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2017 Supreme(Bom) 906
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ANOOP V. MOHTA & ANUJA PRABHUDESSAI, JJ.
The Commissioner of Customs (Imports) Office of the Commissioner of Customs (Import) - Appellant
Versus
M/s. Hyundai Heavy Industries Co. Ltd. and Ors. - Respondents
CUSTOMS APPEAL NO. 2 OF 2007
Decided On : 13-07-2017
For the Appellant : Mr. Pradeep S. Jetly with Mr. Jitendra B. Mishra
For the Respondent: Mr. Hormaz Daruwalla, Ms Krishna Borkute, Mr. Subodh Kurdukar, Mr. V. Subramaniam
The main legal point established in the judgment is that compliance with the relevant provisions of the Customs Act, including obtaining necessary permissions and clearances, is crucial in determining the legality of confiscation and penalty. The court emphasized that mere delay in assessment by the departmental officers cannot be the basis for confiscation and penalty, and the burden is on the department to prove misrepresentation or fraud.
Headnote:
Customs Act - Imposition of Penalty and Confiscation - Sections 111(j), 112(a), 47, 42, 46, 130(1) - The court discussed the legality of confiscation under section 111(j) and the clearance of goods under section 47 of the Customs Act. The court also considered the permissions for conversion of vessels and port clearance under section 42. The key legal provisions discussed were sections 111(j), 112(a), 47, 42, and 46 of the Customs Act.
Fact of the Case:
The case involved the unauthorized removal of goods from the Customs area without payment of duty and without obtaining the 'Out of charge' from the proper officer of the Customs. The Customs Department issued show cause notices to the importers and their agents for alleged contravention of provisions under section 47 of the Customs Act, leading to confiscation and penalty. The importers and their agents denied the allegations and appealed the decision.
Finding of the Court:
The court found that the importers had obtained permissions for conversion of vessels and port clearance as required under the Customs Act. The court noted that the goods were released after obtaining port clearances and due permissions, and the duties were paid before the issuance of show cause notices. The court held that there was no case of misrepresentation, misstatement, or fraud, and the department failed to discharge its burden of proving the alleged breaches.
Issues: The issues involved the legality of confiscation under section 111(j), the clearance of goods under section 47, and the permissions for conversion of vessels and port clearance under section 42 of the Customs Act. The court also addressed the delay in the departmental proceedings and the sustainability of the Tribunal's order in law.
Ratio Decidendi: The court held that the importers had complied with the relevant provisions of the Customs Act by obtaining necessary permissions and clearances. The court emphasized that the delay in assessment by the departmental officers could not be the basis for confiscation and penalty. The court also noted that there was no evidence of willful misstatement or intent to evade duty, and the department failed to prove misrepresentation or fraud.
Final Decision: The court dismissed the appeal, maintained the CESTAT order, and answered the questions of law in favor of the assessee and against the revenue. The court vacated the interim order and ordered no costs.
Anoop V. Mohta, J.
Present Appeal is under section 130 (1) of the Customs Act, 1962 ('the Customs Act').
2. The Appellant/Department preferred this Appeal against common order dated 14th August, 2006 passed by the Customs, Excise and Service Tax Appellate Tribunal ('CESTAT') whereby, the order of imposing penalty and confiscation passed by the Commissioner of Customs (Imports) Mumbai, has been set aside. All the Respondents were the Appellants before the Commissioner of Customs. The other connected appeals are also listed with this Appeal.
3. This Court on 18th July, 2007, admitted the departmental Appeals on following common questions of law:-
“Admit on the following substantial questions of law:-
(a) Whether the CESTAT was correct in holding that the order of confiscation under section 111(j) of the Customs Act, 1962 was not legal on the ground that the importers had obtained the permissions for conversion of the vessels and the port clearance without obtaining an order permitting clearance of goods for home consumption under section 47 of the Customs Act, 1962?
(b) Whether CESTAT was correct in holding that clearance of the goods on the basis of the port clearance permissions was proper despite the fact that Bills of Entry were filed by importers for home consumption under section 46 of the Customs Act, 1962 for clearance of such goods wherein permissions were statutorily to obtained for clearance of the goods as per the provisions of section 47 of the Customs Act, 1962?
(c) Whether the CESTAT was correct in treating the goods imported only as foreign vessels, requiring permissions for conversion and port clearance instead of treating them also as imported cargo whereas the importers had imported vessels and had filed Bills of Entry for clearance of the vessels as goods as required under section 46 of the Customs Act, 1962 for the clearance of which the compliance of the provisions of section 47 was a statutory requirement?
(d) Whether the CESTAT was correct in holding that the confiscation under section 111(j) is not applicable since the section 111(j) deals with permission for removal of the goods while section 47 of the Customs Act, 1962 relates to permission for clearance and nowhere in the Act the terms 'removal' and 'clearance' have been defined.
(e) Whether the CESTAT was correct in holding that the confiscation under section 111(j) was not correct since the importers had the pay orders ready for payment of duty whereas, as per section 47 of the Customs Act, 1962, the importer on filing the Bills of Entry can clear the goods only after the payment of import duty as assessed thereon and any charges payable under the Act?
ADDITIONAL QUESTION OF LAW
Having regard to facts and circumstances of the case whether the order of the Tribunal is sustainable in Law having been passed after six months of conclusion of hearing of Appeal.
2. Ad-interim relief in terms of prayer clause (c) except the bracketed portions with the following directions:-
i. The respondent No.1 to furnish a bond for the full amount of penalty and fine in favour of the appellant and further bank a guarantee for 50% of the amount of fine and penalty in favour of the appellant within a period of 6 weeks from today and shall keep the same alive pending hearing and final disposal of the appeal.
ii. The existing bank guarantee already given by the respondent No.1 to the appellant to be returned on the respondent No.1 furnishing the bank guarantee as indicated in the order.
iii. This order is subject to the final order in this petition.
3. Notice waived on behalf of respondent No.1 to 14.”
Restricted background of litigations, for deciding the appeal on law points:-
4. The Importer (Respondent No.1) M/s. Hyundai Heavy Industries Co. Ltd. submitted about 9 bills of entry (the Bill) on respective dates. Respondent No.2 M/s. Boskalis Westminister Middle East and Respondent No.3 M/s. CGG Marine filed respective Bill. All three importers filed their Bills through M/s. J.M.
