1998 (11) TMI 217 - AT - Customs

Summary

Issues Involved:
1. Determination of the correct method for measuring the quantity of petroleum products imported.
2. Applicability of Section 116 of the Customs Act regarding penalties for short landing.
3. Relevance and accuracy of Ullage Survey Reports versus shore tank measurements.
4. Interpretation of legal provisions and judicial precedents concerning the importation and levy of customs duty.

Issue-wise Detailed Analysis:

1. Determination of the correct method for measuring the quantity of petroleum products imported:
The core issue revolves around whether the Ullage Survey Report at the Port of Destination or the measurement in the shore tanks should be the basis for determining the quantity of imported petroleum products for customs duty purposes. The appellants argued that the shore tank measurement should be adopted, as it reflects the actual quantity of goods imported into India. They contended that the Ullage Survey, conducted both at the foreign port and the Indian port, is inherently inaccurate and should not be the final determinant for the quantity of goods imported.

2. Applicability of Section 116 of the Customs Act regarding penalties for short landing:
The appellants distinguished between the imposition of penalties under Section 116 for short landing and the levy of import duty under Section 12 of the Customs Act. They argued that Section 116, which deals with penalties for not accounting for goods, is not applicable in determining the quantity of goods for duty purposes. The respondents, however, maintained that the Ullage Survey Report should be used for both purposes, as it provides a consistent method for determining the quantity of goods imported.

3. Relevance and accuracy of Ullage Survey Reports versus shore tank measurements:
The Tribunal reviewed various judicial precedents and found conflicting decisions on whether the Ullage Survey Report or shore tank measurements should be used to determine the quantity of imported goods. Some judgments favored shore tank measurements, while others supported the Ullage Survey Report. The Tribunal noted that the Ullage Survey Report, conducted under the supervision of Customs Officers and often countersigned by them, is a primary and basic document for determining the quantity of goods imported.

4. Interpretation of legal provisions and judicial precedents concerning the importation and levy of customs duty:
The Tribunal emphasized the need to harmonize the provisions of Sections 12 and 116 of the Customs Act. It rejected the appellants' argument that different quantities could be used for these sections, stating that the legislative intent was to have a consistent method for determining the quantity of goods imported. The Tribunal relied on the Full Bench decision of the Bombay High Court, which held that importation is complete when the vessel enters the territorial waters of India, and the Ullage Survey Report at the port of discharge should be the basis for determining the quantity of goods imported.

Conclusion:
The Tribunal concluded that the Ullage Survey Report is the primary document for determining the quantity of goods imported and upheld the Orders-in-Appeal, confirming the amount demanded by the Assistant Commissioner of Customs. The appeals were dismissed, affirming the use of the Ullage Survey Report for both the imposition of penalties under Section 116 and the levy of duty under Section 12 of the Customs Act.