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Marcandy Prasad Radhakrishna Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Calcutta
Decided On
Reported in(1985)LC130Tri(Kol.)kata
AppellantMarcandy Prasad Radhakrishna
RespondentCollector of Customs
Excerpt:
.....no 173a (2)/72/101 dated the 4th april, 1972 requesting therein to furnish them a copy of the test report. the appellant had also requested to grant them an opportunity to examine the endorsements on the duplicate bill of entry in regard to thickness of the sample which was found to be 7.90 mm a copy of the test report was given to the appellant by the collector of customs calcutta subsequently the appellant filed another letter dated the 13th june 1972 stating that the appellant had placed an indent with the suppliers for 28 5 m t prime m.s. plates of tested quality of 5 mm thickness and a similar quantity of the same plates of 6 mm thickness and that the supplier's invoice and packing list showed that the goods sent were according to the indent. regarding the sample the appellant.....
Judgment:
1. M/s. Marcandy Prasad Radhakrishna Prasad Pvt. Ltd., 65, Grand Trunk Road (North), Salkia, Howrah, had filed a revision petition being aggrieved from Order No. 412 of 1973 dated the 30th day of November, 1973 passed by the Central Board of Excise & Customs, New Delhi. After the coming into existence of the Tribunal the said revision petition stands transferred to the Tribunal under Section 131B of the Customs Act, 1962 and is being disposed of as an appeal.

2, Briefly the facts of the case are that the appellant had imported 404 pcs. M.S. plates ex. s.s. Restock, Rot No. 426/71, Line No.47-valued at Rs. 83,099.7 C.I.F. from Bulgaria and had sought its clearance against Import Licence No. P/D/8541999/T/OR/47/D/31:32 dated the 23rd December, 1970 issued for Prime M.S. plates tested killed quality 5 mm and 6 mm thickness. On examination of the documents produced by the appellant viz., photo copy of the Mills' Test Certificate, the lower authorities had observed that due to lower content of silicon the goods could not be considered as Killed quality M. S. Plates and was not in confirmity with the Import licence of the appellant. On the basis of the invoice the Custom Authorities had allowed the clearance on a license bond executed by the appellant on the 13th day of August, 1971 stipulated therein to produce proper documentary evidence to prove that the goods were in fact of Killed Quality and thus covered by the license. The appellant had also undertaken to abide by the test result. Accordingly two representative samples of the goods were sent to the Director General Supplies & Disposals, Jarashedpur. The samples were taken in the presence of the party's representative along with the relative invoice. The respondent, the Collector of Customs had received the Report No. 564 dated the 29th October, 1971 from the Director General, Supplies & Disposals, Jamshedpur with the following observations:- Since the licence permitted importation of Killed quality M.S. Plates-5 mm and 6 mm. thickness and goods on test were found to be Semi Killed variety in regard to Sample No. 1 and of thickness 7.90 mm. in regard to Sample No. 2 Accordingly, a show cause notice was issued to the appellant on 16th March 1972 desiring them to show cause why the goods should not be confiscated and the penalty should not be imposed under Section 112 of the Customs Act, 1962 They were also asked to state as to why action should not be taken against them under Section lll(m) of the Customs Act, 1962 for misdeclaration of the goods as killed quality plates. In repiy the appellant submitted the letter No 173A (2)/72/101 dated the 4th April, 1972 requesting therein to furnish them a copy of the test report. The appellant had also requested to grant them an opportunity to examine the endorsements on the duplicate Bill of Entry in regard to thickness of the sample which was found to be 7.90 mm A copy of the test report was given to the appellant by the Collector of Customs Calcutta Subsequently the appellant filed another letter dated the 13th June 1972 stating that the appellant had placed an indent with the suppliers for 28 5 M T Prime M.S. Plates of tested quality of 5 mm thickness and a similar quantity of the same plates of 6 mm thickness and that the supplier's invoice and packing list showed that the goods sent were according to the indent. Regarding the sample the appellant had contended that there was no clear cut method of distinguishing killed and semi-killed steel in the final product as asserted by the Director In-charge. Indian Standard Institution's letter dated the 8th October 1971 addressed to M/s Modi Brothers, Calcutta. The appellant had further contended that the criterion of a minimum of 0.10% silicon in steel which was Silicon-killed applied to the ladle analysis and not to the final product The appellant had also requested the respondent to summon the Testing Officer for cross-examination and the basis on which he had come to the said con elusion. Regarding the thickness of the Sample No. 2, the appellant contended that the sample was drawn in presence of the clearing agents. The appellant had further contended that the sample was not drawn from their consignment and had requested for verification of the Import Manifest to ascertain whether any similar consignment of 7.90 mm. had been imported by any other party The learned Collector of Customs, Calcutta had held that the samples were" drawn in the presence of the representative of the assessee along with relative invoice and on the basis of the test report from the Director General Supplies & Disposals, Jamshedpur, bad held the importation of the goods without proper licence. The learned Collector of Customs had imposed a penalty of Rs 41,500.00 under Section 112 of the Customs Act,-1962. Being aggrieved from the aforesaid order the appellant had filed an appeal before the Central Board of Excise & Customs, New Delhi. The appellant had requested the Hon'ble Board to dispense withthe payment of the penalty of Rs. 41.500.00 till the disposal of the appeal. The Hon'ble Beard did not accede to the request appellant as to the dispense the payment of the penalty in terms of old Section 129 of the Customs Act, 1962 and had intimated the same vide their letter dated the 17th Septem-ber. 1973 to the Solicitors of the appellant requesting them to inform their clients that they should deposit the penalty amount and furnish the particulars to the Board within 30 days of the receipt of the said letter. The appellant did not pay the penalty amount. On 23rd October, the Solicitors for the appellant had written to the Board that the appellant intends to file a Writ Petition in the Hon'ble High Court at Calcutta for the stay of the order as to the payment of the penalty. The Board did not receive any intimation till the 30th day of November, 1973 as to whether any Writ has been filed or not. Accordingly the Board had dismissed the appeal for non-compliance of the provisions of Section 129 (old) of the Customs Act, 1962. Being aggrieved from the aforesaid order the appellant had filed a revision petition to the Secretary, Govt. of India, Ministry of Finance (Dept. of Revenue), New Delhi. The appellant had also made a request to the Ministry to dispense with the payment of penalty amount till the disposal of the revision petition. The Ministry after careful consideration had directed the appellant to pay a sum of Rs. 20,750.00 vide Ministry's letter No. 376/7/74-Cus.II dated 1st March, 1974 desiring the appellant to produce the documentary evidence as to the payment of Rs. 20,750. within 30 days from the date of the said letter. Being not satisfied with the partial stay granted by the Ministry of Finance, the appellant had filed a Writ Petition under Article 226 of the Constitution of India in the Hon'ble Calcutta High Court on the 2nd day of April, 1974. The Hon'ble Mr. Justice Murari Mohan Dutt was pleased to issue a Rule Nisi and an interim order for stay of the further proceedings in the revision application against the order passed in appeal No. 412 of 1973 by the Central Board of Excise & Customs, New Delhi till the disposal of the Rule. The said Writ Petition came up for final hearing on the 24th day of August, 1978 and the Hon'ble Mr. Justice Manashanath Roy had passed the final order in respect of the Writ Petition and had observed as under:- "Be that as it may the view which I have taken and which would be apparent hereinafter I have it on record that I am not going into the merits of the respective contentions of the parties. The matter is admittedly pending in this Court for more than 4 years and the respondents are also suffering injunction. The point as involved and as raised by Mr. Bakshi is arguable and as such I dispose of this Rule with a direction on the respondents concerned to dispose of the Revisional Application as filed in accordance with law. Till such determination is made, the impugned order at page 69, should not be given effect to." 3. Shri Sardar Amjad Ali, the learned senior advocate with Shri Debasish K. Sinha, Advocate, has appeared on behalf of the appellant.

He has reiterated the facts. In particular he has mentioned that the Hon'ble High Court had granted a stay in respect of the payment of penalty of Rs. 41,500.00 and the operative part of the said order appears on page 25 of the Paper Book and the Hon'ble High Court had directed the then Revisional authority to decide the revision application in accordance with the law and had further directed that till such determination the Government's order dated the 1st March, 1974 shall not be given effect. He has pleaded that the order dated the 1st March, 1974 relates to the requirement as to the payment of penalty of Rs. 20.750/- for the compliance of the provisions of Section 129 (now repealed) of the Customs Act, 1962. The learned advocate has pleaded that since the stay has been granted by the High Court, this Court should not insist for the pre-deposit of the penalty amount. On merits the learned Senior advocate has pleaded that the appellant carries a business of Iron foundry, making of steel structures and also as iron & steel stockist. He has pleaded that the appellant had imported Mild Steel plates tested killed quality of 5 mm and 6 mm thickness. He has pleaded that the dispute is as to the imported items in respect of their quality and thickness. He has further pleaded that the goods were cleared by the Customs Authorities after execution of bond which appears at pages 30 to 32 as annexure to the revision application. He has pleaded that the appellant had relied on the packing list, certificate, invoice and the indent whereas the Customs authorities had not relied on them at all and the same had been ignored. He has submitted that two samples were taken and one was forwarded to the Director General, Supplies & Disposals, Jameshedpur.

He has submitted that the sample report appears at page 29 of the Annexure attached with the revision application and a copy of which has also been incorporated in the Paper Book. He has also stated that at the time of taking samples the appellant's representative was the clearing agent. He has also referred to page 5 of the Paper Book which is part of the reply to the show cause notice No. 524B-1I-P-27/714 dated 16-3-72. He has laid particular reference to para No. 2 of page 5 which reads as follows: "With regard to the purported difference, in the thickness of other sample, we are at a loss to understand this. The sample was said to have, been drawn in the presence of our Clearing Agents but we have not been given the opportunity as asked for in our letter dated 4-4-72 of examining the endorsement on the duplicate Bill of Entry." He has stated that the sample drawn by the Revenue was not from the goods comprising the consignment imported by the appellant and had accordingly requested the Customs authorities to examine the Import Manifest of the vessel with a view to ascertain whether any consignment of M.S. plates having thickness of 7.90 mm or thereabouts had been imported by any other party and discharged into the same shed. He has submitted that there is possibility that the sample taken may be from the goods imported by other party. He has referred to the Test Report which appears at page 79 of the Paper Book and page 29 of the Annexure to the revision application. He has pleaded that as per certificate of the Director General, Supplies & Disposals, Jamshedpur, the report in respect of sample No. 1 is that the silicon content is less and however, the sample is compatiable with that of semi-killed variety.

But if the consignment is declared to be aluminium killed; the requirement of minimum silicon content does not apply and the steel maker's furnace charge report alone can reveal whether the steel is aluminium killed or not. The thickness of the plate has been mentioned as 5.05 mm. Whereas in sample No. 2 the same chemical expert has observed that the steel is graded as killed quality but the thickness of the plate is 7.90 mm as declared in the attached sheet. He has submitted that in the 1st sample the quality does not tally but the thickness tallies, whereas in the 2nd sample the quality tallies but the thickness does not tally. He has stated that on the basis of the test report the learned Collector of Customs, Calcutta had issued a show cause notice which appears at page 1 of the Paper Book. He has also referred to the reply to the show cause notice which appears on page 3 of the Paper Book. He has submitted that no expert can give an opinton as to whether the imported steel is a killed steel or semi-killed steel. It is only the certificate of the manufacturer which could have given the details. He has pleaded that in reply to the show cause notice which appears at page 5 of the Paper Book in para No. 1 the appellent had requested the learned adjudicating authorities to summon the testing officer for cross-examination and the said authorities did not accept the appellant's request for cross-examination of the testing officer on the basis of which the show cause notice was issued. He has pleaded that non-summoning of the testing officer for cross-examination is denial of the principles of the natural justice. He has also stated that the appellant had indented for 5 mm and 6 mm M.S. Plates whereas as per test report it is 7.90 mm.

He has submitted that there is big difference in 5 mm or 6 mm or 7.90 mm and as 'such there appears to be some error. He has a,gain reiterated that the appellant wanted to inspect the original manifest of the ship but no opportunity was given. He has submitted that the appellant had also filed copies of the two test report one by the Indian Standards Institution and other by The Superintendence Company of India (P) Ltd. which appear at pages 81 & 83 of the Paper Book. The Indian Standards Institution's certificate is addreesed to M/s. Modi Brothers, Calcutta and the Superintendence Company of India (P) Ltd.'s certificate is also addressed to M/s, Modi Brothers, Calcutta. He has again referred to the test report of the Director General, Supplies & Disposals, Jamshedpur at page 80 where the testing officer has himself admitted that if the M.S. sheet is of aluminium killed, the requirement of minimum silicon content does not apply and steel maker's furnace charge report alone can reveal whether the steel is aluminium killed or not. He has submitted that in spite of the request of the appellant, the duplicate Bill of Entry was not shown to the appellant. Lastly he has pleaded that where there are different opinions of experts, the opinion which is favourable to the appellant has to be accepted. He has pleaded for acceptance of the appeal and quashing of the penalty of Rs. 41,50.000.

4. Shri A.K. Sarkar, the learned Senior Departmental Representative has referred to page 64 of the Paper Book which is copy of the licence. He has submitted that the description of the goods on the licence is "Primems. S. Tested Plates 5MM and 6MM Thick Killed Quality" and the imported items are not in confirmity with the licence. The learned S.D.R. has laid great emphasis on the bond executed by the appellant which appears at page 74 of the Paper Book. He has referred to the words''and shall abide by any test result conducted on the representative sample and the decision taken thereof." He has referred to the test result which appears at page 79 of the Paper Book. He has pleaded that the results of both the samples are not in confirmity with the description of the items as mentioned on the Import licence. He has pleaded that the Custom Authorities have taken a very lenient view and as such the appeal filed by the appellant should be dismissed.

5. In reply Shri Sardar Amjad Ali, the learned Senior advocate has again laid great emphasis on the test report which appears at page 79 of the Paper Book. He has submitted that it is not clear whether it is aluminium killed or silicon killed. Lastly he has pleaded that the show cause notice which appears at page 1 of the Paper Book is for the contravention of the provisions of Section 3 of the Imports & Exports Control Act, 1947 read with Clause 3(1) of the Import Control Order, 1955. He has pleaded for the acceptance of the appeal.

6. After hearing both the sides and going through the facts and circumstances of the case I accept the learned Senior advocate's argument that there is no necessity of compliance to the provisions of Section 129E of the Customs Act as to the deposit of the penalty amount during the pendency of the appeal. I very respectfully follow the directions of the Hon'ble Calcutta High Court's order dated the 24th August, 1978. I also accept the learned Senior Advocate's argument that there is denial of the principles of natural justice in not summoning the testing officer for cross-examination. The appellant had duly requested in his reply to the show cause notice which appears at page 3 of the Paper Book and the relevant portion as to the request for summoning of the testing officer which is at page 5 of the Paper Book is reproduced as under :- "In the alternative, we request you, in the interest of natural justice, to kindly summon the Testing officer for cross-examination in your presence".

The learned Collector of Customs has mentioned in his order that a copy of the test report was duly given to the importers which is at page 36 of the annexure to the revision petition. The learned Collector of Customs had based his order mainly on the test report. Last two paras of his order which appears at page 37 of annexure to the revision petition are reproduced as under :- "A personal hearing was accordingly granted to them on 1-8-72 and again on 14-8-72 but the party did not appear on these dates. A third hearing was then granted to them on 30-8-72. Shri D.E. Borthwick representing the importing firm appeared for personal hearing on the date. He stated that his client had written to the Exporters in Bulgaria asking them to explain as to how the steel supplied became of greater thickness than that covered by the licence but no reply was received so far. He further stated that his client had some doubts as to the sample which was perhaps not drawn from his consignment. He pleaded for a month's time to be given to his client which was granted upto 15-9-72.

The importers failed to produce any documents within the extended period. It is observed that sufficient time was given to the party for explanation but no satisfactory explanation has been adduced by them as yet. Jamshedpur Test Report gives categorical opinion about the quality and thickness of the goods. The question of seeking further comments either from the Directorate General of Supplies & Disposals, Jamshedpur or Indian Standards Institution as desired by the party does not arise. Further, the representative samples of the goods were drawn in presence of the party's representatives along with the relative invoice and as such the importer's contention that sample was not drawn from their consignment does not hold good.

Therefore, in view of the test result of the goods, the importation of the above goods, is held unauthorised against the license produced." No case law has been cited by any side. It is a settled law that principles under the Evidence Act are applicable for the enforcement of the taxing statutes. The Hon'ble Supreme Court had held in the case of Collector of Customs, Madras v. D. Bhoormull reported in AIR 1974 SC 859 that the Collector of Customs is to be guided by the basic canons of criminal jurisprudence and natural justice. The Hon'ble Mr. Justice R.S. Sarkaria speaking on behalf of the Court had observed in para Nos.

26 and 44 of his order as follows : In respect of such goods the provisions of the Evidence Act and the Code of Criminal Procedure, do not, in terms, govern the onus of proof in proceeding under Section 167(8) of the Act." "44, These fundamental principles, shorn of technicalities, as we have discussed earlier, apply only in a broad and pragmatic way to proceedings under Section 167(8) of the Act. The broad effect of the application of the basic principle under-lying Section 106 Evidence Act to cases under Section 167(8) of the Act, is that the Department would be deemed to have discharged its burden if it adduces only so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of the facts sought to be proved. Amba Lal's case (1961) I SCR 933-(AIR 1961 SC 264-1961 (I) Cri LJ 326) was a case of no evidence." 7. In view of the above Supreme Court judgement, the learned Collector of Customs should have followed the procedures as provided under the Evidence Act. He should have given an opportunity to the appellant for the cross-examination of the Testing Officer from Jamshedpur. Sections 45 and 46 of the Evidence Act relate to the opinion of experts. The same are reproduced as under:- "45. Opinions of experts. When the Court has to form an opinion upon a point of foreign law, or of science or art, or as to identity of handwriting [or finger impressions], the opinions upon that point of persons specially skilled in such foreign law, science or art, [or in questions as to identity of handwriting] [or finger impressions] are relevant facts.

The opinions of experts as to the symptoms produced by the poison by which A is supposed to have died, are relevant.

(b) The question is, whether A, at the time of doing a certain act, was, by reason of unsoundness of mind, incapable of knowing the nature of the act, or that he was doing what was either wrong or contrary to law.

The opinions of experts upon the question whether the symptoms exhibited by A commonly show unsoundness of mind, and whether such unsoundness of mind usually renders persons incapable of knowing the nature of the acts which they do, or of knowing that what they do is either wrong or contrary to law, are relevant.

(c) The question is, whether a certain document was written by A. Another document is produced which is proved or admitted to have been written by A. The opinions of experts on the question whether the two documents were written by the same person or by different persons, are relevant." "46. Facts bearing upon opinions of experts.-Facts, not otherwise relevant, are relevant if they support or are inconsistent with the opinions of experts when such opinions are relevant.

(a) The question is, whether A was poisoned by a certain poison. The fact that other persons, who were poisoned by that poison, exhibited certain symptoms which experts affirm or deny to be symptoms of that poison, is relevant.

(b) The question is, whether an obstruction to a harbour is caused by a certain sea-wall." The Hon'ble Bombay High Court in the case of Parwat Patil v. Sukdev Shimram Patil reported in AIR 1956 Bombay 617 has held that the report of an expert is not admissible unless he has been examined as witness and the party affected by it has had an opportunity of cross examining him.

8. In this case the learned Collector of Customs has not afforded an opportunity to the appellant to cross examine the testing officer in spite of his request for summoning him as witness for cross examination. In the case of M/s Bharat Barrel & Drum Manufacturing Co.

v. Collector of Customs, Bombay and Anr. reported in 1971(3) Supreme Court Cases 170, the Hon'ble Supreme Court had held that the proceedings are vitiated by Improper Investigation and procedural infirmities.

Briefly, the facts of the Supreme Court judgment are that the appellant obtained two import licences in June, 1962 and imported steel sheets under twelve consignments. The Collector of Customs passed an order imposing penalties on the ground that the appellant was given licence for importing 'prime quality' sheets; therefore, his import of lower quality sheets was without a valid licence. The Central Board of Excise and Customs upheld the action of the Collector in confiscating the goods but reduced the fine. In revision it was held that the condition of 'prime quality' was laid down by the notification of December, 1961, therefore, it could not apply to licences issued before the date of the notification. The fine in lieu of certain consignments was remitted in full and others reduced. The appellant moved appeals in respect of consignm ents in which fines were not remitted in full.

(i) In view of the infirmities and no proper investigation of the dispute by the Collector of Customs and Central Board of Excise and Customs, the Central Government should have given a better consideration to the revision application. They should have given to the appellant adequate opportunity to prove that there had been no substantial deviation from the terms of the licence.

(ii) The order of the Central Government is set aside with a direction for the consideration of the applications on their merit.

The Central Government will give opportunity to lead additional evidence to prove that the goods imported were subject to 'the permissible tolerance' according to the terms of the licence or for any other reason.

(iii) A public notification has no retrospective operation, therefore, the condition of 'prime quality' could not be applied to the sheets imported under the licences issued before the date of the issue of the notification.

9. No doubt the appellant is bound with the expert opinion given by the testing officer, Jamshedpur in view of the bond dated the 13th August, 1971 executed by the appellant which appears as annexure on page 26, attached to the revision petition. In the bond the appellant had bound himself. The relevant extract from the bond is reproduced as under :- "and shall abide by any test result conducted on the representative sample and the decision taken thereof".

10. In view of the above discussions I am satisfied that there is denial of the principles of natural justice. Therefore, I remand the case to the learned Collector of Customs, Calcutta and further direct that he should afford an opportunity to the appellant to cross-examine the testing officer and decide the same in accordance with the law within six months from the date of this order. For statistical purposes the appeal, is allowed.


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