Custom, Excise & Service Tax Tribunal
Reliance Industries Limited vs Jamnagar(Prev) on 1 August, 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
West Zonal Bench, Ahmedabad
Appeal No. C/278-280/2010-DB
(Arising out of OIO No. 06/COMMISSIONER/2009-10 dated 16/03/2010
passed by Commissioner of CUSTOMS-JAMNAGAR(PREV))
Reliance Industries Ltd., Atlantic Shipping Pvt. Ltd
& Captain A Thangavel - Appellant
Vs.
C.C - Jamnagar (prev) - Respondent
Represented by:
For the appellant : Shri J.C. Patel, Ms. Shilpa Balani, Advocate For the respondent : Sh. S.N. Gohil, Supdt. (AR) CORAM:
Hon'ble Mr. Ramesh Nair, Member (Judicial) Hon'ble Mr. Raju, Member (Technical) Date of Hearing: 02.07.2018 Date of Decision: 01.08.2018 ORDER NO. A/11624-11626/2018 Per: Raju These appeals are filed by M/s Reliance Industries Ltd., Atlantic Shipping Pvt. Ltd & Captain A Thangavel against confirmation of demand and imposition of penalties.
2. Ld. Counsel for the appellant pointed out that M/s Reliance Industries Ltd. was charterer of the vessel, Atlantic Shipping Pvt. Ltd. were the agents of the vessel and M/s Captain A Thangavel was captain/master of the vessel. He pointed out that on 16/05/2008, the vessel was on Hazira Port, Surat, for discharge of cargo and it was tentatively planned to be sent to Fujairah, Bahrain. On 19/05/2008, M/s RIL instructed the captain of vessel by mail to proceed towards Fujairah after completing the discharge at 2 C/278-280/2010-DB Hazira. The vessel thereafter sailed towards Fujairah. The vessel also obtained certificate from Supdt. of Customs for reversal of said vessel to foreign run vessel from coastal. The vessel further sailed from Hazira on 20/05/2008. For certain reason the vessel was no longer required at Fujairah and therefore, by mail dated 21/05/2008 M/s RIL instructed the master of the vessel to bring the vessel to Sikka. On the same day, i.e. 21/05/2018 Atlantic Shipping Pvt. Ltd. informed the Supdt. Sikka about the expected arrival of the vessel on 22/05/2008 and requested for conversion of vessel from foreign run to coastal run. On 22/05/2008, the vessel arrived in the Sikka port and also received duty free bunker supplied by Adani Enterprises Ltd., SEZ Unit, Mundra. The said bunker was cleared by the said SEZ unit in a shipping bill filed in SEZ office. On 22/05/2008 the vessel was converted to coastal run and inventory of ship bunker was carried out by the Preventive Officer. On 26/05/2008, a bill of entry was filed by M/s RIL in respect of bunkers which were used during the voyage from Hazira to Sikka and duty, provisionally assessed, was paid. The duty free bunker which was received on 22/05/2008, it was claimed, was made use on the foreign voyage of the vessel which was to be later undertaken to Columbo on about 5-6th June, 2008. The provisional assessment of duty of bill of entry dated 26/05/2008 was finalized on 26/06/2018. 2.1. Ld. Counsel pointed that investigation were conducted by recording statements of master of vessel and employee of the agent and manufacturer of M/s RIL. Then a Show Cause Notice demanding duty was issued alleging that they were not entitled to receive duty free bunker as the vessel at the material time was on coastal run from Sikka to Hazira port.
2.2. Ld. Counsel for the appellant argued that in terms of section 86 & 87 of the Customs Act 1962, any imported goods may be transferred to and 3 C/278-280/2010-DB remain onboard any vessel without payment of duty. However, same may only be consumed during the period the vessel is a foreign going vessel. He argued that the manner in which such stores are to be used is provided in section 87. It prescribes no condition that at the time when the stores are received, the vessel should be on foreign run. He argued that the section solely provide the time at which the such stores are to be consumed and there is no restriction on the time when the stores can be received. He also relied on the decision of the tribunal in the case of Jaisu Shipping Company 2009 (234) ELT 469 which was upheld by Hon'ble high Court of Gujarat reported in 226 ELT 347 Gujarat. He argued that in identical facts, benefit was granted in the case of Jaisu shipping co. Pvt. Ltd. and the ratio of the said judgments is applicable to the instant case also. He argued that there is no finding in the instant proceedings to show that the duty free bunker received was consumed during the coastal run. He, further argued that the revenue has wrongly relied on board's circular no. 58/97 as the same cannot override the decision of Hon'ble Gujarat High Court. He argued that board's circular provides for payment of duty only if stores consumed during coastal run. He argued that in the instant case the vessel had enough quantity of duty paid bunker for consumption during the coastal run and hence, no duty was required to be paid only on the bunker received on 22/05/2008 which was not consumed in the coastal run. 2.3 He further argued that the Show Cause Notice has been issued on 16/09/2009 and therefore is barred by limitation. He argued that the master of the vessel had informed the Supdt. of Custom, Sikka of diversion of voyage to Sikka instead of Fujairah on the same day and before the duty free bunker was received by them. In these circumstances extended period cannot be invoked. He further argued that section 28 of the Custom Act have can have no application for demand of duty for goods removed from 4 C/278-280/2010-DB SEZ units. He further argued that in the aforesaid circumstance, no penalties can be imposed.
5. Ld. AR relied on the impugned order. He pointed out that Atlantic Shipping Company had issued No Objection Certificate dated 16/05/2008 to M/s Adani Enterprises and certified that the vessel is on foreign run. He argued that it showed that even on 16/05/2008, the appellants were aware that the vessel would be at Sikka port on 22/05/2008. He further argued that the master of the vessel also vide requisition dated 22/05/2008 requested the installation manager of the Adani Enterprises Ltd to supply the bunker certifying therein that the vessel is on foreign run. He argued that from the record it is clear that when this declaration was given, the vessel was not foreign run but on the coastal run.
6. We have gone through rival submissions. We find that the Hon'ble High Court of Gujarat in the case of Jaisu Shipping Company (supra) has upheld the decision of the Tribunal. In the said case the facts were as follows:
The relevant facts in brief are as follows :
(a) The vessel was Tug M.T. Ruby-I brought to Kandla from a foreign country in 1997.
(b) The vessel came on chartered basis and was ultimately sailed out of India in November, 1999.
(c) A consignment of goods which arrived from Osaka, Japan with the declared CIF value of Rs. 1,96,711 was allowed to be cleared by the Assistant Commissioner, Air Cargo, Mumbai cleared without payment of duty during May, 1999 as ships stores and permitted transshipment with permission to be taken to M.T. Ruby-I at Kandla.
(d) The Customs authorities at Kandla took the view that the vessel during the relevant time is not a foreign going vessel and therefore, the goods are not eligible for duty free transshipment from Mumbai and the goods were confiscated by the original authority and offered redemption on payment of fine of Rs. 60,000/-. After denying the benefit of Sections 86(2) and 87 of Customs Act, 1962, duty was 5 C/278-280/2010-DB demanded. He also imposed penalty on the appellant company and on Shri Suresh G. Kewalramani, the other appellant. Commissioner (Appeals) upheld the order of the Assistant Commissioner.
And the decision was as follows:
6. We have carefully considered the rival submissions. The receiving of the materials in April, 1999 to get the vessel repaired and prepared for its onward voyage in November, 1999 appears to be reasonable. There is no finding that the materials were consumed while the vessel was in Kandla Port. Considering that the vessel has finally gone out of the country and considering that the transshipment permission was validly given by the Mumbai Customs authorities, the demand of duty and penal action taken by the Kandla Customs authorities are not sustainable.
From the above it is apparent that the Tribunal held that Status as vessel, whether coastal or foreign run, on is not relevant at the time when the duty free goods are received. The only requirement is that the duty free goods should be consumed when the vessel is on foreign run. In the instant case, there is absolutely no evidence to produced to show that the said bunker was used while the vessel was on coastal run. In these circumstances no violation of section 86 & 87 of the Customs Act has been made out by Revenue. The appeals are thus allowed.
(pronounced in the open Court on 01.08.2018)
(Raju) (Ramesh Nair)
Member (Technical) Member (Judicial)
DS