses the penalty of Rs 1 lakh imposed was set aside even though a licence offence was established by the Tribunal, however the order of confiscation on merits, of goods valued at 15.77 lacs was sustained. We find that in this case, there are no reason for ordering a penalty under section 112 (a) on the importers, keeping in mind the Actual User Status and the fact that there was no Licence (SIC) involved for imports made in this case after the licensing (SIC)
6. In view of our findings, we set aside the order, allow the appeal.
(Pronounced in the Court on 19/3/2001)
