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2019 (8) TMI 1146 - AT - CustomsShort payment of duty - import of petroleum products - non-inclusion of freight incurred in respect of smaller vessels called the daughter vessels - scope of remand - imposition of penalty u/s 114A of the Customs Act by Bench - this Bench in the case of INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF CUSTOMS, COCHIN 2007 (6) TMI 48 - CESTAT, CHENNAI remanded the matter to the Commissioner directing him to pass a speaking order after finalization of provisional assessments - bonafide belief for non-payment of duty - HELD THAT - In the Final Order of INDIAN OIL CORPORATION LTD., the Bench had categorically held that Section 114A of the Customs Act 1962 does not apply in this case and no penalty can be imposed upon the appellant. We are not aware of any order of a higher judicial forum setting aside this finding of this Bench. The imposition of penalty by the Commissioner in the impugned order is a clear violation of this direction by this Bench and therefore, the same needs to be set aside. Inclusion of freight of the daughter vessels - HELD THAT - The method has been prescribed by the Board and the aforesaid Circular No. 04/2006 which is binding upon the departmental officers including the Commissioner. Wherever WSO rates are available, it has been categorically held that those rates must be applied and alternative method can be used only if these rates are not available - In the instant case, the Learned Commissioner has ignored this direction of the Board and has reckoned a different value on the ground that the appellant has recovered a higher amount towards freight. Such an order is contrary to the directions of the CBEC which are binding upon him. The duty liability needs to be worked out directly from the WSO rates which, according to the appellant, are available for the period and any demand made on the basis of some other calculation is not sustainable - the matter must be remanded to the original authority for the limited purpose of calculation of the differential duty payable as per the WSO rates duly attested on the basis of AFRA rates during the relevant period. Appeal allowed by way of remand.
Issues:
1. Duty payment on freight of daughter vessels. 2. Finalization of provisional assessments. 3. Imposition of penalty under Section 114A of the Customs Act. 4. Inclusion of freight in the assessable value. 5. Scope of remand by CESTAT. Issue 1: Duty payment on freight of daughter vessels The appeal was filed against an Order-in-Original alleging underpayment of duty by not including freight for daughter vessels. The appellant, a Public Sector Undertaking importing petroleum products, transferred oil from large tankers to daughter vessels for transit to the port. The Commissioner confirmed a duty demand, which was challenged on appeal. The CESTAT directed the Commissioner to finalize provisional assessments regarding daughter vessel freight and remanded the case. Subsequently, the Commissioner passed another order upholding the demand but reducing the penalty. Issue 2: Finalization of provisional assessments The CESTAT directed the Commissioner to finalize provisional assessments after remand. The appellant argued that assessments were provisional, and there was no intent to evade duty. The legal position regarding daughter vessel freight was unclear, as evidenced by a Board's circular. The CESTAT found the Commissioner's order deviated from the remand scope and set aside the penalty, emphasizing the need for correct determination of duty based on World Scale rates. Issue 3: Imposition of penalty under Section 114A of the Customs Act The CESTAT held that Section 114A did not apply in the case, and no penalty could be imposed. The Commissioner's imposition of a penalty was deemed a violation of the CESTAT's direction. The appellant, a Public Sector Undertaking, was found to have no intent to evade duty. The penalty under Section 114A was set aside by the CESTAT. Issue 4: Inclusion of freight in the assessable value The appellant contended that the Commissioner did not follow CBEC Circular No. 04/2006, which mandated using World Scale rates for duty calculation. The Commissioner's assessment deviated from the circular, leading to an incorrect duty demand. The CESTAT emphasized adherence to the circular's directions for calculating duty based on WSO rates, thereby setting aside the impugned order for a correct duty liability assessment. Issue 5: Scope of remand by CESTAT The CESTAT found that the Commissioner's order exceeded the remand scope by imposing a penalty under Section 114A. The CESTAT emphasized the need for correct determination of duty based on WSO rates and remanded the matter for calculating the differential duty payable. The penalty imposed by the Commissioner was set aside, and the appeal was allowed for remand to determine duty based on WSO rates. This comprehensive analysis of the legal judgment highlights the key issues addressed by the CESTAT in the appeal related to duty payment on freight of daughter vessels, finalization of provisional assessments, imposition of penalty under Section 114A, inclusion of freight in the assessable value, and the scope of remand by the CESTAT.
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