2018 (8) TMI 370 - AT - Customs

Liability of duty - it was held that appellant were not entitled to receive duty free bunker as the vessel at the material time was on coastal run from Sikka to Hazira port - Held that - The Tribunal in the case of Jaisu shipping co. Pvt. Ltd. 2007 (2) TMI 569 - CESTAT, AHMEDABAD held that Status as vessel, whether coastal or foreign run, on is not relevant at the time when the duty free goods are received. The only requirement is that the duty free goods should be consumed when the vessel is on foreign run - In the instant case, there is absolutely no evidence to produced to show that the said bunker was used while the vessel was on coastal run. In these circumstances no violation of section 86 & 87 of the Customs Act has been made out by Revenue. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand and imposition of penalties regarding duty free bunker received by a vessel.

Analysis:
1. The appellant, M/s Reliance Industries Ltd., along with other parties, appealed against the confirmation of demand and imposition of penalties related to duty free bunker received by a vessel. The appellant argued that the duty free bunker received was intended for a foreign voyage to Columbo and was not consumed during the coastal run from Sikka to Hazira port. The appellant cited relevant provisions of the Customs Act 1962, emphasizing that the time of consumption of duty free goods is crucial, not the time of receipt. The appellant also relied on a previous judgment by the Tribunal upheld by the Hon'ble High Court of Gujarat in a similar case, where the duty free goods were allowed to be consumed during a foreign voyage despite being received during a coastal run.

2. The appellant further contended that the Show Cause Notice issued was time-barred as the information regarding the diversion of the vessel's voyage was communicated to the Customs authorities before receiving the duty free bunker. The appellant argued that the extended period cannot be invoked in such circumstances. Additionally, the appellant argued against the application of Section 28 of the Customs Act for demanding duty on goods removed from SEZ units, stating that penalties should not be imposed in the given circumstances.

3. On the other hand, the respondent relied on the impugned order and presented evidence suggesting that the vessel was declared to be on a foreign run even when it was on a coastal run. The respondent highlighted documents indicating that the vessel was represented as being on a foreign run during the relevant period, despite being on a coastal run. However, the Tribunal considered the arguments from both sides and referred to a previous judgment by the Hon'ble High Court of Gujarat in the case of Jaisu Shipping Company. In that case, the Tribunal held that the status of the vessel as coastal or foreign run at the time of receiving duty free goods is irrelevant; the crucial factor is the consumption of such goods during a foreign run. As no evidence was presented to show that the duty free bunker was consumed during the coastal run, the Tribunal allowed the appeals, emphasizing the importance of consumption timing over receipt timing.

4. In conclusion, the Tribunal allowed the appeals, citing the precedent set in the Jaisu Shipping Company case and emphasizing the necessity of proving the consumption of duty free goods during a foreign run rather than focusing on the vessel's status at the time of receipt. The judgment was pronounced on 01.08.2018 by the Tribunal.