2015 (1) TMI 752 - AT - Customs

Duty demand - Provisionally released goods - Imposition of penalty - Penalty on CHA - Held that - At the time of original importation and assessment the appellant had furnished invoices packing lists bill of sale and certificate from the Indian Register of Shipping. Further the goods were also examined on first check basis by the customs authorities by boarding the vessel. Therefore it cannot be said that the Customs officers did not know what the goods under import were that is whether it is only a mere supply vessel or it is also capable of anchor handing. Further the certificate issued by the Indian Register of Shipping clearly described the class of the vessel as tug/supply vessel. - towing capability of the vessel was clearly indicated in the certificate issued by the Indian Register of Shipping. Further in the bill of sale which was submitted along with import documents it is clearly shown that the vessel is an anchor handling tug/supply vessel. Therefore it cannot be said that the assessing authority did not know the nature of the vessels under importation. Even in the Lloyds register which is mentioned in the Indian Register of Shipping the vessel is shown as offshore tug/supply ship. Therefore if the department wanted to classify the vessel under CTH 8904 they should have done the same when the bills of entry were filed along with other import documents for the purposes of assessment which they failed to do. In the appellant s own case the lower appellate authority had classified the anchor handling tug/supply vessel under CTH 89019000 as a cargo vessel. This order of the lower appellate authority was not challenged by the Revenue and had attained finality. In these circumstances the appellant could have entertained a bona fide belief that the goods under importation merited classification under CTH 8901. Appellant had furnished the requisite particulars as envisaged under the law at the time of assessment of the goods. The vessels were also boarded and examined by the Customs and therefore it cannot be contended that the appellant had suppressed any information. Since the show-cause notices have been issued only in 2012 in respect of the imports made in 2008 and 2009 the demands are clearly time barred and therefore the question of confirming differential duty would not arise at all. As regards the argument that since one of the vessels were seized and confiscated and allowed to be redeemed there is no time limit for demand of duty we do not subscribe to this view. As regards the payment of duty under section 125 at the time of redemption the same would arise when no assessment had been done earlier. In any case in the present case the goods have been confiscated under section 111(m) of the Customs Act. Since we have already held that there was no mis-declaration on the part of the appellant and confiscation under the said section is not justified the question of giving any option of redemption or payment of duty at the time of redemption would not arise at all. Consequently the penalties imposed on the appellant and its official are also not sustainable in law. As regards the penalties imposed on the CHA we find no justification for such an imposition. The CHA had acted based on its understanding of the law and on the basis of the documents given had classified the vessels under CTH 8901. We also note that the CHA had specifically asked for assessment on first check basis that is examination first and assessment later which was also acceded to. In these circumstances the CHA could not be said to have aided or abetted evasion of duty by the importer. Therefore imposition of penalties on the CHA and its official is clearly unsustainable in law. - Decided in favour of appellant.

Issues Involved:
1. Classification of imported vessels.
2. Invocation of the extended period for duty demand.
3. Imposition of penalties on the importer and its officials.
4. Imposition of penalties on the Customs House Agent (CHA) and its officials.
5. Time limitation for issuing show-cause notices and demanding differential duty.

Detailed Analysis:

Classification of Imported Vessels:
The primary issue was the classification of the imported vessels "Sea Cheetah" and "Sea Venture." The appellant classified these vessels under CTH 89019000 as vessels for the transport of goods and persons, claiming duty exemption. However, the Customs authority reclassified them under CTH 8904 as tugs, which attracted higher duty. The appellant argued that the vessels, described as tug/supply vessels in the Indian Register of Shipping certificate, could carry cargo and passengers and thus merited classification under CTH 8901. The Tribunal noted that the vessels had cargo and passenger carrying capabilities and cited previous decisions and definitions supporting the appellant's classification under CTH 8901.

Invocation of Extended Period for Duty Demand:
The Customs authority invoked the extended period for demanding differential duty, alleging mis-declaration by the appellant. The appellant contended that they had provided all necessary documents, including invoices, packing lists, and certificates from the Indian Register of Shipping, at the time of import and that the Customs officers had examined the vessels. The Tribunal found no suppression or mis-declaration on the appellant's part, as the nature of the vessels was clearly indicated in the submitted documents and confirmed by the Customs examination.

Imposition of Penalties on the Importer and Its Officials:
Penalties were imposed on the appellant and its officials under various sections of the Customs Act. The Tribunal held that since there was no mis-declaration or suppression of facts, the penalties were not sustainable. The appellant had a bona fide belief in the classification under CTH 8901, supported by previous unchallenged appellate decisions.

Imposition of Penalties on the CHA and Its Officials:
Penalties were also imposed on the CHA and its officials for alleged abetment in duty evasion. The Tribunal found no justification for these penalties, noting that the CHA acted based on the documents provided and requested assessment on a first-check basis, which was approved by the Customs. Therefore, the CHA and its officials could not be held liable for aiding or abetting duty evasion.

Time Limitation for Issuing Show-Cause Notices and Demanding Differential Duty:
The Tribunal emphasized that the show-cause notices issued in 2012 for imports made in 2008 and 2009 were time-barred. The Customs authority's failure to classify the vessels correctly at the time of import, despite having all necessary information and examining the vessels, precluded the invocation of the extended period. The Tribunal cited Supreme Court decisions stating that mere non-payment of duties does not equate to collusion or willful misstatement, and the burden of proving mala fide lies on the accuser. Consequently, the demands for differential duty were not justified.

Conclusion:
The appeals were allowed on the grounds of time bar, setting aside the impugned orders and providing consequential relief in accordance with the law. The Tribunal did not find it necessary to examine other issues related to classification due to the time-barred nature of the demands.

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