1999 (4) TMI 299 - AT - Customs

Issues Involved:
1. Dispensation of pre-deposits of duty, penalty, interest, and redemption fine.
2. Allegations of unauthorized import and removal of goods.
3. Applicability of extended period of limitation under Section 28 of the Customs Act.
4. Valuation of goods and computation of duty.
5. Imposition of penalty and penal interest.
6. Financial hardship claimed by the applicants.

Detailed Analysis:

1. Dispensation of Pre-Deposits:
The applicants sought dispensation of pre-deposits of duty, penalty, interest, and redemption fine under the impugned orders. Essar Oil Ltd. (EOL) argued that they had a strong prima facie case on limitation and merits and claimed financial hardship if directed to pre-deposit the duty and penalty amounts. The tribunal directed EOL to deposit Rs. 2.50 crores and Rs. 1,25,000/- in two separate appeals, ACO to deposit Rs. 1.25 crores and Rs. 1,25,000/- in two appeals, and AML to deposit Rs. 20 lakhs within three months. Upon deposit, the penalty amounts were waived.

2. Allegations of Unauthorized Import and Removal of Goods:
The investigation revealed that imported goods were being loaded, unloaded, stored, and removed at Nhava base without it being notified as a customs area. The goods, including drilling spares and scrap, were brought from rigs and sold in the domestic market without payment of duty. Show cause notices were issued alleging that EOL, ACO, and AML were liable to pay duty on materials brought for repairs and not returned to the rigs. The adjudicating authority passed impugned orders, which were appealed against.

3. Applicability of Extended Period of Limitation:
The applicants contended that the show cause notice was time-barred as it was issued beyond six months. They argued that the Customs department had full knowledge of offshore operations and that there was no specific allegation of collusion or willful misstatement. The tribunal noted that the department's knowledge of operations at Nhava base was not substantiated by any acknowledgment or order permitting the use of the base as a customs area. The extended period of limitation was invoked based on the applicants' failure to observe customs formalities and pay duty.

4. Valuation of Goods and Computation of Duty:
The applicants challenged the valuation of various articles, arguing that the damaged and repaired goods were valued as new, leading to inflated duty estimation. The adjudicating authority had given a margin to the valuation provided by ONGC. The tribunal noted that the valuation aspect required detailed consideration on merits, which could not be undertaken at the stay application stage.

5. Imposition of Penalty and Penal Interest:
The applicants argued that no penal interest could be levied in the absence of a show cause notice and allegations of collusion, willful misstatement, or suppression. They contended that the penal provision could not be applied retrospectively. The tribunal observed that the applicants had failed to produce relevant documents and had admitted to non-payment of duty. The contention regarding the imposition of penalty and penal interest required detailed consideration on merits.

6. Financial Hardship Claimed by the Applicants:
EOL claimed financial hardship if directed to pre-deposit the duty and penalty amounts. However, the tribunal noted that this claim was not substantiated by any material evidence. Consequently, the tribunal directed the applicants to make pre-deposits to take up the appeals for final hearing.

Order:
The tribunal directed EOL, ACO, and AML to deposit specified amounts within three months and waived the penalty amounts upon deposit. The department was instructed to maintain the status quo regarding the order of confiscation and interest pending disposal of the appeals.

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