2011 (10) TMI 450 - AT - Customs

Purchase and clearance of abandoned goods under auction by filing bill of entry - whether to be treated as re-import - Revenue entertained the view that the ship in question had crossed the territorial waters of India and as such the goods have to be considered as exported goods. It is only after crossing the territorial waters of India the ship developed a snag and was diverted to India. It remained in the territorial waters of India for a period of ten months and thereafter the goods were salvaged and sold by the insurance company. As such it is the Revenue s contention that the goods were exported and the subsequent clearance was by filing bill of entry and they have to be considered to be re-imported goods and liable to pay duty. Held that - As the appellant have cleared the goods after filing a bill of entry it has to be held in the peculiar circumstances of the case that the damaged goods were imported requiring the appellant to pay customs duty. Regarding valuation - held that - value at which goods were sold by the insurance company to the appellant has to be treated as the assessable value and the duty has to be re-quantified accordingly.

Summary

Issues: Duty liability on re-imported goods purchased in auction from salvaged consignment, assessable value determination for customs duty calculation.

Analysis:

1. Duty liability on re-imported goods: The case involved the appellant purchasing damaged goods from an abandoned consignment of rubber tyres, tubes, and flaps that were meant for export but got deteriorated due to various factors after the ship carrying them was grounded near Veraval. The Revenue contended that since the ship had crossed India's territorial waters before being diverted back, the subsequent clearance of the salvaged goods by the appellant should be treated as re-import, thus attracting customs duty. A Show Cause Notice was issued for confirmation of duty, leading to a demand of Rs. 1,12,92,590. The Commissioner (Appeals) upheld the duty liability, emphasizing that the damaged goods' transaction value should be considered for duty calculation.

2. Assessable value determination: The appellate authority observed that the goods were originally exported under various schemes and insurance, but due to the ship's return to Indian waters and subsequent salvage, the ownership was transferred to the insurance company, which then sold the goods to the appellant. The Commissioner (Appeals) held that the damaged goods' value at the time of sale to the appellant should be the assessable value for customs duty calculation. The appellant argued against the duty liability, claiming no proof of the ship crossing Indian waters and alleging pressure to file the bill of entry, but failed to provide evidence. The Tribunal concurred with the lower authorities that the damaged goods were indeed re-imported, necessitating duty payment.

3. Conclusion: The Tribunal rejected the appeal, upholding the duty liability on the re-imported goods purchased by the appellant and agreeing with the Commissioner (Appeals) regarding the assessable value determination for customs duty calculation based on the transaction value at the time of sale. The judgment highlighted the importance of considering the circumstances of salvage and re-importation in determining customs duty obligations, emphasizing the need for proper documentation and evidence to support claims in such cases.