[Order per : P.G. Chacko, Member (J)]. - M/s. Pariston Exim, Rajkot had imported a total quantity of 3917 kgs. of mulberry silk from Hong Kong and filed three Bills of Entry on 9-4-1997 for clearing the same. Bills of Entry Nos. 18235, 18236 and 18237 covered 1284 kgs., 1294 kgs., and 1339 kgs., respectively. The import was under DEEC scheme. The goods were supplied by M/s. Sunchan Trading Co., Hong Kong (STC, for short), appellants in Appeal No. C/236/2001. The Commissioner of Customs, Chennai received information from DGFT, Rajkot to the effect that the relevant Advance Licences (DEEC) had been cancelled prior to 23-5-1997. The above goods covered under the three bills of entry were seized on 31-5-1997. Thereafter, the Commissioner received a representation from M/s. World wide Trading Est. Pvt. Ltd., Lucknow (WTL, for short), appellants in Appeal No. C/235/2001, which was. to the effect that the seized mulberry silk weighing 2633 kgs. covered under the second and third bills of entry had been transferred to them by M/s. STC and, therefore, they (WTL) should be permitted to clear the same. This claim of M/s. WTL was rejected by the Commissioner, who, in adjudication of show-cause notice dated 20-11-1997 issued after DRI investigation into the imports, confiscated the entire quantity (3917 kgs.) of raw silk valued at Rs. 58.5 lakhs, with option for redemption on payment of a fine of Rs. 30 lakhs. He also imposed a penalty of Rs. 1 lakh on the proprietor of M/s. Pariston Exim, Rajkot. After this order was passed by the Commissioner, he received a report from M/s. STC on 18-4-1998, wherein the suppliers of the goods sought, permission to take back the goods to Hong Kong or to sell it to any other buyer in India. The Commissioner informed M/s. STC that nothing could be done in the matter at that stage and they were at liberty to go in appeal to the Tribunal against the above order dated 06-3-1998. Subsequently, on 16-6-1998, the goods were sold in auction for a total price of Rs. 14,20,848/-. M/s. WTL and M/s. STC filed appeals against the above order of the Commissioner, which were disposed of by this Tribunal remanding the case for de novo consideration by the Commissioner vide Final Order Nos. 1822 & 1823/1999, dated 27-7-1999 in Appeal Nos. C/592 & 1362/1998 [ (Tri.-Chennai)]. After noting that the goods had already been disposed of through auction, the Tribunal directed the Commissioner to consider the claims of both the parties for sale proceeds of the goods. The Commissioner was to pass a detailed order in the light of the Apex Court’s judgments in East India Commercial Co. Ltd. v. Collector of Customs [ (S.C.)] and Union of India v. Sampath Raj Dugar [ (S.C.)] and the Tribunal’s decision in Savitri Electronics Co. v. Collector [ (Tri.)]. Pursuant to the above remand, the Commissioner heard both parties and passed order dated 19-3-2001 rejecting their claim for sale proceeds. Hence the present appeals by M/s. STC and M/s. WTL.

2. The “limited point” framed by learned Commissioner for consideration in the impugned order was whether the claims of M/s. WTL and M/s. STC could be considered in the light of the Hon’ble Supreme Court’s judgment in Sampath Raj Dugar case and whether the goods were liable for confiscation under the Customs Act. For deciding the point, learned Commissioner went into the chronology of relevant events, which he noted as under :-

From the above chronology of events, it appeared to learned Commissioner that M/s. STC had sold the same consignment to two different buyers viz. M/s. Pariston Exim, Rajkot and M/s. WTL, Lucknow. It appeared to him that M/s. STC were keeping sale documents in duplicate for the same consignment, one in the name of M/s. Pariston Exim, Rajkot and the other in the name of M/s. WTL, Lucknow. He further inferred that there was collusion between M/s. STC and M/s. Pariston Exim, Rajkot. On this basis, learned Commissioner proceeded to examine the applicability of the ratio of the Apex Court’s decision in Sampath Raj Dugar case to the facts of the case on hand. He observed that a foreign supplier of goods imported into India was not entitled to ask for re-export of the goods under claim of ownership over the same, where he was party to any fraud committed by the importer. After noting that the Advance Licences issued to M/s. Pariston Exim, Rajkot had been cancelled by the licensing authority which found the said firm to be fictitious and observing that M/s. STC were hand in glove with the above firm, learned Commissioner found. M/s. STC to be a party to fraud and, on this basis, held that M/s. STC were not entitled to the benefit of Sampath Raj Dugar case (supra). The same view was taken by the Commissioner with reference to the Tribunal’s decision in Uniflex Cables v. Collector of Customs, Bombay []. In relation to M/s. WTL, the adjudicating authority observed that they were only used as a front by M/s. STC to save a part of the goods exported to India.

3. Heard both sides. Learned Counsel for the appellants submitted that the adjudicating authority had gone beyond the scope of the remand order of the Tribunal. The authority had recorded findings contrary to the Tribunal’s findings in the remand order. Contextually, Counsel referred to Collector of Central Excise, Aurangabad v. Tigrania Metal & Steel Industries [ (Tri.-Del.)] wherein a second remand to Collector was ordered as he was found to have recorded findings contrary to certain findings recorded by the Tribunal in its first remand order. Counsel submitted that it was not open to the Commissioner to seek to distinguish Sampath Raj Dugar case from the case on hand. The Apex Court’s decision had only to be followed by the adjudicating authority in terms of the Tribunal’s remand order. The remand order was not challenged by the department and, therefore, it was not open to the respondent to argue to the contra.

4. Counsel submitted that M/s. WTL had paid the price for 1294 kgs. of raw silk (covered under the second bill of entry) to M/s. STC as evidenced by the relevant payment request and payment advice of the supplier’s bankers. However, in respect of 1339 Kgs., of raw silk (covered under third bill of entry), Counsel conceded, that no such payment was made by M/s. WTL to M/s. STC. On these facts, Counsel contended that M/s. WTL had clear title, to 1294 kgs. of raw silk covered under second bill of entry while M/s. STC retained title to 1339 kgs. of raw silk covered under the third bill of entry. They must get “seizure value” of the goods rather than its sale value. In this connection, Counsel relied on the Calcutta High Court’s judgment in Bhogilal Mehta v. Union of India [ (Cal.)]. Alternatively, it was argued that the appellants were entitled to receive proportionate shares of sale proceeds of the goods auctioned by the department, in terms of Section 150 of the Customs Act.

5. Learned SDR did not think that the adjudicating authority had travelled beyond the scope of the Tribunal’s remand order. According to her, it would appear from the operative part of the said order that it was an open remand enabling the Commissioner to consider all claims and contentions of the parties. With reference to Counsel’s claim under Section 150 of the Customs Act, learned SDR pointed out that the provision was applicable only to sale proceeds of goods not confiscated. In the present case, the goods were confiscated and thereafter auctioned. Hence the provision would not be applicable. Learned SDR submitted that, in the event of the appellants’ claim for share of sale proceeds being allowed, the department’s liability would be only to return the balance sale proceeds after adjusting redemption fine, with interest at the rate of 12% on such balance amount. In this connection, reliance was placed on the Hon’ble High Court’s judgment in Collector of Madras v. Meena A. Bharwani [ (Mad.)]. In the event of the appellants being allowed to get proportionate shares of sale proceeds of the goods, they should be made to pay redemption fine and penalty. In this connection, SDR claimed support from the decision of this Bench in M.V. Marketing & Supplies v. Commissioner of Customs, Chennai [ (Tri-Chennai)]. Learned Counsel, in his rejoinder, sought to distinguish the case of M.V. Marketing & Supplies (supra), on facts.

6.0 We have given careful consideration to the submissions. The first question to be considered is whether, in passing the impugned order, learned Commissioner travelled beyond the scope of our remand order viz. Final Order Nos. 1822 & 1823/1999 reported in (Tri.-Chennai). The findings, observations and directions of the Bench are contained in paragraphs 9 and 10 of the said order, which are reproduced below :-

“9. On consideration of submissions made by both the sides, we are convinced that the impugned order suffers from infirmities and is liable for being set aside for remand for de novo consideration. In terms of the Uniflex Cables case (supra) it was held that the authorities have got right to initiate proceedings for violation of the Customs Act, and related laws, more particularly import/export regulations and also for violation of the duty exemption Notification No. 80/95. In this case however, M/s. Pariston had filed Bill of Entry along with valid licence. By merely filing Bill of entry they did not become owners of the goods and they merely got ownership by fiction of law created for proper and effective implementation of the Act as held by the Hon’ble Supreme Court in the case of Sampathraj Dugar (surpa). It has been clearly held in that judgment that in case where there is abandonment of the goods, action may be taken against such person for suspension/cancellation of licence including other proceedings for the purpose of penalty. However, the Hon’ble Supreme Court has also held in that case that such person who filed the BE cannot be treated as owner of the goods even in such state. The Hon’ble Supreme Court has clearly held that holding otherwise would place the exporter in a very difficult position as he loses the goods without receiving payment and his only remedy is to sue the importer for the price of the goods and for such other damages that he may have suffered and this would not be conducive to international trade. Therefore, the Supreme Court clearly held that owner of the goods is entitled to seek re-export of the goods. The Supreme Court has also clearly observed in that case that the goods should not have been confiscated as on the date of the said importation there was no prohibition inasmuch as the import was covered by valid import licence. It was also held that subsequent cancellation of is of no relevance nor does it retrospectively render the import illegal. In this regard reference was also made to earlier judgment rendered in the case of East India Commercial Co. Ltd. v. CC reported in (S.C.) = 1963 (S.C.R.) 338. The facts and circumstances in Sampthraj Dugar also is almost identical to the present case wherein also it was not the case of the Revenue that the owner was a party to any conspiracy or other fraudulent plan hatched or sought to be implemented by second respondent, as the first respondent continued to be owner of the goods and that the goods, cannot be confiscated or proceeded against for the violation committed by the second respondent who had filed the Bill of entry. Further, the Supreme Court also accepted the plea of the owner the first respondent that he was not party to the misuse of the earlier import nor was he aware of the alleged fraudulent practice by the second, respondent in obtaining advance import licence. Therefore, the first respondent owner’s request for re-export of the goods to Hong Kong was accepted by the Supreme Court. Therefore, on consideration of the facts of this case and also that of case of Savitri Electronics Co. (supra) it is proper that the matter is required to be re-considered by the Commissioner as he has not heard owner of the goods viz. Sunchan Trading Co. who had tendered representation for participation in the proceedings. M/s Pariston Exim had also abandoned the goods and had not opted for clearance or claimed ownership. M/s. WWTE Ltd. had purchased a part of the goods and had been pressing for clearing the same in terms of the Customs House practice. In the opinion of the Commissioner the goods were tainted ones and hence liable for confiscation. However, the Commissioner should have decided, as to who should pay the redemption fine and get the goods released. In the present case, as held by Supreme Court in the case of Sampath Raj Dugar, the goods at the time of import had a valid licence. Therefore, the goods could not be confiscated at that stage of filing the Bill of Entry and it cannot be held as tainted goods. Subsequent action of M/s. Pariston Exim or earlier fraudulent action cannot result in denial of opportunity to the appellants for seeking clearance of the goods in terms of the ruling of the Hon’ble Supreme Court in Sampathraj Dugar’s case and also the ownership of the goods had flowed to them in terms of Section 46 of the Customs Act. In the case of Savitri Electronics in similar circumstances, noting the judgment of the Supreme Court in the case of Sampath Raj Dugar, the Tribunal had held that ownership of the goods continued to vest with the exporter i.e. M/s. Kisho Shokai Yokohama Japan and permitted them to re-export the goods.

10. It is now seen that both the parties had been representing to the Commissioner to permit them to participate in the proceedings. M/s. Sanchan Trading Co. had also filed writ petition and there was direction from the Hon’ble High Court to the Commissioner to consider their case. Therefore, the Commissioner having auctioned the goods within the limitation period of appeal is not a justified action in law. However, now that the auction has already taken place, both the parties are seeking for a direction to give them the sale proceeds of the goods. They have also contended that the goods cannot be confiscated in terms of the judgment cited. These contentions are required to be considered by the Commissioner after granting them an opportunity of hearing and permitting them to produce sufficient evidence to satisfy him. The Commissioner shall hear them and pass a detailed order in the light of the law laid down by the Hon’ble Supreme Court and the Tribunal in the noted judgments.

The appeals are thus allowed by remand.”

6.1 It would appear from the above order of the Tribunal that the direction to the Commissioner was to consider two contentions of the appellants: (a) that the goods were not liable for confiscation and (b) that they (appellants) were entitled to receive the sale proceeds of the goods. These contentions were to be considered in the light of the Supreme Court’s decision in Sampath Raj Dugar case and the Tribunal’s decision in Savitri Electronics case. As regards confiscation, we find that the proposal in the show cause notice was to confiscate the goods under Section 111(d) of the Customs Act (vide para 28 of the SCN). Clause (d) of Section 111 provides for confiscation of goods which are imported contrary to any prohibition imposed by or under the Customs Act or any other law for the time being in force. This provision was invoked in the show cause notice in the wake of cancellation of the advance licences. The notice alleged that the raw silk, a restricted item, under Exim Policy 1992-97, had been imported, without valid import licence. On this aspect, a conclusive finding is noticeable in the Tribunal’s remand order, which is to the effect that the goods had been imported under valid licence and could not be held to be tainted goods on the date of filing of the relevant bills of entry. Accordingly, it was held that the goods could not be confiscated. This view, taken in the remand order, ruled out confiscability of the goods under Section 111(d). The importation of the goods was made under Advance Licences issued by the competent authority which were validly in force when the relevant bills of entry were filed. Hence it cannot be said that the goods were imported contrary to any prohibition. The subsequent cancellation of the Advance Licences by DGFT on the ground that the licensee-firm had subsequently turned out to be fictitious would not detract from this position. Hence the application of Section 111(d) is ruled out. This is the view implicitly taken in the remand order, which did not purport to mandate that the Commissioner should examine the question whether the goods were liable for confiscation under Section 111(d). Though it may appear from some observations made in para (10) of the remand order that the appellants’ plea against confiscation was required to be considered by the Commissioner, the order, read as a whole, could not mean that way. Such observations are not determinative of the scope of the remand as they are of superfluous nature. We find that, in the impugned order, learned Commissioner held the goods liable for confiscation under Section 111(d) of the Customs Act, which decision is beyond the scope of the remand (as rightly submitted by learned Counsel) inasmuch as such confiscation was already ruled out in the remand order.

6.2 The real purport of the remand order was to make the adjudicating authority consider the appellants’ claim for sale proceeds of the goods in the light of Sampath Raj Dugar (supra). The remand order had also given a brief account of the facts of the case of Sampath Raj Dugar for the benefit of the lower authority. Learned Commissioner, however, chose to distinguish those facts and to hold, that the ratio of Sampath Raj Dugar was not applicable to the facts of the case of STC and WTL. He held M/s. STC to have colluded with M/s. Pariston Exim and to have acted with fraudulent intention. On this basis, learned Commissioner took the view that M/s. STC were not entitled to claim re-export of the goods. We are unable to accept the distinction drawn between the case of Sampath Raj Dugar and that of STC inasmuch as, in the remand order, this Bench has already found that the facts of the two cases are almost identical. We find that, by holding the goods liable for confiscation and venturing into the act of distinguishing the case of Sampath Raj Dugar, the adjudicating authority was travelling beyond the scope of the remand order.

6.3 The reference to M/s. STC is contained in para 16 of the SCN, which reads as under :-

M/s. Southern Shipping Services, Chennai under their letter dated 15-7-1997 forwarded a letter dated 20-6-1997 received from M/s. Pariston Exim, Rajkot requesting them to withdraw their bills of entry. In the said letter of M/s. Pariston Exim, it has been mentioned that the consignor M/s. Sunchan Trading, Hong Kong has called back the documents from Dena Bank, Rajkot because of which they could not release the documents; that then M/s. Sunchan Trading co. had sold the material to some other buyer and that therefore they requested them to withdraw both the bills of entry with the Custom for the clearance of consignment of Mulberry Raw Silk at the earliest. In this letter, no reference as to the bill of entry number, etc., have been, indicated. M/s. Worldwide Trading Est. Pvt. Ltd. vide their letter dated 16-6-1997, addressed to Assistant Director, DRI, Chennai, has stated that silk yarn consignment, arrived at Chennai by TIGER WAVE V. 5 08 against Bills of Entry No. 10092 & 10093 dated 3-2-1997 was stated to be pending for clearance by their supplier and they requested to transfer the Bill of Entry in their name.

Nowhere in the show-cause notice was there any allegation that M/s. STC had colluded with M/s. Pariston Exim or that they were party to any fraud. We do not forget the fact that the show-cause notice was not directed against M/s. STC. It was the Tribunal’s remand order dated 27-7-1999 and the Hon’ble High Court’s order dated 7-8-2000 which made it obligatory for the to consider the claim of M/s. STC for a share of the sale proceeds of the goods. In the absence of a show-cause notice alleging collusion, fraud etc. against M/s. STC, it was incumbent on the Commissioner to examine the spate of letters on the subject sent to him by that party. It was in a letter dated 19-2-1998 that STC made their first request for taking back 1339 kgs. of raw silk covered under bill of lading No. 10093 and Invoice No. 371. In that letter, they informed the Commissioner that M/s. WTL had abandoned the said goods and, therefore, they (STC) wanted to take it back. This letter was received by the Commissioner on 23-2-1998 as evidenced by the postal authority’s certificate available on record (the impugned order contains an erroneous averment to the effect that the above letter of M/s. STC was received by Commissioner’s office only on 19-5-1998). M/s. STC sent a reminder dated 18-4-1998 to the Commissioner and the same was received by the latter. A further reminder was sent by them on 21-8-1998, wherein they also requested the Commissioner to permit them to warehouse the goods in a Customs bonded warehouse pending consideration of their request for re-export of the goods. Subsequently, having come to know that the goods had already been confiscated and disposed of through auction, M/s. STC, in their letter dated 28-9-1998, asserted before the Commissioner that they were entitled to claim the goods back.. In these letters, they specifically claimed the benefit of the Apex Court’s judgment in Sampath Raj Dugar (supra). They further made the following claim also :-

“Since it is reported that goods have already disposed off, we should be paid the full amount of USD 30,127.50 along with interest @ 9% p.a. till the date of payment together with our expenses and cost for an amount of USD 500.00. Accordingly, we request you to pass appropriate orders directing payment of USD 30,627.50 plus interest @ 9% p.a. till the date of payment without delay.”

In his reply dated 5-10-1998 to STC’s letters, the Commissioner informed them that he was not in a position to accede to their request as order had already been passed in adjudication of the matter (Order-in-Original No. 34/98, dated 31-3-1998). The Commissioner also provided a copy of the said order to M/s. STC and informed them that their remedy was an appeal to the Tribunal. On 14-10-1998, M/s. STC replied to the Commissioner’s letter dated 5-10-1998, seeking to know the value of sale proceeds of the goods which they had wanted to take back. In response to this request the Commissioner’s office furnished the required particulars such as the value of sale proceeds, date of auction, date of delivery of the goods to purchaser etc. After the remand order was passed by this Bench, M/s. STC in their letter dated 30-8-1999 addressed to the Commissioner urged that a personal hearing be granted to them at the earliest. It appears, the appellants’ Counsel was heard by the Commissioner before passing the impugned order. However, any notice of the grounds stated in the impugned order for rejecting the claim for sale proceeds was not given to the parties. Learned Commissioner ought to have put them to notice of the reasons for his proposal to reject their claim for sale proceeds of the goods. In the absence of such notice, we have to hold that the impugned order was passed in violation of the principles of natural justice.

6.4 It appears from the conduct of M/s. STC as discernible from their persistent, correspondence with the Commissioner that they cannot be held to have colluded with M/s. Pariston Exim, Rajkot or to have done anything with fraudulent intention. The contra finding recorded in the impugned order does not necessarily flow from the chronology of events shown in that order. The circumstances in which the goods were shipped on 3-2-1997 in. favour of M/s. Priston Exim, Rajkot but Bills of Lading were raised, on M/s. WTL on the same day were satisfactorily explained, by M/s. STC in their letters to the Commissioner. They have also explained the circumstances in grounds (f) and (g) of their appeal, as follows:

“(f) The appellants submit that there were never two sets of documents. Original set of documents were presented first to first customer’s (Pariston) Bank Dena Bank, Debar Road, Rajkot on D/P terms negotiated through appellants Bank Standard Chartered Bank, Hong Kong on 4-2-1997. Being unable to get payment of the Bill Nos. 97 MAS 370 & 97 MAS 371, , the appellant requested their banker Standard Chartered Bank, Hong Kong on 22-4-1997 to call original documents from Dena Bank, Rajkot. Accordingly, Standard Chartered Bank, Hong Kong requested Dena Bank, Rajkot to return the original-documents related to Bill Nos. 97 MAS 370 & 97 MAS 371. Dena Bank, Rajkot returned original documents to appellant’s Bank Standard Chartered Bank, Hong Kong on 28-4-1997. Meanwhile, the new contract with second buyer (Worldwide) was negotiated on 25-4-1997. Thereafter, the appellants got the B/L amended from Shipping Company on 7-5.1997 and new invoices were made with the same Invoice No. & date substituting the name of old buyer and bank with that of new buyer (Worldwide) and their bank (Union Bank of India, Aminabad, Lucknow). These were then again sent on 8-5-1997 through Standard Chartered Bank, Hong Kong to second buyer’s bank Union Bank of India, Aminabad, Lucknow on D/P terms for payment collection. Once Invoice No. 97 MAS 370 was paid but another invoice No. 97 MAS 371 remained unpaid for long and the original documents were returned by Union Bank of India, Aminabad, Lucknow to petitioner’s Bank Standard Chartered Bank on 11-11-1997.

(g) It is the accounting practice of supplier’s company to make invoice date same as B/L date which in this case was 3-2-1997. When the invoice (on Pariston) was returned unpaid and new contract with another buyer (Worldwide) was concluded at same rates as the first/original invoice only the name of the new buyer and their bank was substituted in new set of documents & other particulars remained same including invoice no. & date. B/L date could not have been changed ...”

we have to accept the above explanation, not controverted by the respondent. We are at a loss to understand how fraud could be detected in the above transactions and attributed to M/s. STC. Allegations of serious nature, such as collusion and fraud, require firm and cogent evidence, which is missing in the impugned order. We, therefore, reject the above finding of the Commissioner against M/s. STC.

6.5 It is not in dispute that, though M/s. WTL had initially agreed to purchase from M/s. STC the raw silk covered under the second and third bills of entry filed by M/s. Priston Exim, they paid for only 1294 kgs. of silk covered under the second . Bill of Entry and did not pay for 1339 kgs. of silk covered under the third Bill of Entry. M/s. STC retained ownership over 1339 kgs of raw silk, for which the bill of lading remained with them and the invoice returned to them unpaid. In the light of the Apex Court’s judgment in Sampath Raj Dugar (supra), the claim of M/s. STC for re-export of 1339 kgs. of raw silk covered under the third bill of entry filed by M/s. Pariston Exim ought to have been accepted by the Commissioner and, the goods having already been disposed of through auction, their alternative claim, for proportionate share of sale proceeds should have been favourably considered.

6.6 The only finding recorded in the impugned order, as against M/s. WTL, is that they were used by M/s. STC only as a “front” to save part of their (STC’s) goods. M/s. STC were entitled, to take care of their own goods, and, for this purpose, they were in constant and direct correspondence with the Commissioner. We have already examined this aspect and have found nothing which can be said to indicate that M/s. WTL were used as a “front” by M/s. STC to save their goods. In any case, the right claimed by M/s. WTL to clear 1294 kgs, of raw silk covered under the second bill of entry cannot be defeated on the sole ground that they acted as a ‘front’ for M/s. STC to save the latter’s goods. They had requested for permission to present bill of entry in their own name after the importer (Pariston Exim) had abandoned the goods. This request was made on the strength of a bill of lading and an invoice, both of which were in their own name. These documents along with banker’s document evidencing payment of price of goods to the supplier should have been accepted as constituting genuine transaction between M/s. STC and M/s. WTL. By presenting such documents to the Customs authorities, M/s. WTL were holding themselves out to be “importer” of 1294 kgs. of raw silk in terms of Section 2 (26) of the Customs Act for the purpose of presenting a bill of entry under Section 46 (1) of the Act for clearing the goods. But they were also liable to produce valid import licence for such clearance of the goods, which was a restricted item. M/s. WTL have also no case that the goods was freely importable. It appears, at no point of time did M/s. WTL claim to clear the goods under a valid licence. The Commissioner, on all these facts and circumstances, should have carefully considered their plea for sale proceeds. Instead, he was rejecting M/s. WTL’s claim, on the ground that they had been used by M/s. STC as a ‘front’ to save their goods, and that too, without putting them to notice of this ground.

6.7 We have found that natural justice was denied to both the parties by the adjudicating authority. Having found that M/s. STC are entitled to claim their share of sale proceeds of the goods, we must now examine the extent to which they can claim this benefit. The only provision, cited before us in this connection is Section 150 of the Customs Act, which reads as under :-

S.150 - Procedure for sale of goods and application of sale proceeds :

(1)     Where any goods not being confiscated goods arc to be sold under any provisions of this Act, they shall, after notice to the owner thereof, be sold by public auction or by tender or with the consent of the owner in any other manner.

(2)     The proceeds of any such sale shall be applied-

(a)     first to the payment of the expenses of the sale,

(b)     next to the payment of the freight and other charges, if any, payable in respect of the goods sold, to the carrier, if notice of such charges has been given to the person having custody of the goods,

(c)     next to the payment of the duty, if any, on the goods sold,

(d)     next to the payment of the charges in respect of the goods sold due to the person having the custody of the goods,

(e)     next to the payment of any amount due from the owner of the goods to the Central Government under the provisions of this Act or any other law relating to customs, and the balance, if any shall be paid to the owner of the goods.

Learned SDR has argued that the above provision is not applicable to the subject goods which were confiscated. We have already held that confiscation of the goods by the Commissioner is beyond the scope of the Tribunal’s remand order. Therefore, for the purpose of Section 150 ibid, the goods must be deemed not lo have been confiscated. The word “confiscated” figuring in the above provision should be understood as “confiscated in accordance with law”. In the present case, the goods were confiscated beyond the scope of the Tribunal’s order and such confiscation cannot be said to be in accordance with law inasmuch as the remand order had become final and binding on the adjudicating authority. It would, follow that the sale proceeds of the goods will have to be applied in terms of Section 150 ibid.

7. In the result, we set aside the impugned order and allow these appeals by way of remand with the following directions to the Commissioner :-

(a)     The claim of M/s. STC for share of sale proceeds of 1339 kgs. of mulberry raw silk, shall be allowed to the extent permissible under Section 150 of the Customs Act after giving them an effective opportunity of being heard on the quantification aspect.

(b)     The claim of M/s. WTL for sale proceeds of 1294 kgs. of mulberry raw silk shall be considered afresh after giving them an effective opportunity of being heard. It shall not be rejected on any ground without prior notice in accordance with the principles of natural justice. In the event of the claim being allowed, the provisions of Section 150 of the Customs Act shall apply to quantification of the claimant’s share of sale proceeds.

(Pronounced in open Court on 12-3-2007)