2015 (10) TMI 207 - AT - Customs

Mis-declaration of good Demand of Duty & Imposition of Penalty Appellant had not declared certain goods in cargo declaration because of which said undeclared goods were confiscated and demand of duty alongwith interest and penalty was imposed Held that - appellant purchased vessel for ship breaking purpose vide Memorandum of Agreement on As is Where is basis On perusal of said agreement, it was clearly evident that appellant purchased vessel RITA for ship breaking purpose It was clear from expert opinion that seized goods were used in oil field, wherein vessel in question was passenger vessel Thus it was clear that these items were not part and parcel of vessel and if they were so, they would have been brought on record and declared as ship stores Hence these items were nothing but cargo / goods , which ought to have been declared in IGM No material available on record that these items were kept in vessel from other source and that appellant had paid any amount for seized goods Demand of duty on these seized items separately can not be sustained which was already included in MOA price as per agreement on lumsum basis Thus, there was no mis-declaration on part of appellant Therefore impugned order can not be sustained Decided in favour of Appellant.

Summary

Issues:
1. Confiscation of seized goods and demand of duty under Customs Act, 1962.
2. Imposition of redemption fine and penalty on the appellant company and its Managing Director.
3. Interpretation of the Memorandum of Agreement (MOA) for the purchase of vessel 'RITA' for ship breaking purpose.
4. Discrepancy in declaration of ship spares and spare chimney in the Bill of Entry.
5. Adjudication of seized goods as not part of the vessel and liable for confiscation under Section 111 of the Customs Act.

Analysis:

1. The case involved a show cause notice proposing confiscation of seized goods, demand of duty, interest, and penalty under the Customs Act, 1962. The Commissioner of Customs had confiscated the goods, imposed fines, and demanded duty. The appellant contended that the seized goods were part of the vessel 'RITA' purchased for ship breaking and had paid duty based on the transaction value. The appellant relied on Supreme Court judgments to support their argument.

2. The Revenue argued that the appellant did not declare ship spares and spare chimney in the Bill of Entry, which were found during rummaging. The adjudicating authority valued the seized goods separately and imposed penalties. The Revenue contended that these items were not part of the vessel and should have been declared, rendering them liable for confiscation under the Customs Act.

3. The Tribunal analyzed the MOA dated 23.6.2006, which clearly stated that all stores and equipment on the vessel were included in the lump-sum price. The vessel was purchased 'as is where is' for ship breaking, and any spares on board were part of the deal. The Tribunal found no evidence that the seized goods were from another source, upholding the MOA price as the transaction value.

4. The adjudicating authority had assessed the seized goods separately, alleging discrepancies in their declaration. However, the Tribunal found that the appellant had paid the lump-sum price as per the MOA, which included all stores and equipment on the vessel. The transaction value declared by the appellant was accepted, and the demand of duty on seized items separately was deemed unsustainable.

5. The Tribunal concluded that there was no mis-declaration by the appellant, as the vessel was purchased for ship breaking, and the appellant had no knowledge of the seized items. The confiscation of goods and fines imposed were deemed unwarranted. The impugned order was set aside, and the appeals filed by the appellants were allowed.

In summary, the Tribunal ruled in favor of the appellant, emphasizing the terms of the MOA, the nature of the vessel purchase, and the absence of mis-declaration. The decision highlighted the importance of transaction value, adherence to agreements, and the liability of goods based on contractual terms in customs cases.