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TMI Blog2024 (3) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... ld by the appellant as 'branded Petrol', for which the higher CVD was payable as per Sl.No. 70(ii) of the said Notification. This resulted in short payment of Countervailing Duty (CVD). 1.2 The relevant Sl.No. 70 of the Notification No. 12/2012-CE dated 17.03.2012 and the corresponding rates of duty are shown hereunder for ease of reference:- Sl. No. Chapter or heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No. (1) (2) (3) (4) (5) 70 2710 Motor spirit commonly known as petrol,- (i) Intended for sale without a brand name; (ii) other than those specified at (i) * 1.20/Ltr. * 7.50/Ltr. 35/2012-CE dtd. 14.09.2012 * 2.70/Ltr. * 3.85/Ltr. 22/2014-CE dtd. 12.11.2014 * 4.95/Ltr. * 6.10/Ltr. 24/2014-CE dtd. 02.12.2014 * 8.95/Ltr. * 10.10/Ltr. 03/2015-CE dtd. 16.01.2015 * 5.46/Ltr. * 6.64/Ltr. 12/2015-CE dtd. 01.03.2015 * 9.48/Ltr. * 10.66/Ltr. 04/2016-CE dtd. 30.01.2016 1.3 From the above, at Sl.No. 70, it can be seen that there are two rates of CVD applicable for Motor Spirit at the time of import, depending on the intended use subsequent to its import as under:- "(i) If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CVD along with interest by Demand Draft dated 19.07.2016 and 27.07.2016. The Department was of the view that the appellant has mis-declared the goods and has violated the conditions of the Notification for the reason which the goods imported are liable for confiscation. The Show Cause Notice dated 05.04.2017 was issued under Section 18 read with Section 124 of the Customs Act, 1962, by DRI proposing (a) to deny the concessional rate of CVD claimed by them at the time of import (b) to finalise the provisionally assessed Bills of Entry by charging CVD at the rate prescribed under Sl.No. 70(ii) of Notification No. 12/2012-CE dated 17.03.2012 (c) consequent to finalisation of Bills of Entry, proposing to recover the higher amount of CVD along with interest (d) to appropriate the amount already paid by the appellant (e) to hold the goods liable for confiscation under Section 111(o) of the Customs Act, 1962 (f) to impose penalty under Section 112 of the Customs Act, 1962. 1.7 After due process of law, the original authority finalised the Bills of Entry and passed the impugned order wherein the concessional rate of CVD claimed at the time of import was denied. The enhanced CVD as pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 111(0) of the Customs Act 1962; However, I given an option to redeem the same on payment of fine of Rs.50,00,000/- (Rupees Fifty Lakhs only) under Section 125 of the Customs Act, 1962; VI. I impose a penalty of Rs.38,00,000/- (Rupees Thirty Lakhs only) under Section 112 (a) of the Customs Act, 1962, on the importer for their acts of omissions and commissions, as discussed above." 2.1 The Ld. counsel Shri Harish Bindhumadhawan appeared and argued on behalf of the appellant. It is submitted that though the Show Cause Notice is issued by DRI, the appellant is not contesting in this appeal the issue as to whether the Show Cause Notice issued by DRI is valid and proper. The appellant has filed an Affidavit to this effect on 19.06.2023. It is also submitted that the appellant is not contesting the confirmation of enhanced CVD or the appropriation thereof and is only contesting the order for confiscation of the goods and the redemption fine and penalties imposed. 2.2 At the outset, the Ld. counsel submitted that confiscation and the penalties proposed in the Show Cause Notice and confirmed vide the impugned order is unsustainable when the assessment was only provisional and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Commissioner of Customs [2000 (118) ELT 502 (Tribunal)] wherein it has been held that Section 18 neither provides for issuance of Show cause Notice nor for imposition of penalty. The Ld. counsel stressed that the Department ought not to have issued the Show Cause Notice for recovery of differential duty, confiscation of goods and imposition of penalty without passing an order finalising the assessment of the subject Bills of Entry. More specifically, without finalization of assessment, the present proceedings of confiscation and imposition of penalty under Section 111, 112 and 114 of the Act ibid ought not to have been invoked. The Show Cause Notice itself is premature for this reason and without authority of law. Following cases were relied:- i. Jaju Petro Chemical P. Ltd. vs. Commissioner of Customs (Port) & Ors., [2017 (7) TMI 633-CALCUTTA HIGH COURT] ii. Commissioner of Customs (Import) vs. Mahesh India, [2006 (7) TMI 306 - BOMBAY HIGH COURT] iii. Collector of Customs vs. Kussum Marodia, [1995 (77) E.L.T. 808 (Cal.)] iv. Lan Esenda Ltd. vs. Commissioner of Customs, Mumbai, [2005 (192) E.L.T. 305 (Tri.-Mumbai)] - affirmed in [2010 (258) E.L.T. 3 (S.C.)] v. Kevin In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h implementation of the differential duty on blended Petrol some procedures have been prescribed by the Board. It is stated in the Circular that the Central Excise duty has to be paid on Motor Spirit at the refinery stage. Where the Motor Spirit is cleared, as intended for retail sale after blending, the manufacturers / refineries shall remove such Motor Spirit to the depots / terminals by paying Central Excise duty as applicable for blended Motor Spirit. The Circular also gives procedures to be followed while removing Motor Spirit as intended for retail sale for blending. 2.7 The Ld. counsel submitted that the situation is analogous to the import of Motor spirit. At the time of import, the appellant is not able to estimate the quantity that they may sell after branding by adding additives to the imported Spirit. It is only after filing the ex-bond Bill of Entry they add the additives to brand the Motor Spirit and therefore there is no violation of the conditions of the Notification. At the time of import, as the goods were intended only for sale as unbranded goods, the CVD duty paid is proper. The appellant has voluntarily paid up the higher CVD duties and do not intent to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l them as unbranded. However, due to change in demand, which occurred post import, they sold them as branded. There was no malafide to evade payment of duty. The Ld. counsel prayed that the confiscation of goods, imposition of redemption fine and penalties may kindly be set aside. 3.1 The Ld. Authorized Representative Smt. Anandalakshmi Ganeshram appeared and argued for the Department. It is submitted that the appellant has wrongly availed the concessional rate of duty under Sl.No. 70(i) of Notification No. 12/2012-CE dated 17.03.2012. The present imports were made during the period 2013 to 2016. All the 10 consignments were assessed provisionally pending investigations into the relationship between the importer and the supplier by SVB of Customs, Chennai. The appellant voluntarily paid up the short paid duty (CVD) along with interest. This clearly shows that they have wrongly availed the concessional rate of CVD. For this reason itself the confiscation of the goods and redemption of fine is legal and proper. 3.2 The appellant had knowingly and deliberately availed irregular concession / exemption of CVD. The manner adopted by the appellant for mis-declaring the impugned goods fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cause Notice in this appeal. The said Affidavit is taken on record. 5.2 From the operative portion of the impugned order, it can be seen that the assessment has been finalised by confirming the enhanced CVD and also appropriating the amount already paid by the appellant. The Ld. counsel for the appellant has submitted that the appellant is not contesting the payment of differential amount of CVD and is limiting their dispute in this appeal on the confiscation of goods, imposition of redemption fine and penalties. 5.3 The foremost argument put forward by the Ld. counsel is that the assessment being provisional, the order for confiscation of the goods and imposition of redemption fine and penalties is against the provisions of law. In the case of AS Syndicate (Warehousing) P. Ltd. (supra), the Hon'ble jurisdiction of High Court had occasion to analyse the issue as to whether the demand under Section 28 of the Customs Act, 1962 can be raised before the finalisation of assessment. The Hon'ble High Court after referring to the analogous provisions under Rule 9-B (1) of Central Excise Rules, 1944, held that there being no final assessment, the demand-cum Show Cause Notice is without ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal assessment. In any case the petitioners accepted that provisional assessment had correctly been made under Heading 2106.90." 5.4 The Hon'ble High Court of Bombay in the case of Commissioner of Customs (Import), Mumbai Vs. Mahesh India [2006 (7) TMI 306 - BOMBAY HIGH COURT] while considering the main issue as to whether the Show Cause Notice dated 22.03.1993 issued by DRI under Section 28 read with Section 124 of the Customs Act, 1962 is valid and proper had observed that the assessment being only provisional, the Show Cause Notice is not maintainable. It was held that the Show Cause Notice issued under Section 28 when the goods have not been finally assessed is bad in law and not maintainable. The relevant Paragraphs reads as under:- "2. The dispute in the present case pertains to the show cause notice issued by the Directorate of Revenue Intelligence unit of the customs department ('D.R.I.' for short) on 22-3-93 in respect of the goods admittedly cleared on provisional assessment basis. 3. By an order-in-original dated 9th February, 1996, the Commissioner of Customs, Mumbai had held that the above show cause notice issued by DRI was bad in law because the goods were prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . 15. The petitioner had imported what is claimed to be slack wax. DRI had initiated an investigation on the suspicion of undervaluation. Such investigation conducted by DRI was commodity specific rather than importer specific. This fact appears from the impugned show cause notice as also the affidavits of the authorities. 16. The records made available to Court establish that, the petitioner had applied under Section 18(1) for the purpose of assessment. Section 18(1) of the Customs Act, 1962 permits the importer, where he is unable to make self-assessment, to make a request to the proper officer for assessment. In the present case, the petitioner had done so. Under Section 18(2) of the Act of 1962, it is the duty of the officer concerned to inform the duty leviable on the goods imported as finally assessed. In the present case, a final assessment of the duty has not happened. Nothing has been placed on record to suggest otherwise. The Customs Authorities have invoked Section 28 of the Act of 1962 without a final order of assessment. Section 28 of the Act of 1962 allows the Customs Authorities to recover duties not levied or short-levied or erroneously refunded. In the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... = 1994 (55) ECR 497] upheld the Tribunal's order wherein it was decided that for price of contemporary imports of identical goods from same manufacturer being higher, declared prices to be disregarded. The judgment of the Hon'ble Supreme Court in the case of M/s. Eicher Tractors Ltd. [2000 (122) E.L.T. 321 (S.C.)] is not applicable to the facts of the present case since this is not a case of discount. 6. Accordingly, we uphold the valuation but set aside the penalties since this is a case of finalisation of provisional assessment." 5.7 In the present case, the Show Cause Notice is issued under Section 18 read with Section 124 of the Customs Act, 1962. There is no invocation of Section 28 for recovery of short paid duty. However there is proposal for recovery of differential CVD. There is no requirement for issuing a Show Cause Notice under Section 18 for finalisation of assessment. At the time of finalisation, the Department is free to look into all factors and finalise the Bills of Entry. The Show Cause Notice has been issued invoking Section 18 and 124 proposing to confiscate the goods, proposing to recover the differential duty and for imposing redemption fine and penalties. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntations have been received seeking clarification on the mechanism for levy of additional central excise duty on unblended motor spirit, particularly as the blending of duty paid motor spirit with duty paid ethanol takes place at depots after clearance from refinery. The difficulty faced by the OMCs is that at the time of clearance of motor spirit from the refinery, the same are cleared as intended for retail sale as blended but they are not able to estimate the quantity that will eventually be sold as unblended. 3. Therefore, to ensure smooth implementation of the differential duty, the following procedures are hereby prescribed in addition to the existing procedures : (i) As per the current statutory provisions, central excise duty shall be paid on motor spirit at the refinery stage. Where the motor spirit is cleared, as intended for retail sale after blending, the manufacturers/ refineries shall remove such motor spirit to the depots/terminals by paying central excise duty as applicable for blended motor spirit. (ii) Where the refinery removes motor spirit as intended for retail sale to the depots for blending after payment of duty as applicable to blended motor spirit, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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