Binu Tamta, J
1. The present appeal arises out of an Order-in-Original no.DLI/CUS-PREV/OPD/COMMR/09/2018 dated 10.10.2018 passed on the matter being
remanded by this Tribunal vide Final Order dated 25.10.2017.
2. Facts of the case are that the appellant is a regular importer of deodorant and perfumes and filed the Bill of Entry No.8107125 dated 27.01.2015.
On examination by the officers, the goods were found to be not affixed with MRP labels, which was a requirement for assessment and clearance of
these items in terms of Notification No.24/2000 dated 24.11.2000 issued by the DGFT read with Excise Notification No.01/2002, Notification No.
05/2001 and 49/2008. On completion of investigation, proceedings were initiated against the appellant on the allegation that they had not declared MRP
before the Customs and sold the goods at higher MRP and thereby evaded the customs duty of Rs.6,23,664/- in respect of the live consignment seized
at the port under B/E dated 27.0 1.2015. During search operations in the business premises of the appellant on 02.02.2015, where 121890 pieces of
imported body spray/perfumes and gift pack, etc worth Rs.37,97,010/- were found, which did not have MRP affixed on them. These goods were
imported by paying duty on declared RSP. It was also noticed that certain invoices issued to some clients in Kerala depicted the transaction value
much higher than the RSP declared by the importer at the time of import. The goods seized were later provisionally released on payment of
differential duty, deposit of amount in lieu of bank guarantee and on furnishing bond of 100% value of the seized goods in respect of the live
consignment.
3. Show cause notice dated 28.0 7.2015 was issued to the appellant. The Adjudicating Authority confirmed the customs duty of Rs.6,23,664/- in
respect of the goods covered by the Live consignment, duty of Rs.14,22,622/- on the goods recovered in the godown and duty of Rs.91,86,981/- in
respect of the past imports of similar goods during the year 2014â€"2015, along with interest and penalty. Challenging the said order, the appellant filed
an appeal before the Tribunal which was partly allowed and partly remanded vide Final Order dated 25.10.2017. The relevant paragraphs of the Final
Order of the Tribunal are set out below:-
“5. There are three aspects in the dispute. The first one is relating to consignment covered by live bill of entry dated 27.1.2015.
Admittedly the consignment is yet to be examined and assessed and there is a request by the importer for a first check, before assessment.
The fact that the goods which are subjected on MRP basis assessment can be affixed with the MRP labels in the custody of the customs is
prevailing practice and the same are done at the request of the importers in many cases. As such, the duty demands and finding of violation
on such consignment is premature and cannot be sustained.
6. On the second issue regarding the duty liability of the goods found in the godown of the appellant, we note the claim of the appellant that
no correlation has been made with specific import consignment of the appellant and also their claim regarding local purchase has not been
verified. We note the duty demand is made based on the inference of higher MRP evidenced in certain sales in Kerala. Admittedly, the good
which were found in the godown were without MRP and possibility of that goods likely to have been sold higher MRP cannot be the reasons
for sustaining the demand for differential duty. In any case there is force in the claim of the appellant that even if the Revenue contends that
these consignments were imported by the appellants apparently they will be part of the other total demand of Rs.91,86,981/- which covers
the period 201415. We find in reason to sustain the demand for such differential duty in respect of goods found in the godown.
7. Regarding the third issue on the charge of the appellant having sold the goods on much higher MRP after changing the MRP label, we
note the point is admitted to an extent by the appellant. Admittedly, for the goods sold through retailers in Kerala, the MRP was more than
double in certain cases. This apparently is clear violation calling for demand of differential duty as well as penal action. However, the
quantification of such differential duty has been made in a summary manner based on certain illustrative evidences. We note that the
invoices submitted by the appellants required detailed verification so that the differential duty in respect of goods which were sold with
much higher MRP can be arrived at on such verification. Penal consequence of such differential duty should be commensurate to violation
as found on such verification. For this limited purpose, we remand the matter to the original authority for re-quantification of duty. The
appellants shall be given adequate opportunity to submit the documents and defence before a decision taken.â€
4. From the aforesaid order of the Tribunal, it is evident that the first two issues were decided on merits in favour of the appellant and the appeal has
been allowed holding the said demands as unsustainable. The third issue was decided on merits holding that as the appellant has admitted that the
goods were sold on much higher MRP after changing the MRP label and that the goods sold through retailers in Kerala, the MRP was more than
double in certain cases, there was clear violation and therefore, the demand of differential duty as well as penal action was justified. However, on the
issue of quantification of the differential duty, since it was made in a summary manner, the issue was remanded for detailed verification of the invoices
submitted by the appellant to arrive at the differential duty in respect of goods which were sold with much higher MRP, can be arrived at along with
commensurate penal consequences. The said order has not been challenged by either party and has been accepted both by the appellant as well as by
the revenue
5. On remand the Adjudicating Authority failed to appreciate the limited scope of its jurisdiction in terms of the remand order and thereby fell in error
in reconsidering all the issues on merits, which were not the subject matter of remand order and passed the impugned order. Hence, the present
appeal has been filed before this Tribunal.
6. Having heard both sides and perused the records of the case, we may first examine the impugned order passed on remand. The relevant paras in
the impugned order which runs contrary to the directions of the Tribunal in the earlier order are as under: â€
“9. As regards the live (Bill of Entry the goods pertaining to which were also seized and subsequently released provisionally on
execution of Bond and payment of differential duty, I find that the MRP/RSP were not found printed or affixed on the goods covered under
Bill of Entry No.8107125 dated 27.01.2015. The differential duty on these goods was also worked out by applying the same formula which
was used for rest of goods found in godowns or cleared in the past. The Hon’ble Tribunal has held that the demand of duty on this live
consignment is premature. However, since goods have already been released provisionally, duty determination with respect to this
consignment has to be finalized. Since these goods were not having MRP affixed, there is no reason to believe that these goods would have
been sold at the MRP declared to Customs, when earlier identical goods were sold at much higher MRP. Therefore I propose to confirm the
duty as proposed in the notice, even though the duty has already been paid at the time of provisional release of the goods.
10. The noticee also raised the point that the duty demanded in respect of the goods found in godown and seized by the department cannot
be demanded again as these goods got automatically included in the goods cleared in the past during the period 2014-15 in respect of
which a demand of differential duty of Rs.91,86,981/-has been made. The Hon’ble Tribunal has also held that such demand is not
sustainable. There is no reason to disagree with this view as the goods found in the godown and seized by the department were definitely
imported by the noticee and cleared in the past on the entire quantity of which duty has been demanded. Demanding duty on such goods
being part of past imports would amount to demand twice over. Therefore I hold the duty of Rs. 14,22,622/- which has been demanded
separately in respect of goods seized at the godowns is not sustainable as it is already covered under the amount of duty demanded for the
entire past imports.
11. It is evident that the goods being subject matter of the SCN in question have been improperly imported as the value declared in the
B/E’s filed by the noticee do not correspond to their actual value with respect to their MRP. Therefore the goods covered under Bill of
Entry no.8107125 dated 27.01.2015 valued at Rs.29,09,395/-as well as goods seized at the godown of the importer valued at Rs.37,96,885/-
seized during subsequent search operation from the business premises of the noticee are liable to be confiscated in terms of section 111(m)
of the Customs Act, 1962.â€
7. We have no hesitation in saying that the Adjudicating Authority has exceeded its jurisdiction in considering the issue in respect of the live
consignment and the goods lying in the godown of the appellant as they have already been decided by the Tribunal and the same were binding on the
Adjudicating Authority being a subordinate authority. The learned Counsel for the appellant while challenging the findings and observations of the
Adjudicating Authority as quoted above, has referred to the decision of the Apex Court in Union of India Vs. Kamlakshi Finance Corporation Ltd,
1991 (55) ELT 433 (SC) laying down that the principles of judicial discipline require that, “the orders of the higher Appellate Authorities should be
followed unreservedly by the subordinate authorities unless its operation has been suspended by competent court. The order of the Appellate Collector
is binding on the Assistant Collector working within his jurisdiction and the order of the Tribunal is binding on the Assistant Collectors and the
Appellate Collectors, who function under the jurisdiction of the Tribunalâ€. Similar observations have been made by the Apex Court in Commissioner
of Customs, Mangalore Vs. Kushalchand & Company, 2015(325) ELT 813 (SC) that the Commissioner being bound by the findings in the remand
proceedings, it is not open for him to revisit the issue all over again and record a contrary finding. In view of the said principles, the findings arrived by
the Adjudicating Authority with reference to the first two issues is set aside as in the absence of any challenge by the Department, the findings
recorded by the Tribunal on the earlier occasion had already attained finality.
8. On the third issue that the appellant admittedly had sold the goods on much higher MRP after changing the MRP label, the Tribunal has
categorically observed that there is clear violation of the provisions of the Customs Act, which calls for demand of differential duty as well as penal
action. Since the quantification of the differential duty was made in a summary manner based on certain illustrative evidences, the Tribunal had
remanded the limited issue for quantification of differential duty by detailed verification. The concluding para in the final order of the Tribunal was to
the effect:-
“For this limited purpose, we remand the matter to the Original Authority for re-quantification of duty. The appellant shall be given
adequate opportunity to submit the documents and defence before a decision taken.â€
9. Before considering this last issue, we would like to examine whether sufficient opportunity has been granted to the appellant during the remand
proceedings. From the impugned order, we find that the appellant vide letter dated 04.06.2018 was called upon to submit documents/invoices,
evidencing sale of goods/retail sale invoices in their defence. A reminder was then sent on 22.06.2018 and the appellant by its reply dated 06.07.2018,
enclosed the self attested copies of some invoices evidencing sale of goods imported by them. The appellant was then granted sufficient opportunity
for personal hearing, which was fixed on 9.08.2018, but no one appeared and on the request for adjournment, the next date was fixed as 27.08.2018
but again nobody appeared nor any request for adjournment was received, yet another opportunity was granted. Personal hearing was given for
24.09.2018 but nobody appeared, and accordingly the case was taken up for adjudication on the basis of the available records and the invoices
submitted by the appellant. Hence, it cannot be said that the principles of natural justice has not been followed and sufficient opportunity has not been
granted to the appellant, however, it is the appellant who failed to co-operate and deliberately avoided the hearing.
10. As per the Revenue, on examination it was revealed that MRP/RSP were neither affixed on individual packs nor on cardboard cartons and later, it
was found that these goods were sold at much higher price than the MRP declared for assessment purposes thereby evading the payment of
appropriate CVD. The further submission of the Revenue is that since the appellant had admitted the said mis-declaration and undervaluation
voluntarily in his statements recorded under section 108 of the Act and accepted to pay the differential duty on the basis of re-determined value in
respect of those goods, detained at ICD, TKD, and at the godown, nothing further survived to be proved. We do not find any merits in these
submissions at this stage as the Revenue had not challenged these findings of the Tribunal in the earlier round of litigation.
11. We may now examine the issue of quantification and its consideration by the Adjudicating Authority. On remand, the appellant had submitted
some documents/invoices and on examining the same, the Adjudicating Authority found that they were the same invoices which were resumed by the
department from the premises of the appellant during investigation and had formed the basis for the show cause notice. Since no further invoices were
submitted, the Adjudicating Authority was of the view that the appellant has no more invoices or documents in support of their contention and hence
proceeded on the basis of the available invoices and concluded that in the absence of the documentary evidence it cannot be said that the invoices
raised to buyers, other than Kerala, the invoice value matched with the MRP declared at the time of import. Even during the course of arguments
before us, the learned counsel for the appellant had no further documents to substantiate the contention that the sale price higher than the declared
MRP comprised only a small percentage and therefore we do not find any reason to differ from the findings of the Adjudicating Authority.
12. We accordingly, modify the impugned order to the extent that:
i.) Confiscation under section 111(m) of the Act is set aside and consequently the redemption fine also, does not stand.
ii.) The amount of Rs.6,23,664/- relating to Bill of Entry No.8107125 dated 27.01.2015 is set aside. iii.) The customs duty amounting to Rs.14,22,622/-
also needs to be set aside and, therefore, the remaining amount of customs duty of Rs.66,41,737/- (Rs.77,64,359 â€"Rs.14,22,622) is hereby affirmed.
iv.) The penalty imposed on the appellant under section 112(a) of the Act is on the higher side as the duty proposed stands reduced to the extent
referred above. Hence, the penalty under section 112(a) is reduced from Rs.25,00,000/- to Rs.5,00,000/-.
v.) Penalty imposed under Section 114AA of the Act of Rs.2,00,000/- is set aside.
13. The appeal is partly allowed to the extent mentioned above. The appeal is accordingly, disposed off.
[ Order pronounced on 6th January, 2025 ]