GITA TIMES Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THIS Reference Application has been filed by the applicants against the Final Order No. A/99/98 NB dated 3 -3 -1998 by which a penalty of Rs. 50,0000/ - was confirmed against the present applicants under Section 112 (a) of the Customs Act, 1962.

(2.) APPLICANT has formulated the following question of law for reference to the Hon'ble High Court: "Can provisions of Section 112 (a) of the Customs Act, 1962 be invoked on an importer who even prior to import, has relinquished his title to the goods in terms of Section 23 (2) ibid -.

(3.) LD . Counsel for the applicants briefly narrated the facts of the case as under : Applicant had in January, 1995 placed an order for 600 cartons of dry battery cells on a company in Hongkong. Such items were freely importable under the Advance Import Licences under the DEEC Scheme and were transferable under para 127 of Import Export Policy 1992 -97. Since they could not arrange for the said licence in time, they had cancelled the order subsequently in February, 1995 but the goods had already been shipped on 29 -1 -1995. On receipt of the cancellation of order, the foreign supplier informed the Shipping company on 27 -2 -1995 to divert the container containing the said consignment of dry cells to Moscow to some other buyer after amending the documents. Due to the failure of the Shipping agents to take timely action, the consignment reached Indian Port at Kandla where it was seized on 28 -6 -1995. The investigation did not disprove the fact that the assessee had relinquished his title to the goods even before the consignment had arrived at Kandla. In the adjudication proceedings under Section 111 (d) and Section 112 (a) of the Customs Act, the adjudicating authority directed confiscation of the goods and imposed a penalty of Rs. 2 lakhs each on the assessee firm and also its proprietor. In appeal the Tribunal had modified the Order -in -Original by reducing the penalty to Rs. 50,000/ - but had confirmed the penal liability on the assessee firm. In the Final Order, the Tribunal had relied on the Supreme Court decision in the case of UOI v. Sampat Raj Dugar 1992 (58) E.L.T. 163 (S.C.) and Savitri Electronics v. Collector of Customs 1992 (62) E.L.T. 395 and held that the scope and purport of Clause 5 (3)(ii) of the Import (Control) Order providing that the goods for import of which a licence is granted shall be the property of licencee at the time of import and thereafter upto the time of clearance through customs was to hold the licencee responsible for anything and everything that happened to the goods from the time of import till they were cleared through customs. Ld. Counsel submitted that the Apex Court itself had entered a caution while interpretting the provisions of Import (Control) Order by saying that the said legal fiction should not be carried beyond the provisions of that order and it cannot go to the extent of extinguishing the title of the exporter of the goods when the exporter has not received payment. He submitted that the fiction that was created was relatable to the licencee at the time of import. In the instant case though the applicant had applied for a licence, the same had not been granted to him and even before the goods were imported, he had cancelled the order placed with the foreign supplier and had made all efforts to see that the goods were sent to another buyer after amending the documents. There was therefore, no action taken by the applicant to make the goods liable to confiscation under Section 111 or to penalty under Section 112 (a) of the Customs Act. Inasmuch the Tribunal had imposed a penalty under Section 112 (a) in the above circumstances, a question of law had arisen which may be referred to the Hon'ble High Court.