Custom, Excise & Service Tax Tribunal
The Commissioner Of Customs vs Atlas Shipping Co. Pvt. Ltd on 24 June, 2010
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No.I APPEAL No.C/544/02 (Arising out of Order-in-Original No.CC-10/2001/Adjudication/ACC/dated 15/03/2002 passed by Commissioner of Customs (ACC), Mumbai) For approval and signature: Honble Mr.P.G.Chacko, Member (Judicial) Honble Mr.S.K. Gaule, Member (Technical) ====================================================
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?
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The Commissioner of Customs
(ACC & Import), Mumbai Appellants
Vs.
Atlas Shipping Co. Pvt. Ltd., Respondents
Appearance:
Shri.S.S.Katiyar, SDR for the Appellants
Shri.Brijesh P. Advocate for the Respondents
CORAM:
Mr.P.G. Chacko, Member (Judicial)
Mr.S.K. Gaule, Member (Technical)
Date of hearing : 24/06/2010
Date of decision : 24/06/2010
O R D E R No:..
Per: P.G. Chacko
1. This appeal of the Department is against an order passed by the Commissioner of Customs in a case remanded by this bench. The respondent in this appeal had filed transhipment permit No.384 dated 21/01/92 with the proper officer of Customs at Air Cargo Complex, Sahar Airport, Bombay for the clearance of communication equipment at # 400/- (F.O.B) equivalent to Rs.23,779/- (C.I.F) covered by an Invoice dated 07/01/92 of M/s.Kelvin Hughes Ltd., H.K. and cleared the equipment for the vessel M.V. Kashi Sagar as ship spares. Earlier, the respondent had filed transhipment permit No.11468 dated 11/12/90 for clearance of another communication equipment valued at BEF 308,640/- (F.O.B) equivalent to Rs.2,23,856/- (C.I.F) covered by Invoice dated 07/12/90 of M/s. Sait Marine International, Belgium and cleared the equipment for the same vessel as ship spares. The Collector of Customs issued a show-cause notice dated 12/03/93 to the respondent for recovery of Customs duty of Rs.62,443.65 and Rs.5,87,845.85 in respect of the equipment covered by transhipment permits dated 21/01/92 and 11/12/90 respectively under Section 28 (1) of the Customs Act and for imposing a penalty on the noticee under Section 112 of the Act. This notice alleged that the respondent was not entitled to tranship the equipment without payment of Customs duty as the above vessel was not a foreign-going vessel. It was alleged that the vessel was in coastal run during the material period. The demand of duty and connected proposals were contested by the party. The order passed by the Collector in adjudication of the dispute was challenged before this Tribunal and the same was set aside by this bench in a remand order, no copy of which is available on record. The ld. SDR has, however, shown us a copy of the remand order available in the original file. This bench had vide Order No.C-II/921/99/WZ dated 16/04/99 in Appeal No.C/1972/Bom held that, if the vessel was actually engaged in travel between the drilling rigs at Bombay High and the port of Bombay for loading and unloading operation, she would have been a foreign-going vessel and stores on board would not be liable to duty. Upon an undertaking given by the ld. Counsel to produce evidence to satisfy the Commissioner on the point, the bench remanded the case to Commissioner of Customs for de novo adjudication. Accordingly, the ld. Commissioner passed the impugned order dated 19/03/2001 dropping the proceedings against the respondent.
2. In the present appeal of the Revenue, it is submitted that a vessel, in order to be called foreign-going vessel must satisfy two tests viz., (i) it must be engaged in the carriage of goods and (ii) must be so engaged in carrying goods from one port in India to any port outside India. It is submitted that, for the purposes of Sections 86, 87 and 90 of the Customs Act, India must be understood as including its territorial waters which extends upto 12 nautical miles from the nearest point of low tide along the baseline of India. The appellant further submits that the vessel was plying on coastal run as indicated by the instrument of contract produced by the respondent. It was not necessarily plying along the West Coast only and was sailing and around including the Bombay High and ONGC platforms/rigs. According to the appellant, the ld. Commissioner should have verified the correct fact from the relevant Manifests filed under the provisions of Customs Act. Supplementing the grounds of the appeal, the ld. SDR has referred to the register of inward/outward entry of vessel and has also produced extracts from the register. Our attention has been invited to some of the entries in this document. Referring to these entries, the ld. SDR submits that the vessel M.V.Kashi Sagar was actually plying between the Bombay port and Veraval port (Gujarat) during December 90 and January 91. It is submitted that, as per the above register, the vessel did not go to Bombay high and hence the goods covered by the transhipment permit dated 11/12/90 cannot claim exemption from payment of Customs duty. The ld. SDR has, however, not produced any document for the period covered by the transhipment permit dated 21/01/92. The ld. Counsel for the respondent has reiterated the findings contained in the Commissioners order. He has particularly referred to paragraphs 7 to 9 of the impugned order, wherein there are references to a contract which was considered by the Commissioner. It is submitted that, as per the findings recorded by the Commissioner after examining the terms of the contract, M.V. Kashi Sagar has to be rightly held to be a foreign-going vessel for the purposes of Section 87 of the Customs Act. The ld. Counsel has also pleaded time bar against any probable demand of duty. The ld. SDR, in his rejoinder, points out that the contract in question is dated 04/09/91 and, in any case, it cannot be pertaining to the transhipment of goods obtained by the respondent in December 90.
3 We have given careful consideration to the submissions. In terms of the remand order passed by this bench, it was incumbent upon the importer to adduce evidence to the satisfaction of the Commissioner about the foreign-going nature (if any) of M.V. Kashi Sagar. The importer produced an agreement dated 04/09/91 before the Commissioner, which was an agreement entered into between the importer and M/s. Land & Sea Overtrans India Pvt Ltd. Apparently, by this agreement, M/s. Land & Sea Overtrans India Pvt Ltd. chartered M.V. Kashi Sagar for trading activities. The trading limits shown in the agreement were Indian Coasts not mainly West Coast of India, including Bombay High and other ONGC platforms, rigs, etc., for carriage of cement bags and dry cargo only with loading and unloading at customary jetties and ports. After a perusal of this agreement, the ld. Commissioner found one of the submissions of the party to be factually incorrect. The party had pleaded that there was an agreement between them and ONGC. The Commissioner further inferred that the vessel had been chartered for trading on Indian Coasts including the Bombay High and ONGC platforms/rigs. The ld. Commissioner recorded a clear finding to the effect that the Charterers were plying the vessel for ONGC oil rigs at Bombay High. As the Bombay High was beyond the territorial waters of India, the ld. Commissioner classified it as foreign-going vessel under Section 2 (21) of the Customs Act, and accordingly granted the benefit of duty-free consumption of the ship spares in question. It is seen from the agreement that the vessel could be plied not only in the coastal waters of India but also at the Bombay High beyond the territorial waters. The question is whether M.V. Kashi Sagar actually sailed between the Indian territorial waters and Bombay High during the material period. It would seen from the document produced from the ld. SDR that, during the months of December 90 and January 91, the vessel was plying between Bombay port and Veraval port in Gujarat. In the absence of documentary evidence to the contra from the respondent, we have got to accept the evidence adduced by the department. In respect of the goods covered by the transshipment permit dated 21/01/92, there is no evidence adduced by the respondent to show that the vessel has actually sailed between the Indian territorial waters and Bombay High during the material period. As we have already noted, the burden of proof was on the importer, which has not been discharged successfully by them. Anything contained in the agreement cannot be taken in its face value as evidence of the vessel having sailed between the Indian coastal waters and Bombay High. In the result, M.V. Kashi Sagar is not liable to be classified as foreign-oing vessel for the purpose of Section 87 of the Customs Act, and consequently the respondent will have a duty liability. The question now is whether the demand of duty raised in the show-cause notice is time-barred or not. We have seen a copy of the show-cause notice, which did not invoke the proviso to Section 28 (1) of the Customs Act. Admittedly, the demand of duty is for a period beyond the normal period of limitation prescribed under Section 28 of the Customs Act. In the result, we have to hold that the demand of duty is time-barred. The Revenues appeal is accordingly dismissed.
(Dictated in Court) (S.K. Gaule) Member (Technical) (P.G.Chacko) Member (Judicial) pj 1 5 2