TMI Blog2015 (2) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of quantification of the duty amount keeping in view that the applicability of duty exemption notifications prescribing effective rate of duty and the penalty under Section 112 and 114A to be separately specified, appellant cannot be allowed to raise the issue that they were not importer or person chargeable to duty at this stage as held by Member (Technical). 2. Whether the appellant can be permitted to raise the issue that the goods are ship stores, meant for use beyond the territorial waters of India and thereafter to be re-exported back and hence no duty can be charged as allowed by Member (Judicial) Or The goods imported are not ship stores as per the definition under Section 2(38) of the Customs Act particularly in view of the fact that the appellants are only providing wireline testing, measurement while drilling etc., service to ONGC and spare parts imported are used in the equipments for providing the said service and are not part/fitment of the oil rigs. Moreover, no catalogue, literature or supporting evidence is produced at any stage for the said claim. No details have been provided how and where the goods are used. The provisions of Customs Act are not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Or Keeping in view the facts and circumstances of the case, duty is chargeable and collectable from the appellant as held by Member(Technical). 7. No penalty is imposed by the Member (Judicial) in view of the fact that the appellants are not liable to pay duty but as they are not contesting the confirmation of duty against them. Or Penalty is imposable under Section 112 of the Customs Act in the facts and circumstances of the case on both the appellants irrespective of contesting or not contesting duty liability as held by the Member (Technical). - Appeal No. C/120 & 121/06/Mum - - - Dated:- 14-7-2014 - Shri Ashok Jindal Member ( Judicial ) And Shri P. K. Jain Member ( Technical ) For the Appellant : Shri Vipin Kumar Jain, Advocate For the Respondent : Shri D. Nagvenkar, Addl. Commissioner (A.R.) ORDER Per Ashok Jindal The appellants are in appeals against the impugned order wherein duty has been demanded along with interest and imposition of penalties on both the appellants. 2. Brief facts of the case are that M/s Schlumberger Asia Services Ltd., (the main appellant) is having its registered office in Hong Kong with a project office e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led bill of entry. Ownership of the goods was never remain with the appellants. As per the Section 2(26) of the Customs Act, 1962, the appellants were neither the importer nor they claimed to be the owner of the goods therefore, they are not liable to pay duty. Hence, on this ground, the demand is required to be set aside. The learned Advocate further submits that as these goods were imported were ship stores which were meant for on board consumption on foreign going vessels. As per Section 85 of the Customs Act, no customs duty is payable on Ship Stores and if the goods were not ship stores, no duty was payable on the disputed goods as immediately after their import, the said had been taken outside the territorial waters of India to places where the vessel/rig operating at ONGC sites, therefore the Customs have no jurisdiction to levy duty on goods. To support his contention the learned Advocate placed reliance on the decision in the case of Amership Management Pvt. Ltd. 1996 (86) ELT 15 (Bom). It is further submitted that no duty is leviable under the Customs Act for goods in transit/transshipment. It is further submitted that the goods have been imported and used for oil explora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation. 5. On the other hand, the learned A.R. reiterated the allegations made in the show-cause notice as well as supported the impugned order. 6. Considered the submissions made by both the sides. 7. In this case, we find that under Section 28 of the Customs Act, 1962 duty is to be demanded from the persons chargeable to duty. The said term has been interpreted by the Hon ble High Court in the case of UOI v. Jupiter Exports 2007 (213) ELT 641 (Bom) and also by this Tribunal in the case of Commissioner v. Dinesh Chhajer 2008 (233) ELT 436 (Tri. Bang) which was affirmed by the Hon ble Karnataka High Court in 2014 (300) ELT 498 (Kar) to mean the importer. The term importer has been defined in Section 2(26) of the Customs Act, 1962 to mean, in relation to any goods at any time between their importation and the time when they are cleared for home consumption included any owner or any person holding himself out to be the importer. In the light of this provisions, it is not in dispute the imports in the instant case were effected either by ONGC or by courier or by hand baggage. Therefore, in these circumstances, the appellants cannot be held as importer as the appellants ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign going vessel in Section 2(21) of the Customs Act, 1962. The adjudicating authority has denied the benefit on the ground that the appellants have not claimed the benefit under Section 85 of the Act at the time of import. The issue came before the Hon ble Apex Court in the case of LIC vs. Escorts Ltd. AIR 1986 SC 1370 wherein it was held that requires permission to be taken such permission can always be granted post facto by the competent authority as long as the statute does not require prior permission to be taken. Since Section 85 of the Customs Act, 1962 does not require any prior permission to be taken, the learned Commissioner ought to have taken note of the undisputed position emerging from the detailed investigation of the case that the goods in question had indeed been used as ship stores and granted post facto permission under Section 85 of the Act. The judgement relied upon by the appellant in the case of Amership Management Pvt. Ltd. (supra) has not been dealt with by the learned Commissioner as the same is directly binding on the adjudicating authority in favour of the appellants. We further find that when the factum of export has not been disputed therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the present case. 9. As discussed in para 8 here-in above wherein it is held that the appellants are not liable to pay duty but as they are not contesting the confirmation of duty against them. In these circumstances, we drop the penalty imposed on both the appellants. Appeals are disposed of with these terms. (Order pronounced in Court on..) Per : P.K. Jain 10. I have gone through the order recorded by my learned Brother. However, my views are at variance with that of my learned Brother and, therefore, I am recording a separate order. 11. Brief facts of the case are that the appellant is having their main office in Hong Kong and they have a project office in India. During the period 1993 to 1998 they were providing certain services to ONGC. For providing the said services certain equipments and tools were imported (either by ONGC or the appellant). It is claimed that ONGC was paying rent for the said equipments. These equipments were being used by the appellant and the ONGC in addition to rent on the equipments was paying serving charges for the services provided by the appellant. During the said period the appellant imported certain spares parts (i) through c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ras (Appeal No. C/461/02-Mum). The third appeal is against penalty of ₹ 1 lakh imposed on official of the appellant company. The learned Advocate s main submissions are:- 1) The order-in-original has been passed without taking into consideration exemption Notification fixing the effective rates of duty on the ground of mis-statement and suppression. The effective rates cannot be denied and duty cannot be charged at the tariff rate on such grounds. 2) If the duty amounts are correctly computed, the amount paid before the issue of show-cause notice would exceed both the amounts payable. Consequently, no interest would be chargeable under Section 28AB. 3) The provisions of Section 28AB and Section 114A cannot be invoked prior to September 1996 when they were introduced. 4) Penalty under Section 112 is not imposable since penalty has been imposed under Section 114A. Further, penalty under Section 114A cannot be sustained as no amount has been specified. 5) Penalties are excessive both on thee appellant company and the official of the appellant company. 2. Shri M.K. Gupta, learned Jt. C.D.R. appearing for the department states that for the period prior to inserti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... First ground being that the appellants are neither importer nor claimed themselves to the owner of the goods therefore duty liability cannot be confirmed against the appellants. The second ground is that the Section 85 of the Customs Act gives exemption from payment of duty for ship stores and in view of this position no duty is chargeable on the goods. 15. At the outset in my view both the issues are beyond the direction of remand and, therefore, cannot be taken in the second round of litigation. No appeal was filed by either party and hence Tribunal s order has attained finality. This Tribunal therefore need not go into these questions and should limit to the directions as per remand order. It is to be noted that the appellants have accepted the duty liability right from the time of investigation. In the first round of litigation including the CESTAT stage, duty and other liabilities and the fact that they are owner of the goods/person chargeable to duty on import were not disputed. Even while passing the impugned order emphasis was on the quantification of the duty amount. Similarly, even in the appeal filed before this Tribunal, the main issue was not about their duty liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter clearance, handed over the same to the appellant. Similarly consignments imported through sea/air were under-valued at the direction of the appellants and was also cleared by the appellants. In view of these facts the ratio of the decision of the Hon ble Bombay High Court is not applicable in the facts and circumstances of the case. I have also gone through the judgement of this Tribunal as also that of Hon ble Karnataka High Court in the case of Dinesh Chhajer (supra). In the said case certain electronic items were smuggled by some unknown persons from Nepal to Kolkata. Shri Dinesh Chhajer was a dealer in electronic goods and he purchased the smuggled goods from certain dealers based in Kolkata and after purchasing, sold the same in the domestic market. Revenue wanted to recover customs duty from Shri Dinesh. The Tribunal has taken the view that investigations have revealed that Shri Dinesh Chhajer was only dealing in the smuggled goods and has not himself imported or smuggled the said goods and therefore duty liability cannot bee fastened on him. It was also observed that no goods have been seized and confiscated from Shri Dinesh Chhajer and therefore duty cannot be demanded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Entry and therefore the courier agency is the importer. I am unable to agree with such conclusion. Courier agency by no stretch of imagination can be called as the importer. Courier agency only provides door to door transportation services of packets/parcels. Since majority of courier parcels are of small value, a simplified procedure has been prescribed by the Government under Courier Imports (Clearance) Regulation, 1995. Regulation 2(1) of the said Regulation reads as under:- Application. -(1) These Regulations shall apply for assessment and clearance of goods carried by the representatives of Authorised Couriers on incoming scheduled passenger flights on behalf of a consignee for a commercial consideration. Further Regulation 7 of the said Regulations reads as under, - 7. Entry of goods on importation.- The authorized courier shall make entry of goods imported by him by presenting to the proper officer a bill of entry in Form III or as the case may be in Form V appended to these regulations: Provided that the authorized courier, or with the concurrence of the authorized courier, the consignee or a Customs House Agent on behalf of the consignee, may file a bill of en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any time hereafter I/we receive any documents from the importer showing a different state of facts I/we will immediately make the same known to the Commissioner of Customs. iii I/We hereby declare that the contents of this Bill of Entry are true and correct in every respect and are in accordance with the Airway Bills and the invoices and other documents attached herewith. iv I/We enclose herewith (number) of airway bills and (number) of invoices for the aforesaid consignments with this Bill of Entry. From the above it is clear that the courier agency handles goods as an agent of the consignee or the importer and is not an importer himself. Courier Agency collects duty from the importer or consignee at the time of delivery and remits the same to the Customs department. In view of this position in my view courier agency cannot be considered as the importer of the goods. Incidentally exactly similar situation occurs in the case of post parcels. There also based upon the declaration pasted by the consignor, the Customs assess the duty and the postal authorities collect the duties from the consignee/importer and remit the same to the Customs department. It is not the postal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s office abroad and were received by appellant for providing service. Appellant have also not produced any evidence to show that the Bills of Entry were filed in the name of the ONGC in this case. On the contrary they have admitted that under-valuation was at their instance and admitted duty liability on the said goods and the duty had been demanded only on the differential value. Thus even in this case duty and other liabilities is on the appellants. 21. In view of the above position, I am of the considered view that the duty liability in all the three situations is on the main appellant and the main appellant alone and duty demand has been correctly confirmed in the impugned order. 22. The second ground on which my learned brother has taken a view that duty liability cannot be confirmed as the goods were used on board rigs which were rendering services to ONGC beyond the territorial waters of India as these were called as ship stores and consumed on board foreign going vessels. It is also stated that Section 85 of the Customs Act gives exemption from payment of duty for such ship stores. Learned Brother has also observed that adjudicating authority has denied the benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact, all the goods were cleared clandestinely through baggage and also misdeclaring the value and description by courier/air/sea. No catalogue literature were produced at any stage so as to even examine whether the goods can be considered as stores to vessel or aircraft and therefore benefit of Section 85 cannot be extended at this stage. In my view findings of the Commissioner in the facts are correct. I have gone though Hon ble Hon ble Supreme Court judgement in the case of LIC v. Escorts Ltd. (supra). The said case was relating to acquiring of share stakes and is in totally different circumstances. Main issue is relating to Customs duty at the time of import. Proper officer has to satisfy various conditions at the time of import. Section 85 itself stipulate (i) goods to be ship stores, (ii) goods are entered for warehousing, (iii) makes and subscribes to a declaration that goods are to be supplied as stores thereafter proper officer may permit. In this case none of the three conditions were satisfied at the time of import. On the contrary, parts were smuggled or misdeclared in value/description. There is therefore no question of granting permission after being caught. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the substance or essence of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the essence of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential. In the case of Indian Aluminium Company Ltd. vs. Thane Municipal Corporation reported in 1991 (55) ELT 454(SC) in para 3 and 7 has observed as under:- 3. The declaration contemplated in Form 14 is to the effect that the goods imported shall not be used for any other purpose for sale or otherwise etc. It can thus be seen that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 5(2)(a)(ii) of the Act in effect exempts a specified turnover of a dealer from sales tax. The provision prescribing the exemption shall, therefore, be strictly construed. The substantive clause gives the exemption and the proviso qualifies the substantive clause. In effect the proviso says that part of the turnover of the selling dealer covered by the terms of sub-clause (ii) will be exempted provided a declaration in the form prescribed is furnished. To put it in other words, a dealer cannot get the exemption unless he furnishes the declaration in the prescribed form. It was further held as under : There is an understandable reason for the stringency of the provisions. The object of Section 5(2)(a)(ii) of the Act and the rules made thereunder is self-evident. While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and collusion in an attempt to evade tax. In the nature of things, in view of innumerable transactions that may be entered into between dealers, it will well-nigh be impossible for the taxing authorities to ascertain in each case whether a dealer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot liable to pay any duty and the goods were also used in area beyond the territorial water of India. These are bald claims of the appellants. However, the facts are that when a particular spare part was shifted, to which place it was shifted (was it not within Exclusive Economic Zone where Customs Law are applicable) and when was it received back in the mainland and when it was re-exported out of India have not been detailed or given by the appellants at any stage in respect of even a single import. Spare parts were used by appellant and not ONGC. No procedure as per law was followed. In fact the appellants have not claimed benefit of ship stores in the first round of litigation and before the adjudicating authority though mentioned by the appellants and claim is not supported with details. It is only the learned Advocate for the appellants during the 2nd round of litigation has pressed this point without any details. In my view it is too late to claim the said benefit particularly when the appellants have accepted the liability in the beginning of investigation itself. Even if for some reason, the claim had to be examined it is absolutely necessary on the part of the appellants t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main equipment and also to prove that the said spare parts/equipment is ship stores as defined under Section 2(38) of the Customs Act. For benefit of export, the appellants have to provide the details of shifting the items to the oil rigs (which are located in area where Customs Act is applicable) and the details of receiving back and thereafter exporting back from India. In the absence of all these details, it cannot be said that no duty is leviable. 26. As far as penalty under Section 112 on the main appellant is concerned, I find that the said goods were (i) smuggled through employees of appellant and were sent from appellant s office abroad and finally collected and used by appellant (ii) were imported through courier by misdeclaring the value as also in some cases the description were again sent from appellant s office abroad and collected in India and used by the appellant. Ownership as also effective control remained with the appellant. The fact that they were used for providing services to ONGC does not make any difference. Smuggling and misdeclaration were at the instance of appellant. Appellant is therefore liable to penalty under Section 112 of the Customs Act and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the applicability of duty exemption notifications prescribing effective rate of duty and the penalty under Section 112 and 114A to be separately specified, appellant cannot be allowed to raise the issue that they were not importer or person chargeable to duty at this stage as held by Member (Technical). 2. Whether the appellant can be permitted to raise the issue that the goods are ship stores, meant for use beyond the territorial waters of India and thereafter to be re-exported back and hence no duty can be charged as allowed by Member (Judicial) Or The goods imported are not ship stores as per the definition under Section 2(38) of the Customs Act particularly in view of the fact that the appellants are only providing wireline testing, measurement while drilling etc., service to ONGC and spare parts imported are used in the equipments for providing the said service and are not part/fitment of the oil rigs. Moreover, no catalogue, literature or supporting evidence is produced at any stage for the said claim. No details have been provided how and where the goods are used. The provisions of Customs Act are not only applicable to the territorial waters of India but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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