2006 (4) TMI 423 - AT - Central Excise

Issues:
1. Availability of duty-free clearance for supply of ship equipment.
2. Lack of documentary evidence supporting the vessel's location during the relevant time.
3. Mis-declaration of the value of the supply.
4. Evidence provided by ONGC regarding the vessel's operations in non-designated areas.
5. Allegations of deliberate evasion of duty due to mis-declaration of value.
6. Dispute over the vessel's movement into non-designated areas.
7. Consideration of the value declared in the invoice for ship stores.
8. Decision on the appeal and setting aside the impugned order.

Issue 1: Availability of duty-free clearance for supply of ship equipment
The appellant imported a vessel and provided ship stores to ONGC without payment of duty under Section 54(2) of the Customs Act. The impugned order denied duty-free clearance for the supply of ship equipment due to lack of documentary evidence supporting the vessel's location during the relevant time and mis-declaration of the supply's value.

Issue 2: Lack of documentary evidence supporting the vessel's location
The appellant contested the findings, arguing that the vessel operated in non-designated areas based on evidence provided by ONGC to Customs authorities. The appellant emphasized that the Customs authorities collected this evidence directly from ONGC, contradicting the Commissioner's presumption that the vessel did not move out of territorial waters.

Issue 3: Mis-declaration of the value of the supply
The appellant attributed the incorrect declaration of value to a mistake by their clearing agent, asserting that the value mis-declaration was irrelevant since ship stores were duty-exempt regardless of their value. The appellant highlighted that the invoice details did not indicate an intentional mis-declaration of value, challenging the grounds for denying duty-free supply.

Issue 4: Evidence provided by ONGC regarding the vessel's operations
The evidence submitted by ONGC confirmed the vessel's operations in non-designated areas, supporting the appellant's claim for duty-free clearance. The Tribunal acknowledged the positive evidence presented and criticized the Commissioner's presumption regarding the vessel's location without sufficient basis.

Issue 5: Allegations of deliberate evasion of duty
The Senior Counsel argued against the allegations of deliberate duty evasion, emphasizing the lack of intent to mis-declare the value based on the invoice details. The Tribunal noted that the mis-declaration of value and the extended period for issuing show cause notices lacked substantial grounds given the evidence presented.

Issue 6: Dispute over the vessel's movement into non-designated areas
The Tribunal recognized the vessel's charter to ONGC and the direct evidence provided by ONGC regarding the vessel's operations in eligible areas. The continuous supply of ship stores further supported the vessel's presence in entitled areas, challenging the Commissioner's assumptions about the vessel's movements.

Issue 7: Consideration of the value declared in the invoice for ship stores
The Tribunal analyzed the invoice details to refute claims of intentional mis-declaration, highlighting the comprehensive information provided that indicated no intent to evade duty. The Tribunal concluded that the value stated in the invoice did not justify denying duty-free supply or invoking the extended period for mis-declaration.

Issue 8: Decision on the appeal and setting aside the impugned order
After thorough consideration of the evidence and arguments presented, the Tribunal allowed the appeal, setting aside the impugned order that denied duty-free clearance for the supply of ship stores. The Tribunal's decision was based on the lack of substantial evidence supporting the Commissioner's findings and the positive evidence presented by the appellant regarding the vessel's operations in non-designated areas.

This detailed analysis of the judgment highlights the key issues, arguments presented, evidence considered, and the final decision made by the Appellate Tribunal CESTAT, New Delhi.

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