Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

M/s Flemingo (DFS) Pvt Ltd, Mr. Ajay Thoria, Mr. V. Prasad Rao Versus Commissioner of Customs, Visakhapatnam

2017 (11) TMI 495 - CESTAT HYDERABAD

Warehousing of goods - goods found outside the bonded lockers of the vessels - seizure of goods - scope of SCN - principles of natural justice - revovation of license of appellant-company - Held that: - the revenue has failed to discharge the requisite burden to saddle the Appellants with liability to confiscation and penalty. Import Duty is payable only when goods are imported into the customs barriers of India. There is no tangible evidence that goods have been improperly imported into the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e not sustainable 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) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 License No. 29/2005 dated 10.9.2005 issued under Section 58 (1) of the Customs Act, 1962 by the Assistant Commissioner of Customs (Bonds), Vishakhapatnam. 3. A Show Cause Notice dated 21.7.08 was issued to the Appellant and others for seizure of goods which were allegedly found outside the bonded lockers of the vess .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mp; sale register to next 28,490 3 Bonded goods diverted to local market by forging additional entries in duplicate & triplicate sale vouchers 9,031 4 Sales allegedly made to crew members of vessels in coastal run 3,86,141 5 Sales allegedly made to crew members of vessels not arrived or already sailed on the date of sale voucher 6,18,650 6 Sales allegedly made to crew members of non-existing vessels 1,53,301 7 Excess sale in one transaction 2,36,0410 8 Repeat sales allegedly made within one .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 adjud .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and the individuals. 6. In appeal thereagainst, this Tribunal by order dated 18.4.2011 was pleased to set aside the said Order-in-Original dated 30.09.2010 and remanded the case back to the Original authority to consider the issue afresh after following the Principles of Natural Justice. The Appeal was accordingly allowed by way of remand for de-novo adjudication. 7. An appeal was also filed by the Department against the said Order dated 30.09.2010 mainly on the ground that the adjudicating auth .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sed in de-novo adjudication confirming all the proposals in the two show cause notices and the adjudicating authority has: (i) confirmed the confiscation and demands proposed vide first show cause notice dated 21.7.2008; (ii) confirmed total demand of ₹ 2,09,45,632/- under various heads under second show cause notice dated 19.01.2009, and (iii) cancelled the Private Bonded Warehouse License dated 10.9.2005 issued to the Appellant Company as proposed in second show cause notice dated 19.01. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

impugned Order-in-Original and the grounds of appeal. 10.2 He submitted that the Impugned Order stands vitiated due to unfairness, non-consideration of vital facts, and being beyond the scope of the show cause notice. The Adjudicating Authority in the de-novo proceedings records concurrence with his view in the earlier Order-in-Original dated 30.09.2010. This according to him clearly discloses predetermined approach which has resulted in gross miscarriage of justice. He submits that the principl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ts, 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 e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as on account of sales and as is normally the case in every shop, some amount was kept to tender change when crew members don t have the exact change. It is submitted that Section 121 of the Customs Act, 1962 applies where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods. The Impugned Order thus fails on this count because the goods were not smuggled and as a natural consequence only if smuggled goods are sold, which onus to establis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

stainability of Section 121 of the Customs Act, 1962 is not evident from the Impugned Order as there is no evidence brought on record to show any seizure and evidence of sale in the local market and thus the finding that the currency is allegedly sale proceeds of smuggled goods is not established beyond reasonable doubt. He relies upon the judgment of Ramchandra versus Collector of Customs reported in 1992 (60) E.L.T. 277 (T). 10.4 As far as the confiscation of goods valued at INR 6,042/- which .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 confiscat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eme Court reported in 2010 (255) E.L.T. A120 (S.C.). He submitted that the demand confirmed is unsustainable and deserves to be set aside. 10.6 He submitted that even though the Department has chosen not to examine the deponents of the statements, though mandatory under Section 138B of the Customs Act, 1962, the adjudicating authority erroneously relied upon the same. He relies upon the judgment of the Hon ble Punjab and Haryana High Court in G-Tech Industries versus Union of India reported in 2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

equently stated on record that the statement of admission were taken under threat and coercion. 10.7 He also relied upon the judgment of Hon ble Supreme Court in Hari Charan Kurmi, AIR 1964 SC 1184, to argue that even otherwise the statement of a co-accused can only be considered for corroboration of any tangible evidence. 10.8. He submitted that statements of various Customs officers were before the adjudicating authority. The Bond Officers admitted that they did not escort goods sold from DFS .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the Respondent. He relied upon the judgment of the Hon ble Bombay High Court in the case of C.C. (General) versus S.S. Clearing & Forwarding Agency P. Ltd. reported in 2011 (263) E.L.T. 353 (Bom.). 10.9. He submitted that the Department could not provide a single case of seizure / confiscation of goods from the local market. Not a single buyer from local market has also been identified during the investigation. Thus, the onus to prove the allegation that goods were diverted in local market .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

9,45,632/-, 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 predeterm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d that the impugned order was legal and proper and required no interference. He therefore prayed that the Appeals of the Company and the individuals were liable to be dismissed. 11. We have heard both sides at length and have carefully perused the records and written submissions. 12. It is seen that the Appellant Company commenced business as DFS at Vizag Port from 19.10.2005. The bond officers of the Customs department were posted at the Appellant's duty-free shops at all times and were awa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re A and condition 4.3 of Condition B clearly shows that the licencee cannot enter the items bought by the outgoing crew member in the store list of the vessel and place it in the board under preventive escort. Similarly, as per condition No.15 of Annexure A once again duty is cast on the Master of the vessel to keep the items mentioned therein in the bonded locker of the vessel. These are undoubtedly the duty of the Master of the Vessel. Even if there was any lapse of the aforesaid conditions, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

used, hence even if there are any lapses by any other person, the Appellant cannot be held in any 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ade 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 arise. 14. Adjudicating Authority presumed that some items which figured in duplicate copy of the bills but not in the original, have been sold in the open market. We find no clear evidence or any seizure .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pick up and drop facility for crew members / passengers from their respective ships to the shop and back, the staff was given tips of small denomination. As regards the sum of ₹ 18,100/- the same was kept for meeting the expenses. In support of this it was also pointed out that the Appellant had issued a cheque for ₹ 25,000/- to the local Manager on 27.12.2007 which was cleared on 3.1.2008. However, the Adjudicating Authority without taking into consideration the reply in this regard .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l premises of the local manager and the staff. However, the said amounts were not seized from the residence of the staff. The finding arrived is only based on conjectures and surmises and is not sustainable in law. Hence the order of confiscation of USD 7,142/- along with ₹ 18,100/-, and demand of duty of ₹ 26,931/- under section 28(1) r/w section 72(1)(a) & 72(1)(b)(b) of the Customs Act along with interest, are unsustainable and therefore set aside. 15. Further, all the sales o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ficers 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 re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

travention of provisions of section 69 read with 72(1)(a) and 72(1)(b) of the Act is unsustainable and there cannot be any liability of confiscation goods under section 111(j), (o), and 113(d) & k of the Customs Act. 16. In the impugned Order, under different heads demand is erroneously confirmed as follows- 17.1 Serial No.1 sales not covered by sale voucher but debited in stock and sale register - Duty proposed and confirmed - ₹ 6,646/-: We are inclined to accept that this small amoun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

register to next - Duty proposed and confirmed: ₹ 28,490/- : This allegation is not substantiated in the Show Cause Notice. In any event, there would be no question of paying any import duty unless it is proved by the Customs Department that the goods have been removed outside the bonded warehouse. The Show Cause Notice refers to a DLink Camera under this category. However, the Appellant demonstrated before the Department that the said camera was still lying in the shop, which fact was als .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n Annexure B of the licence, cannot lead to any adverse inference or duty demand without clandestine removal of goods. 17.3 Serial No.3 bonded goods diverted to local market by forging additional entries in duplicate and triplicate sale vouchers duty proposed and confirmed -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 includi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ir 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 examination, is not sustainable. Moreover, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he ships' final destination. It is only the ships' final destination which would determine their status. The annexure relied upon merely gave the next port and not the final destination of the ship. The department gave copies of IGM and EGM register, but gave incomplete details in so far as it did not reflect the port of final destination or origin of the port for the voyage. Hence, in the absence of material particulars the allegation is not proved. On the other hand the Appellant in th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r No 55 (16-Cus. 1/54 dated 11.10.1954) also clarified that what was to be seen was the final destination and if the final destination was a foreign port then it is irrelevant if the vessels touch Indian port's on the way to final destination. The condition attached to the license only stipulates that duty free goods are to be sold only to eligible crew members /Passengers. However, it never casts a duty on the Appellant to investigate any subsequent conversion of the inbound foreign vessel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

84 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 shi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s of such conversion from foreign run to coastal run, Appellant could not have made any sales to the crew / Passenger of those vessels. Having failed in their duty the Department cannot throw the blame on the Appellant who been established that it had no knowledge about this conversion in respect of any vessel. Hence the demand of ₹ 3,61,047/- is liable to be set aside. The Adjudicating Authority found the contention of the Appellant regarding the status of the vessel to be correct, howeve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ard 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 and the order is liable to be set aside on this ground also, as held in: (i) (1998) 1 SCC 198 M.A. Jackson Vs Collector of Customs. (ii) (2005) 7 SCC 159 SACI Allied Product Ltd. U.P Vs Commissioner of Central Excise, Meerut. Hence, even this demand is not sustainable. 17.5 Sl. No.5 - sales allegedly made to crew members of vessel not arrived .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

certained as to on what basis the adjudicating authority has arrived at a finding that the Appellant was liable to pay duty of ₹ 55,130/- under this category. No duty liability can be fastened on the Appellant in such vague manner. The adjudicating authority found merit in the contentions of the Appellant under this head, however refused to extend the benefit of ₹ 5,63,520/- on the ground that the goods were not placed on board the vessel under preventive escort. This again was beyon .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

₹ 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lation. Undisputedly, the invoice which is also deemed as the shipping bill for DFS is attested by the bond officer. The clarification issued by the Customs Department in the communication dated 30.11.2005 is not considered by the adjudicating authority. There is no provision in the Customs Act to claim duty from the Appellant on alleged excess sales. If any crew member / passenger has bought the goods in excess he has to pay the duty. Neither under Section 28 nor under Section 72, the alleged d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ugh Section 72 has been invoked it has not been stated which clause of 72 is violated. Section 72(b)& (c) are not applicable and clause (d) refers to goods for which bond is executed under section 59 and which have not been cleared for home consumption or exportation or not duly accounted for to the satisfaction of the proper officer. Section 72 (d) is not applicable as the goods have been cleared for export. There is no dispute that the alleged excess sales are only for exportation. Once th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s 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 repeat sales were made to same crew member. The allegation is arbitrary. The Appellant has filed EXHIBIT-5 along with the reply dated 8.10.09 to disprove these allegations. Further Annexure V & XIV of the Show Cause Notice have been reconciled with the data provided by the port trust and a concise chart was prepar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

id goods were exported, the demand of duty from the Appellant would even otherwise is unsustainable. The adjudicating authority has not given any benefit and confirmed even the balance amount of ₹ 3,06,577/- 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. 17.9. Sl.9 - excess sales allegedly made to crew members of the vessel proceeding to a coastal port Duty demanded ₹ 15,43 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of goods or passenger between any port or airport in India and any port or airport outside India, whether touching any intermediate port or airport in India or not and includes, (i) Any naval vessel of a foreign government taking part in any naval exercises; (ii) Any vessel engaged in fishing or any other operations outside the territorial waters of India (iii) Any vessel or aircraft proceeding to a place outside India for any purpose whatsoever" Thus, even if the ship touches any intermedi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

₹ 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

defeated by erroneous interpretation/ presumption of the authority. It is submitted that even where the adjudicating authority held that issues made to the vessels which has sailed before 6 a.m on the next day of the sale date of the cash memo are to be considered as proper, he failed to extend the benefit of ₹ 12,74,916/- solely on the ground that goods were not placed on board with preventive escort, which is again beyond the scope of Show Cause Notice. The demand is therefore unsustain .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed that the sale is permissible to crew members who are embarking. There is no reason to deny direct sales to the crew members who are in transit. Sale of non-duty paid bonded goods from DFS is permissible to individual crew members who are embarking or disembarking. Placing them on ship with preventive escort is not necessary. If the passengers /crew are disembarking there is no question of the goods being taken on ship under preventive escort and placing them on board the ship. The show cause .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f of the crew members by the Master. Only when the Master places an order with the Appellant that the goods are to be placed on board 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 C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e 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. T. Ramkumar, Mr. N. Satyanaryana, Mr. N. Ravindra Kumar, and Mr. M. Seetharam were on record in the relied upon documents. It is admitted in the para 18 of the S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ers who boarded a foreign bound vessel. Hence all these sales would be exports. No duty would thus be leviable. The adjudicating authority performing a quasi-judicial function, ought to have given reasons for not accepting the reply and meritorious contentions raised therein. However, the contentions were brushed aside by the adjudicating authority without any sustainable findings to the contrary. We have given our view in the earlier paragraphs on the erroneous and impractical view taken by the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version