1999 (10) TMI 330 - AT - Central Excise

Adjudication - Jurisdiction - Show cause notice - Rate of duty - Confiscation and penalty - Demand - Limitation

Summary

Issues Involved:
1. Jurisdiction of the Commissioner of Customs (Preventive), Mumbai.
2. Validity of the Show Cause Notice (SCN).
3. Applicable rate of duty and tariff valuation.
4. Contravention of Sections 60, 88, and 90 of the Customs Act.
5. Violation of Section 111(j) of the Customs Act.
6. Limitation period for issuing the SCN.
7. Imposition and quantum of penalties.

Detailed Analysis:

1. Jurisdiction of the Commissioner of Customs (Preventive), Mumbai:
The appellants argued that the Commissioner lacked jurisdiction as his appointment was not gazetted. The Tribunal found that the transfer order of the Commissioner was valid, and he had jurisdiction over the areas from where the goods were removed. However, the Commissioner of Customs (Prev.), Mumbai, did not have jurisdiction over goods cleared from warehouses in Gujarat. Thus, the plea of the appellants on this point succeeded.

2. Validity of the Show Cause Notice (SCN):
The appellants contended that the SCN was invalid as it was not signed by the Commissioner but by an Assistant Commissioner. The Tribunal held that the SCN was valid as it was attested by a senior gazetted officer, and there was no requirement for the Commissioner's signature under the Customs Act. The Tribunal distinguished the facts from cases cited by the appellants and upheld the validity of the SCN.

3. Applicable Rate of Duty and Tariff Valuation:
The appellants argued that duty should be calculated under Section 15(1)(c) of the Customs Act, as no Bill of Entry for home consumption was filed. The Tribunal held that since the goods were fraudulently cleared and sold in the local market, the applicable rate of duty would be determined under Section 15(1)(b), which pertains to the date of removal from the warehouse.

4. Contravention of Sections 60, 88, and 90 of the Customs Act:
The appellants claimed there was no contravention as the goods were not supplied to or loaded on vessels. The Tribunal found that the goods were fraudulently declared as 'ship stores' and diverted to the local market, thus violating Sections 60, 88, and 90 of the Customs Act.

5. Violation of Section 111(j) of the Customs Act:
The appellants contended that there was no violation of Section 111(j) as the goods were cleared with the permission of a proper officer. The Tribunal held that the terms of the permission were violated as the goods were not used as 'ship stores' but sold in the local market, thus establishing a contravention of Section 111(j).

6. Limitation Period for Issuing the SCN:
The appellants argued that the SCN was time-barred for certain shipping bills. The Tribunal agreed that for two shipping bills, the demand was beyond the five-year period stipulated in Section 28(3)(a) of the Customs Act and set aside the demand for these bills. However, the Tribunal upheld the invocation of the extended period for other demands, citing deliberate evasion of duty.

7. Imposition and Quantum of Penalties:
The appellants argued that penalties were excessive and not warranted due to their cooperation and voluntary payment of duty. The Tribunal found that the evasion was planned and penalties were justified. However, considering the circumstances, the Tribunal reduced the penalties as follows:
- M/s. Montana Valves & Compressors: Rs. 15 lakhs
- M/s. Sea King Marine Services: Rs. 14 lakhs
- M/s. Fairlon Engg. Pvt. Ltd.: Rs. 16 lakhs
- Alankar Shipping: Rs. 2 lakhs

Conclusion:
The Tribunal confirmed the demand for duty on consignments cleared from warehouses under the jurisdiction of the Commissioner of Customs (Prev.), Mumbai, set aside the demand for goods cleared from warehouses in Gujarat, and reduced the penalties imposed on the appellants. The voluntary payments made by the appellants were adjusted against their penalty liabilities.