2001 (11) TMI 606 - AT - Central Excise

Issues Involved:
1. Alleged contravention of Sections 34, 36, 39, 40, 50, 67, 71, and 72 of the Customs Act, 1962.
2. Liability for confiscation of goods under Section 113 and the vessel under Section 115.
3. Imposition of customs duty and penalties under Sections 112, 114, and 117.

Issue-wise Detailed Analysis:

1. Alleged Contravention of Sections 34, 36, 39, 40, 50, 67, 71, and 72 of the Customs Act, 1962:
M/s. Indian Oil Corporation (IOC) had imported High Speed Diesel (HSD) oil, which was to be transferred from their bonded warehouse at Paradeep to another bonded warehouse at Budge Budge. They filed the necessary shipping bills and bonds for this transfer. However, the vessel M.T. Jagpraja, which was to transport the HSD oil, was loaded and moved to outer anchorage before the formal customs clearance was completed. The customs authorities alleged that this action violated the provisions of Sections 34, 36, 39, 40, 50, 67, 71, and 72 of the Customs Act, 1962, which govern the proper handling and transfer of warehoused goods.

2. Liability for Confiscation of Goods under Section 113 and the Vessel under Section 115:
The customs authorities argued that the act of loading the HSD oil onto the vessel without proper customs clearance rendered the goods liable for confiscation under Section 113 of the Customs Act, and the vessel under Section 115. The Commissioner of Customs held that the actions of IOC amounted to smuggling, thus justifying the confiscation of the goods and the vessel. However, the Tribunal found that the goods were neither being exported nor intended for export, as they were to be transferred to another bonded warehouse within India. The Tribunal emphasized that the technical infraction of statutory provisions should be viewed in its proper perspective, especially since the goods were ultimately re-warehoused and cleared on payment of appropriate duty.

3. Imposition of Customs Duty and Penalties under Sections 112, 114, and 117:
The Commissioner of Customs imposed a customs duty of Rs. 76,22,618/- on the HSD oil and various penalties on IOC and other parties involved, under Sections 112, 114, and 117 of the Customs Act. The Tribunal, however, noted that since the goods were not liable for confiscation, the penalties imposed under these sections were also unwarranted. The Tribunal highlighted that penalties under Sections 112 and 114 can only be imposed if the goods are liable for confiscation under Sections 111 and 113, respectively. Since the Tribunal held that the goods were not export goods and were not liable for confiscation, the penalties imposed on the appellants were set aside.

Conclusion:
The Tribunal concluded that the entire order of the Commissioner was unwarranted and set it aside. All the appeals were allowed, and the appellants were entitled to consequential relief. The Tribunal emphasized the importance of considering the factual context and the absence of mala fide intention in evaluating technical infractions of statutory provisions.

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