Judgment:
1. Shri S.N. Lihala & Shri S.K. Lihala have filed an appeal No. CD(Cal) 354/83 against the order-in-original No. 52 dated 7-9-1983 passed by the Addl. Collector of Customs, Calcutta.
2. An appeal No. C(Cal.) 152/85 has also been filed by Shri Kashi Nath Panda against the very same order-in-original (No. 52, dated 7-9-1983 passed by the Addl. Collector of Customs, Calcutta, in respect of Shri S.N. Lihala & Shri S.K. Lihala and Ors.).
3. On 19-11-1985 it was brought to the notice of the Bench by the department that both these are connected matter in which the same goods are in issue.
4. After hearing the counsels of both the sides and the department, the Tribunal had passed an order observing inter alia, that :- "3. It is, thus seen that in respect of the same goods there are contesting claimants also, they being the appellants in Appeal No. CD(Cal.) 354/83 and the Appeal No. C-152/85. No doubt Shri J.M. Roy, the Ld. Consultant for the Appellants in Appeal No. CD(Cal.)-354/83 does not admit that the claim of the Appellant in the other Appeal could relate to the goods which is claimed by his Client. This is not a matter that can be gone into at present.
4. It is also to be noted that though the claim in Appeal No. 152/85 is said to relate to the same goods as are the subject matter in Appeal No. 354/83, the Appellants in Appeal No. 354/83 have not been made parties to the Appeal No. 152/85. No doubt, Shri Mukhopadhyay represented that in their appeal the Collector alone could be made Respondent and he relied upon Rule 12 of the CEGAT Procedure Rules to support this contention. But it would be seen that Rule 12 only states that in an Appeal of a Private party the Collector shall be made the Respondent and not that the Collector should alone be made Respondent. Taking into consideration the fact that the Appellants in Appeal No. 354/83 are also contesting Claimants for the goods which are subject matter in Appeal No. 152/85, we feel that the said Appellants, Shri S.N. Lihala and Shri S.K. Lihala are also to be made Respondents in Appeal No. 152/85, so that they may also be heard on the contentions raised by Shri Mukhopadhyay for the Appellants in Appeal No. 152/85. This would require that apart from being made Respondents in the above said manner, the paper books filed by each of the parties should be served on the other also.
Thereafter, the two appeals could be conveniently heard together, so that all the matters in controversy may be gone into in the presence of all the persons who are interested in claiming title to the goods in question, for relief in respect thereof." 5. In the light of this order the registry had posted both the appeals for being heard together and the counsels/representatives of all the three sides were allowed to make their respective submissions.
6. As the appeals are with reference to the same goods and the same order-in-original and the parties have been heard together, we are passing a common order after taking into account the submissions of all the three sides and the order shall govern both the appeals.
7. Shri J.M. Roy speaking for Shri S.N. Lihala & Shri S.K. Lihala submitted that in this case the goods in question were offered for sale to them by Steamer Agents, Lional Edwards Ltd. 8. They accepted the offer and completed all the necessary formalities in this regard including obtaining of CCP and preparing Bill of Entry for Steamer Agents. The Steamer Agents filed the Bill of Entry and the Customs examined the goods and allowed the goods to be cleared from the dock to their godown.
9. Subsequently the Customs officers visited their godown on 6-9-1983 and seized the goods in question. They were issued a show-cause notice and were heard by the Addl. Collector and the order was passed by the said Addl. Collector confiscating the goods and imposing a penalty.
10. The goods in question were eight cartons of Arabic paper which were indicated in the Port Trust out-turn report for Export Champion per Rot. No. 73/80 as un-manifested excess cargo; that is why the Steamer Agents were required to take over the same and the Steamer Agents in their turn had offered these goods for sale to the Appellants. The fact that these goods were purchased by them from the Steamer Agents is evident from the correspondence exchange with them, their submissions in reply to the show-cause notice and the Steamer Agents' submissions before the Addl. Collector.
11. It was, therefore, their contention that they had legally and properly acquired the goods which had been duly cleared out of Customs control on completion of the formalities prescribed by law. Hence no offence had been committed by them and the goods were not liable for confiscation and they were not liable to penalty.
12. It was their contention that the Addl. Collector had not taken all their submissions into account. He had mainly based his finding on the fact that the Port Trust Out-turn Reports showed marks & numbers but the Bill of Entry which had been filed on behalf of the Agents showed marks & numbers as 'Nil'. It was their contention that there were other relevant particulars such as the number of cartons, the weight of the cartons and the ship's name and rotation No. which were also required to be taken into account by the Addl. Collector (but had not been considered by him). In this connection he would particularly emphasise the breadth and length of the paper in the cartons as they were relevant for the purpose of determining the duty. Similarly, the Ship's name, rotation No. etc. were very material and important facts. It was their contention that had the Addl. Collector taken all the relevant facts into account, he would have come to the conclusion that these are the very goods which had been purchased by them from the Steamer Agents, but since he did not do so, he had erroneously concluded that these were different goods and had been acquired illegally.
13. It was also their contention that in respect of this very proceeding another party namely Shri Kashi Nath Panda of M/s. United Engineering Syndicate was allowed to be joined by the Tribunal in the hearing. It was their submission that although Shri Kashi Nath Panda had come up before the Tribunal under the direction of the High Court and, therefore, the Tribunal was required to hear him. In so far as the appellants, Shri S.N. Lihala & Shri S.K. Lihala were concerned, they would like to emphasise that Shri Kashi Nath Panda has nothing to do with this case and these goods are not those goods, if any, which may have been imported by Shri Kashi Nath Panda.
14. It was their contention that as per the Bill of Entry filed by Shri Kashi Nath Panda, the weight of the 8 (eight) cartons which Shri Kashi Nath Panda is claiming, is very different from the weight of eight cartons purchased by them (the Lihalas) from the Steamer Agents. He is willing to file a calculation sheet to show that this difference is substantial and he is mentioning this to emphasise the point that the goods purchased by them were different from the goods claimed by Shri Kashi Nath Panda.
15. It was also his contention that the fact that the department did not implead Shri Kashi Nath Panda itself shows that the department was convinced that these goods were different from those of Shri Kashi Nath Panda. This is also apparent from the order-in-original, inasmuch as in that order the adjudicating officer had held these goods as the appellants' goods and had not held them as belonging to Shri Kashi Nath Panda or any other person(s).
16. It was also their contention that the department's interpretation of the word 'nil' occuring in the Port Trust Out-turn report and other documents and the bill of entry filed by them is incorrect. It was his submission that marks and numbers are shows as 'nil' even in those cases where some marks and numbers may be there but may not be readable. It is also shown as 'nil' in those cases where the marks and numbers are there, but do not tally with the marks and numbers shown in the manifest.
17. In support of this contention he would draw attention to the words used in the supplementary out-turn report of the Port Trust in which the words used are "cargo landed with marks and no marks not appearing in the manifest" below which the word 'nil' is written. It is, therefore, clear that the word 'nil' is used in cases where there are no marks as also in cases in which the marks do not appear in the cargo manifest i.e. do not tally with the marks and numbers appearing in the manifest. It is also clear from the practice of the Port Trust as per the Port Trust manual that the Port Trust used to allow the excess unmanifested cargo to be cleared under wrong/nil marks & numbers.
18. It was also their contention that the marks & numbers on the cartons in question were not clearly readable and that is why they were taken as 'nil' by the Port Trust and it is well known that the Port Trust Out-turn Report is the basic document and it is on the basis of this document, the Customs exercises checks of the bills of entries filed by the steamer agents. Therefore, whatever was mentioned in the supplementary report was reproduced in the same way in the bill of entry. It was also their contention that at the time of search and seizure also they were not clearly readable and the Customs officers, in fact, had to rub the cartons with their cloth and then only they could decipher some markings. The Customs officers at that time could also locate some strips of papers bearing numbers. The Customs officers had recorded these marks and numbers in the search list. However, the Customs officers did not record the full facts inasmuch as they did not record that these were not initially visible or readable and became discernible' only after rubbing and clearing. They also did not record the weight which was crucial and material. They also did not record the ship's name and rotation No. although it had become readable. The search list, thus prepared, was incomplete document and the appellants were made to sign it under duress. The appellants had, however, mentioned these facts at the time of replying to the show-cause notice, but even then the learned Addl. Collector did not take all the relevant facts into account.
19. It was also his submission that the goods which they had purchased from Steamer Agents (eight cartons) were those which had arrived as per Export Champion under rotation 73/80; whereas out of the goods which have been claimed by Shri Kashi Nath Panda, according to their own submissions and the bill of entry filed by them, 6 (six) cartons had arrived as per Export Champion rotation No. 245/85 and this also shows that the goods which they (i.e. the Lihalas) had purchased from the steamer agents were different goods and had the Addl. Collector taken all the relevant facts into account, he would have come to the conclusion that they had been duly and properly cleared from the Customs.
20. The goods in fact are still in custody of the Customs department and the facts can still be verified, if necessary.
21. It was their submission that in view of the above position the orders of the Addl. Collector should be set aside. As they are the rightful owner of the goods in question, the goods should be returned to them.
22. Shri Chakraborty, the learned J.D.R., speaking for the department submitted that it is the department's case that the goods seized from the godown of the appellants had been acquired by them illegally and were liable to confiscation, because the appellants have not been able to show that they were legally and properly imported. Their claim that they had purchased them from the steamer agents was not acceptable to the department, because the Port Trust Out-turn reports for Export Champion, Rotation No. 73/80 showed that eight cartons of excess un-manifested cargo had 'nil' marks and numbers. The transport document allowing transport of the goods within the dock area also shows 'nil' marks and numbers. The bill of entry filed by the steamer agents also shows 'nil' marks and numbers. Whereas at the time of search and seizure the Customs officers found that the eight cartons found in the godown of the appellants had marks and numbers as clearly indicated in the search list. The marks show that the goods were made in U.S.A. and the consignee's name was also clearly indicated as United Engineering Syndicate.
23. In view of these basic facts the department considered that this consignment is different from the one which the appellants might have purchased from the steamer agents. In any eventuality, this was not the consignment which was reported by the Port Trust as excess landed unmanifested cargo as per Export Champion rotation No. 73/80. In view of this position the Addl. Collector confiscated the goods and imposed the penalty.
24. Shri Chakraborty also contended that the word 'nil' does not mean 'wrong number' or 'number does not tally'. The sentence written in the supplementary manifest pointed out by the learned Counsel only indicated a sub-heading and it is significant that against the cartons the word 'nil' is mentioned. In view of this position the stand taken by the department was justified.
25. Shri Roy in reply submitted that their submission that they had purchased the goods from the Steamer Agents stands corroborated by the Steamer Agents' own submissions before the Addl. Collector.
26. Furthermore, it is worth noting that the Addl. Collector did not impose any penalty on the Steamer Agents. Moreover, the goods in question "were not notified goods. Therefore, . the burden of proof that they were smuggled goods rests squarely on the department.
27. In any eventuality since ail the relevant facts have not been taken into account by the Addl. Collector, the order is not a proper order.
In fact, it is not a speaking order and can be set aside on this ground alone.
28. Shri K.K. Banerjee, the learned advocate speaking for Shri Kashi Nath Panda, submitted that in this case they had filed an appeal pursuant to an order-in-petition CR No. 1.4450(W) of 1984 dated 21-12-1984 passed by the Hon'ble Calcutta High Court.
29. The Tribunal has permitted him to make his submissions with reference to the order-in-original No. 52, dated 7-9-1983 by allowing them to be impleaded as party to the case.
30. It was his contention that in the aforesaid order the Addl.
Collector has proceeded with the matter without issuing any show-cause notice to him and without taking his submission into account, although he was a necessary party.
31. The fact is that he had complained to the Customs that some of his goods were seen in the godown of Shri S.N. Lihala and Shri S.K. Lihala.
It was his contention that these goods were part of two consignments imported by him - one of six cartons imported per Export Champion rotation No. 245/80 and another 8 (eight) cartons imported per Export Commerce Rotation No. 402/80. Out of these 14 cartons all the six cartons imported vide Export Champion were presumed to have been lost.
Similarly, out of eight cartons imported through Export Commerce, two cartons were presumed to have been short landed. But actually they had landed and had somehow found their way in the godown of Shri S.N.Lihala and Shri S.K. Lihala.
32. It was his contention that it was pursuant to his letter that the Customs had seized the goods in the godown of Shri S.N. Lihala and Shri S.K. Lihala. Subsequently, summons were also issued to them in terms of Section 108 of the Customs Act and their statement had also been recorded. However, the department did not give any reply to their letter addressed to the Asst. Collector with reference to which the action had been initiated against Shri S.N. Lihala and Shri S.K.Lihala. The department also did not issue any show-cause notice to him and he was not made party to the proceeding against Shri S.N. Lihala and Shri S.K. Lihala. With the result that he did not get any change to prove that the goods in question were his goods.
33. It was under these circumstances that he was compelled to go to the Hon'ble High Court to seek its directions.
34. It was his submission that since he has not been given any chance to be heard in the matter and the order had been passed by the Addl.
Collector with reference to the goods which he claimed as his, the order of the Addl. Collector is required to be set aside with the direction that he should take his (Shri Panda's) submissions into account and a proper order should be passed.
35. Shri Chakraborty, the learned J.D.R. speaking for the department, conceded that in this case action had been initiated by the department on the basis of the letter written by Shri Kashi Nath Panda.
36. He also conceded that the cartons which have been seized from the godown of Shri S.N. Lihala and Shri S.K. Lihala showed marks and numbers and consignee as United Engineering Syndicate of which Shri Kashi Nath Panda happens to be the proprietor.
37. He also conceded that summons were issued to Shri Kashi Nath Panda and his statement was recorded. He also conceded that no show-cause notice was issued to Shri Kashi Nath Panda and he was not impleaded in any manner nor was he associated with the adjudicating proceedings.
38. He also conceded that the order-in-original does not record any finding with reference to the claim of Shri Kashi Nath Panda.
39. Shri Chakraborty submitted that this is how the matter stands as per the department's records and since this is the position he would submit that the case may be remanded back to the proper officer for considering the matter in accordance with the law and the prescribed procedure.
40. Shri Banerjee, the learned advocate, submitted that Shri Kashi Nath Panda is the proprietor of M/s. United Engineering Syndicate and in view of the submissions made by the learned J.D.R. he would request that his prayer may be granted.
41. He submitted that he had mentioned in details the marks and numbers and other particulars of the goods claimed by him at page 56 of his paper book and the proper officer may be directed to pass an appropriate order with reference to him.
42. We observe that the main plea of the Lihalas in this case has been that they had purchased the goods in good faith from the Steamer Agents and that these goods were different from the goods claimed by Shri Kashi Nath Panda. It is also their contention that the Addl. Collector has not passed a speaking order and has not taken all the relevant facts into account.
43. We find that the appellants (the Lihalas) are justifiably aggrieved with the order inasmuch as it is apparent that the Addl. Collector has not passed a speaking order and has not taken all the relevant facts into account. We have noted with great concern that the departmental officers did not care to take into account important indicators of identity and particulars which were valuable from the Customs point of view, as well as appellants' points of view. As for example, the ship's name, rotation No., weight of cartons, length & breadth of the materials etc. as pointed out by the learned Counsel for the Lihalas, Shri J.M. Roy. It is really a matter of serious concern that such a Senior Officer as Addl. Collector had also ignored such important aspects.
44. He learned departmental representative had already conceded with reference to the submissions of the counsel for Shri Kashi Nath Panda that the requirements of law and procedure have not been duly taken care of.
45. It is really surprising and indeed painful to observe that even the elementary provisions of law and procedure were not taken care of and such a Senior Officer as Addl. Collector has not applied his mind at all in this respect.
46. As admittedly the marks and numbers on the cartons in question indicated the name of the consignee as United Engineering Syndicate of which Shri Kashi Nath Panda claims to be the proprietor (this fact has not been denied or controverted either by the department or by Shri S.N. Lihala and Shri S.K. Lihala who have also appealed against this order with reference to this case) and Shri Kashi Nath Panda had claimed in writing that the goods belonged to him as it was on the basis of his letter that the department has admittedly initiated action, it was necessary and essential on the part of the department to enquire into the correctness or otherwise of their claim and the Addl.
Collector was duty-bound to record his findings with reference to his contentions after observing the necessary formalities regarding issue of notice and grant of personal hearing.
47. It is our considered opinion that in the circumstances of the case Shri Kashi Nath Panda was a necessary party and the department ought to have impleaded him in the proceedings and taken his submission into account.
48. Thus taking into account the submissions made by the learned advocate, Shri J.M. Roy for the Lihalas, the learned advocate, Shri K.K. Banerjee for Shri Kashi Nath Panda and Shri L.C. Chakraborty, the learned J.D.R. for the department, we find that Shri S.N. Lihala and Shri S.K. Lihala on one hand and Shri Kashi Nath Panda on the other both are rightly aggrieved of the order-in-original passed by the learned Addl. Collector to the extent that law and procedure have not been duly followed and a defective order has been passed without taking into account all the relevant aspects of the matter.
49. The order of the Addl. Collector of Customs, Calcutta is bad in law and is liable to be set aside as such. However, the question of the ownership of the goods is also required to be decided by the learned Addl. Collector and since correct conclusions can be drawn only after all the relevant facts and circumstances of the case and the submissions of Shri S.N. Lihala and Shri S.K. Lihala as well as of Shri Kashi Nath Panda are taken into account by the original authority which has not been done, we set aside the order-in-original passed by the Addl. Collector and remand the case back to him for de novo adjudication in accordance with law and the prescribed procedures keeping in mind the above observations.