2014 (10) TMI 46 - AT - Customs

Confiscation of goods - Redemption fine - Whether the gas oil brought into the shore tank at Mundra and Kandla should be considered as transshipment cargo or not - Held that - It is observed from the prevailing import-export policy at the relevant time that Hydrcarbons of Import Export Policy headings 27101111, 27101112, 27101113, 27101119, 27101120, 27101190, 27101930, 2710 1940 were permitted to be imported only through State Trading Enterprises or the canalized agencies. The goods of heading 27101950, 27101960, 27101970, 27101980, 27101990 and Heading 2711, pertaining to certain Hydrocarbon gases, of import export policy, were freely importable. It has been correctly observed by the adjudicating authority that the prospective buyers and the port of destination were not known/declared at the time of export. During the course of hearing on a specific query by the Bench it was submitted that after permissions of export given to the main appellant as a result of High Court s order, cargo was taken back by the owner of the cargo to Middle East from where one of the consignment was originally procured. In the facts & circumstances of this case, it becomes difficult to appreciate as to why the cargo was brought into territory of India for transshipment when the same was to be taken back to the same place from where the goods originated. At the time of taking cargo out of India also no port of destination was given by the main appellant. From the facts available on record; incomplete description of the cargo given in the cargo declarations, no mention of the port of destination and the name of any prospective buyer and taking of gas oil back to the same place from where partly the cargo originated, suggest that crgo was not for transshipment. As per the contents of the letter dt.30.04.2010 written by the main appellant to the Joint Commissioner Customs Kandla, the main appellant and their CHA were well aware that there are earlier examples where transshipments have been granted and certain importers like M/s Adani Enterprises Ltd have already explored the possibility of supply of HSD to EOUs, units in SEZ and as bunkers for internationally sailing vessels, after warehousing the same. Goods gas oil , subsequently equated to HSD, was not intended for transshipment. Accordingly, the goods were rightly confiscated and redemption fines were correctly imposed along with penalties on the main appellant. - Decided against the assessee. M/s Act Shipping Ltd (CHA) was well aware of various procedures of transshipment and the facts that on similar transshipments permission was granted by the Revenue but the CHA never guided the main appellant to file proper IGMs showing the port of destination etc. at the time of filing IGM, as required under the procedures prescribed by Revenue. Penalties upon the CHA and Shri T.V. Sujan Director of M/s Act Shipping Ltd have thus been correctly imposed. Penalties on custodians - Held that - It has been correctly argued that they had no knowledge that the goods stored in the shore tanks were not meant for transshipment and were not going to be personally benefited in these proceedings. Therefore, penalties imposed upon the custodians and their employees are set aside.

Summary

Issues Involved:
1. Imposition of redemption fine and penalties on the main appellant for imported goods.
2. Qualification of the imported goods as transshipment cargo under Section 54 of the Customs Act, 1962.
3. Compliance with procedural requirements for transshipment.
4. Imposition of penalties on associated parties such as the Custom House Agent (CHA) and custodians.

Issue-Wise Detailed Analysis:

1. Imposition of Redemption Fine and Penalties on the Main Appellant:
The main appellant, who imported the goods, faced redemption fines of Rs. 5 Crores and penalties of Rs. 1 Crore for each consignment under Sections 125 and 112(a) of the Customs Act, 1962. The adjudicating authority imposed these fines and penalties due to the appellant's failure to comply with the transshipment provisions and procedural requirements. The goods were declared as 'Gas Oil' and were meant for transshipment to any foreign port. However, the appellant did not meet the basic requirements of transshipment as per Section 54 of the Customs Act, 1962. The appellant also failed to clear the goods within the stipulated time under Section 48 of the Customs Act, 1962, and did not seek extensions. The adjudicating authority concluded that the goods were not intended for transshipment, leading to the confiscation and imposition of fines and penalties.

2. Qualification of the Imported Goods as Transshipment Cargo:
The main issue was whether the imported 'Gas Oil' should be considered as transshipment cargo under Section 54 of the Customs Act, 1962. The appellant argued that the cargo was meant for transshipment and cited various legal precedents and clarifications from the DGFT to support their case. However, the adjudicating authority found that the appellant did not qualify the basic requirements for transshipment. The goods were not declared as HSD in the initial documents, and the port of destination and prospective buyers were not mentioned. The adjudicating authority concluded that the goods were not intended for transshipment, as there was no clear intention or proper documentation supporting the transshipment claim.

3. Compliance with Procedural Requirements for Transshipment:
The adjudicating authority observed that the appellant did not comply with the procedural requirements for transshipment. The appellant failed to file a Bill of Transshipment as required under Section 54(1) of the Customs Act, 1962. The cargo declaration and IGM did not mention the port of destination or the prospective buyers. The adjudicating authority noted that the appellant and their CHA were aware of the transshipment provisions and procedures but did not follow them correctly. The incomplete description of the cargo and the lack of proper documentation indicated that the goods were not intended for transshipment.

4. Imposition of Penalties on Associated Parties:
Penalties were imposed on various associated parties, including the Custom House Agent (CHA) and custodians. The CHA, M/s Act Shipping Ltd, was penalized for not guiding the main appellant to file proper IGMs and for being aware of the transshipment procedures. The Director of the main appellant, Shri Yunus Fazilli, was also penalized for his involvement and statements during the investigation. However, penalties imposed on the custodians and their employees, such as M/s Mundra Port & SEZ Ltd, Shri Anand Marathe, Capt. Umesh Abhyankar, and Shri D. Mahapatra, were set aside. The adjudicating authority found that these individuals were not aware that the goods were not meant for transshipment and were not personally benefiting from the proceedings.

Conclusion:
The appeals filed by the main appellant and associated parties were largely rejected, upholding the imposition of fines and penalties. However, the appeals filed by the custodians and their employees were allowed, setting aside the penalties imposed on them. The judgment emphasized the importance of complying with procedural requirements for transshipment and the need for proper documentation and declarations to qualify for transshipment under the Customs Act, 1962.