2016 (8) TMI 637 - AT - Customs

Classification - import of Phosphoric acid - full exemption under Notification No.265/92-CUS dated 27.08.1992 for the manufacture of fertilizers - Held that - Appellant will demonstrate, with the help of few imports, before the Adjudicating authority that there was a difference in the Ullage Report quantity and quantity of cargo received in shore tank with respect to imports made after CBEC Circular dated 27.12.2002. If on examination/demonstration adjudicating authority finds it so then the same should be held to be applicable to the imports for the period prior to CBEC Circular dated 27.12.2002 also because it is not disputed that movement of cargo through pipeline under the supervision of independent surveyor has not changed during the periods prior/post CBEC Circular dated 27.12.2002. On the issue of excess quantity of nearly 2000 MT of Ammonia in the shore tank of the appellant it is observed that the same has been explained to be due to 2000 MT of Ammonia received from M/s.EID Parry (India) Ltd. which was a replacement of appellant s Ammonia quantity diverted from Haldia due to technical problems and stored in the tank of M/s. EID Parry. There is no evidence on record that appellant on any occasion has imported Ammonia in excess of Ullage report quantity which is unmanifested. Revenue thus cannot ask for duty on a quantity in excess of Ullage Report quantity/quantity declared in the Bills of entry based on presumptions in the absence of any evidence to that effect. Accordingly, the argument taken by the appellant that excess quantity of Ammonia represented 2000 MT received from M/s.EID Parry (India) Ltd. is acceptable and no duty can be demanded on that quantity. Decided in favor of appellant and against the revenue.

Summary

Issues:
1. Duty calculation based on Ullage Report quantity vs. quantity received in off shore tanks
2. Applicability of CBEC Circular dated 27.12.2002
3. Excess quantity of Ammonia found in off shore tanks
4. Confiscation, redemption fine, and penalties

Issue 1: Duty Calculation

The main issue revolved around whether duty on imported goods should be determined based on the Ullage Report quantity or the quantity received in the off shore tanks. The appellant argued that duty should be based on the quantity received in the tanks, following CBEC Circulars and Supreme Court judgments. The Revenue contended that the entire Ullage quantity was cleared on payment of duty, rejecting the appellant's claim of lesser quantity received in the tanks. The Tribunal observed that for the period before the CBEC Circular, the movement of cargo was not supervised by customs as required. The Tribunal remanded the matter for the appellant to demonstrate the difference in quantity post the Circular, indicating that if proven, it should also apply to the pre-Circular period due to consistent procedures.

Issue 2: Applicability of CBEC Circular

The appellant relied on the CBEC Circular dated 27.12.2002, following the prescribed procedure for imported cargo. The Tribunal noted a difference in quantity even after the Circular, prompting a remand for further demonstration. The Tribunal emphasized the need for customs supervision during cargo movement and considered the Circular's impact on duty calculation.

Issue 3: Excess Ammonia Quantity

Regarding the excess Ammonia found in the appellant's tanks, the appellant explained it as a reciprocation for Ammonia diverted earlier due to technical issues. The Tribunal found no evidence of unmanifested excess imports and accepted the explanation, rejecting the Revenue's demand for duty on the excess quantity.

Issue 4: Confiscation and Penalties

The Tribunal reviewed the case records and relevant Supreme Court judgments on duty assessment, concluding that confiscation and penalties were not warranted. There was no evidence of diversion of goods for other purposes, leading to the dismissal of the Revenue's claims. The Tribunal allowed the appellant's appeal on confiscation, redemption fine, and penalties, emphasizing the lack of grounds for enforcement.

In the final decision, the Tribunal allowed the appellant's appeal on specific issues related to excess Ammonia quantity and confiscation, redemption fine, and penalties. The Revenue's appeal was dismissed, and a remand was granted for further examination by the Adjudicating authority on the duty calculation issue post the CBEC Circular.