Custom, Excise & Service Tax Tribunal
Devraj M Salian vs Commissioner Of Customs (I) on 5 September, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.C/86916, 86917, 87165, 87166, 87385, 87386/13 (Arising out of Order-in-Original No.21/2013/CAC/CC(I)/AB dated 15/02/2013 & 32/2013 dated 07/03/2013 passed by the Commissioner of Customs (Imports), Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Ramesh Nair, 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 :Yes 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? ========================================
Devraj M Salian Falcon Cargo Services (I) Pvt. Ltd., Hind Offshore Pvt.Ltd., Hasan Abdul Kadir Mapari Appellants Hind Offshore Pvt.Ltd., Hasan Abdul Kadir Mapari Vs. Commissioner of Customs (I) Respondent Mumbai Appearance:
Shri.V.Sridharan, Sr. Advocate Shri T.Vishwanathan, Advocate Ms. Lakshmi Menon Advocate for appellant Shri.K.M.Mondal, Spl. Consultant, for respondent CORAM:
Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) Date of Hearing : 05/09/2014 Date of Decision : 05/09/2014 ORDER NO Per: P.R.Chandrasekharan
1. There are six appeals arising out of Order-in-Original No.21/2013/CAC/CC(I)/AB dated 15/02/2013 & 32/2013 dated 07/03/2013 passed by the Commissioner of Customs (Imports), Mumbai. In the impugned orders, the learned adjudicating authority has classified the Tug/Supply Vessels Sea Cheetah and Sea Venture imported by the appellant, M/s.Hind Offshore Pvt. Ltd. vide Bills of Entry No.891148 dated 20/04/2009 and 867537 dated 23/10/2008, respectively, under CTH 8904 and confirmed differential duty demands of Rs.9,08,68,858.87 and Rs.62,88,264/- respectively by invoking the extended period of time. Further he has imposed the following penalties.
S.No. Name of the person on whom penalty imposed Penalty (in Rs.) under Section of Customs Act 114A 112(a) 114AA Vessel Sea Cheetah 1 Hind Offshore Pvt. Ltd.
9,08,68,858.87
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2Mr. Hasan A Kadir Mapari, Manager (Operations) of Hind Offshore
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5 lakhs 5 lakhs 3 M/s Falcaon Cargo Services (I) Pvt. Ltd.,CHA
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5 lakhs 10 lakhs 4 Mr. Devraj M Salian, Executive (Operations) of CHA firm
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5 lakhs 5 lakhs Vessel Sea Venture 1 Hind Offshore Pvt. Ltd.
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50 lakhs 50 lakhs 2 Mr. Hasan A Kadir Mapari, Manager (Operations) of Hind Offshore
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10 lakhs 10 lakhs Aggrieved of the same, the appellants are before us.
2. The facts relating to the case are briefly as follows:
2.1 M/s.Hind Offshore Pvt. Ltd., the importer had imported two vessels, namely, Sea Cheetah and Sea Venture vide Bills of Entry No.891148 dated 20/04/2009 and 867537 dated 23/10/2008 respectively by declaring them as one used supply vessel Sea Cheetah with all standard equipments and one used supply vessel Sea Venture. They had filed documents such as invoices, packing list, bill of lading, sale bill and the Indian Register of Shipping certificate at the time of assessment. The vessels were examined by the Customs on first check basis and thereafter, the goods were assessed to duty as per the claim of the appellant under CTH 89019000 as vessels for the transport of goods and persons. Subsequently, the department came to know that the vessels imported by the appellant were anchor handling Tug-cum-Supply Vessels, meriting classification under CTH 8904 as tugs and liable to duty accordingly. Therefore, show-cause notices dated 13/03/2012 and 28/03/2012 were issued for re-classification of the vessels by invoking extended period of time and demanding differential duty and proposing imposition of penalties. These notices were adjudicated by the impugned order and the proposals were confirmed. Hence, the appeals.
3. The learned Counsel for the appellants made the following submissions:
3.1 The appellant had submitted the invoices, packing lists, bill of sale and certificates from Indian Register of Shipping, when the goods were originally imported and assessed. In the bill of sale and the surveyor certificate attached thereto and also in the certificate issued by the Indian Register of Shipping, the goods were described as tug/supply vessel. Therefore, there is no mis-declaration on the part of the appellant.
3.2 Further, the vessels were boarded by the Customs (Preventive) Staff and were examined and thereafter, the assessments were done. Therefore, the question of invoking extended period of time for confirmation of duty demand would not arise at all as there is no suppression or mis-declaration of facts on the part of the appellant.
3.3 The learned Counsel submits that the appellant had imported anchor handling tug cum supply vessels earlier also and vide order-in-appeal No.34/2006/MCH/AC/VB/05 dated 19/01/2006, the appellate authority had upheld the classification of Anchor handling tug-cum-supply vessel under CTH 89019000, eligible for duty exemption under Notification No.21/02-Cus dated 01/03/2002. The order of the appellate authority had not been challenged by the Revenue and had, thus, become final. Therefore, the appellants were under the bonafide belief that anchor handing tug/supply vessel imported by them is correctly classifiable under CTH 8901.
3.4 The learned Counsel further submits that the vessel imported by the appellant is a supply vessel with anchor handling capabilities. A supply vessel by its very nature is capable of carrying goods and passengers. In addition, it can also undertake other functions such as anchor handling, towing, etc. Merely because the vessels under import have the capability of anchor handling /towing, it does not cease to be a supply vessel. In the present case, the Sea Cheetah has a capacity of transporting 21 persons including a crew of 13. Further, it has a cargo capacity of 851 M3 for fuel oil, 168 M3 for portable water, 885 M3 for drill water, 600 tonnes of deck cargo and bulk material capacity of 184 M3. Therefore, it is clear that the vessel is capable of carrying cargo. Similarly in the case of Sea Venture, the said vessel also has cargo carrying capacity and passenger carrying capacity and therefore, it is not a mere tug and is in fact a high breadth vessel.
3.5 Reliance is placed on the decision of this Tribunal in the case of Hind Offshore Ltd. vide final Order No.A/101-107/13/CSTB/C-I dated 07/11/2012 wherein it was held that supply vessels would merit classification under CTH 8901. The ratio of said decision would apply to the facts of the present case. Reliance is also placed on the decision of this Tribunal in the case of CGU Logistics Ltd. [2011 (274) ELT 75] wherein a vessel for trans-shipment of cargo was classified as a cargo vessel. As per the Dictionary Shipping Terms published by Informa, London (5th Edition), a supply ship is defined as ship used in Off-shore drilling Industry as well as carrying out the normal duties of delivering supplies; her duties include towing, anchor handling, survey work and rescue work. In the light of these submissions, it is pleaded that the impugned goods are rightly classifiable under CTH 8901 and consequently, the demands for differential duty, liability to confiscation and imposition of penalties on the importer and its officials do not sustain.
3.6 The learned Counsel for the CHA and its official submits that the charge of abetment and evasion of duty by the CHA does not arise as the CHA has filed the bill of entry based on the documents given to him. Further, the vessels were boarded and examined before assessment was done and the classification claimed by the appellant was approved by the assessing officer. In these circumstances, there cannot be any levy of penalty on the CHA or its official on the ground of aiding or abetting.
4. The learned Special Consultant appearing for the Revenue was asked to argue on the time bar aspect pleaded by the appellant before commencing arguments on merits, inasmuch as the vessels had been examined by the Customs Officers before they were assessed and therefore, there could not have been any suppression on the part of the appellant. The learned Consultant submits that in the case of Sea Cheetah, the demands have been made under Section 28 and therefore, the question of time limit would arise whereas in the case of Sea Venture, the vessel was seized and provisionally released and subsequently, the vessel was held liable to confiscation under Section 111 (m) . On confiscation, option to pay fine in lieu of confiscation was granted under Section 125 (1). In a case where goods are confiscated and allowed to be redeemed, the person who is liable to pay fine is also liable to discharge the differential duty liability. Since no time limit has been prescribed for demand of duty under Section 125 (1), the differential duty demand in the case of Sea Venture would sustain. Even in respect of Sea Cheetah, it is his contention that the importer appellant had misdeclared the goods and had not furnished the full details and therefore, invocation of extended period of time is justified.
5. We have carefully considered the submissions made by both the sides.
5.1 First we take up the issue of time limitation. In the present case, we find that at the time of original importation and assessment, the appellant had furnished invoices, packing lists, bill of sale and certificate from the Indian Register of Shipping. Further the goods were also examined on first check basis by the customs authorities by boarding the vessel. Therefore, it cannot be said that the Customs officers did not know what the goods under import were, that is, whether it is only a mere supply vessel or it is also capable of anchor handing. Further, the certificate issued by the Indian Register of Shipping clearly described the class of the vessel as tug/supply vessel. In other words, the towing capability of the vessel was clearly indicated in the certificate issued by the Indian Register of Shipping. Further in the bill of sale which was submitted along with import documents, it is clearly shown that the vessel is an anchor handling tug /supply vessel. Therefore, it cannot be said that the assessing authority did not know the nature of the vessels under importation. Even in the Lloyds register which is mentioned in the Indian Register of Shipping, the vessel is shown as offshore tug/supply ship. Therefore, if the department wanted to classify the vessel under CTH 8904, they should have done the same when the bills of entry were filed along with other import documents for the purposes of assessment which they failed to do. Further, it is seen that in the appellants own case vide order-in-appeal No.34/2006 dated 19/01/2006, the lower appellate authority had classified the anchor handling tug vessel under CTH 89019000 as a cargo vessel. This order of the lower appellate authority was not challenged by the Revenue and had attained finality. In these circumstances, the appellant could have entertained a bonafide belief that the goods under importation merited classification under CTH 8901.
5.2 The Honble Apex Court in the case of Northern Plastics Ltd. [1998 (101) ELT 549 (SC)] had held that if the importer makes a declaration correctly and fully in the bill of entry, and lays claim to some exemption, whether admissible or not, it is a matter of belief of the assessee and does not amount to misdeclaration. In such a situation, the provisions of section 111(m) relating to confiscation are not attracted. Similarly in the case of Uniworth Textiles Ltd. 2013-TIOL-13-SC-CUS, the honble apex court held that mere non-payment of duties is not equivalent to collusion or willful mis-statement or suppression of facts. Interpreting the provisions of section 28 of the Customs Act, the honble apex court held that the main body of the section contemplates ordinary default in payment of duties and leaves cases of collusion or willful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. The honble apex court further held that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. In the present case we find that the appellant had furnished the requisite particulars as envisaged under the law at the time of assessment of the goods. The vessels were also boarded and examined by the Customs and therefore, it cannot be contended that the appellant had suppressed any information. Since the show-cause notices have been issued only in 2012 in respect of the imports made in 2008 and 2009, the demands are clearly time barred and therefore, the question of confirming differential duty would not arise at all. As regards the argument that since one of the vessels were seized and confiscated and allowed to be redeemed, there is no time limit for demand of duty, we do not subscribe to this view. In the present case, the goods were imported by filing the bill of entry and submitting all the necessary documents and the goods were assessed to duty as per the classification claimed by the importer. Once the assessment has been completed by the customs under section17 of the Customs Act, the demand for differential duty on account of short levy or non-levy has to be made under section 28 only and not under any other provision. As regards the payment of duty under section 125 at the time of redemption, the same would arise when no assessment had been done earlier. In any case, in the present case the goods have been confiscated under section 111(m) of the Customs Act. Since we have already held that there was no mis-declaration on the part of the appellant and confiscation under the said section is not justified, the question of giving any option of redemption or payment of duty at the time of redemption would not arise at all. Consequently, the penalties imposed on the appellant and its official are also not sustainable in law.
5.3 As regards the penalties imposed on the CHA, we find no justification for such an imposition. The CHA had acted based on its understanding of the law and on the basis of the documents given, had classified the vessels under CTH 8901. We also note that the CHA had specifically asked for assessment on first check basis, that is examination first and assessment later which was also acceded to. In these circumstances, the CHA could not be said to have aided or abetted evasion of duty by the importer. Therefore, imposition of penalties on the CHA and its official is clearly unsustainable in law.
5.4 Since we are allowing the appeals on account of time bar, there is no need to examine the other issues raised with regard to the classification.
6. In sum, we allow the appeals by setting aside the impugned orders with consequential relief, if any, in accordance with the law.
(Operative part of the order pronounced in the Court) (Ramesh Nair) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 11