Custom, Excise & Service Tax Tribunal
M/S. Indian Oil Corpn.Ltd vs Commr.Of Customs (Port), Kolkata on 10 November, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Customs Appeal No: C/261/10
(Arising out of the Order-in-Original No.KOL/CUS/PORT/22/2010 dated-07/05/2010 passed by the Commissioner of Customs (Port), Kolkata)
M/s. Indian Oil Corpn.Ltd.
APPELLANT(S)
VERSUS
Commr.of Customs (Port), Kolkata RESPONDENT(S)
APPEARANCE Sri S. Santra, Chief Manager (Taxation) FOR APPELLANT(S) Sri K. C. Jena, A.D.C.(A.R.) FOR THE RESPONDENT(S) CORAM:
SHRI P.K. CHOUDHARY, HONBLE JUDICIAL MEMBER DATE OF HEARING:10/11/2016 Date of Pronouncement:07.12.2016 FINAL ORDER NO. FO/A/76245/2016 Per SHRI P.K. CHOUDHARY M/s. Indian Oil Corporation, the appellant herein imported Superior Kerosene Oil (SKO). The appellant was designated as the sole canalising agent for the import of crude petroleum product in line with import export policy of the Govt. of India on the basis of requirements as projected by the Oil Coordination Committee. I.O.C. on payment of appropriate duty as applicable, through ex bond bill of entry, handed over the product to Bharat Petroleum Corpn. Ltd. (BPCL) in accordance with the strict guidelines provided by Oil Coordination Committee. At the time of such removal of SKO, duty was paid availing the notification for ultimate supply through PDS distributor. BPCL was fully aware of the purpose of import of SKO, handed over to them in line with OCL directives for ultimate sale through PDS. I.O.C. is a major canalising agent as per the policy of the Govt. of India and the goods handed over to BPCL was on sale basis. As the inter company transaction was on sale basis, there was no control of the subject goods handed over to BPCL by IOCL. Once the imported SKO was sold to BPCL with clear purpose, it becomes the sole responsibility of BPCL to make use of the same only through PDS supply. The Adjudicating Authority confirmed the demand of Rs.9,78,816.00 and appropriated the said amount as deposited by M/s.IOCL. It has also confiscated the goods and imposed redemption fine of Rs.2,00,000/- and penalty of Rs.9,78,816/- on M/s.BPCL. A further penalty of Rs.1,00,000/- was imposed on the appellant under Section 112(a) of the Customs Act, 1962, which is the subject matter of the present appeal.
2. Sri S. Santra, Chief Manager (Taxation) of Indian Oil Corpn. Ltd. appearing on behalf of the appellant made the Bench go through para 35 of the Order-in-Original wherein the Ld. Commissioner has observed that:
therefore it is a fact on record that BPCL was aware that the subject SKO consignment were cleared without payment of Customs duty under the said Customs exemption notification and the benefit of exemption of duty was extended on the condition that the goods were to be sold only through PDS. therefore in respect of the quantity of imported SKO cleared under the subject Customs exemption notifications and received by BPCL from IOCL, the concerned person becomes BPCL who possessed the goods and ultimately dealt with the imported goods and thereby becoming the person concerned who is chargeable with duty or interest and thus being liable to pay duty etc. Therefore, it is clear that BPCL wilfully suppressed such sale of imported SKO other than PDS before Customs with intent to evade duty. Hence, proviso to Section 28 of Customs Act, 1962 and Section 114A of the Customs Act, 62 were rightfully invoked in the Show Cause Notice for realizing the duty evaded and for imposition of penalty on BPCL. The Ld. Representative of the appellant company argued that on the basis of the admitted facts, BPCL is solely responsible for payment of duty and any interest thereof and any penalty in this regard. Regarding the imposition of penalty, he argued that once the goods sold to BPCL in line with OCL directives to make use of the subject imported SKO meant for PDS supply, the IOCL being a canalising agent only cannot be made responsible and liable to penalty under Section 112(a) as such and the same is not tenable. There is no such obligation or liability, because in the law it will not be alleged or held that there was any omission or commission on the part of the appellant which made it liable of the penalty under Section 112 of the said act.
3. The Ld. A.R. for the respondent reiterated the findings of the adjudicating authority. He has relied on the decision of the Tribunal in the case of ShivkripaIspatPvt. Ltd. Vs. Commr. of Central Excise & Customs, Nasik-2009 (235) ELT 623 (Tribunal larger bench) which was actually upheld by the Bombay High Court and he has also relied on Commr. of Customs, Amritsar Vs. Raja Impex (P) Ltd.-2008 (229) E.L.T. 185 (P&H).
4. I find that there is no material available on record that M/s.IOCL, the appellant herein, had any knowledge of selling of SKO by the BPCL, other than PDS. In other words, it is evident that the M/s.IOCL sold the goods to BPCL in compliance of the conditions of the Notification. It is noted that M/s.IOCL had already paid the duty, which was appropriated by the adjudicating authority. In such situation, the imposition of penalty on the appellant is in my view, unjustified.
5. In view of the above discussions, the penalties imposed on M/s.IOCL is set aside and the appeal filed by the appellant is allowed to that extent.
(Pronounced in the open court on 07.12.2016.)
SD/
(P.K.CHOUDHARY) MEMBER (JUDICIAL)
KB/
Customs Appeal No: C/261/10
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