SUN EXPORT CORPORATION Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) THE above appeals arise out of a common appellate order dated 16-5-88 passed by the Collector of Customs (Appeals), Madras whereby he had admitted the appeals filed by the Department for enhancement of redemption fine on the consignment of Inshell almonds imported by the appellants herein and also for imposing penalty on the appellants by modifying the order-in-original passed by the Deputy Collector of Customs (Appraising) dated 9-11-81. THE Deputy Collector in his order had levied a fine in lieu of confiscation of 60% approximately of the c.i.f. value of the imported goods and had not levied any penalty. THE Collector (Appeals) found that this order of the Deputy Collector needed modification as prayed for by the Department in their appeals and enhanced the redemption fine to 200% of the c.i.f. value and also imposed a personal penalty of Rs. 10,000/- under Section 112 of the Customs Act, 1962. THE appeals filed against the Deputy Collector's order ordering confiscation of the goods by the appellants herein were also heard together by the Collector (Appeals) who rejected their appeals.

(2.) The facts in brief are that the appellants herein imported Inshell almond seeds and sought clearance under REP licence issued against Export Product G.2(i)(a) of Appendix 17 of Import Trade Control Policy in force at the relevant time. They claimed that the goods as 'seeds' fall under the category of item indicated against S. No. (d) of the said export product in the Policy. A sample of the consignment was drawn and forwarded to the Horticulturist, Tamilnadu, for his opinion who opined that the seeds are fit for germination and viable for sowing. As almonds are dry fruits as known in the trade and are also consumer item of agricultural origin falling under S. No. 121 of Appendix 2(b) of the ITC Policy, the Custom House issued a query Memo, while processing the Bills of Entry filed for the clearance of the goods pointing out the above objection and questioning the validity of the licence produced. While maintaining in their reply to the query that the goods are only almond seeds and not dry fruit, the appellants asked for the adjudication of the case without the issue of a formal Show Cause Notice but on granting them personal hearing. The Deputy Collector heard the appeals and held that the goods imported cannot be held to be covered by the REP licence produced by the appellants, and treating the import as unauthorised, ordered the confiscation of the consignment under Section 111(d) of the Customs Act, 1962 levying a redemption fine amounting to 60% of the c.i.f. value in each case. He did not impose any personal penalty on the appellants. The Collector of Customs, Madras, meanwhile, exercising his powers of review under Section 129-D(2) of the Customs Act called for the records of the proceedings before the Deputy Collector and found that the Deputy Collector's order needed review, for the reason that the Deputy Collector, while holding that the imports are not covered by valid licence, had not taken into account the high margin of profit commanded by almonds in the market while levying the redemption fine, and that he had based the quantum of redemption fine on certain Cash Bills of retail sales relating to different kinds of almonds. It was also found that the Deputy Collector's order was improper inasmuch as he had refrained from imposing any personal penalty although, according to the Custom House, there was sufficient grounds to hold that there had been a deliberate attempt as mis-declaration by the appellants herein. On the basis of this examination of the records by the Collector of Customs, a direction was given under Section 129-D(4) of the Customs Act by the Collector to the Assistant Collector of Customs (Group I) to file an appeal before the Collector (Appeals) for determination about the legality and propriety of the Deputy Collector's order. The Custom House also on 18-11-87 furnished to the appellants the gist of the adjudication order dated 9-11-87 passed by the Deputy Collector and in the communication the appellants were also told by the Custom House that the Collector in exercise of his powers under Section 129-D(2) had directed the filing of an appeal against the Deputy Collector's order before the Collector (Appeals). The grounds of the Department's appeal was also enclosed to this communication. The appellants were also given notice of the Department's appeal by the Collector (Appeals) in his letter dated 28-11-87. The appellants also filed appeals on their own against the Deputy Collector's order, after receipt of the copy thereof, questioning the confiscation of the goods. They also put forth their objection to the Department's appeal. The Collector (Appeals) on consideration of the appeals by the appellants as well as by the Department, rejected the appellants appeals and held that a higher fine in lieu of confiscation was leviable and fixed it at 200% of the c.i.f. value, and he also gave a finding that a penalty was imposable in the facts and circumstances of the case on the appellants, and imposed a penalty of Rs. 10,000/- on each of the appellants under Section 112(a) of the Customs Act, 1962. It is against this order that the present appeals have been filed.

(3.) AS regards the points in the Department's appeal, the learned Counsel submitted that the infirmity pointed out relating to the redemption fine that it was based on certain cash bills relating to peeled almonds is a factor not contained in the Deputy Collector's adjudication order at all. There is no reference in that order to Cash Bills as the basis of the quantum of redemption fine. Shri Badsha further referred to and relied upon Order No. 869/874/87 WRB of the CEGAT in the case of Vijayakumar & Co. and Ors. v. C.C.E., Rajkot, to urge that the quantum of redemption fine fixed under Section 125 of the Customs Act should not be made the ground for review. The Tribunal held in that case since Section 125 itself confers discretion the order passed by the adjudicating authority cannot be reviewed as improper unless there is ground for attributing bad faith or mala fide, whereas in this case the very fact that the Deputy Collector who adjudicated the case himself had doubts about the legality of the import is reflected in his drawing samples from the consignment and obtaining the expert opinion of the Horticulturist, and this factor could have weighed in his mind for not imposing any penalty. Therefore no mala fides could be attributed and hence the quantum of redemption fine and non-imposition of penalty cannot be said to be an impropriety in the Deputy Collector's order. The learned Counsel further urged that the West Regional Bench of the CEGAT had in the case reported in 1985 (20) ELT 107 held that the application for review under Section 129-D(4) has to be within the directions contained in Section 129-D(2) and that subsequent event cannot be brought in, and the case reported in 1984 (15) ELT 428 was also cited to emphasise that the provisions regarding review under that Section are mandatory. The learned Counsel urged that it is essential that procedure laid down for review should be followed strictly in the manner prescribed or not at all, and it is important because it affects the mandatory right of appeal of the appellants. AS regards the order on their appeal by the Collector (Appeals), the learned Counsel pointed out that the very issue had come up before this Bench of the Tribunal in the case of MM Exports v. C.C.E., Madras, 1988 (18) E.C.R. 283 which was also relating to import of almonds inshell being sought to be cleared against REP licence against the same commodity group G. 2 of Appendix 17 of ITC Policy 1985-88. The learned Counsel submitted that he would adopt the same arguments here too and would contend that the goods imported are seeds and not consumer goods. AS regards the margin of profit on the goods the learned Counsel contended that reliance placed on Economic Times is erroneous as what appeared in that Newspaper was only a quotation whereas the margin of profit for the consignment imported at Madras ought to have been made on the basis of enquiries in the local market. Further, the quotation in the newspaper of 31-10-87 which have been taken by the Department are not relevant for the import at Madras which took place earlier on 14-10-87. He further pointed out that he understood that in an auction sale of the goods the Custom House itself could sell it only for a much lower margin. The Collector's order also does not indicate how the margin of profit adopted by that authority at 236% was worked out. According to the appellants, the margin of profit on the basis of their own sales of the goods works out to only 83% as per the worksheet submitted, and in this context levy of redemption at 60% by the Deputy Collector cannot be said to be inadequate. Further the Collector (Appeals) has in this case relied upon the clarification given by the Chief Controller of Imports and Exports which was obtained by the Custom House. This is a ground not at all adduced in the Department's appeal before the Collector (Appeals). Therefore, it was erroneous on the part of the Collector to have relied upon the clarification of the Chief Controller of Imports and Exports to the Custom House. The learned Counsel further contended that the Collector (Appeals) ought not to have relied upon and followed the decision of the South Regional Bench of the CEGAT in its Order No. 196/88, dated 21-4-88 in the case of M.M. Exports v. Collector of Customs, Madras, 1989 (39) E.L.T. 482 (Tri.). Since the facts in that case is not comparable with the appellant's case, because in that case decided by the Tribunal, the opinion of the Chief Controller of Imports and Exports was available. No such opinion was there before the authorities in the appellants case. The CEGAT decision is also under Reference Application before the Hon'ble High Court of Madras. The Horticulturist's opinion was clearly in favour of the appellants and in any case there is nothing to indicate mala fide, mis-declaration as the Department itself had doubts about the coverage of the entry in the ITC Policy, and as such, no penalty ought to have been imposed at all in this case. Therefore, the learned Counsel concluded that in the first instance, the appeal filed by the Department before the Collector (Appeals) was itself defective and therefore, not maintainable and even on merits, no penalty was deserved and the quantum of redemption fine was adequate.