Dismissed

The Commissioner of Customs Import v. M/S Gaurav Enterprises

Bombay HC22 Sept 2005CUAPP/6/2004

Case brief

AI extract

What is this about?

Appeal by Revenue against Tribunal order setting aside demand due to limitation bar. Court held declaring goods wrongly for exemption was not misdeclaration. No wilful suppression found allowing limitation defense.

What did the court decide?

Appeal dismissed in limine with no order as to costs.

What the court decided

The Commissioner of Customs Import Vs M/S Gaurav Enterprises — Customs and Excise | Bombay HC (2005)

¶1

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

¶2

CUSTOMS APPEAL NO. 6 OF 2004

¶3

The Commissioner of Customs.

¶4

... Appellant.

¶5

V/s.

¶6

M/s.Gaurav Enterprises.

¶7

... Respondent.

¶8

S.S.Pakale with A.S.Rao i/b. Dr.T.C.Kaushik for the appellant.

¶9

Vikram Nankani with Madhur Baya i/b. N.S. Thacker for the respondent.

¶10

CORAM : V.C.DAGA AND J.P.DEVADHAR, JJ.

¶11

DATED : 22nd September 2005.

¶12

JUDGMENT : (Per V.C.Daga, J.)

¶13

. Heard.

¶14

. This appeal is at the instance of the Revenue. It was admitted by this court vide order

¶15

dated 9th June, 2005 on the following substantial

¶16

questions of law:

¶17

a) Whether the Commissioner of Customs (Adj.) was right in invoking the extended period of limitation as provided under the Customs Act, 1962 particularly in view of the fact that the Respondent had made mis-declaration for claiming benefits of notification no.11/97 dated 1.3.97? b) Whether the importer is liable for penalty under Section 114A of the Customs Act when duty was short levied due to mis-declaration made by him? c) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in setting aside the Order-in-Original CAO No.339/CAC/CC/K.M.T.

¶18

¶19

dated 16.08.2002 passed by the Commissioner of Customs (Adj.), Mumbai who has rightly held that the importer i.e. the Respondent firm has willfully mis-declared the goods under reference and wrongly availed the benefit of Notification no.11/97-cus dated 1.3.97?

¶20

Facts :

¶21

The officers of the Directorate of Revenue
Intelligence, Mumbai ("DRI" for short) were in
receipt of an information indicating that certain
importers were mis-using Customs Notification
No.11/97-Cus dated 1st March, 1997 inasmuch as goods
incapable of being used as "Insole Sheets" in
Leather Industry were being cleared at concessional
rate of duty under the said notification after
availing exemption benefit. Pursuant to the said
intelligence report, the officers of DRI intercepted
certain consignments of "Nylon Tricot Flocking
Fabrics", imported at Mumbai Port, and drew samples
and forwarded it to the Central Leather Research
Institute, Adayar, Chennai for testing and
soliciting their opinion. The said Institute vide
its letter dated 30th December, 1997 opined that the
Nylon Tricot Flocking Fabric material could not be

¶22

used as Insole or Insole Sheet material in

¶23

manufacture of shoes.

¶24

¶25

On another reference made by the DRI

¶26

officers, a technical opinion dated 29th November, 1996 was received by them from the Indian Institute of Leather Products, Chennai, inter alia, stating

¶27

that "Nylon Tricot Flocking Fabrics" is not used as

¶28

Insole in footwear making.

¶29

¶30

In the prima facie opinion of the Revenue,

¶31

the	respondent-	assessee	had	made	misde	claration	and
one	Mr.Niren	Champ	aklal	Ajmera	of	M	/s.Gaurav
Enterprises	and	M/s	.Gaunir	Impex	Pvt.Ltd.,		engaged
in	the import	of	Nylon	Tricot	Flocking	Fabrics	were

¶32

held responsible for claiming benefits of

¶33

notification No.11/97-Cus dated 1st March, 1997.

¶34

¶35

A statement of Mr.Niren Champaklal Ajmera

¶36

was	thus	reco	rded under	secti	on	108 of the	Customs
Act,	1962;		wherein	he	inter	alia; stated	that
their	compan	y	was en	gaged	in	import of	lining
material;		that	they	had	cle	ared consignment	of
"Nylon		Tricot	Flocking	F	abrics"	as ‘Insole	material
for	leather		footwear	by	availi	ng the benefit	of
notificati	on	No.1	1/97-Cus.		It	was further	stated
that	they d	id	not;	manufac	ture	any leather goo	ds or
shoes	or	any	products	made	out	of leather and	that
they	sold	the	imported	Nyl	on	Tricot Flocking	Fabrics
to	various		parties who	were	tra	ders only. It	was

¶37

¶38

admitted that under the said notification, there was

¶39

no exemption benefit for "Nylon Tricot Flocking

¶40

Fabrics".

¶41

6.		Bas	ed on the aforesaid material, sho	w
cause	notice	was	issued to the res	pondent-firm	for
misdeclara	tion	of	the goods alleging	therein	that
the	responde	nt-firm	had filed 16 bills	of entry	for
the	import	of	"Nylon Tricot	Flocking	Fabrics"
declaring	the	same	as "Sheets for ma	king Insole"	and
declaring	their	(the	said 16 bills	of	entry)
assessable		value	at Rs.1,61,53,247/-.	On the	basis
of	the dec	laration	made by them, those	16 bills	of
entry	were	assessed	to a concessional	rate of	duty

¶42

extending the benefits of Notification no.11/97-cus

¶43

dated 1st March, 1997.

¶44

The above show cause notice was replied by

¶45

the noticee.

¶46

The Commissioner of Customs (Adj.) upheld the charges levelled by the Department and confirmed

¶47

the show cause notice vide his order-in-original

¶48

dated 16th August, 2002.

¶49

9.		Being	aggrieved by the aforesaid	order,
the	respondent	herein	preferred an	appeal	bef	ore the
Customs,		Excise an	d Service Tax	Appel	late	Tribunal,

¶50

5 - West Zonal Bench at Mumbai ("Tribunal" for short), who vide its order dated 7th January, 2004 was pleased to set aside the order-in-original dated

¶51

16th August, 2002 holding that the demand made was barred by limitation.

¶52

Being aggrieved by the aforesaid order of the Tribunal, the present appeal has been filed by the appellant-Revenue raising purported substantial

¶53

question of law extracted in the opening paragraph

¶54

of this judgment.

¶55

Submissions :

¶56

Mr.Pakale, learned counsel for the appellant-Revenue submits that while declaring the goods under bills of entry, if the claim for exemption is found to be untenable, in that event, it would amount to misdeclaration of the goods which will enable the department to extend the period of limitation and, therefore, the order of the Tribunal holding that the demand is barred by limitation is

¶57

erroneous and is liable to be set aside.

¶58

12.		Per c	ontra,	Mr.Nankani,	learned coun	sel
appear	ing for	the	re	spondent	submits	that	there	is
no	misdeclaration	of	the	goods.	He	has	point	ed that
the	goods	were	de	clared as	"Nylon	Tricot		Flocking

¶59

¶60

Fabrics	Sheets	for	making	Insole".	In	his
submission	the	goods	imported	were	"Nylon	Tricot
Flock	Fabrics"	only.	Mere	mention	of a	wrong

¶61

notification to claim exemption cannot be said to be

¶62

a misdeclaration of goods under the Act.

¶63

Mr.Nankani, in support of the above
submission, relied upon the judgment of the Apex
Court in the case of Northern Plastic Ltd. v.
Collector of Customs and Central Excise , 1998 (101)

¶64

ELT 549 (SC) and pressed into service para-22 of the

¶65

said judgment, which reads thus:

¶66

As the goods imported by the appellant were being used and intended to be used as Cinematographic Film, the appellant had described them as Cinematographic films covered by sub-heading 3702.20. No attempt was made by the customs authorities either before the Collector or before CEGAT to show that the goods imported by the appellant were ordinarily not used as Cinematographic Films or were not intended by the appellant for such a use. Moreover, looking to the Heading 3702 and its sub-heading, it does not appear that such goods were intended to be covered by sub-heading 3702.90. As regards the claim for exemption in payment of countervailing duty the appellant had stated that it was entitled to the benefit under Notification No.50/88-C.E. The declaration made by the appellant has been found to be wrong by the Collector and CEGAT on the ground that there was a separate exemption notification in respect of jumbo rolls for Cinematographic Films. While dealing with such a claim in respect of payment of customs duty we have already observed that the declaration was in the nature of a claim made on the basis of the belief entertained by the appellant and

¶67

¶68

therefore, cannot be said to be a misdeclaration as contemplated by Section 111(m) of the Customs Act. As the appellant had given full and correct particulars as regards the nature and size of the goods, it is difficult to believe that it had referred to the wrong exemption notification with any dishonest intention of evading proper payment of countervailing duty.

¶69

(Emphasis supplied)

¶70

Mr.Nankani, learned counsel for the

¶71

respondent-a	ssessee further	submi	ts	that	the d	emand
in the	show cause notice	pertain	s to	the	period	from
August,	1997 to May,	1998,	wh	ereas	the	reports
referred	to in para-41 of	the	order	in	original	were
available	with the appellant-	Revenue	in	the	month	of
November,	1996 as well	as in	the	month	of Dec	ember,
1997.	In spite of th	ese rep	orts,	the	goods	were
cleared	on the basis of	the	bills	of	entry filed	by
the	respondent. In	the	circum	stances,	Mr.N	ankani

¶72

submits that there could hardly be said to be a case

¶73

of misdeclaration.

¶74

Mr.Nankani further submits that the

¶75

original	authority	did	not	record	any	finding	with
respect	to the	show	cause	notice	being	barred	by
limitation	in	spite	of	specifica	lly	raising	the
question	before	it	and,	therefore,		the	appellate

¶76

authority could not have dealt with this aspect of

¶77

the matter.

¶78

¶79

Mr.Nankani further placed reliance on the

¶80

Circular No. 7	4/98-Cu	s dated 6th October, 1998	to
contend that prior	to	the issuance of the	circular
the Commissioner	of	Customs, Mumbai had con	sidered
the "Nylon Tricot	Fabr	ics" to be covered under	the
heading Insole	and	Midsole. Which, ulti	mately,
resulted in issua	nce	of the circular in question	so
as to clarify	that	the exemption is not av	ailable
under the said	notific	ation No.11/97-Cus. He,	thus,
submits that if	prio	r to the issuance of	this
circular an exemp	tion	was allowed, then, no case	of
misdeclaration can	be	alleged or make out by	the
Revenue. He also	pla	ced reliance on the judgment	of
the Tribunal in	the	case of Mahavir Corporation	v.
Commissioner of Cu	stoms	dated 19th March,	2003;
wherein the Tri	bunal	has upheld the contention	that
when the goods	were	found to be misdeclared	with
regard to the	exem	ption that by itself was	not
sufficient to hold	that	the importer was guilty	of
suppression. At	this	juncture, it will not be	out
of place to m	ention	that the said view of	the
Tribunal finds	suppor	t from the subsequent ju	dgment

¶81

of the Apex Court in the case of Northern Plastics

¶82

Ltd. (supra).

¶83

Having heard rival parties and having

¶84

examined the factual scenario and the law laid down

¶85

¶86

by the Apex Court in the case of Northern Plastics Ltd. (supra), we are of the view that even if the declaration made by the respondent-assesse with regard to the claim for exemption in payment of duty therein and that the respondent was entitled to exemption under Notification No.11/97-Cus, the

¶87

respondent did not commit any wrong. It cannot be

¶88

said to be a case of misdeclaration.

¶89

In that view of the matter, there is no

¶90

wilful suppression of facts or wilful misdeclaration by the respondent assessee. Consequently, the Tribunal was justified in taking a view that the demand was barred by limitation. In that view of the matter, the Commissioner of Customs was not justified in invoking the extended period of limitation holding that the importer i.e.,

¶91

respondent herein was liable to pay penalty under

¶92

section 114-A of the Customs Act.

¶93

Appeal is, accordingly, dismissed in

¶94

limine with no order as to costs.

¶95

(J.P.DEVADHAR, J.)

¶96

(V.C.DAGA, J.)

The Commissioner of Customs Import v. M/S Gaurav Enterprises

Case brief

What is this about?

What did the court decide?

What the court decided

The Commissioner of Customs Import v. M/S Gaurav Enterprises

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Vipor Chemicals Pvt. Ltd. Vs the Union of India and Ors.

Adf Foods Ltd. and Ors. Vs Kishore H. Thakkar and Anr.

The Commissioner of Central Excise Vs M/S Tarapur Coating and Adhesives Ltd.

Hoteel Leela Venture and Anr. Vs Union of India and Ors.

The Commissione of Customs Import,Mum Vs M/S Gazebo

M/S. Simba Echovision Pvt. Ltd. Vs Union of India and 2 Ors.