TMI Blog2017 (11) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... even on the test of preponderance of probability, the adjudicating authority issued an order cancelling the license. Therefore, this harsh action is also set aside. The license of the Appellant Company shall be restored within a period of one month - appeal allowed - decided in favor of appellant. - C/142/2012-DB, C/143/2012-DB & C/246/2012-DB - A/31754-31756/2017 - Dated:- 6-11-2017 - Mr. M.V. Ravindran, Member (Judicial) And Mr. Madhu Mohan Damodhar, Member (Technical) Mr. Sujay Kantawala Adv, for the Appellants Mr A. Srinivas, A.R. for the Respondent ORDER [ Order Per : M. V. Ravindran ] The Appellant Company is part of the largest private duty-free operator in India, which carries on the business of operating duty free shops (DFS) at various international airports and seaports in India and is part of a group which has operations in 30 countries spread across Australia, Indian Subcontinent, Middle East, Africa, Europe and USA. 2. These appeals relate to their DFS in the seaport situated at Vishakhapatnam Port, Vishakhapatnam which was being operated by the Appellant Company from 19.10.2005 under a private bonded warehouse license bearing Lice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TOTAL (Rs.) 2,09,45,632 5. The Appellant sent a detailed reply dated 8.10.09 answering the various allegations. A personal hearing was granted on 7.4.2010 by the then Commissioner of Customs, Vizag. The Appellants appeared along with their counsel and made detailed oral submissions and detailed written submissions. At the end of the hearing it was pointed out by the adjudicating authority that the details/documents provided by the advocate from the port authorities need to be re-verified and one more opportunity required to be given for making their comments. Thereafter there was a change in the adjudicating authority as it appeared the adjudicating authority who heard the case was transferred. A fresh notice of hearing dated 9.7.2010 was issued to the Appellant. Since the Senior Advocate engaged to argue the case was not well, a request was made to adjourn the hearing. However, without considering the requests made, the Respondent proceeded to pass the Order-in-Original dated 30.9.2010 and confirmed total demand of ₹ 1,78,53,938/- as against the proposed demand of ₹ 2,09,45,632/- and also imposed penalty on the company and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to him clearly discloses predetermined approach which has resulted in gross miscarriage of justice. He submits that the principles of fair play in the sacred adjudication process clearly stands violated as is clearly visible in the Impugned Order. He submitted that instead of appreciating the arguments advanced on behalf of the Appellant Company afresh, the Respondent has mainly adopted the reasons given is his earlier order, also travelled beyond the Show Cause Notice. He submitted that since the adjudicating authority proceeded with a pre-determined approach, the entire proceedings are vitiated. To buttress his arguments, he relies on the following judgments- (i) Oryx Fisheries Private Limited versus Union of India, 2011 (266) E.L.T. 422 (S.C.), (ii) SBQ Steels Ltd. versus Commissioner of Customs, Central Excise and Service Tax, 2014 (300) E.L.T. 185 (A.P.), 10.3 As regards the confiscation and demand raised under the first SCN Notice dated 21.7.2008, he submitted that the same deserves to be set aside in entirety. The Respondent ordered for absolute confiscation of the amount of USD 7142 and INR 18,100, by erroneously and mechanically holding the same as sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fe keeping from fellow crew members and once purchased having being made on earlier occasion, the goods are more safe to keep in the DFS. If the value of the goods which are few bottles is seen (INR 6,042/-) vis-`-vis the turnover of DFS, the same are incomparable. In any event the goods have expired due to passage of time and are therefore rendered useless as on date. The confiscation thus under the Section 111 (j) and (o) which even otherwise are not applicable, the goods having not left the DFS deserves to be set aside. 10.5 As far as the confiscation of goods is concerned, which allegedly have been smuggled into the local market and which were not available physically, the imposition of fine of INR 2,500/- in absentia on this ground alone deserves to be set aside. It is submitted that goods cannot be confiscated in absentia has been confirmed in the judgment passed by Hon ble Bombay High Court in the case of Commissioner of Customs (Import), Mumbai v. Finesse Creation Inc reported in 2009 (248) ELT 122 (Bom) confirmed by the Hon ble Supreme Court reported in 2010 (255) E.L.T. A120 (S.C.). He submitted that the demand confirmed is unsustainable and deserves to be set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the aforesaid, the confiscation and demand raised under the SCN Notice dated 21.7.2008 deserves to be set aside in entirety. 10.11 As regards the proceeding initiated with respect to sales made for the period October 2005-July 2008, he relied upon a detailed point wise written submission dated 6.8.2012 which contains detailed submissions of the Appellant against each allegations made in the Impugned Order / SCN. 10.12. He submitted that while confirming demand of INR 2,09,45,632/-, the major duty of ₹ 1,67,03,863/- (Rs.1,19,14,950 + ₹ 47,88,913) is erroneously confirmed on the ground that goods were sold from duty free shop (DFS) to crew members / international passengers, who proceeded thereafter without any preventive customs escort, despite clear statements of the customs preventive officers deputed at the DFS. 10.13 He invited our attention to the various findings recorded in the impugned order to exhibit a severe prejudice in mind and predetermined approach of the adjudicating authority. He submitted that the impugned Order was harsh and not sustainable even on preponderance of probability. He prayed to allow the appeals and set aside the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way responsible or liable for such alleged lapses even as per the terms of the licence. Thus, in our view the Appellant has not committed any breach of condition No.14 15 of Annexure A of the licence. DFS can sell duty free goods to individual crew members/ passengers by following the conditions stipulated in Para 4.1 and 4.2 of Annexure B which stipulates that payment for the goods sold shall be received in approved foreign currency, under sale voucher in triplicate, taking full signature which shall be countersigned by the bond officer in charge of the DFS. Further as per Para 4.2 of Annexure B, DFS shall inform every passenger/ crew member who disembarks or signs off, regarding their entitlement and also the applicability of Customs Act and Exim Policy if the goods purchased are beyond the permitted limit. In our view, there was no duty cast on the DFS to ensure that every sales made to individual crew members/ passengers is placed on board the ship under customs preventive escort. The adjudicating authority erred in taking a contrary view. Moreover, all such sales by DFS are considered as deemed exports. Thus, the question of imposing any duty on the Appellant does not aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat counter signature of the bond officer on the sale vouchers were obtained by the staff of DFS after the alleged sales were effected. As per section 114(e) of the Evidence Act, there is a legal presumption that official acts have been regularly performed. Even if the countersignatures of the bond officers on the sale vouchers were put after effecting the sales, it amounts to ratifying the sale and does not make the sale illegal. All such sales were deemed exports. Further the DFS can in no way be responsible for any alleged lapse on the part of the bond officer(s). in any event, no such culpable lapse of Bond Officers was found, and thus the Revenue has not made any of them a noticee in the two Show Cause Notices. In Para 42.17 the Adjudicating Authority has referred to an investigating report, which according to him shows that bonded goods were sold to signing in crew members without the supervision of the Customs officers. There is no dispute on the fact that no such investigation report was either disclosed in the Show Cause Notice or a copy of thereof was provided to the Appellant. No such report can be relied upon against the Appellant. Hence the demand confirmed on the erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed -Rs.9,031/-: Barring a statement of Mr. G.V.S. Kondala Rao, the requisite details to substantiate this allegation are not in the adjudication order or the show cause notice. Revenue has chosen not to examine any person including Mr. G.V.S. Kondala Rao. Sales vouchers have been necessarily attested by the Customs (bond) officers. It is settled law as held in G-Tech Industries versus Union of India reported in 2016 (339) E.L.T. 209 (P H) in light of Section 9D of Central Excise Act, 1944 or pari materia Section 138B of the Customs Act, 1962 that, if Revenue chose not to examine any person in the adjudication proceedings, it amounts to giving up that witness and such statement cannot be considered relevant. In their reply the Appellant had reserved its right to cross examine Shri. G.V.S Kondala Rao. However, since he was not examined in adjudication proceedings, there was no occasion for adjudicating authority to offer him for cross-examination. In such undisputed fact situation his statement could not have been considered relevant against the Appellants. Thus, even this demand of ₹ 9,031/- solely based on such statement, not admitted in evidence after his ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that there was no proper mechanism to find out the status of vessels whether it is costal or foreign. Standing order No. 7347 dated 20-01-1998 and 7484 dated 27-10-1999 regarding the' procedure for conversion of vessels from foreign trade to costal trade have been filed by the Appellant along with the Appeal which would show that the onus of following the procedure contemplated therein was clearly on the steamer agent who has to make an application in triplicate to the Assistant Commissioner of Customs, Export department and obtain permission for conversion and also service of a preventive officer for carrying out an inventory of the ship stores and personal property of crew members on board the vessel. The Appellant / DFS Is neither put on notice nor have any check over this conversion of the status of vessel. On the other hand it is the Customs department which is fully involved in this process and which is the authority to grant such permission. Thus proposal to saddle the liability under this category on the Appellant was erroneous. If only the Department had cautioned the Appellant or informed the Appellant about the status of such conversion from foreign run to coastal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not placed on board the vessel under preventive escort. This again was beyond the scope of Show Cause Notice. Hence, in our view this demand is also not sustainable. 17.6 Sl.No.6 - sales allegedly made to crew members of non existing vessels duty demand- ₹ 1,53,301/-, Duty confirmed- Nil The Respondent accepted the contention of the Appellant that on verification with relevant registers no duty was required to be paid by the Appellant on the allegation of sales made to crew members of non-existing vessels. However, the adjudicating authority denied the benefit of ₹ 1,53,301/- and held that they were not escorted by the bond officer and not deposited in the bonded locker of the vessel, and hence duty was liable to be paid. This basis is not only beyond the scope of the show cause notice, but it also ignores the statements of the bond officers that the requirement to place on board under preventive escort will not apply to individual sales. It is settled law that the order of adjudication cannot travel beyond the Show Cause Notice. Hence, this demand is also not sustainable. 17.7 Serial No.7 - excess sales in one transaction- duty demand-Rs.23, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant registers and found to be in order in respect of some vessels, but has given a finding that the remaining sales ought to be considered as illegal sales and appropriate duty was to be collected, and worked out the same to ₹ 14,38,823. Here again the adjudicating authority has not furnished the particulars regarding the liability in respect of the alleged 'remaining sales'. Even on the ground of absence of the details of such remaining sales and quantification of duty on the basis of material particulars, the duty demanded under this category is unsustainable. The adjudicating authority has not given any benefit and confirmed the balance amount of ₹ 9,21,587/- on the ground of not escorting the goods to vessel, which is again beyond the scope of the show cause notice, and even this demand is therefore unsustainable. 17.8 Sl.8 - repeat sales allegedly made within one week of initial purchase duty demanded ₹ 6,57,614/-, Duty confirmed- ₹ 3,51,037/-: There is no evidence forthcoming regarding the alleged repeat sales, and even the dates of the alleged 1st sale are not given. Para 8(b) and Annexure V do not indicate as to how many such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India, it is not a coastal vessel but only foreign vessel. The letter of Port Trust filed with the Reply dated 8.10.09 clearly establishes that the vessels set out in Exhibit VI XV of the Show Cause Notice were only foreign going vessels. The adjudicating authority has categorically stated after accepting the contentions raised that sales made to such vessels were not to be considered as excess sales. However, he has not given any benefit of ₹ 15,42,918/- on the ground that those goods were not placed on board the vessel under preventive escort, which is beyond the scope of the Show cause Notice, and thus not sustainable. 17.10 SI.no.10 - sales allegedly made without quantitative restrictions on a date preceding the date of sailing- duty demanded - ₹ 32,66,481/-, Duty confirmed- ₹ 19,91,565/-: A Letter dated 30.11.2005 of the Commissioner of Customs, Vizag is relied upon by the Appellant which clearly records that - regarding sale of liquor and cigarettes sale to individual seller while the vessel was in port may continue as it is. While the ship sails out they may be permitted as much quantity of liquor and cigarettes as required by them. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the vessel under preventive escort. As per condition 4.2 of Annexure B of the licence, the only duty cast on the Appellant is to inform every passenger /crew member who disembarks or signs off as the case may be at the Port and who purchases the goods from the Appellant that such purchase shall be regarded as import into the country and all the provisions of the Customs Act and EXIM Policy would be applicable to these goods as they apply to regular unaccompanied baggage of passengers / crew members. Hence as far as disembarking passengers are concerned it is clear both from the conditions of the license Annexure-A Annexure-B as well as the allegations made that as far as disembarkation of passengers is concerned the question of placing the goods on board the ship under preventive escort is not applicable. The allegations made do not show whether the crew member / passengers were disembarking crew members or embarking passengers. The adjudicating authority ignored that even the Custom officers have stated that there is no need for any customs escort in respect of purchases made by individual crew member. Statements of Custom officers Mr. G.V.V.S. Prasad, Mr. V. Badri Narayana, Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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