Circular No. 745/61/2003-Central Excise
16th September, 2003
F. No. 385/253/92-JC
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Judicial Cell, North Block, New Delhi
Subject : Hon’ble Supreme Court judgment dated 31.01.2003, in the case of Collector of Customs, Bombay vs M/s Elephanta Oil and Industries Ltd., Bombay:
C.A. No. 4858/95 w.r.t CEGAT Final Order No. 52/92-C, dated 18.02.2002.
Sir,
Kind attention is invited to the above mentioned judgement of the Hon’ble Supreme Court.
2. In this case M/s Elephanta Oil and Industries Ltd., Bombay (M/s Jain Shudh Vanaspati) had imported inedible Beef Tallow from Singapore and submitted bills of entry dated 16th June and 1st July 1983 and claimed clearance against licence dated 29.6.1981. By the time the goods were imported, a Public Notice No. 29/81 dated 5.6.1981 had already been issued putting beef tallow in the canalized items list and not permitting the same under O.G.L. items. Collector of Customs, Bombay had confiscated the consignments of beef tallow and gave the party option to re-export the impugned goods and imposed personal penalty of Rs. 5 Crore under Section 112 of the Customs Act, 1962. The Tribunal has however upheld the party’s appeal holding that the import of beef tallow under OGL was not unlawful and therefore question of confiscation, redemption fine or imposition of personal penalty under Section 112 of Customs Act 1962 would not arise. On appeal filed by the department, the Hon’ble Supreme Court has held that confiscation of goods and thereafter permission to re-export the same would not mean that penalty under Section 112 of the Customs Act cannot be levied. The power to levy penalty under Section 112 of the Act ibid for improper importation of goods is different from confiscation of goods under Section 125 and giving option to pay in lieu of confiscation such fine as authority thinks fit which are exercised under Section 125 of the Act. Therefore levy of fine in lieu of confiscation is in addition to levy of penalty imposable under Section 112 .
3. The Hon’ble Court vide the above order has inter-alia held as under:-
” We would first deal with the contention raised by the learned senior counsel Mr. Sanghi appearing on behalf of the respondent that once the imported article is re-exported as directed by the department, there is no question of levying any penalty or redemption fine. In our view, this submission is without any substance because confiscation of goods and thereafter permitting the respondent to re-export the same would not mean that penalty under Section 112 of the Customs Act cannot be levied. The power to levy penalty under Section 112 for improper importation of goods is different from the power of confiscation of goods under Section 125 and giving an option to pay in lieu of confiscation such fine as authority thinks fit which are exercised under Section 125 of the Act. Relevant part of Section 112 reads thus:-
“112. Penalty for improper importation of goods, etc.
– Any person-
(a) who is 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, or
(b) shall be liable –
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other laws for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees.”
As against this, Section 125 empowers the concerned officer to confiscate the goods which are illegally or improperly imported. After confiscation of the goods under the said section, the Collector of Customs is empowered to give an option to the concerned party to get the same back after paying redemption fine. Section 125 (1) reads thus:-
“Section 125. Option to pay fine in lieu of confiscation – (i) Whenever confiscation of any goods is authorized by this Act , the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall , in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit.”
From the aforesaid two sections, it is apparent that both operate in different fields, namely, one requires imposition of penalty and other provides for confiscation of improperly imported goods. Section 111 provides that goods brought from the place outside India are liable to confiscation if the goods are improperly imported as provided therein. In cases where goods are liable to confiscation , discretion is given to the authority to impose penalty. Further, section 125 empowers confiscation of such goods and thereafter , confiscated goods vest in the Central Government. The Section further empowers the authority to give an option to the owner or the person from which goods are seized to pay fine in lieu of such confiscation for return of the goods and the fine is also limited up to the market price of the goods. Therefore, levy of fine in lieu of confiscation is in addition to levy of penalty imposable under Section 112. (emphasis supplied).”
4. The Hon’ble Supreme Court has also inter-alia held that –
” It is well settled law that in case where SLP is dismissed without assigning any reason, that order would not constitute a binding precedent . ( Re: Ajit Kumar Rath Vs/ State of Orissa ( 1999) Supp. 4 SCR 302).”
5. The judgment is in favour of Revenue. I am directed to request you to circulate the above to all the field formations under your charge for information.
Please acknowledge receipt of this letter.