Customs, Excise and Gold Tribunal - Delhi
Jindal Drilling And Ind. Ltd. vs Collector Of Customs on 3 December, 1999
Equivalent citations: 2001(130)ELT780(TRI-DEL)
ORDER
K. Sreedharan, J. (President)
1. Show cause notice dated 12-5-94 was issued by the Customs authorities to the appellants herein proposing to impose duty on materials stated to have been unauthorisedly removed from the rigs. Those stores which were removed were sought to be confiscated under Section 111 of the Customs Act and penalties under Section 112 imposed. On receipt of the notice, the appellant submitted detailed objections, inter alia, contending that the stores received from the rigs were kept in Nhava base, that they were moved to the mainland for effecting repairs and that they were received back at Nhava base and thereafter sent to the rigs for use in the rigs. Such stores were not liable to duty under the Customs Act. They also disputed the action of the department in imposing duty and about the value of the scrap sold by them.
2. After considering the objection raised by the appellant, Commissioner of Customs by order-in-original No. 59/97 dated 15-10-97 imposed a penalty of Rs. 12,50,000/- under Section 112(a) and penalty of Rs. 50,000/- on ONGC under Section 112(b) of the Act. Appellants were also directed to pay duty of Rs. 2,42,52,866/- as per Annexures A & B attached to the said order. Appellant challenges the above decision.
3. The main argument advanced by the ld. Counsel representing the appellant is that Commissioner went wrong in imposing duty on the stores which were taken out of Nhava base for repair and were actually returned to the base. Only in respect of those stores, if any, which were not returned to the Nhava base could duty be imposed. He also disputed the duty imposed on the scrap sold by the appellant without accepting the value shown in the invoice. We proceed to deal with these arguments herein below.
4. We heard the ld. Counsel representing the appellant and ld. DR. We perused the records.
5. It is common case that stores imported by the appellant for use in rigs belonging to them and operated for ONGC is not liable to customs duty. Stores used in the rigs are sometimes brought back to Nhava base for repair or reconditioning. Goods imported for use in the rigs were also stored in Nhava base. Goods that were so stored in Nhava base cannot be subjected to payment of customs duty. In the course of business transactions of the appellant, it so happens that some of these stores have to be taken out of the base to the mainland for effecting repairs or carrying out reconditioning. After repair or reconditioning, it will again go back to the base for storage or for onward transmission to the rigs. Once the goods which are taken out for repair to the mainland comes back to the same base, no duty can be imposed on them. This fact is virtually conceded by the Commissioner in the impugned order wherein he observes, "I observe that whenever evidence has been tendered to the effect the repair goods were taken back to the rigs, the department has given the benefit to the notices." This observation was not given its full merit while passing the impugned order. If the goods which were taken out of Nhava base came back to the base, duty liability will stand cancelled. It was not necessary to see whether such goods were sent to rigs for use or not.
6. It is the practice of the appellant to bring the stores from rig to Nhava base. Goods in the Nhava base are under the supervision and control of ONGC. If any stores was to be taken out of Nhava base to the mainland for repair, it could be so done against gate passes issued by ONGC. In other words, without the gate pass issued by ONGC the appellants were not in position to take out even a single item to the mainland. From the gate passes it can thus, be ascertained how many stores or what type of stores were taken out of Nhava base. Those stores taken out after carrying out the repairs and reconditioning are returned to the base itself. On such return, cargo manifest or delivery challan will be shown to the CISF personnel who were guarding the Nhava base. On verification of those documents with the description of the article with the article, they made necessary endorsements regarding the receipt of them in the base. So the goods taken out from the base under gate passes are received back in the base with endorsements of CISF personnel in cargo manifest or delivery challan. In other words, when the gate pass tallies with the cargo manifest or delivery challan endorsed by CISF, goods which were taken out of the base must be found to have been received back at the base. After the goods reach back the base, the Customs authorities are not entitled to impose any duty on those stores. The Customs authorities are not to follow those stores thereafter to see whether they were in fact used in the rigs. In this view of the matter, we find that many a number of stores on which duty has been cast by the impugned order are in relation to those which were received back at Nhava base. This action on the part of the adjudicating authority is clearly erroneous. We set aside that part of the order imposing duty on those stores which were in fact received back in Nhava base as ascertained on the endorsements of CISF personnel. Adjudicating authority is directed to reassess the stores which have not been returned to Nhava base in the manner indicated above and to impose duty on those stores in accordance with law. We make it clear that while imposing the penalty, the appellant should be given reasonable opportunity of being heard in the matter.
7. The second contention raised by the ld. Counsel was in relation to the duty imposed on the scrap sold by the appellant. According to the ld. Counsel the adjudicating authority did not accept the valuation given by the appellant but resorted to his own method of valuation. On going through the records, we find precious little in this argument. We do not interfere with the impugned order on this count.
8. The question of penalty to be imposed necessarily depend on the reassessment of the duty in the light of the observations made earlier in this order. So the quantum of penalty imposed on the appellant is set aside. We make it clear that depending on the fresh conclusion arrived at by the adjudicating authority on de novo consideration, the question of penalty will have to be considered in accordance with law. The question of interest imposed on the appellant must also be reconsidered in accordance with law.
9. The appeal is allowed as indicated above.