1998 (12) TMI 381 - AT - Customs

Rate of customs duty - Vessel meant for off-shore drilling - Customs exemption - Demand - Limitation - Penalty

Issues Involved:
1. Sustainability of the demand of duty of Rs. 35 crores and above.
2. Determination of the applicable rate of duty.
3. Validity of filing a Bill of Entry after physical removal of goods.
4. Applicability of Notification 134/89-Cus. and related exemption.
5. Timeliness of the demand of duty.
6. Imposition of penalties on the appellants.

Detailed Analysis:

1. Sustainability of the Demand of Duty:
The primary issue was whether the demand of duty of Rs. 35 crores and above was sustainable. The Commissioner of Customs concluded that the appellants should have paid the duty on the rig "Ed-holt" on or before its removal on 17/18-4-89. The appellants contended that the rig was declared in I.G.M. 338 dated 2-2-89 and permission for removal was given by the Assistant Collector (Export)/Deputy Collector. They argued that this permission could be treated as provisional removal, and since the Bill of Entry was filed on 28-6-89 and assessed on 13-10-89 with exemptions applied, no duty was leviable. The Tribunal, however, found that the appellants removed the rig without paying the appropriate duty, thus making the demand for duty justified.

2. Determination of the Applicable Rate of Duty:
The appellants argued that the rate of duty should be determined based on the date of filing the Bill of Entry, citing several judgments. However, the Tribunal concluded that the date for determining the rate of duty was the date of removal of the goods from the customs area (17/18-4-89), as per Section 15(1)(c) of the Customs Act. The Tribunal observed that the rig was removed without paying the duty, making the duty payable on the date of removal.

3. Validity of Filing a Bill of Entry After Physical Removal of Goods:
The appellants cited cases where the Bill of Entry was filed after the removal of goods. The Tribunal distinguished these cases, noting that in the present case, the appellants had the opportunity to file the Bill of Entry but chose not to. The Tribunal held that the appellants' actions did not justify the late filing of the Bill of Entry.

4. Applicability of Notification 134/89-Cus. and Related Exemption:
The appellants argued that no duty was payable on 17/18-4-89 due to the exemption under Notification 134/89-Cus., even though the essentiality certificate was obtained later. The Tribunal noted that the exemption required the certificate to be produced at the time of clearance, which was not done. The Tribunal rejected the argument that the timing of the certificate was a mere procedural condition, emphasizing that the appellants had not applied for the certificate before the removal of the rig. Consequently, the benefit of the exemption could not be extended to the appellants.

5. Timeliness of the Demand of Duty:
The appellants argued that the demand was time-barred since the show-cause notice was issued long after the assessment of the Bill of Entry. The Tribunal held that the duty became payable on the date of removal (17/18-4-89), and the extended limitation period of five years was applicable due to the appellants' wilful mis-statements and suppression of facts. The Tribunal concluded that the show-cause notice was not barred by time.

6. Imposition of Penalties on the Appellants:
The Tribunal found that the appellants had wilfully misrepresented and suppressed facts to remove the dutiable goods without paying the duty. The penalties of Rs. 20 crores on the first appellants and Rs. 5 crores on the second appellants were deemed reasonable given the deliberate actions to evade duty and the financial gain obtained by the appellants. The Tribunal confirmed the penalties imposed by the Collector.

Conclusion:
The Tribunal rejected the appeals of both appellants, upholding the demand of duty and the penalties imposed. The Tribunal emphasized that the appellants' actions constituted a deliberate attempt to evade duty, and the subsequent filing of the Bill of Entry and obtaining of the essentiality certificate could not rectify the initial illegality. The Tribunal also noted that the show-cause notice was issued within the permissible time frame, considering the extended limitation period due to the appellants' conduct.

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