1. These appeals are directed against the order of Collector, Customs.
The Collector, Customs, in his order had held: "In view of the my findings above, the goods under import should be considered as 'coated fabrics' for customs purposes. As the importing firm is not in existence, I confiscate the goods absolutely under Sections 111(d) and 111(f) of Customs Act, 1962. I refrain from imposing penalty on the non-existing firm. I do not propose to impose penalty on both the steamer agents." 2. The facts of the case, in brief, are that serious doubt was entertained as to the nature of the goods imported under description of consumable for foot wear. During the course of inquiry, the Bombay Customs recovered certain documents from Bank of Baroda. In the address furnished in the import documents, no firm in the name and style of M/s. Stylo Foot Wear existed at the address given in the bill of lading and other import documents. It was also found that the import and export registration certification dated 30-9-85 had not been issued to M/s. Stylo Foot Wear. It was also found that the said certificate under which OGL was claimed was not genuine. The goods were described as insoles for leather footwear made of plastics and the price was shown as US $ 1.00 per metre CIF, Bombay. The goods were found to be of Taiwanese origin. Bombay Customs Authorities also recovered a letter dated 2-11-1990 of M/s. Stylo Foot Wear from the Bank of Baroda. In this letter, M/s. Stylo Foot Wear had declared (a) the import of insoles for footwear are covered by OGL Appendix 6 Part I List 8 Item No. 633 (b) that the goods had not been included in the banned or restricted list. It was evident from this declaration to the Bank that they had imported the subject materials with an intention to clear the same under OGL. On examination of the goods in the presence of witnesses, they were found to be rolls of plastic coated fabrics, each roll of 50 metres length and 142 cms. breadth and some rolls of plastic leather cloth. After testing the sample, the technical opinion given by the Central Leather Research Institute showed that the goods were synthetic coated fabrics that it is a synthetic beckor or lining material that it is a sample which cannot be considered as insole for footwear. The Chemical Laboratory of Madras Customs House after testing the sample found that the sample composed of textile fabrics coated on one side with plastic composition and also in the form of flexible sheets with velvette appeared on one side, the other side being plastic. It was further, alleged that the goods under import were not insoles for leather footwear but they were actually coated fabrics in the nature of consumer goods. It was also alleged that the foreign supplier M/s. Hongkong Polychem Co. had quoted Rs. 7,88,047/- for consignment of 43,050 metres.
3. Regarding import policy, the materials imported were not considered, as insole for footwear and therefore, clearance under OGL was not permitted. It was alleged that SSI certificate dated 30-9-1985 had not been issued to M/s. Stylo Foot Wear. It was therefore, alleged that importers were not entitled to the clearance of the subject goods under OGL. It was also alleged that coated fabrics under import were covered by serial No. 48 of Appendix 2, Part 3 of Import Policy, April, 1992 to March, 1993. It was also alleged that the imported goods were in the nature of consumer goods and were also covered under serial No. 172 of Appendix 2, Part 3 of the Import Policy and therefore, a valid import licence was required. It was therefore, alleged also that there was deliberate misdeclaration in the manifest, with reference to the description of the goods and that there appeared to be a collusion made between the importers and the supplier which had led to the misdeclaration of the goods in the import documents particularly in the bill of lading and the import manifest. The manifest was filed by M/s.
Marine Containers Services and M/s. K. Steamship Agencies Pvt. Ltd. and since the manifest was filed with wrong description of the goods, therefore, the goods were liable for confiscation under Section 111(f) of the Customs Act and that steamer agents were liable to penalty. A show-cause notice was issued accordingly to M/s. Stylo Foot Wear asking them to explain as to why the value of the consignment should not be adopted on the basis of US $ 1.00 per metre CIF Bombay for the entire consignment of 43,050 metres imported in three containers (ii) that why the goods should not be assessed as coated fabrics under Chapter Heading 5903.90 CTI and 5903.23 CFT as against the declared description of insoles and leather footwear (iii) why the goods should not be confiscated and (iv) why penalty should not be imposed.
4. Shri Nitin Kantawala, the learned Advocate appearing for the appellants submitted that natural justice was denied to the appellants; that the appellants had been sending request for re-export of the said goods which were not heeded to by the respondent; that the show-cause notice was challenged and request for re-export of the goods was again submitted; that the request for re-export was ignored and the goods were confiscation in total violation of the Rules of natural justice; that the title in the goods had not passed to any person including the importer; that the documents representing title to the said goods remained unpaid and therefore, the appellants were the owners of the said goods even though these goods were seized by the Customs Authorities at Madras; that there was no misdeclaration on the part of the appellants; that confiscation of the goods under Section 111(f) is not warranted inasmuch as the appellants were not responsible to furnish incorrect information in the manifest. The learned Counsel for the appellants submitted that it was mandatory to issue show cause notice to the appellants as they were the owners of the goods that Section 124 of the Customs Act provides that no goods can be confiscated unless a show-cause notice is issued for its confiscation to the owner; that since the documents had not been cleared by the Indian importer, therefore, the ownership of the goods vested in the foreign supplier and did not pass on to the Indian Importer; that the Hon'ble Supreme Court in the case of Union of India v. Sampat Raj Dugar reported 1992 (58) E.L.T. 163 held that it was incumbent upon the respondents to have allowed the re-export of the goods and not to confiscate them; that the Hon'ble Madras High Court in the case of Vijay Raj v. C.C., Madras reported in 1992 (57) E.L.T. 23 (Mad.) - 1991 (33) ECR 451 also confirmed the grant of re-export of the goods. The learned Counsel also cited and relied upon the judgment of this Tribunal in the case of Savitri Electronics Co. and others v. Collector of Customs, Bombay reported in 1992 (62) E.L.T. 395 (T) = 1992 (42) ECR 454 (T) in which this Tribunal had held that ownership continues to vest with foreign exporter where the importer is fictitious. Goods allowed to be released to reauthorised importer and the orders of confiscation are set aside as goods remained in ownership of the exporter. The learned Counsel also cited and relied upon the decision of the Hon'ble Bombay High Court in the case of PFAFF Industriamaschinen Vertriebsgessellschaft MBH Kaiserlautern and 2 Ors.
v. Additional Collector of Customs and 4 Ors. reported in 1988 (37) E.L.T. 500 (Bom.) = 1988 (18) ECR 475 (Bombay), the Hon'ble Bombay High Court had held that under Section 124 of the Customs Act, 1962 no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is given a notice in writing as set out therein and is given an opportunity of making a representation. Concluding his argument, the learned Counsel submitted that having regard to the submissions made and the case-law cited and relied upon, the case of the appellants is fully covered by the decisions and prayed that the impugned order may be set aside and the goods may be permitted to be re-shipped to the foreign supplier.
5. ......Shri ..................... Appearing for the respondent submitted that the show-cause notice issued to M/s. Stylo Foot Wear, Bombay was returned undelivered; that enquiries, and investigations made in the matter revealed that no firm in the name of Stylo Foot Wear existed at the address given in the import; documents; that the SSI certificate alleged to have been issued in the name of M/s. Stylo Foot Wear was not genuine; that this clearly shows that the importing firm was fictitious and did not exist.
6. Continuing his argument, learned SDR submitted that the goods were described in the invoices as insoles for footwear; that on the basis of technical opinion, it was found that the imported goods were not insoles for footwear but they were coated fabrics; that coated fabrics were not eligible for concessional rate of duty under Notification No.224/85; that the goods were imported under OGL on the basis of an SSI certificate which was not genuine. The learned SDR submitted that the importing firm was fictitious, the SSI certificate was bogus and the imported goods were not insoles, that the imported goods required a valid import licence. He, therefore, submitted that the import of the goods into India was a fraud to revenue with an intention to evade payment of duty to the tune of Rs. 55,42,635/-. The learned SDR therefore, submitted that the goods were liable to confiscation under Section 111(d) inasmuch as they were imported into India without a valid import licence; that the appellants had imported these goods in violation of Section 3(2) of the Import-Export Control Act, 1947; that there was a violation of Section 30(2) of the Customs Act, 1962. In view of the above, the goods were liable to confiscation under Section 111(f). The learned SDR also submitted that the steamer agents stated that they had no knowledge of the actual details of the cargo and they filed the manifest on the basis of the particulars given by the shippers in the bill of lading. The learned SDR submitted that in the case of Savitri Electronics Co. and others cited supra, this Tribunal had held that the ownership of the goods continues to vest with foreign exporter; that this finding given by the Tribunal was having regard to the fact that there was no evidence that the foreign supplier was a party to any fraud or attempt to illegal import of the goods in question into India in contravention of any prohibition. The learned SDR submitted that in the case before us, it is a complete fraud inasmuch as the importer were fictitious persons, SSI certificate was a bogus one and the goods not correctly described and were imported without a valid import licence. He therefore, submitted that the ratio of this decision of the Tribunal will not be applicable to the facts and circumstances of the present case.
7. Referring to the ratio of the judgment of the Hon'ble Bombay High Court in the case of PFAFF Industriamaschines Vertriebsgessellschaft MBH Kaiserslautern cited supra, the learned SDR submitted that the ratio will not be applicable to the facts of the present case inasmuch as the import of the goods was complete and notice was also given to the Indian importer and therefore, there was no violation of Section 124 of the Customs Act, 1962.
8. Referring to the judgment of the Hon'ble Supreme Court in the case of Sampat Raj Dugar cited supra, the learned SDR submitted that the Apex Court had come to the conclusion, on the ground that Clause (d) and Clause (o) were not applicable in that case since on the date of import, the said goods were covered by a valid import licence. He submitted that in the instant case, there was no valid import licence and the goods were not permitted to be imported under OGTL. He therefore, concluded that the ratio of this judgment will also not be applicable in their case.
9. Heard the submissions of both sides. On careful consideration of the submissions made and the case-law cited and relied upon, we observe that the issues for determination before us are: (a) whether the ownership of the goods still vested in the foreign supplier or was transferred to the Indian importer; (c) whether notice as required under Section 124 of the Customs Act was issued to the importer; and (d) whether in the circumstances of the case, the goods should be permitted to be re-shipped.
10. On the question of ownership, we observe that this issue was dealt with by this Tribunal in the case of Savitri Electronics Co. The relevant para is para 10 which is reproduced below: "10. Since the documents in favour of M/s. Savitri Electronics Co.
the original consigness of the goods in question were drawn on collection basis and payment for the goods was not guaranteed by virtue of a Letter of Credit or otherwise, it cannot be disputed that on failure on the part of M/s. Savitri Electronics to retire the documents from the Bank, the ownership of the goods continued to vest with the exporters M/s. Kisho Shokai of Yokohama, Japan. Under these circumstances and having regard to the fact that there is no evidence that the suppliers were a party to any fraud or attempted importation of the goods in question into India in contravention of any prohibition, in our view on the ratio of the Supreme Court judgment in the case of Union of India v. Sampat Raj Dugar [1992 (58) E.L.T. 163 (S.C.) = 1992 (39) ECR 189 (S.C.)] (supra) the exporters were entitled to either to find another buyer of the goods or ask for re-export of the goods." A reading of this para shows that the entire decision was based on the fact that there is no evidence that the foreign suppliers were a party to any fraud or attempted to any importation of the goods into India in contravention of party prohibition. The facts in the case before us are that the Indian importers (M/s. Stylo Foot Wear) were fictitious firm.
We also observe that SSI certificate issued in the name of M/s. Stylo Foot Wear was bogus. We also find that incorrect description of the goods was given to evade payment of duty and also to get away with the requirement of licence. We thus, see that import of the goods in dispute, was prohibited. In this view of the matter, the ratio of the decision on the question of ownership is not applicable to the facts of the present case and in this view of matter also the ratio of the decision of the Apex Court in the case of Sampat Raj Dugar also is not applicable in view of the facts being entirely different as the case before us is a case of fraud.
11. On the question whether the goods were liable to confiscation, we find that the goods were described in the invoices and the bill of lading as insoles for footwears. We also observe that on examination of the goods, they were found to be coated fabrics whereas insoles were under OGL, coated fabrics required a specific licence. Thus by misdeclaring the goods, a fraud was being committed not only for evasion of duty but also to get away from the rigour of specific licence. Having regard to these facts, we find that the goods were prohibited goods as they required a specific licence. We also observe that the goods were misdeclared in the manifest in the bill of lading and in the invoices and therefore, violation of Sections 111(d) and 111(f) is clearly established. Having regard to this violation, the goods were liable to confiscation. As no importer of the goods came forward, therefore, the goods have rightly been confiscated absolutely.
12. In the instant case, the name of the importers was given in the manifest. When no bill of entry was presented, enquiries were conducted. Enquiries revealed that no firm in the name and style of M/s. Stylo Foot Wear existed at the address given in the bill of lading. When further enquiries were conducted with the Bank of Baroda, it was found that SSI certificate claimed by the Indian importer was fictitious and bogus. Further examination of the goods revealed that the goods were described incorrectly. When all these facts were put together, it clearly shows that it was a case of fraud. We also observe that in the case of insoles for footwear, the concessional rate of duty under Notification No. 224/85 was available and thus the entire case appears to be a fraud on revenue. Having regard to these facts the show- cause notice was issued to the importers shown in the bill of lading and the invoices and thus Section 124 of the Customs Act was fully complied with and the case was adjudicated. Thus we do not find any legal infirmity in the order of the lower authorities.
13. Having regard to the above facts and the result of the investigations, we find that it is a case of fraud on revenue by circumventing of the restrictions. In this view of the matter, we do not find it to be a fit case for allowing reshipment of the goods to foreign supplier.
14. Having regard to the above discussions and findings, we uphold the impugned order and reject the appeals.