2024 (4) TMI 385 - AT - Customs

Confiscation of goods - recovery of Customs duty - imposition of penalties - Clandestine removal of bunkers - import of duty free Furnace Oil HSD Fuel Oil under warehouse procedure and same was illegally supplied under the guise of Export to Stores on Foreign Going Vessel - case of the revenue is that although the goods were taken out of charge Ex-Bond successfully yet the same was not supplied to any Foreign Going Vessel and diverted elsewhere - HELD THAT - It is found that revenue during the investigation Bunker Supply documents consisting of the photocopies of Shipping Bills, Short Shipment Notices, Sale contract and Warehousing Bonds/ undertaking etc. were called and recovered from the Appellants. Besides the documents like Shipping Bills, related to bunker supplies and EGM of the recipient vessels were also called for from the Customs Houses of the Ports of Supply where the supplies were shown having been made to the vessels by the Appellants. The documents like Log Book (LB) and the Oil Records Books of Bunker Barges shown having used in the transportation were also called for from the Barge owners/ Operators and details of all bunkers supplies made through barge Zee-II were called for from M/s Zee Shipping Services and others. It is found that the Shipping Bills filed at the Ports, wherein the Consignee is shown as the Master of the Foreign Going Vessels to whom the supply is to be made, were duly assessed by the proper officers of Customs at Kandla, Mundra and others ports where the Bonded tanks is located. This is evident from the fact that on Shipping Bills, bear the signatures of the Customs Officers, who assessed the Shipping Bills. Documentary evidences like acknowledgment by the Master of the vessel, acknowledgment by the Customs officers who escorted bunkers and supervised delivery to the Ships etc. produced by the Appellants clearly established that Bunkers covered under each of the Shipping Bills were supplied to the Foreign going vessels - Customs officers whose statements were recorded by the investigating officers have also confirmed the fact of the concerned bunkers having been supplied to foreign going vessels under their supervision and they have singed/counter singed/endorsed the documents. It is found that if bunkers were diverted i.e they were not supplied to the forging going vessels then it was a case of clandestine removal of bunkers which had to be proved by the department by adducing cogent and reliable evidences for establishing actual clandestine removal and delivery of such disputed bunkers to other persons. But there is no such case nor any evidence by the department for actual diversion of the bunkers were produced on records. We agree with the arguments of the appellant that diversion of duty free goods in clandestine manner being a serious charge which has to be proved by the department by adducing cogent and reliable evidence of independent nature. The case made out by Revenue cannot be sustained in the absence of evidence showing diversion of the duty free imported goods to other persons or in the local markets. In the present matter the demand is confirmed by the Ld. Adjudicating authorities in respect of the Shipping Bills on the ground that the EGM s filed by the vessels do not reflect the receipts of the Bunkers as supplied by the Appellants by virtue of the said Shipping Bills. In this regard we find that EGM is a document that is prepared by the Master of the Vessel or the Shipping agent and filed with the proper officers at the time of departure or within 7 days from the date of departure. However on this basis only duty liability cannot be confirmed against the Appellant. In the present disputed matter we find that in respect of the all the shipping bills appellants have duly recovered the consideration for the bunker supplied to recipient vessels. Despite the EGM not mentioning the receipt of bunkers, the owner of the recipient vessels has duly made payment for the said bunkers - the goods involved in all cases were examined and cleared for Foreign Going Vessel in terms of the Section 88 read with Section 69 of the Customs Act 1962. Goods were loaded on the vessel and the concerned officers who examined the goods and issued let export order confirmed in cross examination that they had made the report/order on the dates appearing in the Shipping Bill(s). In such circumstance, a finding contrary to the official records of the Custom Department cannot be supporetd. It is not established that the officers had predated their signatures on the Shipping Bills. Moreover, it is on record that sale proceeds against the supply of goods were received. Penalties imposed upon other co-appellants - HELD THAT - It is found that the evidences on record clearly point out that M/s AEL and M/s World Link supplied the goods to foreign going vessels and there is no diversion of the disputed goods elsewhere as alleged by the department. In such circumstances we do not find any merit in the impugned orders imposing the penalties on the co-appellants. The impugned orders are liable to be set aside and accordingly the impugned orders are set aside - Appeal allowed.

Summary

Issues Involved:
1. Alleged diversion of duty-free imported bunker fuel.
2. Compliance with customs procedures for warehousing and export.
3. Validity of customs duty demands and penalties imposed.

Summary of Judgment:

1. Alleged Diversion of Duty-Free Imported Bunker Fuel:

The department alleged that M/s AEL and M/s World Link, in connivance with other appellants, imported duty-free Furnace Oil and HSD Fuel Oil under the warehouse procedure and illegally supplied them under the guise of "Export" to "Stores" on Foreign Going Vessels. The investigation revealed that the goods were not supplied to the declared vessels but were diverted/illegally supplied.

2. Compliance with Customs Procedures for Warehousing and Export:

The appellants followed the procedure for duty-free import of bunker fuel, warehousing, and subsequent supply as ship stores. This included filing warehousing bonds u/s 59 of the Customs Act, 1962, and obtaining necessary permissions and endorsements from customs officers. The entire process was supervised by customs officers, and the shipping bills bore the endorsements of the customs officers and the masters of the vessels, confirming the supply of bunkers to foreign-going vessels.

3. Validity of Customs Duty Demands and Penalties Imposed:

The Tribunal found that the department failed to provide cogent and reliable evidence of actual diversion of the bunkers. The shipping bills, landing certificates, and endorsements by customs officers and vessel masters established that the bunkers were supplied to foreign-going vessels. The Tribunal noted that discrepancies in the Export General Manifest (EGM) filed by the vessels could not be attributed to the appellants, as they had no control over the EGM preparation and filing. The Tribunal held that the demand for customs duty and the penalties imposed were not sustainable in the absence of evidence showing diversion of the duty-free imported goods.

Conclusion:

The Tribunal set aside the impugned orders, allowing the appeals filed by the appellants with consequential relief as per law. The penalties imposed on the co-appellants were also set aside, as there was no evidence of diversion of the disputed goods.