Commr. of Cus. (Imports) vs Imperial Trading LLC

Heard.

Perused the appeal.

This appeal is filed by the Commissioner of Customs (Imports) u/s 130 of the Customs Act, 1962 against the order dated 2-12-2004 bearing No. A/1810-1812/WZB/2004/C-I passed in Appeal No. C/462, 369 and 388/04-Mum. [2005 (181) E.L.T. 29 (Tribunal)] by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai.

A few facts giving rise to this appeal are that Imperial Trading LLC, USA supplied the viscose rayon filament yarn from Dubai to India. Someone by name Mile Cobb, who runs this Trading LLC is mentioned in dispatches. The Respondent No. 2 M/s. Impex Enterprises filed two bills of entry Nos. 875998 and 875999 both dated 19-8-2003 at Jawahar Customs House, Nhava Sheva for clearance of goods declared as "Viscose Rayon Filament Yarn, 120 Den of Chinese origin". The goods were supplied to M/s. Imperial Trading LLC vide invoices Nos. 03/ITL/02 and 03/ITL/02 both dated 2-8-2003 and in those invoices the goods were declared as "Viscose Rayon Filament Yarn, 120 Den of Chinese origin" 553 cartons and 207 cartons respectively. The said goods were declared to be stuffed in two Full Container Load (FCL). The details of goods as declared in the said two bills of entry and in other supporting documents like GATT declaration, Bills of Lading, Import Invoices, Packing Lists etc. are as under:

On the basis of the aforesaid declaration, goods were assessed to duty amounting to Rs. 11,54,100/-. The importers paid the above duty on 19-8-2003. Thereafter, both the containers were found lying in CFS of M/s. Gateway Distriparks Ltd., Nhava Sheva.

The goods were examined on the request made by the Deputy Commissioner of Customs (Docks) on 22-8-2003 by the officers of Customs, in the presence of the officers of DRI and two independent witnesses under the Panchanama. On opening and examination of the container No. TRLU-4961908, it was found that some double sized corrugated cartons were stacked/lying in the bottom of the container and were concealed/surrounded with cartons described as Viscose Rayon Filament Yarn. On opening each of the said cartons, it was found that all of them contained raw silk and the cloth bag contained one paper leaflet inscribed with words "Blossoms (R)- white steam filature-China National Silk Import & Export Corp.-Made in China",

The total quantity of the aforesaid raw silk, concealed in 50 cartons, on weighing, found to be 2910 kilograms whereas the total quantity of viscose rayon filament yarn was found to be 16881.40 kilograms packed in 551 cartons as against the declared 553 cartons having total weight 16942.60 kilograms. On opening and examination of the other container bearing No. CRXU-2683537, it was found to contain 209 cartons of viscose rayon filament yarn having total weight 6289.80 kilograms as against declared 207 cartons.

After following due investigation, the authority in original issued the show-cause notice dated 23-12-2003 u/s 124 of the Customs Act, 1962. Thereafter, the Commissioner of Customs (Imports) passed the order-in-original dated 2-4-2004, the operative part of which reads thus:

(a) I order absolute confiscation of 50 (fifty) cartons containing 2910 Kgs. of Mulberry Raw Silk Grade 3 A, valued at Rs. 17,73,352/- (A.V.) and market value of Rs. 32,01,000/- seized from container No. TRLU-4961908 u/s 111(f), 111(i), 111(j) and 111(i) of the Customs Act, 1962 for being ''prohibited'' goods.

(b) I also order confiscation of 551 cartons of viscose filament rayon weighing 16881.40 Kgs. valued at Rs. 20.05 Lakhs u/s 119 of the Customs Act, 1962 for being used to conceal the prohibited goods. However, I give an option to the importers to redeem the same u/s 125 of the said Act on payment of a fine of Rs. 5,00,000/- (Rupees Five Lakhs only).

(c) I impose a penalty of Rs. 2,00,000/- (Rupees Two Lakhs only) on the importers M/s. Impex Enterprises u/s 112(a) of the Customs Act, 1962 for the acts of omission and commission which have rendered the goods liable for confiscation.

(d) I also impose a penalty of Rs. 3,00,000/- (Rupees Three Lakhs only) on Shri Akil A. Rassai u/s 112(b) of the Customs Act, 1962 for his role in rendering the goods liable for confiscation.

(e) I refrain from imposing any penalty on Shri Martinho Ferrao because the charges against him are not substantiated. I also refrain from imposing any penalty separately on Ms. Fiona Ferrao because she is the sole proprietor of the importing firm M/s. Impex Enterprises.

Being aggrieved by the said order dated 2-4-2004, the Respondent No. 1 preferred appeal u/s 129A(1) of the Customs Act, 1962 before the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai on 14-5-2004.

The Tribunal vide its judgment and order dated 2-12-2004 partly allowed the appeal and allowed the importer to re-export 50 cartons of mulberry raw silk on payment of fine amounting to Rs. 3 Lakhs and reduced the redemption fine to Rs. 1 Lakh for the viscose rayon filament yarn.

Not satisfied with the above order of the Tribunal, the Revenue is in appeal before this Court.

The substantial question of law framed while admitting this appeal by the order dated 26-8-2005 reads as under:

Having held that Mulberry Raw Silk are concealed and liable for confiscation, is CESTAT justified in law in allowing re-export of the said goods i.e. Mulberry Raw Silk?

The learned Counsel for the Appellant/Revenue took us through the order-in-original dated 2-4-2004 passed by the Commissioner of Customs (Imports) and also the order dated 2-12-2004 passed by the Tribunal and urged that inspite of the fact that the order of the Appellate Tribunal has affirmed the findings of facts arrived by the adjudicating Authority to be correct, for no valid reasons, the Tribunal has wrongly allowed re-export of mulberry raw silk. Reliance is placed on the law laid down by the Apex Court in case of Commissioner of Customs, Kolkatta Vs. Grand Prime Limited and Others, . The learned Counsel for the Revenue also submitted that the Appellate Tribunal, while granting the request made by Zanrie K. through M/s. Imperial Trading LLC, observed that whether they are authorized to make such a request is left to the posterity to decide. In his submission it was rather strange that without being satisfied about the title and ownership of the said smuggled goods, the Appellate Tribunal has granted the request of re-export of the said smuggled goods.

Having heard rival parties, it is not in dispute that while examining the imported goods it was found that the total quantity of raw mulberry silk in 50 cartons, having weight about 2910 kilograms was found concealed and that the total quantity of viscose rayon filament yarn was found to be 16881.40 kilograms in weight packed in 551 cartons as against the declared 553 cartons totally weighing 16942.60 kilograms. Taking into consideration these undisputed facts and the law laid down by the Apex Court in case of Commissioner of Customs, Kolkata v. Grade Prime Ltd. (supra), the adjudicating Authority has held that the offending goods were intentionally attempted to be smuggled into India after concealing the same in the containers of the declared goods and therefore, the said goods were held to be liable to be confiscated under Sections 111(f), (I), (j) and (I) of the Customs Act, 1962. The adjudicating Authority has also observed that the said concealed goods have become prohibited goods which could not be allowed to be re-exported even by imposing fine and penalty.

The Appellate Tribunal in exercise of its appellate power has observed that both the parties i.e. Department and the Respondents agreed that the goods in question are liable for confiscation. The Appellate Tribunal further observed that it is not merely due to the fault of clerks and loaders that mulberry raw silk landed in India and there is something more than what meets the eye. Inspite of these sharp observations, the Appellate Tribunal found fault with the order-in-original passed by the adjudicating Authority by observing that the adjudicating Authority could not have absolutely confiscated the goods without assigning any reason in support of its order. The Appellate Tribunal has further observed that when there is discretion either to confiscate the goods absolutely or allow them to be redeemed on payment of fine, the adjudicating Authority was required to give reasons as to why he preferred to do one instead of the other and the adjudicating Authority has not done so.

We find that the Appellate Tribunal is not right in its observations. It has been, on circumstantial evidence, fully established that both the parties intentionally smuggled the goods in India and had taken all steps to disguise them and to deceive the customs personnel while clearing the goods. The goods which were declared and imported were used to conceal the undeclared and smuggled goods. These facts loudly proclaim that both parties intentionally attempted to smuggle the goods by concealing them in the container containing declared goods.

The Respondent No. 1 submitted that they were the owners of 50 cartons of Raw Mulberry Silk yarn which had erroneously and through oversight arrived in the port of Nhava Sheva. According to them the said goods were in fact to be sent to their buyer in U.K.. It is to be noted here that all these goods were exported by the Respondent No. 1 along with other goods duly disclosed in the bill of entry. On the basis of the said bill of entry, the Respondent No. 2 paid customs duty and other charges and got the goods released including the Raw Mulberry Silk. Once the goods are exported by the Respondent No. 1, documents of title were delivered to the Respondent No. 2 on payment of consideration for the total goods weighing 23,171.20 Kgs. and delivery of goods was given to the Respondent No. 2 then the Respondent No. 1 cannot claim ownership on the said goods. Their title in those goods stands transferred in the Respondent No. 2. The Respondent No. 2 filed bills of entry, paid customs duty and took delivery of goods, as such, the Respondent No. 1 cannot be said to be the owners of the goods sought to be allowed for export. The Respondent No. 1 did not have any right to claim re-export of those goods. The present is the case of intentional illegal import as such provisions of Section 111(d) and (o) of the Customs Act clearly get attracted. Therefore, the Adjudicating Authority has rightly passed the order of confiscation. Thus, the Respondent No. 1 cannot be allowed to claim ownership of those Raw Mulberry Silk as such they cannot be allowed to re-export the said goods.

As already stated herein above, the Respondent No. 2-importer imported in all 23,171.20 Kgs. as stated in Bills of Entry Nos. 875998 and 875999 dated 19th August, 2003. Those goods were assessed to duty amounting to Rs. 11,54,100/-. The Respondent No. 2 paid the said duty on 19-8-2003. In both the bills of entry, description of goods stated as "Viscose Rayon Filament Yarn 120-D Chinese Origin". No where it is stated in the bills of entry that 50 cartons of Mulberry Raw Silk were also imported by the Respondent No. 2. By false description of the goods, the Respondent No. 2 imported Mulberry Raw Silk to the tune of 2910 Kgs.

Under Sub-section (4) of Section 17 of the Customs Act, 1962, the importer is required to make declaration and subscribe to the truth of the contents while filling the bill of entry. Section 17(4) provides for cases where declaration is found to be different from the actual contents of the consignment. Together these provisions cast duty on the importer to make true declaration of the goods. Proviso to Section 46(4) also stipulates that when the importer is unable to furnish all particulars for want of full information, he may request for examination of the goods, pending production of such information. Therefore, if the importer has any difficulty in making proper declaration of the goods due to doubts or any other reason, he has to avail remedy under the said proviso. Despite these safeguards and cautions provided in law, if the bill of entry is found to contain erroneous declaration, it is not open to the importer to claim that it is not mis-declaration.

In the present case, the order-in-original dated 2-4-2004 passed by the Commissioner of Customs (Imports) was challenged by the Respondent No. 1 by preferring an appeal before the Customs, Excise & Sales Tax Appellate Tribunal, Mumbai praying to allow them to re-export the Mulberry Raw Silk. The said appeal came to be allowed by the order dated 2-12-2004.

As we have held herein above that the Respondent No. 1 if failed to prove that they were the owners of these goods, they cannot be allowed to claim re-export of the said goods.

We, therefore, find that the Appellate Tribunal was not right in finding fault with the Adjudicating Authority for not granting discretionary relief to the Respondent No. 1, who had not established their ownership to the smuggled goods and who had also shared common intention to smuggle goods in India by deceitful means. The Adjudicating Authority, having found parties guilty of smuggling the goods by deceitful means, rightly imposed various fines.

In the result, the question of law framed herein above is answered in the negative i.e. in favour of the Revenue and against the Respondents-Assessee. The appeal is allowed and the judgment and order dated 2-12-2004 passed by the Appellate Tribunal is set aside and the order-in-original dated 2-4-2004 passed by the adjudicating Authority is restored. The parties to bear the costs of appeal as incurred.

In view of disposal of the appeal, the Notice of Motion No. 2136/2005 does not survive and the same is also disposed of.