Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs Unknown on 14 October, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT-II
Appeal No.E/568 & 569/09
Arising out of OIO No.03/Commissioner/2009-10, dt.16.11.09
Passed by: Commissioner of Customs (Appeals), Jamnagar
For approval and signature:
Honble Mrs. Archana Wadhwa, Member (Judicial)
Honble Mr. B.S.V. Murthy, Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant/s M/s. Essar Power Gujarat Ltd.
M/s. Essar Power (M.P.) Ltd.
M/s. Essar Oil Ltd.
Represented by Shri Vipin Kumar Jain Adv
Shri Vishal Agarwal, Adv
Vs.
Respondent/s CC Jamnagar
Represented by Shri R. Nagar, SDR CORAM:
MRS. ARCHANA WADHWA, MEMBER (JUDICIAL) MR. B.S.V. MURTHY, MEMBER (TECHNICAL) Date of Hearing :14.10.10 Date of Decision:14.10.10 ORDER No. /WZB/AHD/2010 Per: MR. B.S.V. Murthy:
M/s. Essar Power Gujarat Ltd. (the first appellant) imported a consignment of steel structures, boilers, generators etc. for setting up 1200 Mega Power Plant in Gujarat. The goods were landed, unloaded and stored at RO-RO/LO-LO jetty at Vadinar Port of Jamnagar. Vadinar Port is notified as a Customs Port under Section 7(a) of the Customs Act, 1962 (the Act) for the purpose of unloading of imported goods and loading of export goods or any class of such goods. However the Commissioner of Customs, Ahmedabad had approved the customs area in Vadinar Port as a landing place for unloading of imported goods namely machinery and equipment (including project imports) imported for Essar Oil Refinery Project and for loading of machinery and equipments imported for Essar Oil Refinery Project under Section 8(a) of the Act. Similarly M/s. Essar Oil Ltd. (the second appellant) were appointed to act as custodian under Section 45(1) of the Customs Act, 1962 only for the purpose mentioned above.
2. On the ground that the goods were landed, unloaded in a place which was not authorized for the purpose by the Commissioner under Section 8 of the Act, proceedings were initiated which has culminated in the impugned order in which the imported goods have been confiscated and an option has been given to the first appellant to redeem the same on payment of fine of Rs.2 crores in the view of confiscation under Section 125 of the Act. Further penalty of Rs.10 lakhs each has been imposed on both the appellants. Similarly in the case of a consignment of boiler parts imported by M/s. Essar Power (M.P) Ltd. (the third appellant) also proceedings on the same ground were initiated which culminated into another order No.4/Commissioner/2009-10 dated 16.11.09/17.11.09. In this order the consignment of boiler parts was confiscated and allowed to be redeemed on payment of fine of Rs.50 lakhs and penalty of Rs.10 lakh each was imposed on the second and third appellant. M/s. Essar Oil Ltd. as a custodian is one of the parties who has been penalized in both the orders impugned before us. The appeals filed by the second appellant have been numbered as C/570/09 and C/595/09. Appeal filed by the first appellant has been numbered as C/568/09 and appeal filed by the third appellant has been numbered as C/569/09. Since the issue involved is common, all the appeals are taken up together and a common order is being passed.
3. Heard both the sides. The learned advocate on behalf of the appellants submitted that Vadinar Port was notified by the Central Government as a Customs Port for import of all goods; the notification issued by the Commissioner under Section 8 of the Act has to be read in harmony with the notification issued under Section 7 and Section 8 is only an aid to Section 7 and cannot be construed to read down the scope and ambit of Section 7 of the Act; in terms of Section 8(a) of the Act Commissioner had the discretion to approve different places for unloading and loading of goods and if no proper place has been approved, goods can be unloaded at any place in the Customs Port; further according to the provisions of Section 8 of the Act, Commissioner has the power only to specify the proper place for loading and unloading and has no power to restrict it to particular goods; once notification has been issued by the Board under Section 7 of the Act specifying the port for unloading of import goods and loading of export goods or any class of such goods, it was not open to the Commissioner to hold that the jetty was a captive jetty of M/s. Essar Oil Ltd. (the second appellant) and only their goods could have been unloaded; this contention sets to naught provisions of Section 7 and the notification issued there under. The conclusion of the Commissioner in the impugned order that until and unless the custodian, the second appellant brings to the notice of the proper officer that it intends to handle all kinds/types of goods and for other importers also, the captive jetty cannot be declared upon suomoto by the departmental authorities for unloading of any type of goods belonging to any importer under Section 8 by issuing a notification; there was no need for any application by the second appellant and after the notification was issued under Section 7, the Commissioner himself should have issued another notification; having acquiesced in the unloading of the goods at Vadinar port by granting permission and supervising the unloading, the department cannot hold that appellants have committed offence; department cannot take advantage of its own omissions and commissions; the Commissioner could also have given post-facto permission and appellants had made a request to the Commissioner for this; since the mistake was contributed to by both the sides, the Commissioner could have granted post-facto permission; notification No.1/2009-10/CCP/Jamnagar which has been issued subsequently has to be held as the one issued with retrospective effect giving effect to the legislative intend of Section 7 of the Act; the rejection of this claim was wrong and since the notification has been issued to give effect to the notification issued under Section 7 of the Act, it has to be necessarily read as retrospective in nature; in any case what has happened is only a procedural violation and no substantive condition has been violated and therefore a liberal treatment was called for and redemption fine and penalties were not warranted. Learned DR reiterated the logic adopted by the Commissioner in the impugned order to come to the conclusion that the goods were unloaded in an unauthorized place and therefore were liable to confiscation and appellants were liable to penalty.
4. We have considered the submissions made by both the sides. Before we proceed, it would be appropriate to reproduce the relevant legal provisions. Section 7 and Section 8 of the Act read as under:
SECTION 7.?Appointment of customs ports, airports, etc. - [(1)] The [Board] may, by notification in the Official Gazette, appoint -
(a)?the ports and airports which alone shall be customs ports or customs airports for the unloading of imported goods and the loading of export goods or any class of such goods;
[(aa) the places which alone shall be inland container depots for the unloading of imported goods and the loading of export goods or any class of such goods;]
(b)?the places which alone shall be land customs stations for the clearance of goods imported or to be exported by land or inland water or any class of such goods;
(c)?the routes by which alone goods or any class of goods specified in the notification may pass by land or inland water into or out of India, or to or from any land customs station from or to any land frontier;
(d)?the ports which alone shall be coastal ports for the carrying on of trade in coastal goods or any class of such goods with all or any specified ports in India.
[(2)?Every notification issued under this section and in force immediately before the commencement of the Finance Act, 2003 shall, on such commencement, be deemed to have been issued under the provisions of this section as amended by section 105 of the Finance Act, 2003 and shall continue to have the same force and effect after such commencement until it is amended, rescinded or superseded under the provisions of this section.] SECTION 8.?Power to approve landing places and specify limits of customs area. The [Commissioner of Customs] may,
(a)?approve proper places in any customs port or customs airport or coastal port for the unloading and loading of goods or for any class of goods;
(b)?specify the limits of any customs area.
5. Initially vide notification No.62-94-Cus(NT) dated 21.11.94 Central Government had notified Vadinar Port as Customs port under Section 7(a) of the Act for the purpose of unloading crude petroleum. Vide notification No.51/97-Cus.(NT) dated 29.09.97, the purpose was notified as for:
A) Unloading of following imported goods namely:
i) Crude petroleum oil
ii) Machinery and equipment (including project imports for Essar Oil Refinery Projects) B) Loading of machinery and equipment imported for Essar Oil Refinery re-project.
6. Subsequently on 10.10.05 Notification No.93/05-Cus.(NT) dated 10.10.05 was issued and the relevant entries were substituted with the following entry:
Unloading imported goods and loading of export goods are any clause of such goods
7. Commissioner of Customs, Ahmedabad by Notification No.3/98(CCP) dated 28.04.98 notified the:
i) RO-RO Jetty
ii) LO-LO Jetty
iii) Barge unloading facility
iv) Back area at the Vadinar port As the landing place under Section 8(a) for unloading imported goods and he also specified the same items which had been specified by the Central Government in the Notification No.51/97-Cus.(NT) dated 29.09.97 and also appointed Essar Oil Ltd. as custodian.
8. In these cases the consignments were received and unloaded in March/April at Vadinar Port and on finding that the notification issued by the Commissioner did not cover the items imported for landing at Vadinar Port, appellants wrote a letter to the Commissioner seeking ex-post-facto permission on 21.04.09. However without waiting for a decision on the letter, goods were seized and show cause notice was issued. Subsequently the Commissioner issued a Notification No.1/2009-10/CCP Jamnagar and Notification No.2/2009-10/CCP both dated 10.06.09 specifying RO-RO Jetty, LO-LO Jetty, Barge unloading facility and the back up area as the landing space for unloading of imported goods and loading of export goods or any class of such goods. However the request of the custodian seeking ex-post-facto permission was not considered and the proceedings have culminated into the impugned order.
9. We find considerable force in the submission made by the appellants that after the issue of notification by the Board in 2005, Vadinar Port became a customs port for import of all goods. There is no dispute on this issue. However the learned Commissioner in the impugned order has taken a view that in the absence of a notification by Commissioner after the issue of notification by the Board, the custodian and the appellants should not have landed and unloaded the goods. He has also observed that the custodian should have made an application for issue of a notification under Section 8 of the Act. Goods have been confiscated under Section 111(h) of the Act which provides for confiscation of any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of Section 33 or Section 34 of the Act. According to Section 33 of the Act, except with the permission of the proper officer, no imported goods shall be unloaded and export goods shall be loaded at any place other than a place approved under clause (a) of Section 8 for the unloading and loading of such goods. However Section 111(a) of the Act provided for confiscation of any goods which are unloaded at any place other than a customs port appointed under clause (a) of Section 7 of the Act. In the case of goods which are unloaded in a place other than a port, goods are liable to confiscation under Section 111(a) whereas in the case of goods landed in a place contrary to provisions of Section 33, goods are liable to confiscation under Section 111(h) of the Act. Section 33 empowers the proper officer to give permission even in places other than the one approved under Section 8 of the Act. Therefore what is to be examined is whether the goods were unloaded without the permission of the proper officer. In this case as submitted by the appellant, the proper officer is the Assistant Commissioner/Deputy Commissioner for the purpose of Section 33 of the Act in terms of Notification No.8/08-07/CCP/Jamnagar dated 12.01.07. The learned Commissioner has observed that even though the imported goods have been unloaded under the supervision of the inspector/superintendent of Customs who are the proper officers for this purpose, the permission to unload should have been granted by the Assistant Commissioner/Deputy Commissioner who is the proper officer as per the notification.
10. The sum and substance of the facts reproduced above and the legal position is that entry inwards was granted and permission for unloading was given by officers who were not authorised to do so. As per the notification issued by Commissioner under Section 8(a) of the Act, import of any class of goods was not covered during the relevant period even though a notification had been issued by the Board in 2005. There is no indication in the order-in-original as to whether action taken by the officers who are not authorised to permit landing and unloading was not approved post facto by the Assistant Commissioner/Deputy Commissioner. In fact the appellants applied for post facto approval whereas the proposal for post facto approval should have been placed before the proper officer by the concerned officers also who had exceeded their authority. Further it is also to be noted that the proper officer is not barred from giving permission. When we notice that Section 33 of the Act specifically provides that except with the permission of proper officer no imported goods shall be unloaded, the conclusion is that the proper officer can give permission for unloading of the goods even in a place not approved under Section 8(a) of the Act. Therefore this is a case where there was a notification under Section 7 of the Act issued by the Board specifying Vadinar Port as the port for import or export of any class of goods and the goods were brought, a proper application for entry inwards filed, a proper IGM was filed and unloading was done under proper customs supervision. The only omission was that neither the customs officers concerned nor the appellants noticed that Commissioner had not issued a notification under Section 8 of the Act after issue of notification by the Board under Section 7 of the Act in 2005. In our opinion this was a fit case where ex-post-facto permission should have been granted and matter regularized. If the proper officer was to grant post facto approval, there will be no case against the appellant at all. We find that the learned Commissioner has not taken into account this aspect at all. The fact that the proper officer has the power and in our opinion this was a case where such a power should have been exercised has not been considered by the learned Commissioner at all. His observations in this regard are available in para 12.3 of the impugned order and are reproduced below:
12.3 As regards, the notice No.1s contention that the goods have been unloaded under the supervision of the Customs authorities and that the cargo declaration form filed under Section 31 of the Customs Act, 1962 clearly stated that the goods are imported by the Notice No.1 (i.e. M/s. Essar Power Gujarat Ltd.), I find that importation of goods involves series of procedural steps and compliances, which begin with filing of an IGM and culminates on grant of out-of-customs charge under Section 47 of the Customs Act, 1962 by the officer. Normally when the goods/consignment are being imported, it is quite plausible that the officer stationed at port, to impart alacrity to the process of unloading and importation of goods and in view of policy of liberalization adopted of late, instantly grants permission to unload goods without going into the subtle intricacies or nitty-gritty, especially when the personnel submitting the documents were the same who routinely were submitting the documents for and on behalf of M/s. Essar Oil Ltd. (Noticee No.2) too. Further, the instant case has been detected based on scrutiny of the documents and therefore the supervision or otherwise of the said goods being unloaded on the jetty, would not obliterate the all-vital fact that the goods (i.e. machinery and equipment) were unloaded at Ro-Ro/Lo-Lo jetty wherein contravention of the Notification 03/98(CCP) supra and provisioins of the Act have taken place, in as much as machinery/goods other than for Essar Oil Refinery Project couldnt have been unloaded at the said jetty. Besides, I find that the subject goods were undoubtedly seized before out-of-customs charge was granted by the officer. Therefore just because the goods were allowed to be unloaded by the customs officer, to the personnel who were regularly approaching them for importation, would not undermine or vitiate the charges leveled in the show cause notice that the subject goods, meant for the power project were unloaded at the place not approved for the same.
This apart, I find that the proper officer under Section 33 of the Customs Act, 1962 as notified under Notification 08/2006-07/CCP/Jamnagar dated 12.01.07 is Deputy/Assistant Commissioner of Customs and not be considered to have been undertaken with permission of the proper officer.
Accordingly, looking to all these aspects I find that the provisions of Section 8 and 33 of the Customs Act, 1962 have been violated and thereby the subject goods have been rightly proposed for confiscation under Section 111(h) of the Customs Act, 1962.
11. In view of the fact that proceedings have been initiated and impugned order has been passed without considering the representation made by the appellants for post-facto permission and in view of the fact that Section 33 of the Act provides for permission, we find that the proceedings are pre-mature and should have been initiated only after rejection of the request with valid grounds by the proper officer. We also find considerable force in the argument advanced by the appellants that the grant of permission and supervision of unloading without proper authorization/permission by the proper officer was an omission on the part of Customs Authorities and the ignorance of notification on the part of Customs officers cannot be condoned if the importers and the custodian are to be punished for not knowing the notification and for landing and unloading the consignment.
12. We are not going into other arguments advanced by the learned counsel in view of the fact that we consider the proceedings to be pre-mature and if any proceedings are required to be initiated, the same should have been initiated after considering the representation made by the appellants for ex-post facto permission by the proper officer which could have been given under Section 33 of the Act. In view of the above, the impugned orders cannot be sustained and accordingly the same are set aside with consequential relief to the appellants.
(Pronounced in Court)
(Archana Wadhwa) (B.S.V. Murthy)
Member (Judicial) Member (Technical)
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