2001 (1) TMI 161 - AT - Customs

Summary

Issues Involved:
1. Confiscation of goods and imposition of penalties.
2. Demand for duty on goods removed from rigs.
3. Applicability of the extended period of limitation.
4. Determination of the rate of duty.
5. Applicability of interest on duty.

Detailed Analysis:

1. Confiscation of Goods and Imposition of Penalties:
The appellants, engaged in oil exploration, faced confiscation of goods and penalties under Section 112 of the Customs Act for goods removed from rigs and brought to Nhava base without payment of duty. The Nhava base was not an area specified under Section 8(a) of the Act for unloading goods, thus making the unloading of goods there liable to confiscation. The Commissioner confirmed the demand for duty and imposed penalties, holding the goods liable to confiscation under clauses (a), (f), and (g) of Section 111 of the Act. However, the Tribunal noted that the department was aware of ONGC's operations at Nhava base and the general nature of these operations. Consequently, it was deemed inappropriate to confirm confiscation or impose penalties for actions known to the department, leading to the partial allowance of the appeals and setting aside the orders of confiscation.

2. Demand for Duty on Goods Removed from Rigs:
The duty was demanded on items initially sent to the rigs as ship stores, brought back to Nhava base, and not shown to have been returned to the rigs. The appellants argued that the department's awareness of the operations barred the extended period for demanding duty. The Tribunal disagreed, stating that general awareness of goods movement did not equate to knowledge of specific items cleared without duty. The obligation to inform the department of the importation of goods was on the importer, which was not fulfilled, justifying the extended period of limitation.

3. Applicability of the Extended Period of Limitation:
The Tribunal held that the extended period under Section 28(1) of the Customs Act was applicable. It reasoned that the department's general awareness of operations did not imply knowledge of specific duty evasion. The Tribunal cited the Larger Bench decision in Nizam Sugar Factory, affirming that the date of the department's knowledge was irrelevant for applying the extended period.

4. Determination of the Rate of Duty:
The Commissioner applied clause (a) of Section 15(1) for determining the rate of duty, which pertains to goods entered for home consumption. The Tribunal found this incorrect, referencing the Supreme Court's judgment in Chowgule & Company Pvt. Ltd., which clarified that clause (c) of Section 15(1) applies to goods imported clandestinely or escaping duty. Since the goods were not imported or cleared in accordance with law, clause (c) was applicable, determining the rate of duty on the date of payment.

5. Applicability of Interest on Duty:
The Tribunal agreed that interest provisions under Section 28AB did not apply, as the duty became payable before the enactment of this section. Consequently, the interest levy was excluded.

Conclusion:
The Tribunal allowed the appeals in part, setting aside the orders of confiscation and modifying the impugned order to apply the rate of duty in force on the date of payment. The liability to penalty was confirmed due to the clear removal of goods without duty payment or compliance with customs formalities. All appeals were allowed in part.