Custom, Excise & Service Tax Tribunal
Commissioner Of Customs, Goa vs M/S Deepak Fertilizers & ... on 10 October, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. C/16 & 17/07 (Arising out of Order-in-Original CAO No. 107/2005/CAC/CC/PK dated 31.10.2005 passed by the Commissioner of Customs (Adjn), Mumbai). For approval and signature: Honble Shri M.V. Ravindran, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Commissioner of Customs, Goa Appellant Vs. M/s Deepak Fertilizers & Petrochemicals Co. Ltd. Respondent Appearance: Shri S.J. Sahoo, AC (AR) for Appellant Shri Narendra Dave, C.A. for Respondent CORAM: SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) Date of Hearing: 10.10.2016 Date of Decision: 01.11.2016 ORDER NO. Per: M.V. Ravindran
This appeal is filed by the Revenue against Order-in-Original CAO No. 107/2005/CAC/CC/PK dated 31.10.2005 passed by the Commissioner of Customs (Adjn), Mumbai.
2. The issue that falls for consideration is whether the adjudicating authority was correct in dropping the proceedings initiated against the appellant for recovery of customs duty on the goods imported i.e. Phosphoric Acid during the period 1991 to 1995.
3. During the relevant period, the respondent imported Phosphoric Acid for manufacture of fertilizers by availing concessional rate of duty under various Customs Notification No.166/76, 236/89, 121/92, 265/92 & 24/94. It is the case of the Revenue in the show-cause notice that out of total quantity imported approximately 80.78 MTs was shown as short received by the appellant in their Books of Account i.e. stock register. It is also the case of the Revenue in the show-cause notice that the respondent is required to discharge the customs duty as this quantity is not used for manufacturing of fertilizers, hence, benefit of Notifications are not available. Respondent contested the show-cause notice on merits and appeared before the adjudicating authority for personal hearing. The adjudicating authority after considering the clauses of notifications, came to the conclusion that the shortage which is recorded is actually not received in shore tank and was less due to transfer of Phosphoric Acid from master vessel to daughter vessel and daughter vessel to shore tank. He also relied upon the Boards Circular No. 96/2002-Cus dated 27.12.2002 for the purpose of assessment in respect of bulk liquid cargo should be the shore tank receipt quantity and also held that Notification exempted Phosphoric Acid imported for manufacture of fertilizers during the period.
4. Learned AR after taking me through the various records submits that the respondent had not received the quantity of 80.47 MTs Phosphoric Acid, hence he is liable to discharge customs duty and also liable to penalty as notification exempted the goods which are imported for manufacture of fertilizers. It is his further submission that such non-utilization of the Phosphoric Acid came to light only when the investigation was taken over by the departmental officer. Hence, the demand by invoking the extended period and imposition of equivalent amount of penalty is justified. It is his submission that the adjudicating authority has incorrectly dropped the proceedings initiated as adjudicating authority did not consider the notification in its correct perspective.
5. Learned C.A. on the other hand would draw my attention to the fact that Phosphoric Acid being hazadous in nature was transferred to master vessel to daughter vessel and daughter vessel into the shore tank. It is also his submission that the difference between the Ullage report of the master vessel at the port of discharge and the quantity discharge and receipt in the shore tank is negligible. It is his submission that the quantity was not even discharged from master vessel and not received in the shore tank at the port of import. Hence, demand of duty is incorrect. He would rely upon the Circular issued by Board vide No. 96/2002-Cus dated 27.12.2002. He would also rely upon the decision of the Tribunal in the case of Commissioner of Customs, Mumbai vs. Hindustan Petroleum Corporation Ltd. 2000 (121) ELT 109 (Tri) for the proposition that in respect of liquid cargo, the quantity which is pumped into shore tank is to be considered and should be assessed. Any storage and transit loss cannot be taxed as quantity received in shore tank is actual quantity. It is his submission that this view of the Tribunal has been upheld by the Hon'ble Supreme Court as reported in 2002 (142) ELT A280 (SC), wherein bunch of appeals were taken up by the Hon'ble Supreme Court for disposal. He would also rely upon the decision of the Tribunal in the case of Mangalore Refinery & Petrochemicals Ltd. 2002 (141) ELT 247 (Tri-Bang) for the same proposition as also in the case of National Organic Chemicals Inds. 2000 (126) ELT 1072 (T) which has been upheld by the Hon'ble Supreme Court as reported in 2001 (130) ELT A265 (SC).
6. On consideration of the submissions made by both sides and perusal of the records, I find that the issue that falls for my consideration is whether quantity received short by the appellant of Phosphoric Acid during the period 1991 to 1995 needs to be subjected to customs duty by denying the benefit of exemption Notification claimed.
7. On perusal of the records, I find that there is no dispute as to the fact that the shortage indicated in the show-cause notice of 80.78 Mts, including the shortage of 65.301 MTs between the Ullage report of master vessel and the quantity discharged and received in shore tank; difference of 15 Mts. is also on the same ground; I also note that the adjudicating authority has recorded that the respondent had produced evidence for the short receipt of Phosphoric Acid in the shore tank. I have perused the Notification concerned and find that the said notification specifically notification No. 24/94 and earlier one Notifications exempt Phosphoric Acid from customs duty if they are imported for manufacture of fertilizers. In the case in hand, there is no dispute as to the fact that the Phosphoric Acid imported is for manufacture of fertilizers. When there is no dispute as to the short receipt of the Phosphoric Acid in the shore tank, I find that the demand as raised by the Revenue was correctly dropped by the adjudicating authority. The reliance placed by the lower authority on the CBEC Circular No. 96/2002 dated 27.12.2002 is correct proposition of law and has been affirmed by the Hon'ble Supreme Court in the case of Hindustan Petroleum Corporation Ltd. (supra), Mangalore Refinery (supra) and National Organic Chemicals (supra).
8. In view of the facts and circumstances of the case in hand and the authoritative judicial pronouncements, I find that the impugned order is correct and legal and does not require any interference. The appeal of the Revenue is rejected.
(Order pronounced in Court on 01.11.2016) (M.V. Ravindran) Member (Judicial) Sinha 2 Appeal No. C/16-17/07