K. Sreedharan, J. (President)
1. These appeals are at the instance of M/s. Nippon Audiotronix Ltd. and by Shri K.S. Goindi, Managing Director. M/s. Nippon Audiotronix Ltd. is a Public Limited Company registered under the Companies Act. They imported 51 consignments of Kenwood Car Cassette Player components. 48 consignments landed in Mumbai and 3 in New Delhi. These imports were from M/s. Future Electronics, Tokyo. As and when the consignments reached Mumbai or New Delhi, as the case may be, Bills of Entry were filed. On the basis of the value shown therein duty was paid and goods were accordingly cleared. Subsequently show cause notice was issued on 17-3-1999 alleging undervaluation. As per the show cause notice a sum of Rs. 81,49,643 was claimed as customs duty evaded by mis-declaration and suppression of value of the goods imported.
They were also asked to explain why penalty under section 114A should not be levied and why interest on account of delayed payment be not realised invoking the provisions contained in Section 28AB of the Customs Act.
2. Even before the show cause notice was issued, M/s. Nippon Audiotronix Ltd. deposited Rs. 81,49,640 towards the duty liability on the 51 consignments.
3. Show cause notice dated 17-3-1999 was issued by Additional Director General, Revenue Intelligence, DRI (Hqrs) New Delhi and adjudication proceedings were conducted by Commissioner of Customs, Air Cargo, New Delhi, as per authorisation issued under section 4 of the Customs Act, 1962. By Order-in-Original No. ACU/VS/31/99 dated 1-10-1999 the demand made in the show cause notice, namely, Rs. 81,49,643 was confirmed as differential duty payable by the importer. By invoking the provisions contained in Section 28AB of the Act a sum of Rs. 19,74,557 was also levied. Penalty amounting to Rs. 1,01,24,200 was imposed on M/s. Nippon Audiotronix Limited invoking the provisions contained in Section 114A of the Act. A similar amount was also imposed as penalty on Shri K.S. Goindi, Managing Director under section 114A. The adjudicating authority ordered to appropriate the amount of Rs. 81,49,643 deposited by the company towards duty liability as per section 28(2) of the Act. Appellants question the correctness of this Order-in-original passed by the adjudicating authority.
4. Learned Counsel representing the appellants raised the following points for our consideration:
(i) the finding arrived at by the adjudicating authority that there was mis-declaration of the value of the goods is not correct;
(ii) Adjudicating authority was not justified in imposing penalty on the Director of the company, when the company was the importer;
(iii) Penalty under section 114A could not have been imposed in relation to imports which were effected prior to the enactment of that provision, namely, 28-9-1996;
(iv) Adjudicating authority was not at all justified in ordering payment of interest in relation to the imports effected prior to 28-9-1996, the date on which section 28AB came into the Statute.
5. We shall proceed to deal with the arguments herein below :
Coming to the argument, namely, that there was no mis-declaration of the value of the goods imported, Learned Counsel took us through various documents. Those documents are not convincing enough to show that there was no mis-declaration. This is more so when we go through the admission made by the Managing Director of the company. That goes to the root of the appellant's contention that there was no mis-declaration. When these facts were brought to the notice of the Learned Counsel, he rightly and fairly conceded that the point may be taken as withdrawn. In these circumstances we do not find any ground to interfere with the conclusion reached by the adjudicating authority on the question of undervaluation. We hold that the company showed lesser value for the goods imported in an attempt to evade payment of duty. Thus, point No. (i) is found against the appellant.
6. The question that was vehemently pressed before us was the legality of penalty imposed on the Director of the company. According to Learned Counsel, Director of a company which imported goods can, in no circumstance, be termed as the owner of the goods. Company, being a Public Limited Company, alone could be the owner of the goods. That company was the importer as well. Section 114A, inter alia, states where the duty has not been levied, the person who is liable to pay the duty shall also be liable to pay penalty equal to the duty. When the company is the owner and the importer, Learned Counsel representing the appellant is well-founded in submitting that the company alone is liable to pay penalty for the following reasons.
7. Section 12 of the Act, inter alia, states that duty of customs shall be levied on goods imported. As per section 46, importer of any goods shall make entry thereof by presenting a Bill of Entry to the proper officer. On the Bill of Entry being presented by the Importer, assessment has to be made as per Section 17 of the Act of the duty which is leviable. On such assessment, the duty is levied. On payment of the duty so assessed goods are cleared under section 47. When the goods so cleared are found to have been subject to short-levy, procedure contemplated by Section 28 has to be initiated. When duty has not been levied or had been short-levied, competent officer of the Department shall issue notice on the person chargeable with duty or interest requiring him to show cause why he should not pay the amount specified therein. Section 28(1) makes it clear that notice contemplated by that section is to be served on the person chargeable with duty. The person chargeable with duty in the instant case is the Limited Company.
8. In Collector of Customs, Cochin v. Trivandrum Rubber Works Ltd. 1999 (106) E.L.T. 9 (SC), the Supreme Court had to consider whether notice issued under section 28(2) to a clearing agent was a proper notice under that section. Their Lordships took the view that notice contemplated by Section 28 can only be to a person chargeable to duty. In the case of imports, it is the importer to whom notice is to be issued. Such a notice cannot be to an importer's clearing agent. This position applies on all fours to the present case. In the instant case the importer is M/s. Nippon Audiotronix Limited. So notice under section 28(2) can only be to the Company. The penalty contemplated by Section 114A can only be on the person liable to pay the duty and not to any other person. Viewed in this light, the order imposing penalty under section 114A on the Director is illegal.
9. Learned Departmental Representative tried to sustain the penalty imposed on the Director under section 112 of the Act. Adjudicating Authority in the impugned order had categorically stated that the provisions contained in section 112 are not invoked for imposing penalty on the Managing Director. Since the adjudicating authority has consciously excluded Section 112 and invoked the provisions contained in Section 114A only, it is not now open to the Revenue to try to sustain the order under section 112. Consequently, we vacate that part of the order which imposes penalty on Shri K.S. Goindi, Managing Director.
10. Third point urged by the Learned Counsel is that Section 114A could not be invoked in relation to imports effected prior to 28-9-1996. Section 114 imposes penalty on the person who is liable to pay duty as determined under section 28(2). Circumstances which warranted an order under section 28(2) should have come into existence subsequent to 28-9-1996 for invoking section 114A. If the situation arose prior to 28-9-1996 the penalty under section 114A cannot be imposed on the importer. Penalty under section 114A can be imposed on persons who created situation warranting action under section 28(2) subsequent to 28-9-1996 only. Article 20 of the Constitution of India specifically stated that no person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence. Nor can he be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. In view of the specific provision contained in Article 20(1) of the Constitution, no importer can be made liable to pay a penalty contemplated by Section 114A in relation to an act done prior to its coming into force. Section 114A came into statute book only with effect from 28-9-1996. Major portion of the imports were anterior to that date. In relation to such imports, no penalty as contemplated by Section 114A could be imposed. According to the Learned Counsel representing the appellant duty on all the goods imported subsequent to 28-9-1996 comes only to Rs. 27,49,000. Penalty under section 114A in relation to such goods can also amount to Rs. 27,49,000. So, penalty imposed on the company has to be limited to Rs. 27,49,000. We do so and the impugned order modified accordingly.
11. Interest has been ordered to be paid by the appellant as provided by Section 28AB of the Customs Act, 1962. That provision also came into the statute book only with effect from 28-9-1996. Clause (2) of that section states -
"For the removal of doubts, it is hereby declared that the provisions of subsection (1) shall not apply to cases where the duty became payable before the date on which the Finance (No. 2) Bill, 1996 receives the assent of the President".
So, interest in respect of duty which was payable on goods imported subsequent to 28-9-1996 alone could be levied. Interest so calculated will come to Rs. 3,16,242. Learned Departmental Representative appearing in the case accepted this amount as the correct amount of interest payable by the appellant. Therefore order of the Adjudicating Authority on interest is modified to this sum, i.e. Rs. 3,16,242.
12. One other contention raised by the Learned Counsel representing the appellant was that no penalty or interest is payable by the appellant because the entire duty which was found payable was deposited by the Company nearly 1 1/2 years prior to the issue of the show cause notice. Since the entire amount was deposited there was no necessity to issue a show cause notice under section 28(1) as was done in this case. The Department ought to have adjusted the amount deposited towards the differential duty and closed the matter. This argument is quite attractive; but we do not find our way to accept the same. At the time when the goods were cleared duty was levied on the basis of the value furnished by them. Subsequently that was found to be incorrect because of mis-declaration of value. Thereupon, correct value of the goods imported was found out by the Department. Amount short-levied was quantified at Rs. 81,49,643. No order was passed by the Department calling upon the importer to pay the differential duty. In the meantime, the importer deposited Rs. 81,49,643. That deposit can, under no circumstance, be termed as a payment pursuant to an order levying the duty. So that deposit will not exonerate the importer from the liability to pay differential duty pursuant to an order passed on notice contemplated by Section 28(1). Notice for payment of duties, interest, etc., was issued, in the instant case, on 17-3-1999. Pursuant to that notice, adjudication order was passed and thereafter alone could the amount deposited by them be adjusted towards short-levy of duty on the disputed consignments. Earlier deposit was not in compliance with any order levying duty which was short-paid. In this view of the matter, we overrule the contention raised by the Learned Counsel that the Department was not justified in invoking the provisions contained in Section 28 of the Act.
13. On the basis of earlier decisions rendered by this Tribunal, yet another submission was made by the Learned Counsel representing the appellant that even invoking Section 114A, the penalty imposable need not be equal to the duty not levied or short-levied. We are not disputing this proposition of law; but it all depends on the facts and circumstances of each case. On the facts of this case, the Company cannot claim any such leniency from Tribunal. They tried to evade substantial amount of revenue by misdeclaring value. So we do not find any justification in reducing the quantum of penalty.
14. Appeals are disposed of as stated above. Quantum of penalty and interest stand varied as stated by us hereinabove.