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2004 DIGILAW 857 (MAD)

Ketan Enterprises v. Union of India & Others

2004-07-09

N.KANNADASAN

body2004
Judgment :- The writ petition No.19082/1997 is filed contending that the petitioner has imported poppy seeds of Pakistan origin from Karachi under two bills of entry at a declared value of Rs.6,59,640/- and Rs.3,77,177/-, the 4th respondent namely the Adjudicating Authority held that the poppy seeds are not allowed to be imported as they were consumer items but however allowed the goods to be redeemed on payment of redemption fine at 290%. Aggrieved against the said order, the petitioner filed an appeal before the 3rd respondent namely the Commissioner of Customs (Appeals). The 3rd respondent after conducting an enquiry has reduced the redemption fine to 75% and imposed a penalty of Rs.1,50,000/-. The redemption fine worked out to Rs.4,94,730/- and Rs.2,82,882/- in respect of the bills of entry. As against the said order of the 3rd respondent, the department filed an appeal before the second respondent Tribunal namely The Customs Excise Gold (Control) Appellate Tribunal, South Zone, Madras. The Tribunal by its order dated 28.11.97 has fixed the redemption fine at the rate of 155% and confirmed the penalty imposed by the 3rd respondent. 2. Learned counsel for the petitioner contended that the Adjudicating Authority namely the 4th respondent has passed the order based on an enquiry conducted with reference to the available records. When the appeal was filed as against the order of the 4th respondent, the 3rd respondent by order dated 17.1.1997has found that the market value of the poppy seeds arrived at by the Adjudicating Authority was not fixed as per the records available before them and accordingly fixed the market value. Learned counsel further contended that the 3rd respondent has relied upon the copies of the 'Economic Times' and 'Financial Express' for the month of October & November and found that the market value fixed by the 4th respondent was based on the said publication as Rs.75000/- per metric tone was incorrect as the said market value is only at Delhi and that the finding of the value of Rs. 40,000/- to 50,000 per metric tone is only at Calcutta. 40,000/- to 50,000 per metric tone is only at Calcutta. Learned counsel further contended that the 3rd respondent has also taken note of the demurrage charges which works out to 6.75 lakhs for six containers with reference to the letters of Customs House Agent and the market value of the poppy seeds and reduced the redemption fine at the rate of 75% and imposed a penalty of Rs.1,50,00/-. Learned counsel further contended that when a further appeal is filed before the 2nd respondent Tribunal/ the Appellate Authority has chosen to conduct independent market enquiry as if the said Tribunal is acting as an Adjudicating Authority and had chosen to pass an impugned order. 3. Per contra Mr. K.Veeraraghavan, Additional Central Government counsel appearing for the respondents contended that there is no infirmity in the order of the Appellate Authority inasmuch as the said Authority namely, the Tribunal has chosen to find out the correct value by ordering a separate enquiry. Learned Additional Central Government Standing Counsel further submits that since the original authority has failed to conduct the market enquiry, there is nothing improper on the part of the Tribunal to conduct such an enquiry. He further submitted that the order of the Tribunal is liable to be upheld. 4. I have considered the rival submissions of the learned counsel of the respective parties. Since the 2nd respondent Tribunal has reversed the order of the 3rd respondent namely The Commissioner of Customs (Appeals), it will be useful to refer the relevant findings of the Appellate Authority which reads as follows: "Challenging the above findings, the appellants have stated that the market value of the goods is Rs.75,000/- per MT only at Delhi and it ranges from Rs.40,000/- to Rs.50,000/- per MT at Calcutta which should be reckoned. I find that there is force in the above plea as seen from the 'Economic Times' Madras dated 26.11.96 vide P.23 ( the adjudication order was passed on 19.11.96). The CEGAT has also noted that the price of Pakistani variety is far less than the price of the same goods of India variety – Vide para 5 in order No.570/93 dated 13.10.93 in the case of M/s. Chawla Drug Pharma. The CEGAT has also noted that the price of Pakistani variety is far less than the price of the same goods of India variety – Vide para 5 in order No.570/93 dated 13.10.93 in the case of M/s. Chawla Drug Pharma. Thus, even if assumed to be relevant to the imported Pak variety (which is admittedly inferior in quality), the margin of profit will not be 292% ( on the landed cost of Rs.27,176/-) as noted by the Additional Commissioner in these orders, but will be about 100% only. Now, if the demurrage charges of Rs.2.5 lakhs in respect of appellant No.1 and Rs.6.75 lakhs for appellant No.2 till January 97 are also further to about 60%. Though the appellant have cited the decision in M/s. Vel Traders vide order no.54197 dated 18-12-96, the same will not apply here, since the party therein had produced REP licences, which is not the case here. 8. Having regard to all these factors and the level of redemption fine of 75% adopted by the Tribunal in respect of a similar consumer product i.e., Cassia – vide order No.2478/96 dated 18-12-96 in Appeal No.1199/96 and C/697/96 of M/s. General Traders and the demurrage charges involved, I consider that ends of justice will be met if the redemption fine is reduced to 75% of CIF value in each case. I order accordingly. In the facts and circumstances of these cases, I reduce the penalty of Rs.50,000/- (Rupees fifty thousand only) in the case of appellant No.1 and Rs.1,50,000/- (Rupees One lakh fifty thousand only) in the case of appellant No.2 for both the appeals i.e. (A.No.C 24/2/97 & C 24/3/97)." 5. Inasmuch as the 3rd respondent has dealt with the matter with reference to the available records and reversed the finding rendered by the Adjudicating Authority namely, the 4th respondent and when a further appeal is filed before the 2nd respondent Tribunal, as rightly contended by the learned counsel for the petitioner, the matter came to be disposed of entirely on different presumptions. The 2nd respondent Tribunal has chosen to embark upon the enquiry as if it has to discharge the duties of the Adjudicating Authority namely, the 4th respondent. In fact, a perusal of paragraph 3 of the order of the Tribunal discloses that actual grounds on which the appeal was filed was by the department. The 2nd respondent Tribunal has chosen to embark upon the enquiry as if it has to discharge the duties of the Adjudicating Authority namely, the 4th respondent. In fact, a perusal of paragraph 3 of the order of the Tribunal discloses that actual grounds on which the appeal was filed was by the department. Even in the Grounds on Appeal, the department has not chosen to assail the order passed by the 3rd respondent and 4th respondent as illegal on the ground that the market enquiry was not conducted. That, apart the manner in which the market enquiry being conducted, in the instant case is unknown to the established principles of natural justice. When the matter was pending before the Tribunal, it has directed the representatives of the Department to conduct the market enquiry which is admittedly behind the back of the petitioner and has obtained the views of the representatives of the Department. Further, the Tribunal has chosen to rely upon the value arrived at in an earlier case which was disposed of in Order Nos.2570 to 2573/91 dated 16.9.97. It is not known as to how the Tribunal has chosen to compare the value which was fixed in respect of a different consignment wherein the report was called for on 16.8.97 with regard to the samples taken in the said consignment. In the instant case, it is not disputed that the bills of entry is related to August 1996 which is totally a different consignment for a different period. The approach of the 2nd respondent Tribunal in considering the value arrived at in respect of a different consignment, a sample of which was drawn which was also of the subsequent year, is not legally sustainable. 6. Learned Additional Central Standing Counsel has fairly submitted that the procedure which was adopted by the Tribunal is not in terms of any of the provisions of Customs Act. Even though learned counsel contended that such an enquiry is permissible in law, of course it has to be conducted after giving adequate opportunity to the aggrieved person. Admittedly such opportunity was not given to the petitioner herein while conducting the market enquiry. Even though learned counsel contended that such an enquiry is permissible in law, of course it has to be conducted after giving adequate opportunity to the aggrieved person. Admittedly such opportunity was not given to the petitioner herein while conducting the market enquiry. Even otherwise it was not the case of the department that the Adjudicating Authority as well as the Appellate Authority have failed to conduct the market enquiry, even though the facts and circumstances of the case on hand warranted to hold such an enquiry. Inasmuch as the respondents 3 and 4 have not chosen to conduct the market enquiry, it has to be presumed that they have decided to arrive at a value for the poppy seeds based on records available before them. When the Adjudicating Authority as well as the Appellate Authority have concluded the matter based on the enquiry conducted by them and in the absence of a specific pleading in this regard by the department before the 2nd respondent Tribunal, the said procedure seems to have been adopted and conclusion was also arrived at fixing the value of the poppy seeds, without giving any opportunity whatsoever to the petitioner, which is not permissible in law. 7. It is also seen the procedure adopted by the Tribunal is contrary to the principles laid down by the Apex Court in its decision rendered in 1997(95) ELT 8 (S.C.) Commissioner of Customs, Calcutta Versus Hanuman Trading Corporation which reads as follows: 5. There is no controversy that the respondents did not avail of the opportunity before the authorities to adduce any evidence and it was only before the Tribunal that material was produced by the respondents/sole proprietor challenging confiscation and penalty. In the facts and circumstances of the case, we are satisfied that the course adopted by the Tribunal of permitting respondents to adduce evidence before it for the first time and then in proceeding to decide the case on merits on that basis was not correct. If the Tribunal was of the view that a fresh opportunity was required to be given to the respondents to adduce evidence and show cause in response to the notice given to the respondents, the appropriate course for adoption was to remit the matter to the Commissioner of Customs, Calcutta. For this reason alone, the Tribunal's order must be set aside. 8. For this reason alone, the Tribunal's order must be set aside. 8. Further, the Tribunal has gone to the extent of passing remarks as against the statutory authority in ordering the release of the goods which is not warranted. A perusal of the order of the Tribunal discloses that it has exceeded its jurisdiction in making remarks as against the statutory authority in ordering release of the goods which are not relevant for the final disposal of the matter. That apart, the Tribunal while fixing the redemption fine at the rate of 155% has not indicated the reasons for fixing the said amount. 9. For the reasons stated above, I am of the view that the order dated 28.11.97 of the 2nd respondent is liable to be quashed . Accordingly, the writ petition is allowed. However, there will be no order as to costs. W.P.No.255/1998 This writ petition is filed challenging the order dated 28.11.1997 in Appeal C/469 of the second respondent ending with his order bearing No.3074 to 3090/97 in Appeal C/469 to 485/97. The Tribunal has passed the impugned order placing reliance upon the order which is the subject matter of the order in W.P.No.19082/197. Hence, without going into the further details on factual aspects, this writ petition is allowed in view of the order passed in the connected Writ Petition No.19082/1997. Accordingly, W.P.No. 255 of 1998 is allowed. However, there shall no order as to costs.