Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri Rajesh Rawal & Mr. ... on 8 October, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : C/22 to 24 of 2006 & C/1024 of 2006 Arising out of : OIO No. KDL/Commissioner/27/2006 dated 28.7.2006 Passed by : Commissioner of Customs, Kandla For approval and signature : Hon'ble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Appellant (s) : M/s. Ruchi Soya Industries Limited Shri S.P. Joshi, Shri Gilbert DLima M/s. J.M. Baxi & Company Represented by : Shri Rajesh Rawal & Mr. Ruban George, Advocates Respondent (s) : Commissioner of Customs, Kandla
Represented by : Shri K.J. Kinariwalla, A.R. CORAM :
Hon'ble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical) Date of Hearing / Decision : 08.10.2013 ORDER No. _____________ /WZB/AHD/2013 Per : Mr. H.K. Thakur;
These appeals have been filed by the appellants against OIO No.KDL/27/2006 dated 28.07.2006/10.08.2006 passed by Commissioner of Customs, Customs House, Kandla.
2. The issue involved in these appeals is that the main appellant M/s. Ruchi Soya Industries Limited, Indore imported Palm Oil which was declared in the IGM and other documents as Crude Palm Oil of Edible Grade in Bulk. After arrival of the vessel at Kandla on 25/09/2005, (four) representative sample of the cargo were drawn for ascertaining FFA% and carotene value. On receipt of test report, inter-alia, the carotene value mg/kg (as beta carotene) was found to be between 462.76 to 482.15. In two of the bills of landing for a quantity of 3247.734 MT, it was found that carotene value (mg./kg./) was shown to more than 500 in load Port Analysis Report but was seen to be less than 500 as per the tests got done by the Revenue. It was, therefore, opined by the Revenue that the cargo was mis-declared as Crude Palm Oil as against other palm oil classifiable under CTH 1511 9090. 3247.734 MT was seized by the revenue on 7.10. 2004 under a reasonable belief that the same is liable to confiscation under Sec. 111(d) & 111(f) of the Customs Act, 1962.
3. Main appellant requested for provisional release of the seized goods and also filed Special Civil Application No.13892 of 2004 before Gujarat High Court seeking directions for lifting seizure for provisional release. Honble High Court vide order dated 19.10.2004 passed directions to decide the provisional release application filed by the appellant. Accordingly, goods were released provisionally subject to execution of appropriate bond and bank guarantee and also on payment of applicable duty. After conducting investigations, show-cause notice was issued to the appellants proposing confiscation of imported goods and imposition of penalties against all the appellants. The above show cause notice was decided against the appellant and imported goods were confiscated under Section 111(f) and Section 111(m) of the Customs Act, 1962. Penalties were also imposed upon the main appellant and others under Section 112 of the Customs Act, 1962. Appellants have filed the present appeals against the said order in original No. KDL/COMMR/27/2006 dated 28/07/2006 issued on 10/08/2006.
4. Shri Rajesh Rawal (Advocate) and Shri Ruben George (Advocate) appeared on behalf of all the appellants and argued that there was no mis-declaration on the part of the main appellant as they are not responsible for the filing of IGM. It was their case that Crude Palm Oil of edible grade was declared as such as per the documents available with the shipping lines. It was also argued that as per Section 111(f) of the Customs Act, 1962, there is no requirement that detailed description of the imported goods along with Carotene Value is required to be mentioned. He further emphasized that the carotene value was more than 500 mg. per kg. when the goods were dispatched from the supplier country. He relied upon the judgment of Karnataka High Court in the case of Commissioner of Customs, Mangalore vs. Ruchi Soya Industries, Indore, under which it has been held by the Honble High Court that carotene value of crude palm oil reduces on day to day basis. It was his case that there was a long gap between the crude palm oil loaded from abroad to the date when the samples were drawn. In view of the law laid down by Karnataka High Court, the Carotene value in the consignment could have reduced from more than 500 to less than 500.
5. Advocate appearing on behalf of the appellants also relied upon the judgment of CESTAT, New Delhi in the case of Sigma Electronics vs. Collector of Customs, Jaipur [1997 (91) ELT 401 (Tribunal)] mentioned that declaration of the value in the IGM was not considered as a mis-declaration for confiscating imported goods under Section 111(f) of the Customs Act, 1962. It was thus argued by him that on the same analogy that any description given in the IGM by the shipping lines cannot be made a ground for confiscation of crude palm oil imported by the appellants. It was also argued that as per Notification No.21/2002-Cus dated 1/03/2002, as amended by Notification No.7/2005-Cus. Dated 4/02/2005, exemption is provided only to those categories of crude palm oil of edible grade which contain acid value and Beta Carotene value in specific range and it is nowhere defined that only the specified ranges can be considered as crude palm oil of edible grade.
6. Shri K.J. Kinariwalla (AR) appearing on behalf of the revenue argued that there was a clear cut mis-declaration in the description of imported goods in the IGM as Crude Palm Oil of edible grade when the same should have been described as Other Palm Oil classifiable under CTH. 15.11.90.90. It was his case that due to above mis-declaration in the IGM, imported goods were correctly confiscated and penalties were rightly imposed.
7. Heard both sides and perused the case records. The main issue involved in these appeals is whether a description of imported cargo given in the IGM will make those goods reliable to confiscation under Section 111(f) and Section 111(m) of the Customs Act, 1962. Section 111(f) and Section 111(m) of the Customs Act, 1962 are reproduced below:-
Section 111. : Confiscation of improperly imported goods, etc. The following goods brought from a place outside India shall be liable to confiscation:-
(a) to (e) .. ..
(f) any dutiable or prohibited goods required to be mentioned, under the regulations in an import manifest or import report which are not so mentioned;
(g) to (l) ..
(m) any goods which do not correspond in respect of value or in any other particular] with the entry made under this Act or in the case of baggage with the declaration made under section 77 [in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-Section (1) of Section 54] 7.1 It is observed from the above provisions of Section 111(f) that the same is applicable to a situation where imported cargo is not included in the IGM. The Performa for IGM does not include columns on valuation, description and classification to be done by an importer. It is also evident from the above provision that there is no indication that any incomplete description given in the IGM should be treated as mis-declaration for confiscation of imported cargo. In the present proceedings a description of goods was given in the IGM based on the documents available with the shipping lines. It has been held by CESTAT, New Delhi in the case of Sigma Electronics vs. Commissioner of Customs, Jaipur (supra) as follows in Para 7.3.
7.3 The Collector has confiscated certain items? under Section 111(f) of the Customs Act on the ground that they were not declared in the manifest. The Counsel for the appellants contends that the manifest is prepared in general terms and is not intended to give detailed description of the goods imported. Moreover, there is no column in the import manifest for declaration of value. The manifest is prepared by the shipping agents. There is nothing to show that any instructions were given by or on behalf of the appellants to the owner or the shipping agents of the carrier. He also stated that if there was any mis-declaration calculation in the manifest, the primary responsibility was that of the Carrier namely Shipping Corporation of India, which is a public sector undertaking. The Collector has not imposed any penalty on the Shipping Corporation of India and therefore, taking any penal action against the appellants would not be legal, just or proper. On the other hand, it has been argued on behalf of the Revenue that the appellants had entered into a criminal conspiracy with the foreign supplier and by virtue of that conspiracy, the goods were differently described in many cases so as to get them wrongly classified or to obtain benefit of exemption or to avoid submission of import licence. Added to this, the values were grossly understated to evade duty of customs. Thus the wrong manifestation of goods was the handiwork of the appellants themselves and not the Shipping Corporation of India who made the declaration on the basis of the facts made available to them by the suppliers who were acting on behalf of the appellants.
We have carefully considered the submissions made by both the sides. We do not find any evidence on record to show that any instructions were given by or on behalf of the appellants to the Shipping Corporation of India in respect of the declarations to be made in the import manifest. The Import Manifest (Aircraft) Regulations, 1976 provide that every import manifest shall cover all the goods carried in the Aircraft and consist of, inter alia, a cargo manifest in Form III. The cargo manifest shall be delivered in separate sheets in respect of (a) cargo to be landed (b) unaccompanied baggage (c) goods to be transhipped and (d) same bottom or retention cargo. Import Manifest (Vessels) Regulations, 1971 also provide for submission of a cargo declaration in Form III. The manner of declaring cargo is also the same as in the case of Import Manifest (Aircraft) Regulations, 1976. Form No. III of Cargo Manifest for air has columns for `number of packages and `nature of goods. Form III of Cargo declaration for vessels have columns `number and kinds of packages i.e. cases, cartons, bag, bales, pieces and description of goods; there is no column in either of the two forms requiring declaration of value. The description of goods is also given broadly, such as machinery, electronics, articles of goods etc. and precise description of goods contained in each consignment which may comprise a large number of packages does not appear to be a requirement. The Collector has not specified in his order as to what is the deficiency in the declarations made in the import manifests. We do not therefore, see any justification for confiscating the goods under Section 111(f) of the Customs Act. We agree with the Counsel for the appellants that the primary responsibility for declaration in the manifest is that of the owners or the agents of the vessel or the aircraft and if they are exonerated, it would not be appropriate to confiscate the goods under Section 111(f) of the Customs Act particularly when there is no evidence to show that the declarations in the manifest were made under the instructions of the appellants. 7.2 It is seen from the above observation that the description of goods in IGM is required to be given broadly and precise description of the imported goods is not the requirement and it was held that no confiscation is warranted under Section 111(f) of Customs Act, 1962. In the present case also the cargo was declared finally as Crude Palm Oil and it has not been brought on record by the revenue that carotene value is required to be shown in the IGM.
8. Another argument taken by the main appellant is that wordings of Notification No.21/2002-Cus. along with its amendments does not convey that palm oil of edible grade having specified Acid value and beta carotene value will only be considered as crude palm oil. The relevant entry of Notification No. 21/2002-Cus is reproduced below:
(A) Crude Palm oil and its fractions, of edible grade, having an acid value of 4 or more and total carotenoid (as beta carotene) in the range of 250mg/kg to 2500 mg./kg. in loose or bulk form for manufacture of refined oil, refined Palmolein, Vanaspati, bakery shortening or inter-esterified fats;
9. It is seen from the above entry contained in Notification No.21/2002-Cus. that the Crude Palm Oil of edible grade having specified acid value and Bjta Carotene value has been specified for a Crude Palm Oil which will be entitled to the benefit of this exemption Notification. It is not coming out from this Notification that only that palm oil having these specified limits of acid value and beta carotene value will be crude palm oil. Accordingly it is held that there could be other categories of crude palm oil of edible grade, which do not have an acid value and bjta carotene value as specified in Notification No.21/2002-Cus, as mentioned. The only will be that such Crude Palm Oil of edible grade will not be eligible to get the benefit of Notification No. 21/2002-Cus. Appellants have also correctly relied upon the judgment of Karnataka High Court 23.11.2007 in the case of the main appellant that carotene value in the crude palm oil varies on day to day basis.
10. In view of the above observation, there was no mis-declaration on the part of the appellants when the goods were described as crude palm oil of edible grade in the documents. Accordingly confiscation of imported goods by the appellants is not liable to confiscation under Section 111(f) and Section 111(m) of the Customs Act, 1962. The order passed by the adjudicating authority regarding confiscation and imposition of fine is required to be set aside.
11. So far as imposition of penalties upon the appellants under Section 112 of the Customs Act, 1962 are concerned, it is held that once on merits, imported goods are not liable to confiscation, there is no point of imposition of penalties upon the appellants under Section 112 of the Customs Act, 1962.
In view of the above observations appeals filed by the appellants are allowed with consequential relief, if any.
(Operative part of the order pronounced in the Court)
(M.V. Ravindran) (H.K. Thakur)
Member (Judicial) Member (Technical)
.KL
8