TMI Blog1999 (4) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... e under the impugned order, dated 28-11-1997. M/s. Aban Lloyd Chiles of Offshore Ltd. (ACO for short) has to pay the duty of amount of Rs. 5,06,12,412/- and penalty of Rs. 25 lakhs under the impugned order, dated 29-9-1997, and duty amount of Rs. 4,69,104/-, interest and redemption fine under the impugned order, dated 27-1-1998. M/s. Amership Management Ltd. (AML for short) has to pay duty amount of Rs. 68,66,092/- and penalty amount of Rs. 4 lakhs under the impugned order, dated 29-9-1997. EOL has filed the appeal C/1115/97 and C/395/98, and ACO has filed the Appeal No. C/1113/97 and C/394/98 and AML have filed Appeal No. C/1114/97. 2. The facts of the case are that the investigation is taken up on the information received that loading, unloading, storage and removal of the imported goods was taking place at Nhava base without such base being notified as custom for post under Section 7 of the Custom Act or Custom area under Section 8 of the Custom Act. No customs formalities, as prescribed under such act were observed when dutiable goods were removed for home consumption from the base. It came to the notice of the Customs department that drilling spares etc. cleared as ship stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then transshipped to the rigs. These goods include the day today living requirement for the crew of the rigs, including drinking water and other day today human requirement. They are imported and indigenous, in which cases, they cannot be taken directly to the rigs. All supplies are routed through ONGC and the EOL has to act as per its directions. M/s. ACO also own rigs working for ONGC operating outside the territorial waters of India, so also AML. 5. After the investigations based on the above information were conducted, the show cause notices were issued to the applicants referred above on 12-5-1994 and 22-4-947(sic) and also to ONGC under Section 111, 112 and 114 of the Customs Act with the allegation that M/s. EOL are liable to pay duty on the material brought for repairs from the rigs when such material was not returned to the rigs. After the receipt of the reply from them and hearing the parties and considering the material available on record, the impugned orders were passed by the adjudicating authority which were appealed against in this appeal. 6. In the other two cases namely C/394 395/98 against EOL and ACO, pursuant to the information that the ONGC is using as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions from the applicants, dated 8-12-1997 and hearing the parties, the impugned order was passed by the adjudicating authority, which is appealed against now. 7. In C/395/98, the appeal of M/s. EOL, the same case is made out as referred in the above paras except regarding the valuation of the goods which is Rs. 6,36,950/- belonging to EOL which was stored at the wharf of the base. The value of the material was supplied by the representative of the said company i.e. ONGC and accordingly computed. Annexure A-1 A-3 of the show cause notice shows the goods mentioned as imported into Nhava base from the rigs stationed outside the territorial waters of India and the goods mentioned in A-2 A-4 were brought to ONGC Nhava base to be shipped to the rigs beyond the territorial waters of India. In the Show cause notice issued against the applicant along with Annexure A-1 to A-4 mentioned above, it was alleged that they were imported into India from the rigs stationed beyond territorial waters of India unauthorisedly and the same were liable to confiscation under Section 111 clause (a, c, f, h j) of the Customs Act and it was valued at Rs. 3,55,450/- and the goods mentioned in Annexur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment has always been aware of the operations. There was a long-standing practice of the department in not insisting upon the customs formalities with regard to the transfer of goods to and from the rigs and the sudden change in the stand is not justifiable. In support of these points, the ld. Counsel has relied upon the case laws ranging from 1987 to 1995 in 24 ruling. 9. The ld. Sr. Counsel has submitted that M/s. SR Oil Ltd., was one of the companies engaged by M/s. ONGC for exploration or oil in the sea, which was going on from 1970. Oil rigs owned or chartered by various companies were placed at the disposal of the said ONGC, and the area for operation and other details were as ordered by it. The ships stores were imported on the rigs brought by supply vessels to the docks and stored there. They were taken to the rigs by supply boats. As and when required certain articles manufactured in India were also similarly taken. The stores which were damaged and used were brought back to the base, and sent into the town for repairs and brought back thereafter or else they were sold as scrap. The entire scheme was known to the customs department. These operations were conducted fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that under Section 28AB of the Customs Act, no penal interest can be levied in the absence of show cause notice, and allegation of collusion, wilful mis-statement or suppression. The said provision was not in existence when the goods were imported. The penal interest is brought into force under the financial bill of 1996 in September. The finding of the Collector that the liability for penal interest arise on the finalization of the adjudication proceedings has no basis in law. The penal provision cannot be retrospective. Three case laws of 1998 are cited in support of this contention, in the case of Maruti Udyog, Laxmi Packaging (P) Ltd. and P.V. Mohammad Barmay Sons. The delay in finalizing the adjudication, after the hearing with a gap of almost three years during which Section 2B AB was introduced, cannot go to the advantage of the Customs department. It cannot levy penal interest. Regarding the penalty, it is submitted that breach by M/s. EOL is of a technical/venial nature as he had no independent discretion to exercise, being only a contractor carrying out offshore operations for and behalf of ONGC an organ of the state. It has acted as per the instruction of ONGC and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly stated in para 20 of the show cause notice that the normal period of demand of duty is extended to 5 years under proviso 28 of clause (i) of the said act, in view of the contents in the above paras namely 1 to 19 in which the clear and specific case is made out against the applicant to invoke the longer period. This is based on the information collected by the department that no customs formalities is prescribed in the act were observed in the case of removal of the goods from Nhava base to return to domestic market, and the scrap and the spares cleared earlier as ship stores, are brought back from the rigs located outside India and cleared without payment of duty. The letter, dated 23-5-1988 addressed to the Collector of Customs for permission by the ONGC is not supported by any acknowledgement from the said authority for having received the said letter, and no order is produced for giving permission to use the base at the customs port or the customs area. The elaborate procedure adopted by the contractor is enumerated in para 9 of the notice. There is clear allegation that no customs duty was paid by the applicant EOL for drilling equipment and hearing for the rig EE which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded that Annexure A goods valued at Rs. 6,86,42,750/- has unauthorisedly been removed from ONGC Nhava base imported from rigs stationed outside the territorial waters of India as repair and return goods and some were not sent back to the rigs. The Annexure B goods valued at Rs. 1,86,36,100/- have been unauthorisedly removed from base which were imported from the rigs EE, stationed outside the territorial waters of India, scrap non-returnable goods by them. Annexure C goods valued at 1,74,77,028/- were imported from their rig EE, stationed outside the territorial waters of India as drilling equipment as storage and non-returnable goods by them. In the course of the reply to the show cause notice, these allegations are not challenged as pointed out in the course of arguments for invoking the extended period of limitation. 12. The contention of the applicant that in the impugned order, there is an admission by the department that it was aware that the Nhava base is being used as a base where the imported and exported goods land and it is a landing place. In page 4 of the impugned order, the contention of the applicant regarding the question of time bar is considered in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out in the show cause notice narrated above, for which there was admissions in the course of investigations by the staff of EOL who have failed to produce the relevant documents in that regard. So under these circumstances, the contention of the applicants that they have got a prima facie case regarding limitation, cannot be accepted. On the other hand, the above facts clearly goes against them. So their contention in this regard, is rejected. 13. Now coming to the other aspects, it is an admitted fact that the applicants claimed exemption of payment of customs duty on the imported good, which they have to show. Regarding the valuation aspect, the staff of EOL have failed to give any material and the department had to take the same from ONGC. As pointed out by the applicants, the valuation is made by the officer of the ONGC as new articles. The adjudicating authority has considered this aspect and has given margin to that valuation in determining the value of the goods. How far it is proper is a matter to be considered on the merits of the case. So under these circumstances, the contention of the applicants on the imposition of penalty and its quantum and the penal interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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