2013 (9) TMI 660 - AT - Customs

Duty demand under section 125 - Held that - The demand of duty on the vessel by the Commissioner was clearly unsustainable in law - there was no seizure and there was no confiscation as is evident from the Commssioner s order - the demand of duty had been confirmed under the provisions of Section 125 (2) the provisions of Section 125 (2) are attracted only when the goods are seized and thereafter confiscated. Proper Documentation - department contended that the assessee did not file proper IGM and Bill of Entry for home consumption in respect of the said vessel Held that - The question of payment of duty by the assessee or filing of IGM or Bill of Entry would not arise at all - from Circular No. 16/2012 it was very clear that only w.e.f. 17/03/2012, the requirement of filing IGM and Bill of Entry had been made mandatory in respect of vessels brought from abroad which are being converted for coastal trade the vessel was brought into India on 02/02/2011 much before the levy of CVD was imposed on 16/03/2011 - assessee had made out a strong case in their favour - waiver of pre-deposit granted stay granted.

Summary

Issues:
1. Duty demand confirmed under Section 125(2) of the Customs Act, 1962.
2. Allegations of improper filing of import documents and duty evasion.
3. Applicability of penalties under various sections of the Customs Act.
4. Compliance with formalities and procedures for vessel import and conversion.

Analysis:
1. The tribunal considered the duty demand confirmed under Section 125(2) of the Customs Act, which allows recovery of duty only when goods are seized and confiscated. As there was no seizure or confiscation in this case, the demand of duty on the vessel was deemed legally unsustainable.

2. The appellant was accused of improper filing of import documents and duty evasion related to the vessel imported for salvage operations. The investigation revealed discrepancies in filing procedures, leading to a show-cause notice proposing duty assessment, confiscation, and penalties under various sections of the Customs Act.

3. The tribunal examined the penalties imposed on the appellant and its Senior Vice President under Sections 112(a), 112, and 114AA of the Customs Act. The appellant argued that they had not suppressed any facts and had followed all necessary procedures, highlighting compliance with filing requirements and permissions obtained from Customs authorities.

4. The compliance with formalities and procedures for vessel import and conversion was a crucial aspect of the case. The appellant contended that they had fulfilled all requirements, including filing IGM, Bills of Entry, and seeking permission for conversion into coastal run, as evidenced by records and Circular No. 16/2012-Customs.

5. The tribunal observed that the Customs department was aware of the activities undertaken by the appellant and the absence of any advice or intervention regarding procedural errors. Considering the exemption available before a specific date, the tribunal found the demand of duty and imposition of penalties prior to the mandatory filing date as legally unjustified.

6. Ultimately, the tribunal granted a waiver from pre-deposit of dues adjudged against the appellants and stayed recovery during the appeal's pendency, acknowledging the strong case made by the appellants in their favor based on procedural compliance and legal provisions.