Case Law Details

Case Name : Commissioner of Customs Vs. Shadi Ram & Sons Pvt. Ltd. (Madras High Court)
Appeal Number : C.M.A. (MD). No. 314 of 2020
Date of Judgement/Order : 31/08/2020
Related Assessment Year :
Courts : All High Courts (5998) Madras High Court (556)

Commissioner of Customs Vs. Shadi Ram & Sons Pvt. Ltd. (Madras High Court)

The issue under consideration is whether the custom notification for increasing the duty on peas will be levied on retrospective basis or prospective basis?

High Court states that, it is an undisputed fact that, prior to the notification No.84/2017-Customs dated 08.11.2017, the import of yellow peas was not liable for payment of duty. According to the learned Counsel appearing for the respondent/importer, the notification No.84/2017-Customs dated 08.11.2017, came to be published at 22.15 Hrs., whereas, the formalities regarding assessment of Bills of Entry have completed much earlier at 12.50 Hrs., on 08.11.2017. Further, they states that, there was no malafide intention on the part of the appellant in clearing the consignment without payment of duty. In the considered opinion of High Court, the Tribunal in the peculiar facts and circumstances of the case, especially, with regard to the time of the notification No.84/2017-Customs, dated 08.11.2017, as well as, in prior to the said notification, there was no requirement to pay the duty, had exercised the discretion. Hence, the disposal by the CESTAT in the facts and circumstances of the case, especially, in the light of the time at which the notification came to be issued and that prior to the notification, the duty on the imported goods was also not Therefore, it is answered in negative against the Appellant/Revenue.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

The Revenue is the appellant.

2. The present statutory appeal is preferred by the appellant/Revenue, challenging the final order dated 16.03.2018, made in Final Order40673/2018 in Appeal C/40440/2018-DB, on the file of the Customs, Excise and Service Tax Appellate Tribunal (in short “CESTAT”), South Zonal Bench, Chennai.

3. In the memorandum of grounds in the statutory appeal, the following substantial question of laws are raised:-

“(i) Whether in the facts and circumstances of the case, CESTAT is correct in law to prescribe the amount fixed for filing appeal under 129E of the Customs Act, 1962 as the quantum of Bank Guarantee under Section 110A ibid for release of seized goods?

(ii) Whether the CESTAT is correct in amending the quantum of the Bank Guarantee ordered to be furnished by the Competent Authority under Section 110A ibid read with CBEC Circular 35/2017-Cus. dated 16.08.2017?

(iii) Whether the Tribunal has jurisdiction to entertain an appeal against a letter allowing provisional release under Section 110A of the Customs Act, 1962?”

4. The facts leading to the present statutory appeal have been narrated in detail and in extenso in the final order passed by the CESTAT, is the subject matter of challenge in this statutory appeal and therefore, it is unnecessary to reinstate the said facts once again. The respondent/importer had imported a consignment of Yellow Peas, through a vessel MV Riva Wind and the Import General Manifest of the vessel was filed on11.2017. On 06.11.2017, the respondent/importer filed two Bills of Entry both dated 06.11.2017, through EDI under self assessment (Risk Management System) with “Nill” rate of duty.

5. The vessel was granted inward entry on11.2017 at 12.50 Hrs and on the same day, the notification bearing No.84/2017-Customs dated 08.11.2017, came to be issued imposing a duty of 50% on the commodity imported (at 22.15 Hrs). Out of charge was given on 14.11.2017 and the part of the cargo of the yellow peas was moved to the private warehouse by the respondent without payment of duty and on 16.11.2017, the officers of the Directorate of Revenue Intelligence (DRI), Tuticorin, seized the entire cargo lying in the said place on the ground that the goods were non-duty paid in terms of the above said notification No.84/2017-Customs dated 08.11.2017.

6. The respondent/importer made a request for provisional release of the entire goods valued at Rs. 59,15,70,344/- involving Customs Duty of Rs. 29,57,85,172/- and the Commissioner of Customs, Tuticorin, allowed the provisional release of the goods vide letter dated 29.11.2017 with a condition to furnish a Bond equal to the value of the goods and submitting a Bank Guarantee or Cash Security equal to 60% of the value of the goods towards likely adjudication levies including duty, fine and penalty. The respondent/importer aggrieved by the said decision/proceedings dated 29.11.2017, filed the appeal before the CESTAT, Chennai. The CESTAT, Chennai, after taking note of the fact, found that the yellow peas enjoyed benefit of full exemption from duty, before the issuance of notification No. 84/2017-Customs dated 08.11.2017 and since Bills of Entry have been filed on priority entry basis, those Bills have to be deemed as a date of entry inwards granted to the said consignment.

7. The Appellate Tribunal on the facts and circumstances of the case has also noted that there was no malafide intention on the part of the appellant/importer therein and clear the consignment without payment of duty and therefore filed the same status by the Commissioner for provisional release of the imported goods which was seized, is unfair.

8. The Tribunal, on further probe of facts, found that the entire duty was to be demanded from the appellant/importer under Section 28, the same would be of the order of Rs.30 Crore as informed by the learned Counsel appearing for the appellant/importer, there will be a requirement of making pre-deposit to the extent of 7.5% of Rs.30 Crore under Section 129E of the Customs Act, 1962 and taking a guidance from the provisions of mandatory pre-deposit, the Tribunal ordered the release of goods subject to the submission of bond with Bank guarantee equal to 7.5% of the duty liability within a period of two weeks from the date of the order and also directed the Customs authorities to finalise the case as expeditiously as possible, within a period of three months. The Revenue, especially, aggrieved by the reduction of the Bank guarantee, had filed this statutory appeal.

9. The learned Counsel appearing for the appellant/Revenue had drawn the attention of this Court to the Customs Circular35/2017-Cus., dated 16.08.2017, as to the guidelines for provisional release of seized imported goods pending adjudication under Section 110A of the Customs Act, 1962 and also drawn the attention of this Court to the letter/proceedings of the Commissioner of Customs, dated 29.11.2017, which was a subject matter of the challenge before the CESTAT, Chennai, and would submit that it is only a letter and we cannot termed as an order/decision and it is purely an executive in nature and as such, the appeal before CESTAT, per se, is not maintainable.

10. It is the further submission of the learned Counsel appearing for the appellant that admittedly, the notification came into being on 08.11.2017 and whereas, the Bills of Entry were also came to be granted at 12.50 Hrs. on 08.11.2017, the contents of the notification have full force upon the facts of the case and he would further add that it is the discretion of the CESTAT in reducing the Bank guarantee from 60% to 7.5%, per se not in order and prays for interference.

11. Per contra, Mr.N.Viswanathan, learned Counsel appearing for the respondent/importer would submit that in compliance of the direction issued by the CESTAT is the subject matter of challenge in the statutory appeal. The Commissioner of Customs have passed the order No.12/2018, dated 15.10.2018 and the order is extracted below:-

(i). I deny the exemption from payment of Basic Customs Duty claimed on the import goods “Ukranian origin Yellow Peas in bulk new crop 2017 year” under Serial No.20 of the Notification No.50/2017-Customs dated 30.06.2017  as Peas (Pisumsativum) was excluded from Serial No.20 of Notification No. 50/2017-Customs dated.30.06.2017 vide Notification 84/2017-Customs dated 08.11.2017.

(ii) I order that the date of Port Entry inwards i.e., 08.11.2017 for the vessel MV RIVA WIND entered by the proper officer in the EDI system after completing the boarding formalities at anchorage on 08.11.2017 is the actual date of entry inwards and same has to be taken into account as the date for assessment of the customs duty as per the Notification No.84/2017-Customs dated 08.11.2017 read with proviso to the Section 15 of the Customs Act, 1962.

(iii) I order confiscation of the goods imported by them vide two bills of entry with a total assessable value of Rs. 77,44,67,801/- (Rupees Seventy Seven Crore Forty Four Lakh Sixty Seven Thousand and Eight Hundred and one only), which were already seized under Section 111(m) of the Customs Act, 1962. However, the seized goods are already released provisionally to the importer under Section 110A of the Customs Act,1962, I give an option to redeem the same on payment of fine of Rs.5,00,00,000/-(Rupees Five Crore) under Section 125 of the Customs Act, 1962.

(iv) I confirm the differential duty of39,88,50,918/-(Rupees Thirty Nine Crore Eighty Eight Lakh Fifty Thousand Nine Hundred and Eighteen only), arrived by applying the rate of duty in terms of Notification 84/2017-Customs dated 08.11.2017 on the goods imported vide the said two bills of entry under Section 28(10) of the Customs Act, 1962.

(v) I confirm the interest on the differential duty confirmed in para (iv) under Section 28AA of the Customs Act,1962.

(vi) I impose a penalty of39,88,50,918/- (Rupees Thirty Nine Crore Eighty Eight Lakh Fifty Thousand Nine Hundred and Eighteen only), and an amount equal to interest confirmed at (v) above on M/s.Shadiram and Sons Private Limited under Section 112 of Customs Act, 1962. Also, I do not impose any penalty under Section 112 of Customs Act in view of the proviso (v) to Section 114A of the Customs Act, 1962.

(vii) I impose a penalty of Rs.2,00,00,000/- (Rupees Two Crore only) on Shri.Sandeep Kumar Mohan, Director, M/s.Shadiram and Sons Private Limited, Tuticorin under Section 112(a) of the Customs Act, 1962.

(viii) I impose a penalty of Rs.1,00,00,000/- (Rupees One Crore only) on Ms.Hari & Co, the Customs Broker, Tuticorin under Section 112(a) of the Customs Act,1962.

(xi) I order to invoke the Bond and Bank Guarantee executed for the provisional release of the impugned imported goods towards above dues.”

Challenging the legality of the said order, the respondent/importer also filed an appeal before the CESTAT and pending disposal of the same, filed an application for the speedy disposal of the same in Application No. C/EH/40073/2019, and the CESTAT vide Misc. Order No.40178/2019, has directed the listing of the matter on 15.04.2019 and however, the Revenue is not cooperating for early disposal of the appeal. He would further add that, in the light of the said developments, nothing remaining for further adjudication in this statutory appeal.

12. This Court has carefully considered the rival submissions and also perused the materials placed before it.

13. It is an undisputed fact that, prior to the notification No.84/2017-Customs dated 08.11.2017, the import of yellow peas was not liable for payment of duty. According to the learned Counsel appearing for the respondent/importer, the notification No.84/2017-Customs dated 08.11.2017, came to be published at 22.15 Hrs., whereas, the formalities regarding assessment of Bills of Entry have completed much earlier at 12.50 Hrs., on 08.11.2017.

14. The Tribunal has taken into consideration the said important factual aspect and also found that there was no malafide intention on the part of the appellant in clearing the consignment without payment of duty and also recorded the findings in terms stated by the Commissioner of Customs, vide letter/proceedings dated 29.11.2017, are unfair. The Tribunal further submitted that the requirement of making pre-deposit to the extent of 7.5% of Rs.30 Crore under Section 129E of the Customs Act, 1962 and would be a tall order upon the respondent/importer in the light of the above facts and circumstances and taking note of the surrounding facts and circumstances, thought fit to reduce the Bank guarantee from 60% equal to 7.5% of the duty liability within a period of two weeks from the date of the order and also directed the Commissioner of Customs, to finalise the case as expeditiously as possible. The Commissioner of Customs also in the light of the said direction had finalise the case and passed the order No.12/2018, dated10.2018 and challenging the legality of the same, the respondent/importer herein, had also filed an appeal before the CESTAT and moved an application for early hearing and the same was also ordered.

15. In the considered opinion of this Court, the Tribunal in the peculiar facts and circumstances of the case, especially, with regard to the time of the notification No.84/2017-Customs, dated 08.11.2017, as well as, in prior to the said notification, there was no requirement to pay the duty, had exercised the discretion. In the considered opinion of this Court, the discretion came to be exercised by the CESTAT in the facts and circumstances of the said case and that apart, the Commissioner of Customs has also disposed of the matter vide order No.12/2018 dated 15.10.2018 and nothing remains for further adjudication in this matter for the reason that the present appeal technically has become infructuous.

16. In the light of the above facts and circumstances, the substantial questions of law 2 and 3, is left open to be decided in an appropriate proceedings and therefore, it need not be answered and so far as the substantial question of law No.1 is concerned, as already observed, the disposal by the CESTAT in the facts and circumstances of the case, especially, in the light of the time at which the notification came to be issued and that prior to the notification, the duty on the imported goods was also not Therefore, it is answered in negative against the Appellant/Revenue.

17. In the result, this Civil Miscellaneous Appeal is dismissed, subject to the above observations. No costs. Consequently, the connected civil miscellaneous petition is also dismissed.

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