9911796707
TMI Blog2007 (11) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... showed 3296.801 MT of phosphoric acid, the bill declared affirmed 3262 MT and ultimately 3103.152 MT was found as the correct figure in the Ullage report. 3. The customs authorities issued a show cause notice calling upon the petitioner to satisfy it as to why penalty in terms of Section 116 of the Act ought not be imposed for the short landed goods. The proceedings were resisted; eventually an order was made by imposing a penalty of Rs. 4,30,000/- upon the petitioner, on 30.9.1998. This order was appealed against; the Collector of Customs (Appeals) by order dated 1.9.1989 reversed the Adjudicatory order and remitted the matter for fresh consideration, to the adjudicating authority i.e. Deputy Collector of Customs at Kandla. The Deputy Collector confirmed the previous findings regarding penalty of Rs.4,30,000/- rejecting the Ullage report and holding that only an allowance of 2% could be accepted by way of ocean loss, since that was the permissible limit prescribed by executive instructions. He however noticed the peculiar nature of the goods and the tendency of sludge formation during long voyage. 4. The petitioner appealed to the Collector of Customs (Appeals). The appeal was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss allowing of 2%, while working out the quantity of short landings, 12. It is also noticed that the rate of duty taken by the adjudicating authority in the first three cases ( sl.no.1 to 3) for working out the quantum of penalty as not correct, as the concessional rate of duty charged on the consignments in question, has not been taken into account. Section 116 of Customs Act, 1962 provides that in case of shortage in the quantity unloaded, penalty not exceeding twice the amount of duty that would have been chargeable on the goods not unloaded, had such goods been imported, can be imposed on the person in-charge of the vessel. Thus, the amount of penalty that can be imposed under Section? 116 is directly related to the rate of duty leviable of the goods in question at the time of importation. In other work if a particular cargo has been cleared on payment of concession rate of duty, the same rates are to be taken for determining the quantum of penalty and not the tariff rate. 12.1 In view of this matter the adjudicating Authority has clearly erred in adopting the effective rate of duty (70% back 30% A.D. and 8% C.V.D.) instead of concessional rate of 15% duty, while working o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate order dated 25.11.1991. It issued a show cause notice to the petitioner and after considering the materials set aside the appellate order. The relevant part of the discussion of the revisional authority is as follows : "Taking up the second ground first, Government is of the considered view that notification 166/76 is a conditional exemption based on fulfillment of end use condition. The impugned short landed quantities were not utilised for the end-use prescribed in the said notification and, therefore, the concessional rate of duty prescribed therein cannot be applied for purpose of calculating the quantum of penalty. To that extent the review proposal succeeds. Regarding the first point relating to sludge formation, following discussions are relevant. As stated by applicant collector phosphoric acid is not a volatile liquid. Further the quantity delivered (as also loaded) is calculated in terms of concentration of acid (P 2 O5 content). It is also well established by party's own pleading that sludge is formed of impurities, whereby P2 O5 content would go up (admitted by the learned advocate during hearing). Hence neither evaporation loss nor sludge form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound to give the petitioner the benefit of the rate of duty notified under Section 25 of the Customs Act which was 15% whereas what was actually taken into consideration while reckoning the penalty was the amount enacted in the schedule. Learned counsel relied upon the judgment of the Calcutta High Court in Estate Shipping Vs. Deputy Collector of Customs Civil Order No.8696/12decided on 10.7.1992. 11. Mr. Katyal, learned counsel for the respondent resisted the petition and submitted that the revisional order impugned in these proceedings was justified in the circumstances. He submitted that at an intervening stage the Collector of Appeals had remanded the matter for re-consideration to the adjudicating authority. Counsel relied on the observations made and during the course of that order and submitted that the Appellate Authority, at that stage had drawn adverse inferences against the petitioner for mis-reporting the quantity of sludge formation as 159MT whereas what was ultimately found was much more. In these circumstances the order of the adjudicating authority was justified and all the reviewing authority did was to restore it. 12. Learned counsel further relied upon the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignificant characteristics i.e. the real possibility of sludge formation, having regard to the climate and the other variables on account of a long voyage, exist. The reasoning of the adjudicating authority was that allowance only to the extent of 2% was permissible and any sludge formation beyond that was not permissible as there was no authority for him to permit such allowance. The adjudicating authority did not go into the nuances of merits of the acceptance or the veracity of the ullage report. However, the Appellate Authority not only considered the peculiar characteristics of the goods but also the law on the aspect and apparently took into account the judgment of the Bombay High Court. It further noted that there is some material that the ullage measurement was worked out of the in the presence of the shipping officer, consignee and customs as well as port officers and the quantity of sludge was found on board. After a detailed reasoning the Appellate Authority accepted the ullage report taking into consideration the quantity of sludge allowed to be carried on board of the ship with the permission of the customs, the balance short landed quantities were 2.05 MT and 34.449 M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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