HANIFF SHABBIR BROTHERS Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) The above reference arises out of the order of the Customs, Excise and Gold (Control) Appellate Tribunal, South Regional Bench at Madras, in C (T) Appeal No. 199 of 1981 (MAS), dated 24-12-1985 and came to be made to this Court under the orders of this Court in R.C.P. No. 15 of 1986 directing the Tribunal under Section 130(3) of the Customs Act, 1962, hereinafter referred to as "the Act", to state the following questions of law, for the decision of this Court :-

(2.) The petitioner had brought 658 drums of R.B.D. Palmolein by the vessel "M.V. LADY KRISHTINA" which arrived at the Port of Madras and sought clearance against a licence issued by the Chief Controller of Imports and Exports valid for importation of goods shipped on or before 27-3-1979 and the goods were also had been initially allowed clearance free of duty, against a bond with a Bank Guarantee in terms of the order of the Delhi High Court, and the goods were actually released on payment of 12 1/2% duty and execution of Bank Guarantee for Rs. 16 lakhs towards the value of the goods and potential penalty, if the ultimate finding on the conclusion of the enquiry was against the petitioner. The Bill of Lading produced was dated 26-3-1979. Subsequently, it came to be known the very vessel noticed above was itself berthed at Singapore only on 10-4-1979 and consequently, on the view that the goods in question could not have been loaded on 26-3-1979 and that the Bill of Lading was really manipulated to suit the validity of the licence period, which expired on 28-3-1979 and, therefore, the goods could not have been shipped during the currency and validity period of the licence, the Collector of Customs issued a show cause notice dated 3-1-1980 to the petitioner alleging contravention of Clause 3 of the Import (Control) Order, 1955 and with Section 3 of the Imports and Exports (Control) Act, 1947, and calling upon the petitioner to show cause as to why the goods should not be confiscated under Section 111(d) of the Act and also as to why a penalty should not be imposed on them under Section 112 of the Act. The petitioner submitted a reply dated 25-1-1980 reiterating their earlier reply dated 8-10-1979 to the department's letter dated 6-10-1979 with supporting materials and records to substantiate their stand and that no action can be taken against them in the absence of authentic information and evidence, merely acting on presumptions, assumptions and surmises. Reliance was also placed upon Section 3 of the Bill of Lading Act and they denied the accusation that the Bill of Lading was a manipulated document. The Collector, by his proceedings dated 29-9-1980, while confirming the stand taken in the show cause notice that the shipment could not have been on 26-3-1979, held that it is the importers who stood to benefit rather than the shippers by the Bill of Lading and consequently, ordered "Having due regard to all the facts and circumstances of the case, I impose on the importers a penalty of Rs. 3,50,000/-(Rupees Three Lakhs Fifty Thousand only) under Section 112 of the Customs Act, 1962. The penalty should be paid forthwith". It may be noticed even at this stage that the proposal to confiscate the goods under Section 111(d) was virtually abandoned and given up.

(3.) On further appeal by the petitioner before the Central Board of Excise and Customs, by an Order No. 153A of 1981, dated 19-3-1981, the Board set aside the order of the Collector and allowed the appeal. In paragraph 4 of the order of the Board, on a comparative assessment and an analysis of the materials produced by the petitioner and those available with the department, it was held that there was no case for any strict interpretation of rules and regulations, that the conclusions of the Collector on the materials relied upon was nothing but in the nature of surmises and the petitioner is entitled to the benefit of doubt and consequently, there was no jurisdiction for the imposition of penalty upon the petitioner. It was also held that the Collector's Order also does not speak of any materials suggesting involvement of the petitioner in arranging importation of the goods knowing that the shipment was made after the expiry of the Import Licence and that in the absence of any order of confiscation of the goods as such, there cannot be any imposition of merely penalty under Section 112of the Act. The appeal was allowed.