The Commissioner of Customs(E.P.) v. M/s. Jupiter Exports & Ors.

Judgment

1. These are two proceedings, one is Customs Application Section 130(A) Customs act, 1962, ("the Act" short) instance Commissioner Customs (E.P.) ("the Revenue" for short) to seek ( 2 ) reference opinion Court, inter-alia, deciding questions referred appearing hereinafter; another a Writ petition Article 226 Constitution Writ Petition No. 794/2002, instance respondents India application, i.e. M/s. Jupiter Exports, (the petitioner) seeking mandamus directions against Commissioner Customs implement passed Customs Excise, and Gold (Control) Appellate Tribunal, Mumbai. ("the "Tribunal" for short) FACTS: FACTS: FACTS: ----- ----- -----

2. The facts involved in both the proceedings common. The petitioner engaged in the business of export of fabrics and allied products.

3. The Commissioner of Customs (E.P.) issued a show cause notice alleging gross misuse of DEEC scheme adopting fraudulent obtain higher entitlement ( 3 ) imports (Polyester Filament Yarn (P.F.Y.) materials DEEC scheme. It alleged exporting 38,646.412 fabrics (containing 31,518 P.F.Y.) M/s. Jupiter Exports altered export permission (E.P. copies) shipping enhanced quantity exported (66,996.890 kgs) consequently showed of excess quantity of P.F.Y. in exported fabrics (60.295 kgs).

4. The E.P. copy was submitted to D.G.F.T.

obtain Advance Licences import P.F.Y. disperse chemicals. The excess weight P.F.Y. 45,221.155 kgs. It alleged forged fabricated documents M/s. Jupiter Exports (Petitioner) obtained a higher entitlement import licence P.F.Y. permissible materials DEEC scheme. Since Advance Licence fraudulently obtained imports ( 4 ) sought treated without Advance Licence. M/s. Jupiter Exports (the petitioner) therefore, called Rs.17,12,306 should recovered noticees for having the petitioner to evade customs duty.

5. M/s. Jupiter Exports, the petitioner it’s taking various factual defences deposit a Rs. 1,01,00,000/- Adjudicating Authority, to avoid detention of it’s partners under COFEPOSA Act, 1974.

6. The parties to the Show Cause Notice Adjudicating Authority; namely, Commissioner Customs (General), pleased imports treated without advance licence payable imports liable recovered M/s. Jupiter Exports. The Commissioner Customs ( 5 ) pleased confirm entire demanded notice i.e. Rs. 17,12,306 imposed penalty Rs. 18 partner i.e. partner, sleeping partners namely, partner. The Commissioner Customs, thus, directed recovery penalties the sum of Rs. 89,12,306 to be recovered from the deposit of Rs. 1,01,00,000/-.

7. At this stage, it will be relevant to transferees licences question exonerated Adjudication proceedings against dropped. Revenue accepted order. With result, exonerating transferees became final and conclusive against the Revenue.

8. M/s. Jupiter Exports (the petitioner) satisfied Commissioner Customs carried appeal Tribunal contending neither ( 6 ) importer styled "deemed importer", either Section 2 (26) Section 28 Customs Act, neither responsible imports made by the transferees nor penalty could be imposed on it.

9. The Tribunal after hearing both the parties conclusion demanded accordance equity. That demand consideration. That Section 28 recovered "from person chargeable duty". Such person "chargeable duty" importer import exporter export duty. That definition "importer" Section 2 (26) covers person causes import person holding himself importer between importation clearance consumption. As imports ( 7 ) transferees licenses obtained petitioner, considered importers recovered original holder import licence. It petitioner liable extent actually imported it, quantified Rs.

1.38 lakhs approximately, i.e. for the goods actually imported by it.

10. The Customs Department not satisfied aforesaid Tribunal invoked jurisdiction Court Section 130 (A) Customs Act reference for opinion of this Court on following questions of Law. a) Whether exports made by manipulating and forging the documents and creating false exporting items other than that declared in the shipping bill are liable for confiscation? records and b) Whether the licence obtained by manipulation and forging the documents for creating false record so that the requirement of the DEEC scheme is fulfilled, is valid and legal? ( 8 ) c) Whether the licence holder or the transferee of the licence obtained by manipulation and forging documents are entitled to import validly, illegally and exempted from payment of duty?

11. At this juncture, it will be relevant to filing application Court Revenue a considerable time. With result, M/s. Jupiter Industries, petitioner, petition Article 226 Constitution India implementation Tribunal amount Customs Department entitled. When petition came up for hearing, both proceedings were tagged and heard together. RIVAL SUBMISSIONS: SUBMISSIONS: RIVAL RIVAL SUBMISSIONS: ------------------ ------------------ ------------------

12. The learned Counsel Mr Rao urged that licenses obtained manipulating forging documents creating record, transferees ( 9 ) imported goods, entitled exemption. However, exemptions granted favour holding transferees. Inspite exemptions payment customs Custom’s Department follow original licenses holding deemed importers; Commissioner Customs justified directing recovery customs penalty original license holder i.e. Transferor License, M/s. Jupiter Exports. He, further submits forged licenses requirement DEEC scheme cannot validly fulfilled. He, thus, submits Tribunal liable Commissioner of Customs is liable to be restored.

13. Per contra, Mr. Shroff learned Senior Counsel appearing respondents Tribunal consonance ( 10 ) Court further submitted Section 28 Customs Act original licensee already parted licence consideration favour transferees cannot responsible imported transferees; especially, transferees bonafide purchasers having validly imported goods, entitled exemption. He further submits concept deemed import neither recognized Customs Act, Rules framed thereunder nor notifications issued under the Act and Rules.

14. Mr Shroff further brought to our notice Notification No. 204/92-Cus 19th May, 1992, reliance was placed Commissioner Customs; original licence holder, namely, M/s. Jupiter Exports treated "deemed importer" notification. We perused Notification. It contain provision. We whisper ( 11 ) Mr behalf. Mr Rao appearing Revenue specifically finger a a notification support findings recorded Commissioner Customs. However, difficult. Rao fairly conceded notification does not spelt out such a concept of "deemed importer".

15. Mr Shroff without prejudice to his aforesaid contentions, alternatively assuming denying recovered original licence holder. There dispute actual export PFY 31,518 contained 36,646.412 fabrics. As Standard Input-Output Norms (SION) 1 PFY exporter import

1.1 input. As against entitlement 34,669.800 PFY quantity imported 11,243.280 kgs. Hence payable imports made. In fact, according him, respondents/Transferees were, therefore, still entitled to import a further quantity of ( 12 ) 23,426.520 kgs of P.F.Y duty-free.

16. Mr Shroff urged that in fact, the Commissioner paragraphs 19 20, 73 74 has, following earlier orders similar cases, entire export cannot treated having therefore, quantity actually exported considered eligible purposes importation liability demanded notice requires revised. However, erroneously mistake Commissioner confirmed entire quantity demanded notice i.e. Rs. 17,12,306/-. Therefore, Annexures "A notice, paragraphs B" 19 20, 73 74 Commissioner’s order, no duty whatsoever could have been demanded from the respondents.

17. Mr Shroff also tried to support each and finding Tribunal contending ( 13 ) Tribunal correct rejecting penalties imposed partners firm. According him, settled partnership itself penalized, separate penalties cannot imposed partners firm. He relied SwemSwemSwem Industries Industries Industries 2003 2003 2003 (154) (154) (154) ELT ELT ELT 417 417 417 (T). event, according him, warrant imposition penalty sleeping partners, namely Mr Vikas Jakalia Mrs. Premlata Jakarta, respectively partners He submits evidence either notice In firm. Commissioner either alleged manipulation forgery evidence finding knowledge same. That penalty justified all. Mr Shroff submits amount admittedly refundable Commissioner refunded despite several applications Commissioner Tribunal. Hence, petitioner ( 14 ) required petition implementation of the order of the Tribunal in it’s true letter and spirit.

18. He, thus, prayed for rejection of the appeal Revenue. At time, petition seeking implementation Tribunal liable allowed, event, application filed by the Revenue is dismissed. CONSIDERATION: CONSIDERATION: CONSIDERATION: -------------

19. Having heard the rival parties, no fault Tribunal. It settled partnership is penalised, separate penalties cannot be imposed on the partners.

20. So far as first question is concerned it Commissioner itself did not confiscate any goods that were exported; ( 15 )

21. With regard to the second question, this question determination Court Commissioner extent actual exports, respondents benefit license; transferees concerned, import cannot touched considered in this application, since order exonerating them is accepted by the Revenue.

22. With regard to the issue as to whether a license issued D.G.F.T. determined D.G.F.T. Customs Authorities. It settled licenses Court LtdLtdLtd cancelled licensing authority deemed valid. The Hon’ble Supreme vs. vs. vs. Titan Medical Titan Medical Titan Medical Systems Systems Systems Pvt. Pvt. Pvt. Collector Collector Collector Customs, Customs, Customs, New New New Delhi Delhi Delhi 2003 2003 2003 (151) (151) (151) ELT ELT ELT 254 254 254 (SC) (SC) (SC) advance licence issued licensing authority, questioned Customs authorities cannot refuse exemption ( 16 ) allegation misrepresentation. If misrepresentation, licensing authorities behalf. In present case, licensing authority sought cancel licenses, appeal, remanded denovo consideration. No further passed thereafter. In circumstances, licenses valid. Even license subsequently cancelled, Supreme Court Sampat Sampat Sampat Raj Raj Raj Duggar Duggar Duggar Vs.Vs.Vs. Union Union Union India India India 1992 1992 1992 (58) (58) (58) ELT ELT ELT 163 163 163 (SC), (SC), (SC), following East East East India India India Commercial Commercial Commercial Co. Co. Co. Ltd. Ltd. Ltd. Collector Collector Collector 1963 1963 1963 (3) (3) (3) S.C.R. S.C.R. S.C.R. 338 338 338 v. v. v. import covered a import license. The subsequent cancellation a licence relevance nor does it retrospectively render the import illegal.

23. law, With regard to the third question of namely, "whether license holder transferee license obtained ( 17 ) manipulation forging documents creating records entitled import validly legally exempted payment duty?" This question relates transferee. As cannot allowed raised application, Commissioner transferees license entitled import import recovered them. However, import recovered respondent-petitioner. Tribunal negatived correctly The Section 28 recovered "a person chargeable duty" a person would importer import exporter exports. The definition "importer" Section 2(26) Customs Act defines "importer" a person caused import himself importer imported goods. As respondents importer. It ( 18 ) cannot chargeable demand equity considerations. The Tribunal rightly department proceed against a person obtained a license by fraud or misdeclaration in accordance with law.

24. For the reasons recorded, application is devoid substance liable rejected. In the result, application is rejected with no order as to costs.

25. Having dismissed aforesaid application Revenue, become obligatory Commissioner Customs implement Tribunal. Amount M/s. Jupiter Exports entitled quantified Rs. 98,62,000/- deposited Court, invested Nationalized Bank. Petitioner, thus, entitled amount accrued interest thereon. Hence ( 19 ) petition entitled petitioner Rs.98.62 accrued interest thereon. The Prothonotary Senior Master directed amount petitioner M/s. Jupiter Exports A/c Payee’s cheque. Rule is made absolute accordingly with no order as to costs.

26. Parties to act on an authenticated copy of this order which shall be issued as per procedure. (V.C. DAGA,J) DAGA,J) (V.C. (V.C. DAGA,J) (DR.S.RADHAKRISHNAN,J) (DR.S.RADHAKRISHNAN,J) (DR.S.RADHAKRISHNAN,J)