2024 (2) TMI 319 - AT - Customs

Exemption from payment of whole of Customs duty and whole of Additional duty leviable under the virtue of Notification No. 104/94-Customs dated 16.03.1994 - failure to follow the procedures as laid down in the said Notification - failure to re-export 39 containers within the period of six months prescribed in the said notification - not seeking extension of time limit for re-export from the proper officer - HELD THAT - The appellant have availed benefit of Notification No. 104/94 which permits Duty Free Import of the container subjected to the condition that they are re-exported within six months. In the instance case, same could not be re-exported within six months purportedly due to some fire on the port and damage to other containers, out of 39 containers brought in at the port. Thus, there was clearly a breach of condition of exemption notification and in the absence of any remission or waiver of duty having been granted by the competent authorities and the same not having been sought by the party for considerable length of time. The valuation has not been done with full transparency and such valuation report has not been allowed to be commented upon by the appellants. The grievance thus appears genuine. While in principle, it is agreed that duty in absence of remission was payable, as import which is subject matter of levy can even take place when goods enter in territorial waters. And only in normal case, the collecting point is deferred till Bill of Entry is filed. However, if goods get destroyed on port, the remission provision comes into play, which in this case was not sought. The assessment of duty etc, however has to be done on proper valuation after following natural justice, therefore, it is held that containers though could be subjected to duty, but assessment has to be on proper valuation arrived as per provisions and by following of natural justice - Appeal is allowed by way of remand on this aspect. Penalty - HELD THAT - Section 114(A) requires malicious intent cannot be sustained in the facts of this matter specifically considering the supervening fact of fire after imports. Same is therefore dispensed with. Appeal disposed off.

Summary

Issues Involved:
1. Compliance with Notification No. 104/94-Customs.
2. Liability for customs duty and penalties.
3. Validity of duty demand under Section 28 of the Customs Act, 1962.
4. Valuation of damaged containers.

Summary:

1. Compliance with Notification No. 104/94-Customs:
The appellant failed to re-export 39 containers within the prescribed six-month period and did not seek an extension from the proper officer, violating the conditions of Notification No. 104/94-Customs dated 16.03.1994. Consequently, the lower authority viewed the containers as liable for confiscation under Section 111(o) of the Customs Act, 1962.

2. Liability for Customs Duty and Penalties:
The adjudicating authority confirmed a duty amounting to Rs. 9,48,095/- along with interest, ordered the confiscation of the 39 containers valued at Rs. 32,20,324/-, and allowed redemption on payment of a fine of Rs. 3,22,000/-. Additionally, a penalty of Rs. 9,48,095/- was imposed under Sections 112(a) and 114A of the Customs Act, 1962.

3. Validity of Duty Demand under Section 28 of the Customs Act, 1962:
The appellant argued that the containers never crossed the customs barriers and thus should not be considered imported into India. They relied on the decision in Garden Silk Mill Ltd. vs. UOI, asserting that the import was not completed. The appellant also cited the case of Kutch Shipping Agency Pvt. Ltd. vs. Commissioner of Customs (General) Mumbai, where it was held that duty cannot be demanded under Section 28 if the containers were not in the possession of the shipping agency. The Tribunal observed that the original authority erroneously relied on Section 28 without sufficient evidence and acknowledged that the containers were in the custodian's possession.

4. Valuation of Damaged Containers:
The appellant contested the valuation of the damaged containers, arguing that the valuation report was not shared with them and that the containers, being heavily damaged, could only fetch scrap value. The Tribunal found that the valuation lacked transparency and was not conducted following principles of natural justice.

Tribunal's Decision:
The Tribunal held that while duty was payable due to the breach of conditions under the exemption notification, the assessment of duty must be based on proper valuation and adherence to natural justice. The appeal was allowed by way of remand for proper valuation. The penalty under Section 114(A) was dispensed with, considering the fire incident that damaged the containers.

Conclusion:
The appeal was disposed of with directions for a proper valuation of the containers and setting aside the penalty under Section 114(A).