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Schlumberger Asia Services Ltd, Shri Sudhir Pai Versus Commissioner of Customs (ADJ) , Mumbai

2015 (9) TMI 1136 - CESTAT MUMBAI

Scope of the remand in earlier round of the litigation - Whether the imported goods could be called ship stores as per the definition under Section 2 (38) of the Customs Act - Import through courier - Import of goods in hand baggage by its employees without declaring the same or by mis-declaring the value - Whether in case of imports made by sea could duty have been demanded from the Appellant - Levy of duty in case of where good were transshipped/re-exported - Evasion of duty - appellant is a s .....

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ntions and had confined its case to a dispute only on the quantum of duty demanded and the consequent penalty. In my view unless there is an express conceding of the issue and the legal contentions, which the Tribunal records in its order, it cannot be construed that when the matter has been remanded by finding merit in one of the contentions urged, that, the other contentions stand given up or foregone. - the contention that contention that they were not the importer is required to be examined. .....

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herein it is provided that any goods imported into a Custom Station for transshipment to any place outside India, may be allowed to be transshipped without payment of duty. - consequently no customs duty could have been demanded.

Import through courier - duty evasion - Held that:- there is no evidence relied upon which would even suggest let alone establish that Appellant was the consignee of the courier parcels. It is not in dispute that during investigation the investigating officia .....

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Held that:- the demand for customs duty can only be raised against the passenger who was the importer and not against the Appellant. It has been pointed out that here again the demand has been confirmed by the Respondent on the erroneous premise that the Appellant was the owner of the goods. - Appellant is admittedly not the owner of the goods imported and consequently the ratio laid down in the case of Associated Cement Companies Ltd vs CC [2001 (1) TMI 248 - Supreme court of India] does not ap .....

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here good were transshipped/re-exported - Held that:- Appellant not being the importer, as also the goods having been transshipped/re-exported, the duty liability could not be fastened upon the Appellant.

However I hasten to point out her that the Appellant having time and again, before different authorities accepting that it did not wish to claim refund of the duty paid and that it was contesting the matter only in view of the penalty imposed on it. Given the undertaking made by the .....

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(T) And M V Ravindran, Member (J) - Third Member on Reference For the Appellant : Shri Vipin Kumar Jain, Adv For the Respondent : Shri D Nagvenkar, Addl Commissioner (AR) 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 .....

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ere was no outright sale of such goods either to the appellant or to ONGC and the title of the imported tools and spares remained with the overseas vendor. As per contract, the CIF value of any tools which were lost in the sea during operations was recovered from ONGC and in most cases the said tools and spares were re-exported after being used for the ONGC work. IN the year 1998, the DRI initiated investigations and asked certain information from the appellant regarding the import of logging to .....

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orts made through courier/hand baggage and in three cases by sea along with interest and penalties were also proposed. The appellant also deposited a sum of ₹ 2 crores during the course of investigation. The show-cause notice was adjudicated and the demand against the appellant along with interest and penalties were confirmed. When the matter came up before this Tribunal, this Tribunal remanded the matter back to the adjudicating authority for readjudication. In remand proceedings, again t .....

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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 wee "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&q .....

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iable under the Customs Act for goods in transit/transhipment. It is further submitted that the goods have been imported and used for oil exploration work for ONGC which was otherwise exempt from payment of duty. As end-use of the goods was not in dispute therefore, merely in the absence of essentiality certificate, exemption should not have been denied. It is further submitted that in some cases, ONGC was able to obtain essentiality certificate for the import of the said goods. It is further su .....

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customs and reflected in the documents were explained by Shri Sudhir Pai during the course of investigation as the values declared to the Customs were the depreciated value of the old and used equipment actually imported for ONGC work, whereas the values shown in the documents from the possession shows the value of new parts. Therefore, the value of new parts cannot be considered as true value for the importation of used and old parts. The said explanation has not been considered by the adjudic .....

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fact that the goods have been immediately taken outside the territorial water of India for the operational purpose of ONGC, penalty is not leviable. In the last, the learned Counsel submits that as the appellant has already paid a sum of ₹ 2 crores during the course of investigation and the same be adjusted towards the demand of duty & interest and penalty against the appellant be waived. If penalty is waived against the appellant, the appellant shall not claim any refund of the amount .....

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3) ELT 641 (Bom) and also by this Tribunal in the case of Commissioner v. Dines 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 t .....

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e. In case, the imports were made by courier agency, the courier agency is required to file bill of entry therefore the courier is the importer. In case of hand baggage, the passenger who brought the baggage is the importer. In case of the imports were made through sea, ONGC has to file bill of entry as importer. This position has not been disputed by the Revenue. Therefore, the liability of payment of duty cannot be fastened on the appellants as the appellants are neither the importer of the go .....

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mbai or the contracting agency. The service charges are paid by the contracting agency to the parent firm directly. The title of the imported tools and spares remains with the parent firm even though M/s. SASL or the contracting agency as the case may be, are the importer and the invoices for Customs purposes are raised in either of their name. However, the CIF value of any tool which is lost in the sea during the operations, is recovered from the contracting agency." 7.1 Therefore, duty li .....

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icating authority that the rigs have been used beyond the territorial waters of India which qualify as foreign going vessel by virtue of the definition of the expression foreign 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 .....

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post facto permission under Section 85 of the Act. The judgment 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 benefit of exemption should not be denied for procedural violation as held by the Hon'ble Bombay High Court in the case of .....

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ial waters, they are said to be exported from the country as held by the Hon'ble Apex Court in the case of CC v. Sun Industries - 1988 (35) ELT 241 (SC). 8. With these observations, we hold that as the appellants are neither importers nor they claim to be owner of the goods therefore the appellants are not liable to pay duty. Further, as per Section 85 of the Customs Act, 1962 the goods are entitled for exemption of duty. 9. But we find that vide letter dated 29.9.2005 the appellants have ad .....

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exure 1 to their written submissions dated 6 th December, 2004. It was, however, made clear that this offer was being made " Without Prejudice to the submissions contained in their written submissions and purely with a view to put an end to the long-standing dispute with the customs department. It was also clarified that the offer was "Without Prejudice to our clients' rights and contentions tin the criminal case filed by the Department being Case No.29/S/03 are pending before the .....

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y 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 of .....

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eriod the appellant imported certain spares parts - (i) through courier services, (ii) by hand baggage brought by the employees of the appellant when travelling from abroad to India after collecting the same from overseas office of the appellant and hand over the same to the appellant and (iii) few consignments by sea/air. Based upon the information collected by the Directorate of Revenue Intelligence, an investigation took place and it was found the value of the spare parts while clearing throu .....

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value and the second invoice was presented to the Customs at the time of clearance. Investigation also revealed that the appellant has written to their counter-parts in their own offices abroad to make two sets of invoices and mis-declaration in value was done at the instance of officials in the project office of the appellant. In certain correspondence they have also indicated that the value should be 25% of the actual value and in some cases they indicated the invoice should be only 10 US $. .....

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ed along with interest and penalties. Appellant filed an appeal before this Tribunal, this Tribunal vide order dated No. C-III/708-710/WZB/2003 dated 17.4.2003, remanded the matter for re-adjudication. The said order of the Tribunal is reproduced below: "Shri M. Setalwad, learned Advocate appearing for the appellants states that these three appeals are essentially on the same issue. The appellants imported some items through courier, part of which came through Madras (Appeal No. C/461/02-Mu .....

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efore 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 these appellant c .....

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sustainable at it has computed the duty liability without applying the exemption Notification prescribing effective of duty from time to time. We also observe that penalties have been imposed both under Section 112 and under Section 114A which are mutually exclusive. The Commissioner has also not quantified the amount of penalty under Section 114A and has merely stated that the appellants are liable to pay mandatory penalty as envisaged under Section 114A. In view of the foregoing, we have no op .....

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remand was two fold. The first was to correctly assess the quantum of duty after applying the exemption notification and the second direction of the Tribunal was to separately quantify the penalties under Section 112 and Section 144A as the two sections are mutually exclusive. The Tribunal also ordered that while determining the penalty liability, due consideration should be given to the facts that appellant paid duty even before issue of show-cause notice. It would thus be seen from the remand .....

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brother has set aside the demand mainly on two grounds. 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, t .....

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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 liability. It was only during the argument that the Learned Advocate for the appellants raised this issue and thereafter made this as the main point in the written submissions. In my view, it is not correct to entertain such plea at this stage mor .....

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. 16. Even if for some reasons it is accepted that the appellant is entitled to raise such a plea even at this stage, I proceed to examine on merit. My learned Brother has relied upon the decision of the Hon'ble Bombay High Court in the case of Union of India v. Jupiter Exports (supra). I have gone through the said judgment. The fact in that case was that the appellant obtained an advance licence by manipulating certain export documents. The manipulation led to higher entitlement of duty-fre .....

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the said circumstances the Hon'ble High Court has taken a view that even though the manipulation has been done by the appellant but the duty free goods have not been imported by the appellant but by the transferees and, therefore, the duty liability is on the transferees and cannot be fastened on the appellant. In the present case, it is not in dispute that the spare parts were sent in courier parcel in the name of the appellant from their offices abroad or of their associates. Further, the .....

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cts 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 custo .....

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goods brought as baggage were by appellant's employees as per appellant's direction. Goods were collected by them abroad from appellant's office and were handed over to appellant in India. Such employees have only acted as carrier and smuggled the goods on behalf of the appellant. 17. Section 28 of the Customs Act under which demands were raised stipulates serving notice on the person chargeable with duty. Further Section 2(26) of the Customs Act, 1962, defines the "importer&qu .....

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for their work. Ownership of the goods was with the appellant alone. Even the goods were in physical possession of the appellant. All the spare parts received by the courier were in the name of the appellant. Spare parts received through baggage were again sent by the appellant's office abroad and were delivered to the appellant's project office in India. The carriers of such goods were the appellant's employees. Even the goods which had come through sea/air were sent by the appellan .....

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urier agency, the courier agency is required to file Bill of 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 .....

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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 Custom House Agent on behalf of the consignee, may file a bill of entry in the form prescribed in the Bill of Entry (forms) Regulations, 1976 for clearance of any of the imported goods: Provided further that for the following goods the entry shall be made in the form prescribed in the Bill of Entry (F .....

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7) published under the Ministry of Commerce Public Notice No. 1-ITC(PN)/92-97, dated the 31 st March, 1992 as amended from time to time; (c) goods imported against any other licence issued under the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992); (d) goods imported by or on behalf of a person who is related to the consignor within the meaning of Rule 2 of the Customs Valuation (Determination of Price of Imported Goods) rules, 1988; and (e) goods in respect of which the proper .....

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aration provided by the consignor/consignee. It is seen from the said courier Bill of Entry format that the courier is required to give the following declaration:- i. I/We hereby declare that I/we have obtained the authorization from each of the consignees mentioned above to act as an agent for the clearance of the goods described above. ii I/We declare that I/we have not received any other documents or information showing a different price, value, quantity or description of the said goods and t .....

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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 declarat .....

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postal authorities (unless and until they have connived with the consignee). If any duty is short paid due to mis-declaration in value or any other reason, same has to be paid by consignee. In view of this position, appellant is the importer/chargeable to pay duty and not the courier agency. Incidentally, appellant is also the owner of goods. 19. As far as hand baggage is concerned, the spare parts were supplied by the appellant's offices abroad, were brought by the appellant's employee .....

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e duty and in turn they would have collected from the appellant, as they were only carrier and their role was nothing more than the carrier. During initial investigation itself the appellant has accepted the duty and other liabilities on behalf of their employees and it is for this reason that the Customs did not investigate further and did not issue notices to individuals by finding out the name and other details of such employees. After more than a decade, the appellant now cannot turn back an .....

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#8377; 68,549/-. There is no dispute about the fact that the goods were supplied by appellant'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 .....

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rs 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 Custom Act gives exemption from payment of duty for such ship stores. Learned Brother has also observed that 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. From the details provided it appears that the appellant is providing wire line testing and measur .....

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while carrying out the operation based upon oil rigs. However the same are not part of oil rigs. Spare parts imported are parts of certain equipments used by the appellant while providing earlier mentioned services viz. wireline testing and measurement service. Thus prima facie spare parts cannot be considered as ship stores. I also note that the appellants have not produced any catalogue or literature either at the time of original investigation nor at the time of adjudication or at the time o .....

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dered as ship stores. 23. Section 85 reads as under:- "Stores may be allowed to be warehoused without assessment to duty.- Where any imported goods are entered for warehousing and the importer makes and subscribes to a declaration that the goods are to be supplied as stores to vessels or aircrafts without payment of import duty under this Chapter, the proper officer may permit the goods to be warehoused without the goods being assessed to duty." It would thus be seen from the above Sec .....

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ion 85 cannot be extended at this stage. In my view findings of the Commissioner in the facts are correct. I have gone through 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 .....

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- 2010 (260) ELT 3 (SC) has observed as under, - 24. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the requirements. Like the concept of "reasonableness", the acceptance or otherwise of a plea of "substant .....

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y out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means "actual compliance in respect to the substance essential to every reasonable objective of the statute" and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. Fiscal statute generally seeks to preserve the need to comply st .....

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ance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. The test for determining .....

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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 .....

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red Form 14, there is no opportunity for the authorities to verify. Therefore the petitioner Company has definitely failed to fulfil an important obligation under the law though procedural. The learned Counsel, however, submitted that even now the authorities can verify the necessary records which are audited and submitted to the authorities and find out whether the material was used in its own undertaking or not. We do not think we can accede to this contention. Having failed to file the necess .....

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proper verification. 7. In Kedarnath Jute Manufacturing Co. v . Commercial Tax Officer, Calcutta and Ors. the appellant which was a Public Limited Company, sought exemption under the provisions of the Bengal Finance (Sales Tax) Act, 1941 in respect of certain sales but did not produce before the Officer the declaration forms from the purchaser dealers required to be produced under the proviso to that sub-clause granting exemption. It was contended on behalf of the appellant that proviso to the .....

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n 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 .....

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e 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 has sold the specified goods to another for the purposes mentioned in the section. Therefore, presumably to achieve the two-fold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption s .....

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dy mentioned the concession can be granted only if the raw material is used in the industrial undertaking seeking such concession. For that a verification was necessary and that is why in the rule itself it is mentioned that a declaration has to be filed in Form 14 facilitating verification. Failure to file the same would automatically disentitle the Company from claiming any such concession. In the present case, appellant has not even clearly told under which provision he is claiming the benefi .....

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ion 85 any stores imported in a vessel or aircraft can be transferred to any vessel or aircraft as stores for consumption therein. In the present case first of all no stores have been imported and whatever have been imported has not been imported in the vessel or aircraft and it has not been manifested as goods for transit and transshipment and therefore, the appellants will not be entitled to benefit of the said Section. My Learned Brother has also mentioned that there is no dispute that the go .....

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rted 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 2 nd round of litigation .....

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on in number of cases). Leaflet catalogue of each equipments and use of the same so as to enable to Revenue to examine whether the said spare parts can be considered as ship stores. Appellants have also to provide details of the goods sent to rigs and when they received back and re-exported. 25. My learned Brother has quoted the judgment of Hon'ble Bombay High Court in the case of Repro India Ltd. (supra). I have gone through the said judgement. The said judgement is in the context of CENVAT .....

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t case are totally different. The issue is relating to Customs duty on imported goods which were clandestinely smuggled through Baggage or cleared through courier/sea/air by misdeclaring the value and description. No procedure whatsoever stipulated under Customs Act was followed, even after getting caught and two rounds of litigation no details like when goods transferred to which rig, where the said rig was located whether in territorial waters of India or exclusive economic Zone (where Customs .....

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he view that this claim has to be examined, the matter will need to be remanded back to the Commissioner and the appellants will be required to produce leaflet of each item of spare parts along with catalogue of the 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 .....

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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 penalty has been correctly imposed in the impugned order. 27. Incidentally, L .....

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licy, old spare parts are not allowed to be imported. There are hundreds of consignment in the present demand. No correspondence or any evidence has been brought on record to establish that even a single consignment was that of old part. On the contrary, e-mail/correspondence establishes directions to mis-declare the value. Employees not declaring the goods in the baggage and hence the contention needs to be out-rightly rejected. 28. A penalty of ₹ 1 lakh is imposed on Shri Sudhir Pai, sec .....

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facts and circumstances of the case appellants can at this belated stage raise the issue that they are neither importer nor person claimed themselves to be the owner of goods and hence no duty can be confirmed against them as allowed by Member (Judicial). Or In view of the facts that the goods belongs to the appellant or their associate and sent at their instance, the appellant admitted the duty liability at the time of investigation thereby stopping further investigation and the fact that durin .....

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rter 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 provid .....

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details have been provided when the goods were taken on oil rigs, when received back and when re-exported back and no procedure has been followed as prescribed under any Sections of the Customs Act and under the circumstances the appellants cannot claim the benefit as ship stores or that the goods were immediately re-exported back. Even the Tribunal has remanded the matter to examine this issue. Hence, this issue cannot be raised at this stage, and benefit of ship stores, re-export etc. cannot b .....

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of hand baggage, the passenger who brought he baggage is the importer and hence duty cannot be demanded from appellant as held by Member (Judicial) Or In the case of hand baggage also duty is chargeable from the appellant as goods were brought by appellant's employees without declaring or declaring but under-declaring the value, goods were owned by the appellant or their associate, were taken from appellant's offices abroad and after passing through Customs in India again handed over to .....

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by appellant for providing the service to ONGC under the circumstance appellant is to be held person chargeable to customs duty as held by Member (Technical). 6. Keeping in view the facts and circumstances, no duty chargeable from the appellant as held by the Member (Judicial) 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 th .....

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mber Decision Date of Hearing: 9.6.15 Date of Decision: 30.7.15 Per: M V Ravindran: This difference of opinion is placed before me as per order of Hon'ble President for deciding the following points of difference that arose before the bench while deciding the appeal. a) Whether in the facts and circumstances of the case appellants can at this belated stage raise the issue that they are neither importer nor person claimed themselves to be the owner of goods and hence no duty can be confirmed .....

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rpose 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). b. Whether the appellant can be permitted to raise the issue that the goods are ship stores, meant for use beyond the territorial w .....

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atalogue, 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 also to Exclusive Economic Zone. Further no details have been provided when the goods were taken on oil rigs, when received back and when re-exported back and no procedure has been followed as prescribed under any Sections of the Customs Act and under th .....

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d by Member (Judicial) Or Courier agency acts as an agent of the appellant consignee, while filing a consolidated Bill of Entry for all consignees, and appellant consignee is the importer and person chargeable to duty in respect of his consignments as held by Member (Technical). d. In case of hand baggage, the passenger who brought he baggage is the importer and hence duty cannot be demanded from appellant as held by Member (Judicial) Or In the case of hand baggage also duty is chargeable from t .....

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try as importer as held by Member (Judicial) OR Appellant has admitted duty liability in respect of 4 consignments of spare parts imported by sea/air, and no evidence is produced that bill of entry was filed by ONGC. Moreover, goods were shipped by appellant, received by appellant and used by appellant for providing the service to ONGC under the circumstance appellant is to be held person chargeable to customs duty as held by Member (Technical). f. Keeping in view the facts and circumstances, no .....

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in the facts and circumstances of the case on both the appellants irrespective of contesting or contesting duty liability as held by the Member. 2. Heard both sides and perused the records. Before dealing with the points of difference, it will be relevant to record the relevant facts as to enable proper appreciation of the dispute in hand. 2.1 The Appellant is a company incorporated in Hong Kong with a project office established in India under the erstwhile FERA Regulations; it is a service prov .....

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to the Appellant or to ONGC. Service charges were paid by ONGC directly to the overseas entity for the logging tools, spares, etc imported; the title in the imported tools and spares remain with the overseas entity. As per contract, the CIF value of any tools which were lost in the sea during operations was recovered from ONGC. In most cases however, the said tools and spares were re-exported after being used for the ONGC work. The relevant portion s from the notice in this regards is extracted .....

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oods and without sending consequential remittances abroad against the specific imports with the contracting agency and the parent firm facilitated M/s SASL to prepare parallel set of invoices reflecting a nominal value exclusively for customs purposes..................." 2.3 Sometime in the year 1998, the DRI initiated investigations by calling upon the Appellant to furnish information regarding the import of logging tools and spares for ONGC contract. In response to the enquiry letters fro .....

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at the imports were made by ONGC, who were directly liaising with the Customs, and that the Appellant was merely assisting ONGC in clearing their consignments expeditiously, being their service provider. It also emerges from these statements that in case of emergency, some of these imports were made through courier/or were personally carried as hand baggage. The relevant extract from the statement of Shri Sudhir Pai dated 6.8.1998 as also that of Shri Edgar Gonzalwes dated 29.6.1998 is extracted .....

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;s confirm that the order is ready an invoice is sent to us. We request the supplier to shift the material on the invoice received. After the shipping documents are received we apply for EC from DGH (Directorate General of Hydrocarbon). Once this is received then the B/E is field by ONGC with Customs.............". 2.5 Based on the records furnished it was observed that in the following four instances, there was a difference between the values declared to the Customs in the invoices submitt .....

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declared to the Customs vide B/E No. 1769 dated 10.9.94 is USD 91825 whereas the original invoice value shows the value of USD 194075. More specifically, it is found in this invoice that against the main logging unit (one unit), the value declared to Customs is USD 40000 whereas the original value shows the value USD 80,000 i.e. undervalued to the extent of 100%. c) Invoice 93/0743 dated 21.7.93 (Annexure X-5, the value declared to Customs was US$ 21169 as against the original invoice value of .....

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ed the original value of the equipment (i.e. of the new equipment without considering depreciation for the period of its use). He further stated that the equipments imported being old and used, they had been invoiced as per their depreciated value in accordance with the Standard Guidelines of Schlumberger. The relevant extract of the statement of Mr Sudhir Pai dated 18.5.1998 reads as under: "..................In this case the value has been fixed as per the Standard Guideline of equipment .....

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Customs and that imports were made in the aforesaid manner in emergencies to met contractual obligations of ONGC, which is a Government of India undertaking engaged in oil exploration works of national importance. With a view to prove their bonafides, an amount of approximately ₹ 2,00,00,386/- crores was deposited and it was prayed under cover of letter dated 22.9.1998 that no show cause notice be issued. 2.8 A Show Cause notice was issued to the Appellant requiring it to show cause as to .....

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s SASL have repeatedly imported huge consignments of mechanical spares and allied items and cleared the same without payment of proper Customs duties. They have prepared parallel invoices with the specific purpose of evading Custom duties. The nature of transaction i.e .without the sale of the imported goods and without sending consequential remittances abroad against the specific imports with the contracting agency and the parent firm facilitated M/s SASL to prepare the parallel set of invoices .....

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e normal procedure of importation and willfully adopted the short cut of mis-representing the facts to the department. The fax messages clearly indicate that the evasion was willful and there was a deliberate attempt on their part to suppress the actual value form the department, thereby making them liable for action under proviso to Section 28 and Section 28AB of Customs Act, 1962 and the goods become liable for confiscation under Section 111(d), 111(m) and 111(o) ibid by virtue of the fact tha .....

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xpressed its inability to furnish the courier documents, the Customs duty paid at the nominal value is not considered and the duty is being demanded at the original value of the imported consignments without any deduction of the value declared to the Customs at the time of clearance. As far as imports through sea ports are concerned, the duty is demanded only on the differential value." 2.9 In its defense, the appellant under cover of its letters dated 1.3.1999 and 10.11.2000 contended that .....

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ores' meant for consumption on board foreign going vessels. (c) That no duty was otherwise payable on the disputed goods, (assuming that they were not ship stores) as immediately after their import, the said goods had been taken outside the territorial waters of India to places (i.e. the vessel/rig operating at ONGC sites) where the Customs had no jurisdiction, which tantamounted to export from India. (d) That after being used for ONGC work, most of the goods were re-exported back to the ove .....

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n the Notice for alleging undervaluation had been submitted to the Customs by the appellant on their own (and not seized in any search) and the further fact that the appellant had deposited duties which were not legally recoverable from it in the course of investigation were cited as circumstances warranting waiver of penalty. 2.10 The proposal made in the Show Cause Notice were confirmed by the adjudicating authority against which the Appellant preferred an appeal before this CESTAT, wherein it .....

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ility without applying the exemption Notifications prescribing effective rates of duty from time to time. We also observe that penalties have been imposed both under Section 112 and under Section 114A which are mutually exclusive. The Commissioner has also not quantified the amount of penalty under Section 114A and has merely stated that the appellants are liable to pay mandatory penalty as envisaged under Section 114A. In view of the foregoing, we have no option but to set aside the Order in Or .....

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ship stores, goods having been exported and in addition it stated as under cover of its letter dated 29.9.2005 that; "In response to a query raised by Your Honour, it was stated on behalf of our clients that our clients would not oppose a confirmation of customs duty to the extent of ₹ 1,84,03,780.37 which has been computed in Annexure F' to our clients' earlier appeal to the CESTAT, a copy of which is Annexure 1 to their written submissions dated 6 th December 2004. It was, .....

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as therefore submitted that in view of this position and the payment of the full amount of duty by our clients even before a Show Cause Notice was issued, no penalty/interest or a very nominal penalty/interest should be imposed in the present case." 2.13 The Adjudicating authority has vide Order dated 29.9.2005 upheld the demand for Customs duty to the tune of ₹ 1,84,08,757/-; ordered recovery of interest under section 28AB; imposed penalty of ₹ 1,84,08,757/- on the Appellant co .....

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anted at a later date. Insofar as the argument that goods having been imported for oil exploration work were otherwise exempt from payment of duty/goods after use were re-exported and drawback would have been eligible, it was held that the claim for exemption /drawback could not be examined at the adjudication stage and ought to have been claimed at the time of import/export. It was further held that there was evasion of Customs duty and accordingly the Appellant company and its employee was lia .....

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ether the CESTAT had vide its order dated 17.4.2003 remanded the matter back only for applying the correct duty rates as held by Member (Technical) or the remand was unqualified one, leaving it open to the appellant to urge all its contentions. 3.2 On behalf of the Appellant it has been contended that, it never accepted the liability to customs duty as an importer and that in all replies and pleadings both before the adjudicating authorities or two occasions and before the CESTAT on the first oc .....

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other contentions had been given up by the Appellant. Even the adjudicating authority did not construe the order passed by the CESTAT as only having remanded the matter back for a limited purpose for determining the effective rate of duty. In fact, the Respondent has in the remand order dealt with all the contentions urged by the Appellant on merit and consequently it could not by any stretch of imagination contented that the remand was only for a limited purpose. It was further submitted that i .....

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rpose of computing the effective rate of duty and that it was not open for the CESTAT to examine any other issue, as the same would be hit by the principles of resjudicata. In support of this contention reliance was placed on the following decisions: 1) Sunbel Alloys Co. of India Ltd vs UOI 2015 (316) ELT 353 HC Bom 2) M Nagabhushana vs State of Karnataka 2011 (271) ELT 481 (SC) 3) Central India Polyester Ltd vs CCE 2004 (171) ELT 241 (T) 3.4 In my view the order passed by CESTAT, remanding the .....

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that when the matter has been remanded by finding merit in one of the contentions urged, that, the other contentions stand given up or foregone. It has always been the practice of this Tribunal, that whenever an assessee gives up on any of its contention or makes a concession, the same is specifically recorded in the order. In the instant case neither from the order nor from the records I could find either any written or oral concession on the part of the appellant with respect to any of legal .....

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e same was beyond the scope of the remand directions. I am therefore of the view that the scope of the remand order was not confined to determination only of the effective rate of duty. The judgements cited by the Ld. AR Additional Commissioner on the question of resjudicata cannot be applied to the facts of the present case. I am, therefore of the view, that the Ld. Member Judicial was correct in holding that all the contentions urged by the Appellant could be considered by this Tribunal. I als .....

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rein it has been held acquiescence cannot take away from a party the relief he is entitled to whether tax is levied or collected without the authority of law'. I therefore agree that appellant's contention that they were not the importer is required to be examined. 4. The second question of difference is essentially whether the imported goods could be called ship stores as per the definition under Section 2 (38) of the Customs Act, particularly in view of the fact that the Appellant was .....

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rted on urgent basis so that the operation of the rigs was not held up, which would entail a national loss of ₹ 1 lakh per hour. It was further submitted that the only reason assigned by the adjudicating authority for refusing to extend the benefit of ship stores was that in terms of Section 85 of the Customs Act, 1962 it was the prerogative of the proper officer to permit warehousing of the goods imported without payment of duty for use as ship stores. According to the Respondent since pr .....

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ng of Member (Technical) to the effect that there was no evidence produced to show that the goods imported were infact used as stores', was concerned, it was submitted that there was no dispute ever raised by the Revenue on this aspect and it was not open for the CESTAT to traverse beyond the scope of the dispute before it. 4.2 The Ld. AR (Additional Commissioner) contended that Section 85 contemplates a specific prior permission from the proper officer inasmuch as if what has been imported .....

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ods imported were to be used as ship stores. The term stores' has a specific connotation under the Customs Act and has been defined to mean "goods for use in a vessel or aircraft and includes fuel and spare parts and other articles of equipment, whether or not for immediate fitting." Though it is not in dispute that the imported goods were transferred to the rig in the offshore location, however whether the same was for use in the vessel or for use of the equipments on board the ve .....

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that the goods on their import were transshipped to the offshore location in the Continental Shelf and Exclusive Economic Zone and were after being used there, were brought back to the main land for the purpose of re-export only is concerned, it was submitted by the Appellant that in the course of investigation itself they had clearly come out that the imported goods in question were used in offshore locations, to which the jurisdiction of the Customs Act was not extended. I find that, it is no .....

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of the Customs Act has been extended only to some specific designated areas in the CS & EEZ by Notifications dated 11/1987-Cus dated 14.1.1987 and 64/1997-Cus(NT) dated 1.12.1997. It is not the Revenue's case that the vessels were operating in the said designated areas. In this view of the matter, the present case can be termed as one of transshipment, where the goods are meant to be taken outside India and in terms of Section 54(2) of the Act, no duty is payable on such goods. I find th .....

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or customs duty can be sustained on such goods which have been brought into India for being transshipped. It also clearly comes out from the record that the goods after being used were brought back to the main land for re-export outside the country. In my view for this movement also, there can be no liability to customs duty as the goods were exported outside the country. 4.5 The Ld. (AR) has however contended that by virtue of the decision of CESTAT in the case of Larsen and Toubro vs Commissio .....

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designated area in the Continental Shelf and Exclusive Economic Zone of India could not be segregated from the pipeline within the designated area and that if that part of the pipeline which was in the non-designated area was cut to pieces, the same would become unfit for use. The goods imported in the instant case have been taken to offshore locations where the provisions of the Customs Act had not been extended and that the goods after being used there, were brought back to India for being re- .....

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e territorial waters of India. The CS & EEZ being beyond the territorial waters was clearly outside India. Further the Apex Court has in the case of Collector of Customs vs Sun Industries reported in 1998 (35) ELT 241 SC held that a ship beyond the territorial waters of the country would be a place outside the country. The relevant observation of the Apex Court in this regards is extracted herein below for ease of reference: 6. .......................It is true that the goods did not land in .....

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had been taken out of India. "Place" according to Webster Comprehensive Dictionary International Edition page 964 means a particular point or portion of space, especially that part of space occupied by or belonging to a thing under consideration; a definite locality or location. It also means an open space or square in a city. Therefore, in international trade the ship beyond the territorial waters of a country would be a place outside the country, if the goods are taken to that place .....

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the consignee who is the importer? 5.1 The Appellant has contended that the expression importer' has been defined in Section 2(26) to mean, in relation to any goods at any time between their importation and the time they are cleared for home consumption includes any owner or the person holding himself out to be the importer. It is clear from the definition that till such time that the goods are cleared for home consumption in addition to the natural meaning of the term importer i.e the pers .....

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o provides that with the concurrence of the courier, the consignee or the customs house agent on behalf of the consignee, may file a Bill of Entry for clearance of the imported goods. It was submitted that it was nobody's case that the Appellant or a CHA on its behalf had filed the bill of entry holding itself out to be the importer after taking necessary concurrence of the courier. There is also no evidence which would even suggest let later on establish that the appellant was the consignee .....

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he importer was that it was the owner of the imported goods, which was contrary to the accepted facts in the notice itself. 5.2 The Ld. AR contended that the courier is an agent of the consignee and cannot be considered an importer. If any duty is short paid due to mis-declaration in value or any other reason the same has to be paid by the consignee. 5.3 i agree with the Appellant that, the reason assigned by the Respondent for confirming the demand for duty against it i.e., on the premise that .....

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ported goods to M/s SASAL Mumbai or the contracting agency. The service charges are paid to parent firm directly. The tile of the imported tools and spares remains with the parent firm............." "8.................The nature of the transaction i.e. without the sale of the imported goods and without sending consequential remittances abroad against the specific imports with the contracting agency and the parent firm facilitated M/s SASL to prepare parallel set of invoices reflecting .....

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onsequences which flow from such an election. It appears that insofar as courier imports are concerned it is the courier which held itself out to be the importer and filed a bill of entry seeking clearance of the goods. If there was any mis-declaration of value, the only course of option available to the revenue was to raise a demand, if any, against the courier. Even under the Courier Import( Clearance) Regulations 1995, which have been relied upon by Member (Technical) it is the authorised cou .....

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urier. 5.4 I also find merit in the Appellant's contention that there is no evidence relied upon which would even suggest let alone establish that Appellant was the consignee of the courier parcels. It is not in dispute that during investigation the investigating officials were able to identify the courier docket number, etc in a few cases yet they chose not to investigate as to who the consignee was as also whether there was any authorization from the appellant in favour of the courier to f .....

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een imported by the passenger, the demand for customs duty can only be raised against the passenger who was the importer and not against the Appellant. It has been pointed out that here again the demand has been confirmed by the Respondent on the erroneous premise that the Appellant was the owner of the goods. 6.2 The Ld. AR (Additional Commissioner) has contended that as the Appellant had undertaken to pay duty during investigations, the investigating authorities did not identify who the actual .....

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d actually brought in the goods, cannot by any stretch of imagination countenanced. It is settled law that tax cannot be levied by acquiescence or agreement. It was for the investigating authorities to have raised the demand against the person from whom it was legally due. They could have however legally sought appropriation of the amount deposited as duty by the appellant based on their authorization. However, having failed to raise the demand against the person from whom it is due revenue auth .....

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not the owner of the goods imported and consequently the ratio laid down in the case of Associated Cement Companies Ltd vs CC does not apply to the facts of the present case. 7.1 The fifth question of difference is essentially whether in case of imports made by sea could duty have been demanded from the Appellant? 7.2 It was submitted by the Appellant that bills of entry for the import by sea were filed by ONGC and that the Appellant has not assigned any reason for holding that the Appellant has .....

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lant. 7.4 In my view the onus was on the revenue to establish as to who had actually filed the Bill of entry and had taken upon it the mantle of an importer. The Revenue having failed to discharge this burden, it was not open for the Revenue to draw an adverse inference against the Appellant and call upon it to prove the negative. I also take note of the fact that the Appellant has right from the stage of investigation itself clearly stated in no uncertain terms that ONGC was the importer, which .....

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he view that the Appellant not being the importer, as also the goods having been transshipped/re-exported, the duty liability could not be fastened upon the Appellant. However I hasten to point out her that the Appellant having time and again, before different authorities accepting that it did not wish to claim refund of the duty paid and that it was contesting the matter only in view of the penalty imposed on it. Given the undertaking made by the Appellant they would not be eligible for refund .....

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