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High Court Of Calcutta
Ruma Pal
BENGAL TOOLS LTD - Appellant
Versus
ADDITIONAL D.G.R.I - Respondent
Matter 961 Of 1994
Decided On : 02/03/1995
CUSTOMS ACT, 1962 - SECTION 47 - SECTION 110 - SECTION 111 - SECTION 28 - SECTION 129D - SECTION 17 - CLASSIFICATION OF IMPORTED MACHINES - POWER TO DETAIN AND CONFISCATE MISDECLARED GOODS - SCOPE OF SECTION 47 ORDER - DISTINCTION BETWEEN ASSESSMENT AND CLEARANCE - RECOVERY OF SHORT LEVY - POWER OF REVIEW UNDER SECTION 129D - APPLICABILITY OF SECTION 111(M) TO CLEARED GOODS - BINDING NATURE OF EARLIER CLASSIFICATION - INTERPRETATION OF SECTION 47 BY DELHI HIGH COURT AND SUPREME COURT.
Fact of the Case:
The petitioner imported machines described as Power Tillers and classified them under Tariff Item 8432.80. The goods were assessed and released under Section 47 of the Customs Act, 1962. Subsequently, the goods were detained under Section 110 on the ground of misdeclaration and were liable to confiscation under the Act. The petitioner challenged the detention order under Article 226 of the Constitution. The High Court quashed the detention order, but on appeal, the order was set aside, and the matter was remanded back for hearing on affidavits.
Finding of the Court:
1. The order under Section 47 is not an order of adjudication and does not preclude proceedings under Section 28 (recovery of short levy) or Section 111 (confiscation of improperly imported goods). 2. The power to confiscate goods under Section 110 and Section 111 is independent of the power to assess and clear goods under Section 47. 3. The show cause notice issued under Section 28 read with Section 124 of the Act is valid and the Adjudicating Authority can determine the classification of the imported goods. 4. The order of Shri Varadarajan classifying the machines under Tariff Heading 8701 is not binding on the Department, as it was not a reasoned order passed after hearing the parties. 5. The fact that the petitioners had previously imported identical machines under Tariff Heading 8701 and paid duty accordingly does not preclude the Department from classifying the machines under Tariff Heading 8701 in subsequent imports.
Issues: 1. Whether an order under Section 110 can be passed in respect of goods that have already been cleared under Section 47. 2. Whether the machines were correctly classified under Tariff Heading 8432 or 8701. 3. Whether the earlier classification of the machines under Tariff Heading 8432 by Shri Varadarajan is binding on the Department.
Ratio Decidendi: 1. An order under Section 47 is not an order of adjudication and does not preclude proceedings under Section 28 or Section 111. 2. The power to confiscate goods under Section 110 and Section 111 is independent of the power to assess and clear goods under Section 47. 3. The show cause notice issued under Section 28 read with Section 124 of the Act is valid and the Adjudicating Authority can determine the classification of the imported goods. 4. The order of Shri Varadarajan classifying the machines under Tariff Heading 8701 is not binding on the Department, as it was not a reasoned order passed after hearing the parties. 5. The fact that the petitioners had previously imported identical machines under Tariff Heading 8701 and paid duty accordingly does not preclude the Department from classifying the machines under Tariff Heading 8701 in subsequent imports.
Final Decision: The writ application is dismissed with costs. Interim orders, if any, are vacated.
( 1 ) THE petitioner company imported 103 machines which it described as Power Tillers between 10 August 1993 and 7th January 1994. In the Bills of Entry the relevant Tariff Item was mentioned as 8432. 80. The goods were assessed on that basis and released under Section 47 of the Customs Act, 1962 (hereafter referred to as the Act ). The goods were warehoused in the petitioner's warehouse. On 8th March 1994 they were sought to be detained by virtue of an order Section 110 of the Act on the ground that they had been imported by misdeclaration and were liable to confiscation under the Act.
( 2 ) THE order of detention was challenged by the petitioners under Article 226 of the Constitution on 5th April, 1994. By a judgment and order dated 5th April 1994 A. N. Ray, J. made the Rule absolute and quashed the impugned order of detention. An appeal was preferred from this order by the Customs Authorities. Before this the petitioners claim to have sold some of the machines. The order dated 5-4-1994 was set aside and the matter remanded back to be heard on affidavits.
( 3 ) AFFIDAVITS were filed. A preliminary objection was raised by the petitioners that the impugned order of detention had been issued by the Preventive Officer of the Department of Revenue Intelligence, who had no jurisdiction to do so. The Department produced relevant notification from which it was apparent that the Preventive Officer of the DRI had in fact been empowered to exercise powers inter alia under Section 110 of the Act. The point was decided as a preliminary issue against the petitioners by an order dated 19th September, 1994.
( 4 ) FURTHER issues were raised by the petitioners. The first is whether an order under Section 110 may be passed in respect of the goods which have already been cleared. According to the petitioners the precondition to the exercise of power under Section 110 is that goods must be liable to be confiscated. It is submitted that once the goods have been cleared they were no longer confiscable under Section 111 of the Act.
( 5 ) IT is contended that when goods have been cleared under an order under Section 47 they cannot be detained without setting aside the order under Section 17 (4) or Section 129d of the Act. It is argued that an order under Section 47 is passed after assessment is made by the proper officer. This amounts to an adjudication which can only be corrected by an order passed in Revision under Section 129d or Section 17 (4) and could not be set at naught by initiating proceedings for confiscation. Such a proceeding it is submitted would be without jurisdiction. Reliance has been placed on several decisions in this context which are considered at a later stage in this judgment.
( 6 ) THE next issue raised is that the machines were correctly classified under Tariff Heading 8432. It is submitted that the Customs Authorities were seeking to classify the same under Tariff Heading 8701 which did not apply. According to the petitioners the Tariff Heading 8701 related to the Tractors of specific types and did not include Power Tillers. It is contended that even as a legal proposition it was not open to the Customs Authorities to give different findings in respect of the same machines. It is stated that not only the petitioners but other concerns had imported the, same machines and that the Customs Authorities had treated the same as classifiable under Tariff Heading 8432. Particular reliance was placed on an order passed by Shri Varadarajan, Additional Collector of Customs by which the machines were classified under Tariff Item 8432. 80. The petitioners have cited the decisions reported in to contend that an earlier finding is binding on the Department unless new facts come to light. According to the petitioners no such facts existed.
( 7 ) THE respondents on the other hand have relied upon the following cases to contend that even after assessment and clearance of goods under Section 47 proceedings could be taken
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