2013 (9) TMI 320 - AT - Customs

Confiscation - Removal of Goods The Customs Department on receipt of information that certain imported goods which were not yet examined by the Customs officers were also removed by the appellant, visited the Vadinar port and conducted further enquiry into the matter. On completion of enquiry and investigation, it was noticed that one of the imported item Coker Fractionator was removed from the Customs area without examination and without obtaining any order under Section 47 of Customs Act, 1962. - Held that - The removal of Coker Fractionator from the Customs area by the assesse was inadvertent error and mistake - It was also to be noted that the said Coker Fractionator could not be considered as dutiable goods in order to be liable for confiscation under Section 111(j) of Customs Act, 1962, as the assesse had discharged the assessed duty liability on the complete 64 packages imported by them, before unloading. Following ASSOCIATED CEMENT COMPANIES LTD. Versus CC 2001 (1) TMI 248 - Supreme court of India - During the material period, finished leather attracted duty at specified rate under the tariff but Exemption Notification No. 21/2002-Cus. (as amended) granted full exemption from payment of duty thereon - during that period, the Revenue was not entitled to charge any duty on the goods - Where duty was not so chargeable, the goods were said to be not chargeable to duty and, by virtue of the above definition, they were not dutiable goods - Where the goods were not dutiable, the penalty u/s 112(a)(ii) of the Customs Act was not liable to be imposed on the importer of the goods - order to the extent it was in challenge was liable to be set aside - Decided in favor of assesse.

Summary

Issues Involved:

1. Confiscation of the Coker Fractionator.
2. Confiscation of the conveyance (Nicholas Carrier).
3. Imposition of penalties under Section 112(a) and 112(b) of the Customs Act, 1962.

Detailed Analysis:

1. Confiscation of the Coker Fractionator:

The appellant filed Bill of Entry No. F-43 dated 21.06.2010 for the clearance of capital goods for their refinery expansion project. Out of the 64 packages, 40 were examined and cleared by Customs. However, the Coker Fractionator was removed without examination or obtaining an order under Section 47 of the Customs Act, 1962. The Customs Department detained the Coker Fractionator and issued a Show Cause Notice for its confiscation under Section 111(j) of the Customs Act, 1962. The adjudicating authority ordered the confiscation but allowed the appellant to redeem the goods on payment of a redemption fine of Rs. 50,00,000/-.

The appellant contended that the removal was inadvertent due to the continuous unloading of machinery and that there was no intention to evade duty, as the duty under the EPCG scheme had been paid. The Tribunal found that the removal was an inadvertent error and that the goods were not dutiable since the duty had already been paid. The Tribunal referred to Section 2(14) of the Customs Act, which defines "dutiable goods" as goods chargeable to duty on which duty has not been paid. Since the duty was paid, the goods were not "dutiable" and thus not liable for confiscation under Section 111(j). The Tribunal set aside the confiscation order.

2. Confiscation of the Conveyance (Nicholas Carrier):

The adjudicating authority ordered the confiscation of the conveyance used to transport the Coker Fractionator under Section 115 of the Customs Act, 1962, but allowed redemption on payment of Rs. 2,00,000/-. The appellant appealed against this order. The Tribunal, considering the same inadvertent error and the payment of duty, set aside the confiscation order for the conveyance as well.

3. Imposition of Penalties under Section 112(a) and 112(b) of the Customs Act, 1962:

The adjudicating authority imposed a penalty of Rs. 10,00,000/- on the appellant under Section 112(a) and 112(b) for the removal of the Coker Fractionator without Customs clearance. The appellant argued that there was no mens rea (intention to evade duty) and that the removal was a technical error. The Tribunal agreed, noting the absence of any intent to evade duty and the payment of duty on the entire consignment. It referred to judicial precedents, including the case of Jai AR Enterprises and the Supreme Court's decision in Associated Cement Companies Ltd., to conclude that the penalties were not justified. The Tribunal set aside the penalties.

Conclusion:

The Tribunal allowed the appeal, setting aside the orders of confiscation and penalties, and granted consequential relief to the appellant. The judgment emphasized the inadvertent nature of the error, the payment of duty, and the legal definition of "dutiable goods" under Section 2(14) of the Customs Act, 1962.