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TMI Blog2023 (9) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... of "Tamil Nadu Electricity Board". The project was approved and the Essentiality Certificate was issued by the Sponsoring Authority viz., Energy Department, Government of Tamil Nadu vide letter dt. 16.03.1999. M/s.PPN submitted a proposal to the Energy Department, Government of Tamil Nadu for their power plant and the Energy Department vide their letter dated 16.03.1999 have certified the details of items of import and prescribed certain value limit against the relevant items. Thus concessional benefits of Customs duty for the import of such items were allowed. In this regard, the Energy Department's letter is addressed to Commissioner of Customs, detailing the value limit. As per the said certificate, the Sponsoring Authority has recommended 9 segments of the project totalling to JPY 8,86,24,43,836 and USD 6,41,13,986. Based on the Sponsoring Authority's approval, the project contract of M/s.PPN was registered by Custom house, Chennai on 30.03.1999. As per the norms stipulated in the Project Import Regulations, 1986, M/s.PPN had submitted a Bond for Rs.638 Crores and a Bank Guarantee for Rs.13.77 crores in favour of the Commissioner of Customs, Seaport Chennai and a cash security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h segments were supplied by M/s.Kier International, U.K. The goods relating to the 3rd, 4th, 5th, 6th were supplied by M/s.Stone and Webstar Engineering Corporation, USA. only. 5. As mentioned above, the goods relating to 3rd, 4th, 5th & 6th segments were supplied by M/s.Stone and Webstar on behalf of M/s.Marubeni who raised invoices on M/s.PPN. Based on these invoices, M/s.PPN filed their import documents before the Customs Department. M/s.PPN have cleared goods covered under 259 bills of entry and 12 bills of entry were supplied by M/s.Stone and Webstar invoiced through M/s. Marubeni. 6. In the 3rd segment, goods relating to "Sea water System/Desalination System", in the 4th segment, goods relating to "Balance of Plant", in the 5th segment, goods relating to "Electrical and Control Equipment" and in the 6th segment, goods relating to "Fuel System" were imported by M/s.PPN availing concessional benefits of Customs duty. 7. After the erection and commissioning of the power plant, M/s.PPN submitted a proposal to the Commissioner of Customs, Seaport Chennai requesting for finalization of provisional assessment vide their letter dated 26.12.2002. The matter was taken up for finaliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zation of the assessment. To establish that there has been huge delay in final assessment, Dates & Events have been furnished by the counsel for easy reference as follows :- SN DATE EVENTS 1 16.03.1999 The Appellant received recommendation letter from the Tamil Nadu Government to the Collector of Customs, Chennai for setting up their power plant. 2 30.03.1999 The Respondents registered the project of the Appellant and issued a Project Intimation letter in F. No. S37/11/1999.The Appellant executed bank guarantees and also deposited an amount of Rs. 84 lakhs as security deposit. The goods were imported during the period from 10.2.2000 to 20.12.2001. 3. 26.12.2002 The appellant as per letter dated 26.12.2002 requested the Commissioner of Customs to finalize the provisional assessment. 4. 17.06.2003 The Petition's Counsel sent a letter to the Assistant Commissioner of Customs requesting him to finalise the assessments in respect of the imports made by them. 5. 10.07.2003 The Appellant's Counsel sent a letter to the Assistant Commissioner of Customs requesting to finalise the assessments in respect of the imports made by them. 6. 29.11.2003 Letter from the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem to finalise the assessment. 22 05.09.2017 Bank Guarantees executed by the Appellant were periodically renewed. 23 05.03.2018 Final Reminder sent by the Appellant's Counsel to the Commissioner of Customs. 24 22.5.2018 The appellant preferred a writ petition bearing no. 6492 and 6493 of 2018 seeking direction from the Hon'ble High Court to the Department to finalize the assessment and return the huge cash security deposit made for an amount of Rs.84 lakhs and also to release the bank guarantee executed for an amount of Rs.13.77 crores. During the pendency of the said writ petition, the subject show cause notice dated 22.5.2018 on an entirely new ground that the value for the imported equipment was lesser than the supplier's purchase price. 25 08.10.2018 The appellant filed writ petition bearing no. 14365 of 2018 challenging the subject show cause notice dated 22.5.2018. The main ground taken was the delay in adjudication. The Single Judge of the Hon'ble High Court of Madras disposed of the said writ petition directing the appellant to participate in the adjudication proceedings and gave a series of directions. 26 30.11.2018 A Writ Appeal was filed against the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual or legal basis to demand differential duty. 11. The decision in the case of J. Sheik Parith Vs CC (Seaports-Exports), Chennai - 2020 (374) ELT 15 (Mad.) was relied by the Ld. Counsel to argue that when there was a huge delay of 8 years for adjudication of the show cause notice, it was held to be against the principles of natural justice. The demand was set aside by the Hon'ble Jurisdictional High Court. 12. It is submitted by the counsel that the Hon'ble Supreme Court in the case of State of Punjab Vs Bhatinda District Co-Op. Milk P. Union Ltd. - 2007 (217) ELT 325 (SC) held that when there is no period of limitation prescribed in the statute, the authorities must exercise its jurisdictional with a reasonable period. Though there is no period prescribed in the Customs Act, 1962 as to finalization of assessment, it is incumbent upon the officers of the department to complete the finalization within a reasonable period. In the present case, the appellant had requested for finalization of the assessment on 26.12.2002. Further, the appellant had even approached the jurisdictional High Court requesting for conclusion of the matter. No part of the delay can be attributed to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted amount 4. Sea Water / Desalination System M/s. Stone & Webster Engineering Corporation, USA 1,18,62,835 1,27,57,000 6. Electrical & Control Equipments M/s. Stone & Webster Engineering Corporation, USA 84,52,403 91,05,000 7. Fuel system M/s. Stone & Webster Engineering Corporation, USA 6,53,429 7,21,000 9. Single point mooring system M/s. Kier International Limited, England 50,12,444 72,23,644 15.1 It is held by the Department to be intentional mis-declaration of value for which the differential duty at merit rates is demanded from the importer viz. M/s.PPN and a penalty of Rs.1 crore has been imposed under Section 112 (a) on PPN as well as on M/s.Marubeni being the foreign supplier. 15.2 There is no dispute that when all the imports under nine segments are taken into consideration, the overall sub-contracted amount is within the amount contracted between M/s.Marubeni and PPN. 15.3 It is relevant to note that M/s.Marubeni had concluded the EPC Contract with PPN in the month of April 1998, whereas the agreement with the sub-contractor M/s. Stone & Webster was negotiated during the month of November and December, 1998, Though the sub-contracted price was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) b) Tolin Rubbers Vs. CC, Kochi - 2004 (163) ELT 289 (SC) c) Commissioner Vs. Bureau Veritas - 2005 (181) ELT 3 (SC) d) CC, Mumbai Vs. J.D. Orgochem Ltd. - 2008 (226) ELT 9 (SC) e) CC, Vishakhapatnam Vs. Aggarwal Industries Ltd. - 2011 (272) ELT 641 (SC), f) Basant Industries - 1996 (81) ELT 195 (SC) g) Mirah Exports Pvt. Ltd. - 1998 (98) ELT 3 (SC) 16.3 Further, the impugned order ignores the fact that the payment has been made on account of a signed contract and through Letter of Credit. These documents show that the price paid is a negotiated price and is the true transaction value. The same must be accepted. Without prejudice, it is submitted that the total cost of the project remained the same irrespective of the fact that certain goods were bought at a lesser rate and certain goods were bought at a higher rate under various sub-contracts. 16.4 Since all the imports were under the Project Import scheme, all the goods were classified under CTH 9801 attracting the same rate of duty. Thus, there is no revenue loss at all as projected by the Department in the impugned order. 16.5 The basic requirement for availing the benefit of Project Import Scheme is the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Milk P. Union Ltd., 2007 (217) E.L.T. 325 (S.C.), c) Neeldhara Weav. Factory v. DGFT, New Delhi, 2007 (5) S.T.R. 404 (P & H) d) CCE., Chandigarh-I V. Malwa Iron & Steel Co., 2015 (320) E.L.T. 533 (P & H) e) CCE, Chandigarh v. Hari Concast (P) Ltd., 2009 (242) E.L.T. 12 (P & H) f) Usha Stud & Agricultural Farms (P) Ltd. v. CC., New Delhi, 2011 (274) E.L.T. 365 (Tri. - Del.) 19. Ld. Consultant submitted that, in the present case, the Bills of Entry were filed, duty was paid, and the good were cleared way back during the period 1998 to 2002 itself. Thus, any SCN proposing to levy penalty should have been issued latest by 2007. Therefore, the present SCN issued on 22/05/2018, more than 15 years after the date of import, is beyond the reasonable period of time, and thus, is barred by limitation. The impugned order merits to be dropped on this ground itself. 20. The letter dated 22/05/2018 is seeking to demand differential duty and impose penalty in respect of goods imported during the period 1998 to 2002. The sole basis on which the proceedings are initiated is the purported investigation undertaken by the DRI in the year 2006 and a communication dated 04/10/2007 received fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 146 (Tribunal) b) Guru Electronics Singapore Pvt. Ltd. - 2009 (240) E.L.T. 56 (T) c) Vishwajyoti Impex Vs. CC(Adjn.), Mumbai, 2009 (238) E.L.T. 257 (Tri. - Mumbai) d) Patel Engineering Ltd. CC (Exports), Nhava Sheva, 2014 (301) E.L.T. 370 (Tri. - Mumbai) e) Ankit Gopal Agarwal Vs. CC, Cochin, 2009 (234) E.L.T. 646 (T) f) Advance Exports vs. CC, Kandla, 2007 (218) E.L.T. 39 (T) g) Relax Safety Industries Vs. CC, Mumbai, 2002 (144) E.L.T. 652 (T) h) Shafeeq P.K. Vs. CC, Cochin, 2015 (325) E.L.T. 199 (Tri. - Bang.) i) Narendra Raval Vs. CC, Ahmedabad, 2017 (347) E.L.T. 565 (Tri. - Ahmd.) The issue is one of bonafide interpretation. Hence, no penalty is imposable. 28. No penalty is imposable on the Appellant under Section 112(a) of the Customs Act, 1962 as the issue is one of interpretation and the Appellant was acting on bonafides. 29. Penalty under Section 112 of the Customs Act, 1962 is linked to confiscation under Section 111 of the Customs Act, 1962 i.e., where the goods are liable to confiscation under Section 111, only then penalty can be imposed under Section 112 ibid. 30. When the demand of duty is found to be non-sustainable, the question of levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) of the Customs Act, 1962, Assistant Commissioner is the proper officer to finalise the provisional assessment and therefore, the proceedings are within jurisdiction. 35. Though it is true that the Assistant Commissioner of Customs is the proper officer to finalise the provisional assessment, the same will hold good only in case of mere assessments. When the issue of confiscation, imposition of penalty etc. are also combined invoking other provisions of the Customs Act, 1962 such as Section 28 (Demand of duty), Section 111 (Confiscation of goods), Section 112 (Imposition of Penalty), Section 124 (Issuance of Notice for confiscation), etc., then the Notice ought to be issued and the case adjudicated only by the officer empowered to adjudging confiscation and penalty. 36. Ld. A.R Ms. Anandalakshmi Ganeshram appeared and argued for the department. The findings in the impugned order were reiterated. 37. Heard both sides. 38. The issue to be decided is whether the differential duty demand and the penalties imposed are legally sustainable or not. According to department for the goods sourced from the overseas supplier M/s. Stone & Webstar, the transaction value declared by appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from different suppliers and held that the value of goods supplied by M/s.Stone & Webstar to M/s.Marubeni is higher than the invoice value issued by M/s.Marubeni to M/s. PPN. The other items does not have such dispute. The value which is stipulated in the contract has been paid to M/s>Marubeni. There is no allegation that there is some hidden payments made by M/s.PPN to M/s.Marubeni. The documents of payment show that appellant has paid only the amount as per contract. The ground put forward by the department to reject the transaction value declared for some items cannot be accepted when the amount fixed is for the entire project import. 40A. In the case of Agarwal Industries Vs CC Vizag - 2006 (193) ELT 421 (Tri.-Bang.) the Tribunal held that the transaction value arrived at purely on commercial considerations based on contracts, transaction value not to be rejected unless established with reason. The relevant para reads as under : "2. In the above cases, the importers entered into contract with foreign suppliers for delivery of goods within a specified period at a contracted price. However, due to certain circumstances, the foreign supplier was not in a position to supply the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the appeals with consequential relief, if any." The said decision was affirmed by the Hon'ble Apex Court as reported in CC Vs Vishakatpatnam Vs Aggarwal Industries Ltd. - 2011 (272) ELT 641 (SC). The relevant para reads as under : "12. In Eicher Tractors Ltd. (supra), relied upon by the Tribunal, this Court had held that the principle for valuation of imported goods is found in Section 14(1) of the Act which provides for the determination of the assessable value on the basis of the international sale price. Under the said Act, customs duty is chargeable on goods. According to Section 14(1), the assessment of duty is to be made on the value of the goods. The value may be fixed by the Central Government under Section 14(2). Where the value is not so fixed it has to be decided under Section 14(1). The value, according to Section 14(1), shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place and importation in the course of international trade. The word "ordinarily" implies the exclusion of special circumstances. This position is clarified by the last sentence in Section 14(1) which describes an "ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no allegation of the supplier and importer being in collusion. It is also not the case of the revenue that the transaction entered into by the respondent was not genuine or undervalued. Nor was there a mis-description of the goods imported. It is also not the case of the revenue that the subject imports fell within any of the situations enumerated in Rule 4(2) of CVR, 1988. It is manifest from the show cause notice, extracted in para 3 supra, that the contract value was not acceptable to the Adjudicating Authority in terms of Section 14(1) of the Act read with Rule 4 of CVR, 1988 merely because by the time actual shipment took place in August 2001, international price of the oil had increased drastically. No other reason has been ascribed to reject the transaction value under Rule 4(1) except the drastic increase in price of the commodity in the international market and the difference in price in the invoices in relation to the goods imported under contracts entered by the respondents in the month of August 2001. In our opinion, the import instances relied upon by the revenue could not be treated as instances indicating contemporaneous value of the goods because contracts for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o realise the amount." 42. The date and event chart noticed above will show that there has been inordinate delay in finalizing the assessment. Though it was a matter under investigation by DRI, the report of DRI was filed in 2006. In spite of this, there was no steps on the part of the department to finalize the assessment. The appellant M/s.PPN has been continuously requesting for finalizing the assessment by issuing letters to the department on 27.09.2004, 05.10.2004, 01.05.2004, 15.02.2017 etc. On 27.05.2018, the appellant preferred a writ petition in W.P.No.6492-6493/2018 seeking direction from the High Cort for finalizing the assessment. During the pendency of the W.P., the present SCN was issued dt. 22.5.2018 alleging this present allegation that for some segments the invoice value is lesser than the value at which M/s.Marubeni procured it . Only after then in the OIO finalizing the assessment was passed on 27.09.2019 which confirmed the proposals in the SCN. We do note that there is considerable delay of more than 13 years after the date of report of DRI (8/2006) till the order of finalization (27.09.2019). The department has not been able to explain this delay. The higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady Rs.84 lakhs has been remitted by the appellant. The appellant need not renew the Bank Guarantee "and the department is directed to intimate the petitioner's bankers about the above direction within a period of two weeks from the date on which the appellant remits the sum of Rs.16 lakhs, on compliance of which, the Bank Guarantee shall stand revoked. c) We direct the adjudicating authority to complete the adjudication process as expeditiously as possible and in any event not later than three months from the date of receipt of the copy of this judgement subject to the assessee extending full co-operation in the adjudication process. closed. No costs. Consequently, the connected miscellaneous petition is closed." 44. The finalization has happened after 15 years of provisional assessment which, in our view, is extremely inordinate delay, and also against the instructions issued by CBIC as to finalization of Project Import Assessments The department has not been able to put forward cogent evidence to reject the transaction value. For these reasons, we find that the demand of differential duty the order for confiscation of goods, imposition of Redemption Fine and penalties ..... X X X X Extracts X X X X X X X X Extracts X X X X
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