Custom, Excise & Service Tax Tribunal
Cc, Trichy vs M/S. Nagarjuna Oil Corporation Ltd on 11 November, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI C/141/2012 (Arising out of Order-in-Appeal No. 6/2012 (P) dated 25.04.2012, passed by the Commissioner of Customs and Central Excise (Appeals), Chennai). CC, Trichy : Appellant Vs. M/s. Nagarjuna Oil Corporation Ltd. : Respondent
C/323-324/2012 & C/40701/2015 (Arising out of Order-in-Appeal No. 19/2012 dated 24.07.2012, passed by the Commissioner of Customs and Central Excise (Appeals), Trichy, OIA No. 754/2012 dated 27.07.2012, passed by the CC (Appeals), Chennai, and Interim Order No. 1/2013 (Cuddalore) (Cus.) dated 10.12.2013, passed by the Commissioner of Central Excise (Appeals) Chennai).
M/s. Nagarjuna Oil Corporation Ltd. : Appellant
Vs.
CC, Trichy : Respondent
Appearance
Shri R. Parthasarathy, Adv., (assessees)
For the applicant
Shri P.R.V. Ramanan, Spl. Counsel
Ms. Indira Sisupal, AC (AR)
For the respondent
CORAM
Honble Shri R. PERIASAMI, Technical Member
Honble Shri P.K. CHOUDHARY, Judicial Member
FINAL ORDER No. 41672-41675 / 2015
Date of Hearing/Decision:
05.11.2015 and 11.11.2015
Per: R. Periasami,
All the three assessees appeals and one Revenue appeal are taken up together for disposal, as the issues involved in these appeals are common in nature.
2. The brief facts of the case are that the appellant M/s. Nagarjuna Oil Corporation Ltd., Chennai, imported a second hand plant and machinery from Germany for setting up of a six million tonne refinery plant near Cuddalore. The appellant entered into agreement dated 13.02.1996 with UHDE GmbH, Germany for supply of old refinery as is where is condition. The appellants imported the said equipments from a Mobile Refinery UHDE, GmbH, Germary in CKD condition covering 123 Bills of Entries in various consignments through Chennai, Pondicherry, Karaikal, and Cuddalore ports.
3. Appeal No. C/324/2012 Out of total consignments, the appellants filed five warehousing Bills of Entries No. 277765 dated 13.09.2000 and No. 16147 to 16150 dated 07.06.2000 in Chennai Customs and the goods were assessed provisionally as per the Commissioners Order no. Misc. 105/99-Enquiry dated 05.11.2009 and allowed for warehousing at their refinery site at Tiruchopuram, Cuddalore. On obtaining necessary permission from the Commissioner of Customs, Trichy, the Chennai Customs had carried out the examination of the goods at the site before finalizing assessment. From the time of import to the finalization of assessment, since the goods were kept at the site for more than two to three years, from the date of import and in order to identify the correctness, value of the goods in question as is where is condition, and the year of manufacture etc., an independent Chartered Engineer was appointed. The CE after examining the second hand machineries submitted his report dated 28.06.2000 to the Chennai Customs. As per the Chartered Engineers report, the value estimated was more than the declared value. Accordingly, the adjudicating authority proposed to reject the declared value under Rule 3 of CVR, 1998 and proceeded to re-determine the value under Rule 8 ibid, as the same cannot be determined under Rule 4 to 7 sequentially. The adjudicating authority after following the principles of natural justice, in his order No. 15051/2011 dated 04.03.2011, rejected the declared value and enhanced the value in respect of all the five Bills of Entries, in terms of Section 14 of Customs Act, 1962 read with Rule (8) and Rule (9) of the Customs Valuation (Determination of value of the imported goods) Rules, 2007.
4. Aggrieved by this order, the appellant preferred appeal before the Commissioner (Appeals) and the LAA in his OIA C. Cus. No. 754/2012 dated 27.07.2012, set aside the adjudication order and allowed the appeal in principle. He rejected the local Chartered Engineers certificate and held that load port CE certificate be considered to determine the assessable value of the second hand machinery as per the Boards Circular F.No. 493/124/86-Cus. VI dated 19.11.87 after allowing depreciation and directed LA that the assessable value may be re-worked for recovery of short duty collected. The appellant preferred the present appeal.
Appeal No. C/323/2012
5. The issues are identical to the above appeal except in this case the appellants imported second hand plant and machinery for the refinery through Karikal port and filed Bill of Entry No. 26/2009 dated 29.05.2009. The Deputy Commissioner of Customs, Customs Division Nagapattinam in his Order dated 19.11.12, while finalizing the assessments, rejected the transaction value and enhanced the value by 2.195 times and also added the cost of dismantling, marking and packing charges based on the value enhancement made by the DC, Customs, Chennai in OIO No. 15051/2011 dated 04.03.2011. Accordingly, he finalized the said B/E with applicable customs duty along with interest. The appellants preferred appeal against this order before the Commissioner (Appeals), Trichy. The lower appellate authority in his OIA No. 19/2012 dated 24.07.12 upheld the OIO and rejected the appeal. Hence, the appellant preferred appeal before this Tribunal.
Appeal No. C/40701/2015
6. In this appeal the appellant imported 8 consignments of second hand plant and machinery through Cuddalore and filed 10 Bills of Entries. The same was assessed provisionally and warehoused. The adjudicating authority vide his order No. 2/2012 dated 09.03.2012 followed the DC. Customs, Chennai OIA dated 04.03.2011 rejected the transaction value and declared value of 18 Bills of Entries and enhanced the value by 2.195 times plus declared cost of dismantling, marking and packing costs in terms of Section 14 of Customs Act, 1962 read with Rule 8 and Rule (9) of the Customs Valuation Rules, 1988. The appellant preferred appeal before the Commissioner (Appeals), Chennai and the Commissioner (Appeals) in his Interim Order no. 1/2013 (Cuddalore) (Cus.) dated 10.12.2013 ordered pre-deposit of an amount of Rs. 8,92,13,245/- being 10% of the duty amount and to report compliance on or before 31.12.2013. The same was extended to 31.01.2014 vide amendment to the Interim Order dated 10.12.2013. Against the Interim order of the Commissioner (Appeals) the appellant preferred a writ petition No. 1562/2014 before the Honble High Court of Madras and the Honble High Court vide Order dated 08.10.2014 disposed the writ petition of the appellant and directed the petitioner to file appeal before the Honble Tribunal within 4 weeks as the appellants are already before the Tribunal in respect of other appeals of their own case in appeal No. C/323-324/2012. Accordingly, the appellant filed the present appeal.
Appeal No. C/141/2012
7. The facts are identical to the above appeals. In the present appeal they have imported 95 consignments of plant and machinery for refinery through Puducherry port and filed 95 Bills of Entries. The goods were provisionally assessed and warehoused at their refinery site. The Assistant Commissioner of Customs, Customs Division, Cuddalore in his order No. 10/2011 dated 29.11.2011 finalized the assessments of all the 95 B/Es and rejected the transaction value and enhanced the value to 2.195 times by following the OIO No. 15051/2011 dated 04.03.2011, appropriated the Customs duty and interest. Against this order, the appellants preferred appeal before the Commissioner (Appeals), Chennai and the LAA in his order No. 6/2012 (P) (Cus.) dated 25.04.12, allowed their appeal and set aside the OIO. The Revenue reviewed the said OIA and preferred appeal before this Tribunal. For the sake of clarity of the case, the table containing the details of all the four appeals are reproduced as under:-
Port of Import Chennai Puducherry Karaikal Cuddalore Appeal No. C/324/2012 C/141/2012 (Revenue) C/323/2012 C/40701/2015 Period of Import Aug-sep 2000 March 2001-November 2009 May, 2009 August 2008 to July 2009 No. of B/Es 5 95 1 18 Duty involved Rs.) NQ NQ 9,17,50,036/-
89,21,32,455/-
Order in Original 15051/2011 dated 04.03.2011 10/2011 dated 29.11.2011 75/2011-12 dated 19.01.2012 02/2012 dated 09.03.2012 Authority who passed the OiO DC Customs, Chennai (seaport) AC, Customs, Customs Cuddalore AC, Customs, Nagapattinam AC, Customs, Cuddalore Order in Appeal no and date C.Cus no OIA754/2012 dated 27.07.2012 OIA No. 06/2012 (P) Dated 25.04.2012 OIA No.19/2012 dated 24.07.2012 OIA Interim Order No. 01/2013 (Cuddalore) (Cus) dated 10.12.2013 Authority who passed the OiA CC(A), Chennai CC & CE (A), Chennai CC & CE (A) Trichy CC & CE (A) Chennai Result OIO set aside and remanded OIO set aside. Assessees appeal allowed OIO upheld. Assessees appeal dismissed Predepsit ordered . Honble High Court set aside the interim order vide order dt. 8.10.2014
8. Heard both sides. Shri R. Parthasarathy, the Ld. Counsel appearing for all the three assessees appeals explained in brief the background details of the proposal for setting up a Six Million Tons capacity of Crude Oil Refinery Plant near Cuddalore. He submits that in all the four appeals the supplier is one and the same and they have imported the secondhand plant and machinery of Mobile refinery in CKD in 123 consignments imported through four ports in Tamil Nadu i.e. 95 B/E in Pondicherry, 5 B/E in Chennai, one B/E in Karaikal and 18 B/E in Cuddalore. He explained that the said imports of secondhand refinery is arising out of a contract agreement signed on 13.02.1996 between M/s. Pennar Refineries Limited (now M/s. Nagarjuna Oil Corporation Ltd.) and M/s. UHDE, Gmbh, Germany, which is annexed at page 37 of the paper book (in appeal C/323/12). As per the agreement, the consideration for the supply of refinery equipment is for 220,000,000 DM. Subsequently, the agreement was revised and enhanced to 159,112,600 DM vide amendment to the contract dated 09.04.1999 and the price was revised to 284,112,600 DM. He submits that since there was a delay in shipment, another contract dated 14.11.2006 was signed for packing of equipments annexed at page 190 to 231 of the paper book (in C/323/12) and the consideration @ 10, 100,000 EURO.
9. He further submits that all the B/Es were assessed provisionally and the goods were warehoused. The Chennai Customs took up the five Bills of Entries for finalization of provisional assessment. The Department appointed a Chartered Engineer for valuation of second hand machinery covered under the said B/Es. The CE has examined the goods pertaining to one Bill of Entry No. 277765/2000 and submitted his report dated 28.06.2000, which is placed at pages 325-335 indicating the value, year of manufacture etc. Based on the local CE certificate of one B/E, the adjudicating authority in his OIO No. 15051/2011 dated 4.3.11 enhanced the value to 2.195 times for all the five consignments. On appeal, the Commissioner (Appeals) had set aside the local CEs certificate and recommended for enhancement of value based on the load port CE certificate and the finalization is still pending with Chennai Customs. He further submits that even though all the 135 consignments relates to plant and machinery of one refinery dismantled and shipped in various consignments from the same supplier, each import accompanied with separate invoices, declared CIF price, and a load port CE certificate etc.
10. In respect of the imports made through Cuddalore, Pondicherry and Karaikal, all the three adjudicating authorities have rejected the invoice value and enhanced the value by relying on the OIO dated 4.3.2011, Customs, Chennai, without considering the declared invoice price of each B/E. He submits in respect of OIO passed by the AC, Cuddalore that the Commissioner (Appeals), Chennai, had rightly set aside the order and held that based on one CE certificate and also based on the Chennai Customs order, the value cannot be enhanced to other consignments imported through other ports. The Revenue preferred appeal. Whereas, the Commissioner (Appeals), Trichy upheld the OIO and rejected their appeal against which they are on appeal.
11. He further submits that the importer (appellant) and the supplier *UDHE) Germany are one and the same for all the 123 B/Es and all the 123 consignments should be considered as a plant and machinery of single refinery dismantled abroad and sold on as is where is, basis as per single contract. He submits the total payments made to their supplier as consideration of sale is strictly as per the contract amounts. Therefore, he pleaded that all the consignments should be finalized and assessed together as one entity.
12. He submits that even though the entire CKD plant and machinery of refinery were partly imported through Chennai, Cuddalore, Karaikal and Nagapattinam Ports, in Tamil Nadu, since all the consignments relates to one refinery and provisionally assessed at the time of import, in order to avoid conflicting decisions by different adjudicating authorities, resulting in further appeal before different Commissioner (Appeals), he pleads that the entire case may be remanded for re-determination of value and finalization of assessment by one competent authority at any one jurisdiction. He also submits that if such remand is considered and if the entire issue is before one single authority, they will be able to produce all the relevant documents and put forth the evidences before such authority instead of four different jurisdictional authorities. Therefore, he pleaded that since Chennai, Customs is yet to finalize the assessment as per Commissioner (Appeals) order, he pleaded for remanding the matter to the adjudicating authority.
13. On the other hand Shri P.R. V. Ramanan, the Ld. Special Counsel appearing for the Revenue submitted his preliminary observations. He explained the findings of the Dy. Commissioner, Chennai Customs order and submitted that sufficient grounds exists in not accepting the load port CE Certificates as the same were prepared only at the time of shipment to India. He further submitted that though the Commissioner (Appeals) has set aside the said order, the issue of finalization of assessment is still open. He also submitted that if all the consignments are to be considered together as one refinery plant and assessed, there is a justification of the Revenue that the local CE Certificate examined for one consignment can be considered as representative sample for all the other consignments. He also submitted that in view of the four different Commissioner (Appeals) orders, taking different views and considering the assessments are provisional, he is agreeable to the proposals of the Counsel of the appellant that the issue can be remanded to the lower authority, preferably to one single authority, so that the entire issue can be placed before the authority and he can re-examine the issues in denovo. The special Counsel also submitted that since all the 123 Bills of Entries involving value of more than 284 million DM and also the total customs duty involving more than 100 Crores, he suggested that the adjudicating authority should be of the rank of the Commissioner. He also submitted that if this case is adjudicated by the Commissioner, it will result in uniform decision and also save considerable time.
14. We have carefully considered the submissions of both sides and examined the records, contract agreements etc. The issue in all the four appeals relates to enhancement of value on the second hand plant and machinery (entire refinery) imported by the appellants under 123 Bills of Entries, and cleared through Chennai, Pondicherry, Karaikal and Cuddalore ports. We also find that all the bills of entries were assessed provisionally and warehoused at their refinery site at Tiruchopuram, Cuddalore, Tamil Nadu and the period of import starts from August, 2000 to November, 2009.
15. On perusal of the records in appeal No. C/324/2012, the Dy. Commissioner of Customs, Chennai Customs port had finalized the assessment of five bills of entries based on the load CE certificate. The LAA set aside the assessment done based on the local CE certificate and directed the LA to re-determine and to consider the load port CE certificate. On perusal of the contract agreement entered with the foreign supplier M/s. UHDE, Gmbh, Germany, we find that it is for the supply of entire refinery equipments from the existing mobil refiney, Germany on as is where is condition and includes dismantling, packing, freight etc. As per the terms of the agreement, the existing mobil refinery to be dismantled and supplied to the appellants site. As per the scope of the contract, and article (2) of the agreement , the said contract covers supply of refinery equipments including containers and documentation from outside India as per the Annexure-A and includes dismantling, shifting services as listed in Annexure-B. The entire refinery equipment will be delivered at CIF terms to the Ports viz Chennai, Pondicherry, Karaikal and Cuddalore. As per article 4 of the agreement, the consideration for the supply of the second hand refinery equipment was around 220 million DM. Vide amendment to the said contract agreement dated 09.04.99, it has been enhanced. In addition to the above, the appellants are also entered into another separate contract dated 14.11.2006, which is for dismantling and packing of refinery equipments. In the said contracts both the importer and the supplier had agreed upon the services referred in article 2 of the contract agreement, for 10.1 million EURO. On perusal of the sample copy of the bill of entries and invoices, the appellants have imported the parts of the refinery equipment as per their contract, with description of each equipment and declared the invoice price for each item.
16. We find that even though the said second hand machinery of refinery covered in all the four appeals had originated from a single place (ie. Mobil Refinery, Germany) and a single supplier M/s. UHDE, Germany, the appellant cleared each shipment as independent import under specific invoice with description of item and price for each equipment accompanied by the Load Port CE Certificate. When all the shipments were completed in 2009, the Chennai Customs had initiated finalization of assessment of 5 B/Es. We find that inspite of existence of Load Port CE Certificate for the said second hand machineries, the department engaged a local CE for determining the value of the second hand machineries. The CE after examining the goods of one B/E No. 27765 dated 9.5.2000 submitted his report. By relying this CE report, the adjudicating authority in his order dated 4.3.2011, rejected the declared price and enhanced the value to 2.195 times and also included the cost of packing, shipping freight. It is seen that the LAA in his impugned order set aside the order of the LA and directed him to re-determine the value. By virtue of LAA order, the said B/Es are still pending before DC, Customs, Chennai for finalization of assessment.
17. We also find that consequent on the finalization of five bills of entries by Chennai Customs, the jurisdictional authorities at Pondicherry, Cuddalore and Nagapattinum have taken up the finalization of assessment of the B/Es and finalized and loaded the value by simply relying the Chennai Customs order dated 04.03.2011. No independent findings given for rejecting the transaction value. On appeal, the Commissioner (Appeal) Trichy had upheld the impugned order of loading the price by 2.195 times and LAA, Chennai set aside the OIO of the AC, Puducherry.
18. On perusal of all the four orders passed by the four different adjudicating authorities and four different Commissioner (Appeals), we find that the adjudicating authorities at Puducherry, Cuddalore and Nagapattinam failed to determine the value of the second hand machineries in accordance with custom valuation Rules (CVR) read with Boards Circular, instead adopted the percentage of loading done by the DC, Chennai. Interestingly, we find that the two LAAs passed two contra orders, one upheld the OIO of Cuddalore and other LAA set aside the OIO of Puducherry, resulting in both assessee and revenue are before this Tribunal. It is pertinent to see that the order of DC, Chennai, which is adopted by other three authorities is non exist now as the same has been set aside by LAA, Chennai order dated 27.7.2012. Therefore, in view of the peculiar nature of this case and considering the over all circumstances of the case and without going into the merits of the case, we are convinced that it is a fit case to be remanded to the original authority. As rightly stated by both the appellants and the special Counsel for the Revenue, we find that both the appellant and the overseas supplier entered single contract agreement for supply of entire existing refinery to set up a refinery project at Cuddalore and the supplier had dismantled and supplied the entire machinery to the appellant in as is where is condition under 123 consignments. In view of the above facts and as stated by both the parties, we are of the considered view that the whole issue relates to a single project and relates to a single refinery plant to be set up at Cuddalore and requires to examine and re-determine the value afresh by original authority.
19. Taking into the above aspects and in the interest of both assessee and Revenue and also considering the quantum of imports covering 123 Bills of Entries involving the value of more than 284,112,600 DM, while remanding the case in denovo, we strongly recommend to the Government that the issue needs to be re-examined in denovo by one single authority and finalise the case covering all the consignments. It is our concern that the Government/ Board to consider the above proposal and appoint a higher authority at the level of the Commissioner of Customs, as a common adjudicating authority for this case. This will result in uniform decision and certainly save valuable time for both sides. In the denovo proceedings, all the issues are kept open and the original authority to decide the issue afresh and taking into account all the issues and finalize the assessment within a period of three months from the date of receipt of this order. It is needless to state that the original authority is directed to give reasonable opportunity to the appellant and the appellants to extend full co-operation and produce all the evidences before the authority. Accordingly, all the four appeals are remanded denovo to the original authority. All the four appeals are disposed of by way of remand.
(Order dictated and pronounced in the Open Court)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
BB
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