2015 (2) TMI 553 - AT - Customs

Duty demand u/s 28 - Difference in value declared to the Customs in the invoices submitted to the Customs at the time of import vis- -vis the values stated in the documents available in the appellant's file - Imposition of penalty - Difference of opinion - matter may be referred to the President to nominate a 3rd Member to resolve the following issues - 1. Whether in the facts and circumstances of the case appellants can at this belated stage raise the issue that they are neither importer nor person claimed themselves to be the owner of goods and hence no duty can be confirmed against them as allowed by Member (Judicial). Or In view of the facts that the goods belongs to the appellant or their associate and sent at their instance, the appellant admitted the duty liability at the time of investigation thereby stopping further investigation and the fact that during the first round of litigation that is before the adjudicating authority or before this Tribunal, the appellant did not dispute the duty liability and the matter was remanded by this Tribunal for the limited purpose of quantification of the duty amount keeping in view that the applicability of duty exemption notifications prescribing effective rate of duty and the penalty under Section 112 and 114A to be separately specified, appellant cannot be allowed to raise the issue that they were not importer or person chargeable to duty at this stage as held by Member (Technical). 2. Whether the appellant can be permitted to raise the issue that the goods are ship stores, meant for use beyond the territorial waters of India and thereafter to be re-exported back and hence no duty can be charged as allowed by Member (Judicial) Or The goods imported are not ship stores as per the definition under Section 2(38) of the Customs Act particularly in view of the fact that the appellants are only providing wireline testing, measurement while drilling etc., service to ONGC and spare parts imported are used in the equipments for providing the said service and are not part/fitment of the oil rigs. Moreover, no catalogue, literature or supporting evidence is produced at any stage for the said claim. No details have been provided how and where the goods are used. The provisions of Customs Act are not only applicable to the territorial waters of India but also to Exclusive Economic Zone. Further no details have been provided when the goods were taken on oil rigs, when received back and when re-exported back and no procedure has been followed as prescribed under any Sections of the Customs Act and under the circumstances the appellants cannot claim the benefit as ship stores or that the goods were immediately re-exported back. Even the Tribunal has not remanded the matter to examine this issue. Hence, this issue cannot be raised at this stage, and benefit of ship stores, re-export etc. cannot be extended as held by Member (Technical). 3. Whether in the case of imports through courier, since Bill of Entry is filed by the Courier Agency therefore the courier is the importer and not the appellant as held by Member (Judicial) Or Courier agency acts as an agent of the appellant consignee, while filing a consolidated Bill of Entry for all consignees, and appellant consignee is the importer and person chargeable to duty in respect of his consignments as held by Member (Technical). 4. In case of hand baggage, the passenger who brought the baggage is the importer and hence duty cannot be demanded from appellant as held by Member (Judicial) Or In the case of hand baggage also duty is chargeable from the appellant as goods were brought by appellant s employees without declaring or declaring but under-declaring the value, goods were owned by the appellant or their associate, were taken from appellant s offices abroad and after passing through Customs in India again handed over to the appellant, which in turn were used by appellant in connection with providing service to ONGC as held by Member (Technical). 5. Whether in case the imports were made through sea, ONGC has to file bill of entry as importer as held by Member (Judicial) Or Appellant has admitted duty liability in respect of 4 consignments of spare parts imported by sea/air, and no evidence is produced that bill of entry was filed by ONGC. Moreover, goods were shipped by appellant, received by appellant and used by appellant for providing the service to ONGC under the circumstance appellant is to be held person chargeable to customs duty as held by Member (Technical). 6. Keeping in view the facts and circumstances, no duty chargeable from the appellant as held by the Member(Judicial) Or Keeping in view the facts and circumstances of the case, duty is chargeable and collectable from the appellant as held by Member(Technical). 7. No penalty is imposed by the Member (Judicial) in view of the fact that the appellants are not liable to pay duty but as they are not contesting the confirmation of duty against them. Or Penalty is imposable under Section 112 of the Customs Act in the facts and circumstances of the case on both the appellants irrespective of contesting or not contesting duty liability as held by the Member (Technical).

Summary

Issues Involved:
1. Whether the appellants can raise the issue that they are neither importers nor owners of the goods and hence not liable to pay duty.
2. Whether the goods can be considered as ship stores and exempt from duty.
3. Whether the courier agency or the appellant is the importer in case of imports through courier.
4. Whether the passenger or the appellant is the importer in case of hand baggage.
5. Whether ONGC or the appellant is the importer in case of imports through sea.
6. Whether duty is chargeable from the appellant.
7. Whether penalties are imposable on the appellants.

Issue-wise Detailed Analysis:

1. Importer and Ownership Liability:
The appellants argued that they are neither the importers nor the owners of the goods as per Section 2(26) of the Customs Act, 1962, and hence not liable to pay duty. The Tribunal found that the imports were effected either by ONGC, courier, or hand baggage, and the appellants neither filed a bill of entry nor claimed ownership. The goods were imported for ONGC's benefit, and hence, the appellant cannot be held liable for duty. The Tribunal cited the case of UOI v. Jupiter Exports and Commissioner v. Dinesh Chhajer to support this interpretation.

2. Ship Stores Exemption:
The appellants claimed that the imported goods were used as ship stores on rigs beyond India's territorial waters, qualifying for duty exemption under Section 85 of the Customs Act. The Tribunal noted that the adjudicating authority did not dispute that the rigs operated beyond territorial waters, which qualifies them as foreign-going vessels. The benefit should not be denied due to procedural violations, as held in Repro India Ltd. v UOI. The Tribunal found that the goods were re-exported after use and thus not liable for duty.

3. Importer in Case of Courier:
The Tribunal concluded that the courier agency acts as an agent for the consignee (appellant) and is not the importer. The consignee is the importer responsible for duty, as the courier only facilitates transportation. This conclusion was based on the Courier Imports (Clearance) Regulation, 1995, which states that the courier agency handles goods on behalf of the consignee.

4. Importer in Case of Hand Baggage:
The Tribunal held that the employees bringing goods in hand baggage were acting on behalf of the appellant. The appellant directed the import and received the goods, thus being the effective owner and importer. The Tribunal rejected the argument that the passengers (employees) were the importers, emphasizing the appellant's control and ownership of the goods.

5. Importer in Case of Sea Imports:
The Tribunal found no evidence that ONGC filed the bill of entry for sea imports. The appellant admitted duty liability for these consignments, and the goods were used by the appellant for providing services to ONGC. Thus, the appellant was considered the importer and liable for duty.

6. Duty Liability:
The Tribunal held that the appellant is liable for duty as the effective importer and owner of the goods. The goods were used for providing services to ONGC and were imported under the appellant's direction. The Tribunal emphasized that the appellant's acceptance of duty liability during the investigation and the first round of litigation confirmed their responsibility.

7. Penalties:
The Tribunal imposed penalties under Section 112 of the Customs Act on the appellants for smuggling and misdeclaration of goods. The penalties were deemed appropriate given the appellant's role in directing the import and misdeclaration. The Tribunal rejected the argument to waive penalties based on the appellant's acceptance of duty liability, emphasizing the need for penalties to address the violations.

Separate Judgment Analysis:

Member (Technical) P.K. Jain:
- Disagreed with the conclusion that the appellants are not liable for duty.
- Emphasized that the appellants admitted duty liability during the investigation and the first round of litigation.
- Found that the goods were imported under the appellant's direction and used for providing services to ONGC.
- Concluded that the appellant is the importer and liable for duty and penalties.

Member (Judicial) Ashok Jindal:
- Held that the appellants are neither importers nor owners and not liable for duty.
- Found that the goods qualify as ship stores and are exempt from duty.
- Concluded that the courier agency and passengers (employees) are the importers, not the appellant.
- Dropped the penalties based on the appellant's acceptance of duty liability.

Referral to President:
Due to the difference of opinion, the matter was referred to the President to nominate a third member to resolve the issues, including the appellant's status as importer, ship stores exemption, and penalty imposition.