2013 (11) TMI 337 - AT - Customs

Stay application - Import of crude oil - Sl. No. 32 of Notification No. 21/02-Cus - Held that - appellant at the time of clearance of crude palm oil from the blended stock did not follow the First In First Out (FIFO) method or the Last In First Out (LIFO) method. The removal from the storage tank is said to be on an arbitrary basis and the same resulted in removal of imported palm oil for sale rather than for refining as required under the Notification. The adjudicating authority worked out the quantity of palm oil so removed on a proportionate basis and computed the demand. The learned counsel has claimed that, at any point of removal of goods from the storage tank, there was sufficient quantity of locally procured stock left in the tank. He has also submitted that this fact was accepted by the adjudicating authority. However, we have not found these submissions to constitute sufficient challenge to the computation of demand done by the adjudicating authority. After a perusal of the grounds of the appeal, we have not found a satisfactory explanation from the appellant vis-a-vis the basis of demand. The appellant has not pleaded financial hardships either - Prima facie case not in favour of assessee - Stay granted partly.

Summary

Issues:
1. Waiver and stay of customs duty and penalty sought by the appellant.
2. Compliance with the conditions of Notification No. 21/02-Cus dated 1.3.2002 regarding clearance of crude palm oil.
3. Method of clearance of crude palm oil from blended stock not following FIFO or LIFO method.
4. Challenge to the computation of demand by the adjudicating authority.
5. Requirement for the appellant to predeposit 50% of the duty demanded.

Analysis:

1. The appellant sought waiver and stay in relation to customs duty of Rs. 44,26,141 and penalty of Rs. 5,00,000. The appellant was importing crude palm oil and clearing it at a concessional rate of duty as per Notification No. 21/02-Cus dated 1.3.2002. The issue arose when the appellant cleared quantities for domestic sale from a blended stock that should have been used for refining, as per the conditions of the Notification. The Revenue claimed non-compliance with the conditions, resulting in the duty demand.

2. The Tribunal observed that the appellant did not follow the FIFO or LIFO method during clearance of crude palm oil from the blended stock. The removal from the storage tank was deemed arbitrary, leading to the sale of imported palm oil instead of refining it as required. The adjudicating authority calculated the demand based on the quantity of palm oil removed proportionately. The appellant's submissions regarding the availability of locally procured stock were not deemed sufficient to challenge the demand computation.

3. Despite the appellant's arguments and lack of satisfactory explanations regarding the basis of the demand, the Tribunal directed the appellant to predeposit 50% of the demanded duty within six weeks. The appellant was instructed to report compliance to the Dy. Registrar by a specified date. Waiver and stay of the penalty were subject to this predeposit, along with the balance amount of duty and interest.

This judgment highlights the importance of complying with the conditions of customs notifications during import and clearance processes, emphasizing the significance of proper record-keeping and adherence to specified methods. The decision reflects the Tribunal's approach to balancing the interests of the appellant with the enforcement of duty requirements, ensuring a fair resolution based on the facts presented during the proceedings.