Case Law Details
Damani Shipping Pvt. Ltd. Vs Commissioner of Customs (Import-I) (CESTAT Mumbai)
Without a threadbare analysis of the relevant portion of the clarificatory Circular No. 11/2016-Cus. dated 15.03.2016 it can be said that the Circular in unambiguous terms clarified that other person implies that other person to which no demand of duty is raised with notice served under Section 1 or sub-Section 4 of Section 28, as the case me be. Hence the Appellant’s case squarely covered under provision. Since it was a co-notice to whom no demand notice was made but notice under Section 28 was served. Ambiguity arises because of the fact that at the end of para 6 it was noted that case involving seizure of goods under Section 110 of the Customs Act or cases where confiscation proceedings are involved, would be out of the purview of this Circular. Apart from the fact that the said Circular was held in Rohit Sakhuja case (supra) as clarificatory and cannot supersede and legislative intent of the Act, the addition of provision concerning seizure and confiscation could only held to be applicable in cases where Section 135(A) and 140 of the Customs Act were invoked and it has no bearing on simple duty demand and penalty upon adjudication of a proceeding on mis-declaration. Be that as it may, the Circular No. 11/2016-Cus. dated 15.03.2016 has not personified any violator individually since it had categorically stated that cases involving seizer and confiscation would be out of the purview of the Circular and therefore the order passed by the Commissioner in allowing the benefit contained in Section 28(6)(i) to the importer company and its Managing Director and denying the same to the Appellant CHA who is charged under same penal provisions under Section 112, 114(A), 114(A)(A) in the same case is unsustainable in law and equity. Hence the order.
FULL TEXT OF THE CESTAT MUMBAI ORDER
Refusal to extend benefits of sub-Section 6(i) of Section 28 of the Customs Act in concluding proceedings against the Appellant-Customs Broker after differential duty with required penalty was paid by the importer and confirmation of penalty of Rs.50,000/- against the Appellant under Section 112(A) of the Customs Act, 1962 by the Commissioner of Customs (Import), Mumbai vide above referred order is assailed in this appeal.
2. Factual back drop of the case, as could be inferred from the appeal memo and the order of the Commissioner, is that Appellant as CHA had cleared rotating tube bundle dryer and high speed mixture with their accessories imported by M/s. Chandigarh Distillers & Bottles Ltd. by filing bill of entry No. 5491717 dated 15.05.2014 and classifying the items under Customs Tariff Heading No. 8436 that attracted nil rate of CVD. Special Intelligence and Investigation Branch investigated the matter and having regard to the classification of those products made by other importers, opined that the imported goods were supposed to be classified under CTH 8419 with 12.5% CVD. Being informed importer discharged the duty liability with interest and also paid penalty @25% of the duty before issue of show-cause notice which is acknowledged in para 19 and 22(iv) of the show-cause notice. Appellant was also put to show-cause for violation of provision contained in the Customs Act making it liable for penalty under Section 112(a) of the said Act. Learned Commissioner of Customs had absolved the importer and its Managing Director by extending the benefits contained in sub-Section 6(i) of Section 28 of the Customs Act but confirmed penalty against the Appellant by holding that Circular No. 11/2016-Cus. dated 15.03.2016 excludes application of such provision of deemed “conclusion of proceeding” against goods which were seized under Section 110 of the Customs Act or liable for confiscation on the other Sections of Customs Act and since in the instant case both Section 110 & 111(m) were invoked, the same benefit can’t be extended to the Appellant. Thereafter, she confirms the penalty on the Appellant for having not performed its job stipulated under Customs Broker Licencing Regulation, 2012 in not collecting correct information concerning classification and valuation of goods before filing the bills of entry. The Appellant assailed the said order of confirmation of penalty before this forum.
3. During the course of hearing of this appeal learned Counsel for the Appellant Mr. Prashant Patenkar, with reference to judicial decision reported in 2016 (338) ELT 620 (Tri.-Del.) in the case of Orbit Jewellers Vs. Commissioner of Customs, Air Cargo whereby earlier Section 25 of the Customs Act and its application, which is coterminous to the present provision contained in Section 28(6)(i) has been discussed, and judicial decisions reported in 2018 (362) ELT 316 (Tri.-Del.) in the case of Rohit Sakhuja Vs. Commissioner of Customs (ICD TKD)(Import), New Delhi that deals directly with the provision contained in Section 28(6)(i) of the Customs Act, had argued that those two decisions alongwith many other decisions as referred in his compilation clearly indicate that the deemed conclusion of proceeding against the Appellant Customs Broker would also cover penalty imposed under Section 112(A) of the Customs Act, 1962 since show-cause notice was issued under Section 28 of the Customs Act and discharge of duty liability alongwith interest and penalty was made under Section 28(5) of the said Act. He further submitted that board Circular has brought an artificial distinction in stipulating conditions which are not in conformity to the Customs Act, relevant provision contained in Section 28(6)(i) and therefore cases of seizure and confiscation under the said Act which is stated in the clarificatory Circular No. 11/2016-Cus. dated 15.03.2016 for non-closer of proceedings in cases involving seizure and confiscation concerning criminal prosecution classified under Sections 135, 135A or 140 of the Customs Act basing on which learned Commissioner had passed his order is erroneous, in view of the fact that it was held to have no overriding effect over Section 28 of the Act, as per observation in Rohit Sakhuja case (cited supra). He further pointed out that learned Commissioner had concluded the proceeding against the then Managing Director of the importer by invoking the said provision contained in Section 28(6)(i) of the Customs Act but had not extended the same benefit to the Appellant despite the fact that both were charged under the same provision of the Customs Act, for which the order passed by the Commissioner is unsustainable in law and fact.
4. Learned Authorised Representative for the Respondent-Department Mr. D.S. Maan, in filing written submissions and relied upon the judgment of the Hon’ble High Court of Madras in the case of Sri Kamakshi Agency Vs. Commissioner of Customs, Madras reported in 2001 (129) ELT 29 (Mad.), argued with reference to the reasoning and rationality of the order passed by the Commissioner and drew attention of this Bench to confession of the Director of the Appellant Company recorded under Section 108 of the Customs Act regarding different classification noted by them in the earlier consignment of another importer that speaks well about intentional misclassification though he attributes it to inadvertent mistake, for which penalty was rightly imposed on the Appellant that needs no interference by the Tribunal.
5. I have gone through the case record, the relevant provision of law and decided case laws on the issue as well as written note submitted by both the side. Before going into the grounds stated in the appeal memo it is imperative to have a look at the text of the provision contained in Section 28(6)(i) it reads:-
“Where the importer or the exporter or the agent or the employee of the importer or the exporter, as the case may be, has paid duty with interest and penalty under subsection (5), the proper officer shall determine the amount of duty or interest and on determination, if the proper officer is of the opinion –
(i) That the duty with interest and penalty has been paid in full, then, the proceedings in respect of such person or other persons to whom the notice is served under sub-section (1) or sub– section (4), shall, without prejudice to the provisions of Sections 135, 135A and 140 be deemed to be conlusive as to matters stated therein” (emphasis supplied by the appellant)
6. While applying this provision against the Appellant, the Commissioner had observed that the goods were seized under Section 110 and liable for confiscation under Section 111(m) of the Customs Act, 1962 and hence the co-noticee M/s. Damani Shipping Pvt. Ltd. (present Appellant) is out of the purview of the clarification of the Board Circular No. 11/2016-Cus. dated 15.03.2016. Further, Section 28(6)(i) of the Customs Act, 1962 clearly reveals that the proceedings in respect of ‘such persons or other persons’ to whom the notice is served under sub-Section (1) or sub-Section (4) of the Section 28 of the Customs Act, shall, without prejudice to the provisions of Section 135, 135A and 140 be deemed to be conclusive as to the matters stated therein. But then he opined that since goods were liable for confiscation the proposed penal action cannot be concluded in terms Section 28(6)(i) of the Customs Act, 1962 against the Appellant.
7. Now, let us have a look at the relevant portion of the Board Circular No. 11/2016-Cus. dated 15.03.2016 it reads under para 5 & 6 as follows:
“5. The provision of deemed conclusion is contingent upon the person to whom a show-cause notice has been issued under sub-section (1) or sub-section (4) paying up all the dues of duty, interest and penalty as the case may be. Only in such a circumstance of compliance, shall closure of proceedings against other persons come into effect. Therefore, as a corollary, other persons implies person(s) to whom no demand of duty is envisaged with notice served under sub-section (1) or sub-section (4) as the case may be. Other persons who happen to be co-noticees in the show-cause notice for their acts of commission or omission other than demand of duty would be benefitted by the deemed closure in cases where the compliance of conditions mentioned in proviso to sub-section (2) or clause (I) of subsection (6), as the case may be, by the main noticee to whom inter alia a demand of duty has been issued has been fulfilled. Further, all such case where proceedings reach closure stage under the provisions of Section 28, an order to the effect must be invariably issued by the concerned adjudicating authority.(underlined to emphasise)
6. Section 28 primarily deals with the recovery of duty or erroneous refund. While introducing the facility of deemed conclusion, enabling provision was made for payment of interest and/or penalty. Therefore, all such SCNs or cases which involve duty, interest and/or payment of penalty shall be covered by the above clarification. Further, it may be noted that the cases involving seizure of goods under Section 110 of the Customs Act, or cases where confiscation provisions under sections 111, 113, 115, 118, 119, 120 and 121 are invoked, would be out of purview of this Circular.”
Without a threadbare analysis of the relevant portion of the clarificatory Circular as noted above it can be said that the Circular in unambiguous terms clarified that other person implies that other person to which no demand of duty is raised with notice served under Section 1 or sub-Section 4 of Section 28, as the case me be. Hence the Appellant’s case squarely covered under provision. Since it was a co-notice to whom no demand notice was made but notice under Section 28 was served. Ambiguity arises because of the fact that at the end of para 6 it was noted that case involving seizure of goods under Section 110 of the Customs Act or cases where confiscation proceedings are involved, would be out of the purview of this Circular. Apart from the fact that the said Circular was held in Rohit Sakhuja case (supra) as clarificatory and cannot supersede and legislative intent of the Act, the addition of provision concerning seizure and confiscation could only held to be applicable in cases where Section 135(A) and 140 of the Customs Act were invoked and it has no bearing on simple duty demand and penalty upon adjudication of a proceeding on mis-declaration. Be that as it may, the said Circular has not personified any violator individually since it had categorically stated that cases involving seizer and confiscation would be out of the purview of the Circular and therefore the order passed by the Commissioner in allowing the benefit contained in Section 28(6)(i) to the importer company and its Managing Director and denying the same to the Appellant who is charged under same penal provisions under Section 112, 114(A), 114(A)(A) in the same case is unsustainable in law and equity. Hence the order.
ORDER
8. The appeal is allowed and order passed by the Commissioner of Customs (Import-I), New Custom House, Mumbai vide Order-in-Original CAO No. 19/2019-20 dated 21.05.2019 imposing penalty of Rs.50,000/- on the Appellant is hereby set aside.
(Order pronounced in the open court on 28.09.2022)
