Customs, Excise and Gold Tribunal - Tamil Nadu
Metro Marine Services Pvt. Ltd. And Ors. vs Commissioner Of Customs on 14 August, 2007
Equivalent citations: 2007(123)ECC194, 2007(149)ECR194(TRI.-CHENNAI), 2008(223)ELT227(TRI-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. These appeals have been filed by M/s. Jotun NOF (Singapore) Pte. Ltd., its Indian executives S/Shri B.K. Mukherjee and Dinesh R. Prabhu, M/s. Bharat Marine Company, Chennai, CHA and M/s. Metro Marine Services (P) Ltd., Chennai, C&F agents.
2. The facts of the case are that a consignment of marine paints and thinners was imported by M/s. Jaisu Shipping Co. Pvt. Ltd., in April 1999 per vessel M.V. TIGER PEARL V-700 with the master of the vessel M.T. AL NIMS as consignee. M/s. Bharat Marine Company, Chennai, CHA filed an application on 23/04/99 on behalf of the importer for transshipment of the consignment to Kandla where the vessel M.T. AL NIMS was berthed. The transshipment application indicated that the goods were meant for consumption on board a vessel on foreign run. On receipt of the transshipment cargo by the Assistant Commissioner (Preventive), Custom House, Kandla, the officers of Kandla Custom House discovered that the vessel M.T. AL NIMS was not a vessel on foreign run. Therefore, the importer was asked to pay the duty due when copies of invoices No. 128/99 dated 12.04.99 and No. 128/99A dated 12.04.99 were produced. These were respectively for Singapore $11345.15 and US$ 2912.60. It transpired in the investigation that there was another parallel set of invoices with the same number and date, which had been submitted at the Chennai Custom House while applying for transshipment advice. The bill of lading had described the goods as nine pallets of marine paints and thinners. However, one of the two invoices No. 128/99A had covered Aluminium and Zinc anodes. Visits to the premises of the CHA, the cargo forwarder M/s. Metro Marine Services (P) Ltd., Chennai, who assisted the CHA in documentation for transshipment of imported cargo, M/s. Jaisu Shipping Co. Pvt. Ltd. and Indian executives of M/s. Jotun NOF (S) Pte. Ltd., indicated that the supplier M/s. Jotun NOF (S) Pte. Ltd., Singapore, had raised two sets of invoices, (one showed higher values compared to the invoices furnished to the Kandla Customs), showing the goods as meant for use as ship stores on a foreign going vessel. It was tentatively found by the department that the importer M/s. Jaisu Shipping Co. Pvt. Ltd and the appellants had entered into a conspiracy to import thinners, paints and anodes, evading the import duty due thereon. The importer surrendered the consignment when it was detected in investigation that the documents had been manipulated to evade the appropriate import duty. After issuing show cause notices and after hearing M/s. Jaisu Shipping Co. Pvt. Ltd., it's M.D. Shri Suresh G. Kewalramani and the appellants, the Commissioner Customs, Kandla passed the impugned order.
3. The Commissioner confiscated Marine Paints, Thinners & Anodes under Section 111(m) and 111(n) of the Customs Act, 1962. The Zinc & Aluminium anodes were also confiscated under Section 111(1) of the Act. He imposed the following penalties on the noticees:
(i) Rs. 6,79,360/- (Rupees Six Lakhs Seventy Nine Thousands Three Hundred & Sixty Only) on M/s. Jaisu Shipping Co. Pvt. Ltd., Kandla under Section 114(A) of the Act.
(ii) Rs. 5,00,000/- (Rupees Five Lakhs Only) on Shri Suresh G. Kewalramani under Section 112 (a) & (b) of the Act.
(iii) Rs. 5,00,000/- (Rupees Five Lakhs only) on M/s. Jotun NOF (Singapore) Pte. Ltd., Chennai under Section 112(a) & (b).
(iv) Rs. 2,00,000/- (Rupees Two Lakhs only) on Shri B.K. Mukherjee, Country Manager, M/s. Jotun NOF (Singapore) Pte. Ltd., under Section 112 (a)&(b)
(v) Rs. 3,00,000/- (Rupees Three Lakhs Only) on Shri Dinesh Prabhu, Regional Marketing Manager (Western Region), M/s. Jotun NOF (Singapore) Pte. Ltd., Mumbai Office under Section 112 (a)&(b).
(vi) Rs. 2,00,000/- (Rupees Two Lakhs Only) on M/s. Metro Marine Services, Chennai, under Section 112 (b).
(vii) Imposed penalty of Rs. 50,000/- (Rupees Fifty Thousand Only) on M/s. Bharat Marine Company, Chennai, CHA under Section 112(b) of the Customs Act, 1962.
4. In their appeal M/s. Bharat Marine Company claimed that they had filed the transhipment application as they were informed by M/s. Jaisu Shipping Co. Pvt. Ltd., that the vessel M.T. AL NIMS had been on 'foreign run'. They had filed invoice No. 128/99 dated 12.04.99 for a value of S$ 27053.88. M/s. Metro Marine Services (P) Ltd. claimed in their appeal that the invoice received by them relating to thinners and paints was submitted by them to Madras Custom House. They were not aware of the existence of another set of invoices. The transshipment application was filed for transhipment of nine pallets which included anodes also. They were under the bonafide belief that the consignment was not liable to duty. They prayed that they may be exonerated.
5. M/s. Bharat Marine Company, CHA had filed the transshipment application dated 23/04/99 with the Assistant Commissioner Customs for transhipment of nine pallets of ship stores arrived per vessel MV TIGER PEARL V-700. They believed the instructions of the importer that the consignment was meant for a vessel on foreign run eligible for duty free import (transshipment under Section 87 of the Customs Act). The documents furnished to the Custom house for transshipment of the consignment indicated that the nine pallets transhipped covered also anodes alleged to be suppressed in the declaration. They were not aware of the second set of invoices furnished before Kandla Customs. They were not party to the alleged attempt by M/s. Jaisu Shipping Co. Pvt. Ltd., to evade duty payable on the impugned goods.
6. Shri Dinesh R. Prabhu of M/s. Jotun NOF (Singapore) Pte. Ltd., claimed that he was made to believe that the vessel M.T. AL NIMS was on foreign run and eligible for free supply of imported ship stores. They had no reason to misdeclare the value of the goods in the invoice as value was not relevant as per his understanding of the status of the vessel M.T. AL NIMS on board which the imported goods were meant to be used as ship stores. He prayed that Rs. Three lakhs penalty imposed on him may be set aside. Shri. B.K. Mukerjee of M/s. Jotun NOF (Singapore) Pte. Ltd. has raised the same grounds as Shri Dinesh R. Prabhu and prayed for vacation of penalty imposed on him in the impugned order. He was not involved in the transaction personally or benefited in any way from the transaction. He acted in his official capacity as Country Manager of M/s. Jotun NOF (Singapore) Pte. Ltd. He prayed that the imposition of penalty of Rs. Two lakhs on him in addition to imposition of penalty on his company was not justified. M/s. Jotun NOF (Singapore) Pte. Ltd., has also raised similar grounds as their executives Shri Dinesh R. Prabhu and Shri. B.K. Mukerjee and sought to vacate the penalty of Rs. Five lakhs imposed on it on the ground of bonafide conduct. The non-submission of invoice relating to anodes was a clerical omission on the part of the agent as they were under the mistaken impression that M.T. AL NIMS was eligible for import of duty free stores and there was no need to misdeclare the quantity and value of the goods under import. They prayed that the penalty may be vacated.
7. During hearing, the learned Counsel for the appellants submitted that the format of transshipment application did not require furnishing value of the consignment and that the packing list submitted contained details of all the goods. Therefore charge of misdeclaration by M/s. Bharat Marine Company or M/s. Metro Marine Services Pvt. Ltd. was without basis. The goods were believed to be for use as shipstores not liable to pay import duty and these were to be warehoused at Kandla without assessment as per Section 85 of the Act. He submitted that the finding of misdeclaration by the adjudicating authority against the appellants was without basis. Ld DR reiterated the findings contained in the impugned order.
8. We have carefully considered the case records and the rival submissions. We find that in adjudication the Commissioner confiscated the impugned goods on the ground that the importer had misdeclared the description, quantity and value of the goods imported. In the impugned order, the Commissioner found that Shri M.B. Govindaraj, of M/s. Bharat Marine Company, Chennai, Shri M. Karuppiah and Shri Bairavasundaram of M/s. Metro Marine Services Pvt. Ltd. had transshipped the impugned consignment on the bonafide belief that the same was meant for use on a foreign going vessel. The Commissioner also found that S/Sh. Dinesh Prabhu and B.K. Mukerjee, of M/s Jotun NOF (S) Pte Ltd also had believed that the paints, thinners and anodes had been meant for transshipment to Kandla for use as ship stores on the foreign going vessel M.T.AL NIMS. The Commissioner also recorded a finding in the impugned order that the appellants S/Sh. Dinesh R. Prabhu, B.K. Mukerjee and M/s. Jotun NOF (S) Pte. Ltd., had been misled by M/s. Jaisu Shipping Co. Pvt. Ltd., to believe that the impugned goods had been intended for supply to a foreign going vessel as ship stores. The following are the findings of the Commissioner:
The aforesaid indicate that Transhipment Advice No. 1/99 of Chennai Customs or Paints and Thinners was issued only with a firm presumption that goods were meant for vessel M.T. AL NIMS which is a foreign going vessel. The statement of Shri M.B. Govindraj of M/s. Bharat Marine, Chennai dated 15.06.99 recorded under Section 108 also reveal that, they had filed TSA with understanding that goods covered under TSA were meant for foreign going vessel only. The statement of Shri M. Karuppiah & Shri R. Byrava Sundaram both of M/s. Metro Marine Services, Chennai dated 15.06.99 & 16.06.99 & recorded under Section 108 of the Customs Act, 1962 also reveal that the goods were transshipped with a belief that, goods were meant for foreign going vessel only. I also find that, Shri Dinesh Prabhu, Regional Manager (Western Region) Mumbai in their written submission dated 28.02.2000 has stated that importer had their company believe that goods imported were eligible for duty free import in India. Shri B.K. Mukerjee, the Country manager of supplying firm M/s. Jotun NOF (Singapore) Pte. Ltd., India Branch Office, Chennai in his statement recorded under Section 108 of the Customs Act, 1962 dated 16.06.99 stated that he had presumed that goods under transshipment were being supplied to a foreign going vessel & person, who had negotiated with M/s. Jaisu Shipping Co. Pvt. Ltd., as per his own written submission has stated that he was made to believe that goods are eligible for duty free import. Thus, I find that, all the concerned persons at Chennai have stated that, goods were transshipped for a foreign going vessel M.T. AL NIMS.
...
Further, I find that all the persons related with transshipment from Chennai to Kandla viz. Shri M.B. Govindraj of M/s. Bharat Marine Co., Shri V.M. Karuppaih & Shri R. Byrava Sundaram of M/s. Metro Marine Services, Chennai & even Shri B.K. Mukherjee, Country Manager of M/s. Jotun NOR (Singapore) Pte. Ltd., Chennai, have all interalia stated that goods were transshipped with a understanding that, goods were to be placed on board of foreign going vessel. Shri Dinesh Prabhu has in his written submission dated 28.04.2000 has also stated that, their company were made to believe by M/s. Jaisu Shipping Co. Pvt. Ltd., Kandla that goods supplied were eligible for duty free imports in India. Thus, it is evident from facts & circumstances that, M/s. Jaisu Shipping Co. Pvt. Ltd., Kandla has mislead the supplier that goods were being supplied to a foreign going vessel as a ship stores.
We find from the transshipment application that the imported goods had been transshipped for warehousing at Kandla without payment of duty. The packing list submitted along with the application before Chennai Customs had included all the imported goods including Aluminium and Zinc anodes. We find that in terms of Section 85 of the Customs Act, any goods entered for warehousing in respect of which the importer makes and subscribes to a declaration that the goods are to be supplied as stores to vessel or aircrafts without payment of duty, the proper officer may permit the goods to be warehoused without the goods being assessed duty. In terms of Section 86 of the Act, any stores imported in a vessel or aircraft may be transferred to any vessel or aircraft as stores for consumption therein.
9. From the above statutory provisions, we find that ship stores imported for use on a foreign going vessel need not discharge any customs duty. Commissioner found the conduct of the appellants to be under the bonafide belief that the impugned goods were not liable to discharge customs duty on their import to Chennai/transshipment to Kandla. The appellants had believed that the impugned goods were meant for use on a foreign going vessel. Therefore, the allegation of willful misdeclaration as regards the value and description of the imported goods by the appellants is unsubstantiated. The appellants had no motive to suppress the import of Zinc and Aluminum anodes or the value of the consignment. Therefore, his finding that the impugned goods had been misdeclared and rendered liable for confiscation under Section 111(m), (n) and (1) of the Act by the appellants inviting liability to penalty, is not sustainable. M/s. Bharat Marine Company or M/s. Metro Marine Services Pvt. Ltd. did not declare price of the impugned consignment in the transshipment application as the format of the TSA did not provide for furnishing such information. Moreover penalty on these two firms are imposed under Section 112(b) of the Act. Firms cannot have mensrea and penalty under Section 112(b) cannot be imposed on firms. M/s Jotun NOF (S) Pte. Ltd. acted bonafidely and had not filed a Bill of Entry or transshipment application in respect of the imported goods. Therefore charge of misdeclaration against these appellants cannot stand. Accordingly, we set aside the penalties imposed on the appellants and allow the appeals filed by them.
(Operative portion of the Order pronounced in open Court)