Custom, Excise & Service Tax Tribunal
Tradex Shipping Company Pvt Ltd vs Chennai(Air Port & Cargo) on 28 June, 2024
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
Customs Appeal No. 42426 of 2014
(Arising out of Order in Appeal C. Cus. No. 1460/2014 dated 13.8.2014 passed by
the Commissioner of Customs (Appeals), Chennai)
Tradex Shipping Company Pvt. Ltd. Appellant
No. 24, Bagavandham Street
T. Nagar, Chennai - 600 017.
Vs.
Commissioner of customs Respondent
Airport & Air Cargo Meenambakkam, Chennai - 600 027.
APPEARANCE:
Shri N. Viswanathan, Advocate for the Appellant Shri R. Rajaraman, Authorized Representative for the Respondent CORAM Hon'ble Shri M. Ajit Kumar, Member (Technical) Final Order No. 40764/2024 Date of Hearing : 26.06.2024 Date of Decision: 28.06.2024 The present appeal is filed against Order in Appeal No. 1460/2014 dated 13.8.2014 passed by the Commissioner of Customs (Appeals), Chennai.
2. Brief facts of the case are that the appellant filed a Courier Bill of Entry dated 6.9.2023 through their authorized courier M/s. DHL Express (I) P. Ltd. Chennai declaring the goods as 'Impeller wheel, bearings etc. - ship spares' weighing 30 kilograms and valued at EURO
700. On suspicion, the department called for evidentiary proof on the value declared. The appellant vide letter dated 17.9.2013 informed that they do not have any evidence and requested the department itself to fix a fair value. But subsequently the appellant filed the original invoice in which the value of the goods was shown as EURO 5807.70. 2
C/42426/2014 Besides on verification with the freight certificate the consignment was found to be weighing 41 kilograms which was confirmed by the appellant. The appellant requested for waiving the Show Cause Notice and vide Order in Original dt 07/03/2014, the original authority confiscated the goods with an option for redemption on payment of fine and imposed penalties under sec. 112(a) and 114AA of the Customs Act, 1962. Aggrieved by the said order, the appellant preferred an appeal before Commissioner of Customs (Appeals), who vide the order impugned herein upheld the same. Hence the present appeal.
3. I have heard learned counsel Shri N. Viswanathan for the appellant and Shri R. Rajaraman, learned Authorized Representative for the respondent.
3.1 The learned counsel for the appellant submitted that M/S Deniz, Turkey, appointed them as their Protecting Agent for their vessel MV Samsun. The vessel was awarded through a global tender floated by the Directorate of Shipping, the right to ferry passengers within the Andaman & Nicobar Island. The services of the appellant was limited to sign on and sign off of the crews, inspection of the health of the crew, co-ordination with the port authorities etc., with right to appoint sub-agents. Consequent to the vessel developing some technical snag, the Master of the Vessel contacted their principal abroad for dispatch of spares such as impeller, wheel bearing etc. Considering the urgency involved, the spares were sent from their stock through M/S. DHL Express Courier. The said courier parcel was consigned in the name of the appellant instead of being directly addressed to the master of the vessel without the appellants knowledge or consent. The Courier in 3 C/42426/2014 terms of the regulations filed courier bill of Entry declaring the classification of the goods under CTH 8479 9090 with its value was shown as 700 Euro based as per the information provided to them by the principal. The invoice accompanying the goods also declared "unused spare no commercial value - value for customs purposes only". The customs authorities felt that the value declared as Euro 700 was too low and initiated adjudication proceedings in the matter. Consequent to which the appellant obtained the actual invoice value for the goods and submitted the same to the adjudicating authority apart from explaining the true facts involved. However, the original authority held them guilty of mis-declaration of the value for the goods and confiscated the same under Sec. 111 [m] of the Customs Act after enhancing its value. Redemption of the goods was permitted on payment of a fine of around 50% of the value apart from imposing the penalties under Sec. 112 [a] and 14 AA of the Customs Act. The appeal filed by them was rejected by the 1st Appellate Authority. Hence this appeal. He stated that the import is admittedly of ship spares required for the repair of an ocean-going vessel registered in India during an emergency due to which certain procedural deviations may have occurred. However, the spares were unconditionally exempted from the payment of Customs duties in terms of serial no. 460 of Notification No. 12/2012 Customs 17.03.2012. There was hence no loss of revenue to Govt. and for this reason alone the impugned order merits to be set aside. Moreover, the spares were dispatched without the knowledge of the appellant. Without prejudice when the value of the goods was enhanced, as per the invoice given by the vessel owners, and there was no possibility of any commercial benefits being earned by them 4 C/42426/2014 since the import itself was not for any commercial benefits but done during an emergency, the imposition of the huge and harsh redemption fine and penalty was not justified. He prayed that their appeal be allowed by setting aside the impugned order with consequential benefits.
3.2 The Ld. AR representing Revenue has stated that the violation of the Customs Act was not in doubt in as much as the value was wrongly declared. He also stated that the vessel caried a foreign flag and therefore was not eligible for exemption from duty as per Notification No. 12/2012, having not being registered in India. Hence the confiscation and penalty was justified. He prayed that the order may be upheld.
4. I have heard the rival parties. I find that this case relates to the low valuation of ship spares received through the courier mode, in the name of the appellant who was the Agent for the vessel, during a breakdown of the vessel MV Samsun which required urgent repairs. When Customs asked for a commercial invoice the same was subsequently submitted by the appellant. I find that though there was a technical breach of the Act and Rules there was no intention to evade payment of duty. Nor was the appellant involved in any fraudulent activity that invited harsh penalties. The goods were also statedly exempt from payment of duty as per Notification 12/2012, as the vessel carrying a foreign flag was registered in India during its contract period as per the tender conditions issued by the Directorate of Shipping.
5. Confiscation of goods and imposition of a personal penalty is meant to be remedial and hence coercive in its nature so as to serve 5 C/42426/2014 as a deterrent. It can be imposed for a tax delinquency. However, the amounts imposed in this case are not commensurate with the degree of contravention of law involved. The charge is for a procedural lapse which is technical in nature and happened during an emergency which does not involve an act of intentional duty evasion.
6. The Hon'ble supreme Court, in Hindustan Steel Ltd. vs. state of Orissa case reported in 1978 ELT (J 159) has held at para 7 that;
"Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform statutory obligation is a matter of discretion of the authority to be exercised judicially and on consideration of all the relevant circumstances."
7. In the circumstance I feel that the ends of justice will be served after this long period, by setting aside the fine and penalties imposed by the impugned order in terms of the Hon'ble Supreme Court's judgment cited above.
8. The eligibility of the goods for clearance free of duty as per the conditional exemption, if desired by the importer or his agent, may be verified by the proper officer and decided on merits. The impugned order is modified as above. The appellant is eligible for consequential relief, if any as per law. The appeal is disposed of accordingly.
(Pronounced in open court on 28.06.2024) (M. AJIT KUMAR) Member (Technical) Rex