1991 (2) TMI 357 - AT - Customs

Summary

Issues Involved:
1. Introduction of additional/supplementary grounds.
2. Determination of the actual importer.
3. Liability for duty evasion and post-importation conditions.
4. Applicability of Customs Notifications and the Assistant Collector's satisfaction.
5. Responsibility and knowledge of the appellants regarding diversion of goods.
6. Limitation period for issuing demand notices.
7. Quantification of duty.

Detailed Analysis:

1. Introduction of Additional/Supplementary Grounds:
The appellants filed miscellaneous applications for permission to introduce additional/supplementary grounds. The Departmental Representative had no objections, and after hearing both sides, the applications were allowed.

2. Determination of the Actual Importer:
The appellants argued that they were only handling agents for M.M.T.C., the actual importer. The Customs authorities, however, considered the appellants as the importers based on the bills of entry filed in their name. The Tribunal concluded that the appellants were not the actual importers. The Ministry of Agriculture and M.M.T.C. were the actual importers, with the appellants acting merely as handling agents for the clearance of M.O.P. through Customs.

3. Liability for Duty Evasion and Post-Importation Conditions:
The Collector adjudicated that once M.O.P. cleared without payment of duty was used for purposes other than as manure or in the production of complex fertilizer, it became liable for customs duty, and the exemption would not be available. The Collector held the appellants liable for the duty but refrained from taking penal action under Sections 111(o) and 112 of the Customs Act, as the appellants had no knowledge or intention to divert the goods for non-specified uses.

4. Applicability of Customs Notifications and the Assistant Collector's Satisfaction:
The relevant Customs Notifications (180-Cus., 21-Cus., and 146-Cus.) required the Assistant Collector's satisfaction that the goods were being imported for use as manure. The 1980 notification did not include a post-clearance condition that the goods should not be used for any purpose other than as manure. The Tribunal agreed with the appellants that the exemption applied if the Assistant Collector was satisfied before clearance that the goods were being imported for the specified use.

5. Responsibility and Knowledge of the Appellants Regarding Diversion of Goods:
The appellants argued that they distributed the imported M.O.P. to authorized fertilizer dealers and had no knowledge of any diversion for non-permitted uses. The Collector's findings supported this, noting that the appellants followed the prescribed procedure and had no intention to divert the goods. The Tribunal found no evidence implicating the appellants in the diversion and held that the appellants had no responsibility for the misuse of the goods after their distribution.

6. Limitation Period for Issuing Demand Notices:
The appellants contended that the demands were not linked to specific importations and were barred by the limitation period under Section 28 of the Customs Act. The Tribunal noted that the show cause notices were issued long after the imports, making the demands time-barred. The Tribunal emphasized that if Section 112 was not invoked, the demands under Section 28 must be made within the prescribed limitation period.

7. Quantification of Duty:
The appellants argued that the Collector improperly averaged the value and duty element instead of considering the relevant dates of import and the rates of duty at those times. The Tribunal agreed that such averaging was impermissible and the duty should have been calculated based on the actual dates and rates.

Conclusion:
The Tribunal set aside the Collector's order and allowed the appeals, granting consequential relief to the appellants. The Tribunal held that the appellants were not the importers and were not liable for the duty evasion, as they had no knowledge or intention to divert the goods for non-specified uses. The demands were also found to be time-barred under Section 28 of the Customs Act.