Case: M/s. Jacsons Thevara Vs. Collector of Customs &amp; Central Excise

or employee of the importer or exporter. Here the relevant date was December 7, 1979, the date on which the duty was paid and the enhanced period of five years prescribed under the proviso to sub-section (1) of Section 28 was invoked by the customs authorities to issue the show cause notice dated June 4, 1982, to the appellant. The present case falls within the ambit of the said proviso because the appellant had cleared the goods from the customs on payment of concessional rate of duty under Heading No. 84.66 of the Customs Tariff by making a misstatement in the application form dated November 21, 1979, for registration under the Project Import (Registration of Contracts) Regulations, 1965, that the machinery that had been imported was for substantial expansion of the existing industrial unit of the appellant and by suppressing the fact that under Agreement dated July 31, 1979, the appellant had agreed had agreed to transfer the said machinery to the Company. In the circumstances the Collector was justified in directing that the goods in question should be re-assessed to duty on merits under the appropriate heading of the Customs Tariff without giving the benefit of the assessment under Heading 84.66 and to collect the short levy from the appellant. The demand for the additional amount of Rs. 1, 26, 163.45 paise made on the basis of such re-assessment in pursuance of the aforesaid direction given by the Collector, does not, therefore, suffer from any legal infirmity. 11. We may now come to the penalty of Rs. 50, 000/- which has been imposed by the Collector and which imposition has been upheld by the Appellate Tribunal. The penalty has been imposed under Section 112 of the Act which provides for levy of penalty on a person who in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111 or abets the doing or omission of such an act. The Collector and the Appellate Tribunal have proceeded on the basis that the appellant has done an act which renders the goods imported by it liable to confiscation under Clause (m) and (o) of Section 111 of the Act and for that reason the said penalty has been imposed on the appellant. Since we are of the view that the instant case is covered by Clause (o) of Section 111 we do not consider it necessary to go into the question whether Clause (m) of Section 111 would be applicable to the present case. Clause (o) of Section 111 provides as under : "111. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscation - XXXXX XXXXX XXXXX (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;" * 12. Shri Avadh Bihari has urged that Clause (o) of Section 111 envisages that the goods are exempted from payment of duty or any prohibition in respect of import thereof and that in the present case the goods that were imported by the appellant were not exempted from duty but were chargeable to duty and, therefore, it cannot be said that the present case falls under the said Clause and the goods imported by the appellant were liable to be confiscated under it. We are unable to agree with this submission. The expression "exempted" in Clause (o) does not mean full exemption from duty because under Section 25 of the Act power has been conferred to grant exemption from the whole or any part of the duty of customs leviable on the goods specified in the notification. This means that Clause (o) would also cover cases where partial exemption from duty has been granted in respect of the goods in question. This was a case where partial exemption from duty, in the form of concessional rate had been granted under Heading No. 84.66 of the Customs Tariff and the said exemption was available subject to the conditions laid down in the said Heading. The appellant obtained the benefit of the said concession and got the goods cleared from customs on payment of concessional rate of duty by making a declaration that the goods were required for substantial expansion of the existing industrial unit of the appellant. The said declaration of the appellant was not correct inasmuch as the goods were not to be used for substantial expansion of the unit of the appellant but were to be used for setting up a new unit by the Company. The appellant after getting goods cleared from the customs transferred the same to the Company and thereby the appellant failed to observe the condition on the basis of which the benefit of concessional rate of duty under Heading 84.66 of the Customs Tariff was obtained. The goods were, therefore, liable to confiscation under Clause (o) of Section 111 of the Act and penalty could be imposed under Section 112 of the Act. nd13. The maximum amount of penalty that can be levied under Section 112 in the case of dutiable goods other that prohibited goods is five times the duty sought to be evaded on such goods or one thousand rupees, whichever is the greater. As mentioned earlier the difference between the duty payable and the duty actually paid by the appellant was Rs. 1, 26, 163.45 and the maximum amount of penalty that could be imposed was five times of that amount. Keeping in view the facts and circumstances of the case the Collector has imposed a penalty of Rs. 50, 000/- which imposition has been upheld by the Appellate Tribunal. We find no ground for interfering with the said direction about imposition of penalty.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The submission of Shri Avadh Bihari is that from the aforesaid documents, it is clear that the appellant has not committed any breach of any condition of the import licence dated February 14, 1979, and that the import authorities have also not found that the appellant has contravened the conditions on the basis of which the import licence was granted to the appellant that in these circumstances, it was not open to the authorities under the Act to proceed against the appellant.These contentions, in our view, are misconceived because here the customs authorities have not taken action against the appellant for breach of any condition of the import licence dated February 14, 1979. Action had been taken against the appellant under the provisions of the Act for obtaining clearance of the goods by paying customs duty on a concessional rate under Heading 84.66 of the Customs Tariff by suppression and wilful misstatement of facts. What is of relevance is whether before obtaining clearance of the machinery imported under import licence dated February 14, 1979, the appellant had informed the customs authorities that the said machinery had been transferred to the Company under agreement dated July 31, 1979. The office of the Deputy Chief Controller of Imports and Exports, Cochin, had no role in the matter of levy of customs duty on the imported machinery and, therefore, the conduct of the appellant in informing the Deputy Chief Controller of ImportsExports about the agreement dated July 31, 1979, entered into by the appellant and the Company with regard to transfer of business can have no bearing on the action taken by the customs authorities for the contravention of the provisions of the Act. The decision of this Court in East India Commercial Company Ltd., Calcutta and Another (supra) is not applicable because the action that has been taken by the customs authorities is not for breach of the conditions of the import licence but for the contravention of the provisions of the Act.It appears that under various other headings of the Customs Tariff Act a higher rate of customs duty was prescribed for the various items of machinery that were imported by the appellant. Under Heading No. 84.66 duty at a concessional rate was provided in respect of machinery, etc., imported for substantial expansion of an existing unit of a specified industrial plant. In order to avail this concessional rate of customs duty it was necessary to have the contract registered with the appropriate Customs House in the manner prescribed by the Regulations made by the Central Board of Excise and Customs under Section 157 of that a notice shall be served on the person chargeable with the duty requiring him to show cause why he should not pay the amount specified in the notice. The said notice has to be served within one year of the relevant date in cases when import is made by an individual for his personal use or by Government or by an educational, research or charitable institution or hospital and the period for service of such notice is six months in other cases. The proviso to(1) of Section 28 enhances the aforementioned that a notice shall be served on the person chargeable with the duty requiring him to show cause why he should not pay the amount specified in the notice. The said notice has to be served within one year of the relevant date in cases when import is made by an individual for his personal use or by Government or by an educational, research or charitable institution or hospital and the period for service of such notice is six months in other cases. The proviso to(1) of Section 28 enhances the aforementioned periods for service of the notice to five years in cases where any duty has not been levied or has been short levied or erroneously refunded by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter. Here the relevant date was December 7, 1979, the date on which the duty was paid and the enhanced period of five years prescribed under the proviso to(1) of Section 28 was invoked by the customs authorities to issue the show cause notice dated June 4, 1982, to the appellant. The present case falls within the ambit of the said proviso because the appellant had cleared the goods from the customs on payment of concessional rate of duty under Heading No. 84.66 of the Customs Tariff by making a misstatement in the application form dated November 21, 1979, for registration under the Project Import (Registration of Contracts) Regulations, 1965, that the machinery that had been imported was for substantial expansion of the existing industrial unit of the appellant and by suppressing the fact that under Agreement dated July 31, 1979, the appellant had agreed had agreed to transfer the said machinery to the Company. In the circumstances the Collector was justified in directing that the goods in question should beto duty on merits under the appropriate heading of the Customs Tariff without giving the benefit of the assessment under Heading 84.66 and to collect the short levy from the appellant. The demand for the additional amount of Rs. 1, 26, 163.45 paise made on the basis of suchin pursuance of the aforesaid direction given by the Collector, does not, therefore, suffer from any legal infirmity.Shri Avadh Bihari has urged that Clause (o) of Section 111 envisages that the goods are exempted from payment of duty or any prohibition in respect of import thereof and that in the present case the goods that were imported by the appellant were not exempted from duty but were chargeable to duty and, therefore, it cannot be said that the present case falls under the said Clause and the goods imported by the appellant were liable to be confiscated under it. We are unable to agree with this submission. The expression "exempted" in Clause (o) does not mean full exemption from duty because under Section 25 of the Act power has been conferred to grant exemption from the whole or any part of the duty of customs leviable on the goods specified in the notification. This means that Clause (o) would also cover cases where partial exemption from duty has been granted in respect of the goods in question. This was a case where partial exemption from duty, in the form of concessional rate had been granted under Heading No. 84.66 of the Customs Tariff and the said exemption was available subject to the conditions laid down in the said Heading. The appellant obtained the benefit of the said concession and got the goods cleared from customs on payment of concessional rate of duty by making a declaration that the goods were required for substantial expansion of the existing industrial unit of the appellant. The said declaration of the appellant was not correct inasmuch as the goods were not to be used for substantial expansion of the unit of the appellant but were to be used for setting up a new unit by the Company. The appellant after getting goods cleared from the customs transferred the same to the Company and thereby the appellant failed to observe the condition on the basis of which the benefit of concessional rate of duty under Heading 84.66 of the Customs Tariff was obtained. The goods were, therefore, liable to confiscation under Clause (o) of Section 111 of the Act and penalty could be imposed under Section 112 of the Act. nd13. The maximum amount of penalty that can be levied under Section 112 in the case of dutiable goods other that prohibited goods is five times the duty sought to be evaded on such goods or one thousand rupees, whichever is the greater. As mentioned earlier the difference between the duty payable and the duty actually paid by the appellant was Rs. 1, 26, 163.45 and the maximum amount of penalty that could be imposed was five times of that amount. Keeping in view the facts and circumstances of the case the Collector has imposed a penalty of Rs. 50, 000/which imposition has been upheld by the Appellate Tribunal. We find no ground for interfering with the said direction about imposition of penalty.