2015 (1) TMI 710 - AT - Customs

Valuation - import of vessel - Benefit of exemption under Notification No. 21/2002-Cus - The only reason for denying the benefit of notification is that the value of the barge as shown in the invoice does not match to the value shown in the Insurance cover and the invoice issued by M/s. SEL on 17-3-2009. - Held that - Reliance on the documents namely invoice issued in 2009 and the insurance cover for insurance of the impugned barge are not the evidences to determine the assessable value. We further find that in this case the adjudicating authority has not relied on any other evidence for enhancing the declared value. Therefore the value declared by the appellant in their bill of entry is really a transaction value and the same cannot be rejected without any supporting evidence. We also find that the appellant produced a certificate issued by Chartered Engineers dated 31-12-2010 certifying the value of the barge is US 23.5 Million. The said evidence has not been discarded by the adjudicating authority. Further the appellant has also produced a quotation to know the price of new identical barge and it shows that the new barge will cost USD 25 Million from the manufacturer. This evidence has also been discarded by the adjudicating authority. Impugned order is without justification as held by the decision in the case of Titan Medical Systems Pvt. Ltd. (2002 (11) TMI 108 - SUPREME COURT OF INDIA). We also find that in the case of CCE v. Wander Ltd. (2003 (8) TMI 48 - SUPREME COURT OF INDIA) the Hon ble Apex Court held that the issue of valuation of barge seized have no relevance or significance if the same is exempted and there is no duty liability. - value declared by the appellant in the bill of entry is true and correct. Therefore the impugned proceedings are not warranted. - The essentiality certificate issued for the barge in question is for Swiber Victorious therefore the impugned order quo rejecting the essentiality certificate is set aside. As the value declared by the appellant is USD 23.5 Million is true and correct value therefore we hold that the appellant is entitled for the benefit of exemption at Sl. No. 214 of Notification No. 21/2002 dated 1-3-2002. - Decided in favour of assessee.

Issues Involved:
1. Rejection of Essentiality Certificate by the adjudicating authority.
2. Demand for duty and confiscation of the vessel.
3. Imposition of penalties on the appellants.
4. Determination of the vessel's value for customs purposes.
5. Eligibility for exemption under Notification No. 21/2002-Cus.

Issue-Wise Detailed Analysis:

1. Rejection of Essentiality Certificate by the Adjudicating Authority:
The appellants contested the rejection of the Essentiality Certificate issued by the Directorate General of Hydrocarbons (DGH), which was crucial for claiming exemption under Notification No. 21/2002-Cus. The adjudicating authority rejected the certificate based on the discrepancy between the value shown in the essentiality certificate and the insurance cover. The Tribunal held that the essentiality certificate issued by DGH, which certified the necessity of the barge "Swiber Victorious" for petroleum operations, could not be disputed merely due to valuation differences. It was emphasized that the certificate's issuance was not based on the value of the goods but on their essentiality for petroleum operations.

2. Demand for Duty and Confiscation of the Vessel:
The adjudicating authority demanded a duty of Rs. 22,18,19,208/- and confiscated the vessel, allowing its redemption on payment of a fine of Rs. 23,00,00,000/-. The Tribunal found that the value used by the adjudicating authority, based on an invoice and insurance cover, was not appropriate for determining the assessable value under Section 14 of the Customs Act, 1962. The Tribunal observed that the transaction between Swiber Engineering Ltd. and its subsidiary was not a commercial transaction and thus could not be used to assess the value. The Tribunal also noted that the insurance value was not the market value.

3. Imposition of Penalties on the Appellants:
Penalties were imposed under Section 114A of the Customs Act, 1962, on the main appellant and co-appellants. The Tribunal found that since the essentiality certificate was valid and the value declared by the appellants was correct, the penalties imposed were unjustified. The Tribunal set aside the penalties.

4. Determination of the Vessel's Value for Customs Purposes:
The appellants declared the value of the vessel as US$ 23,533,700 in the bill of entry, which was contested by the Revenue based on an insurance cover value of US$ 42,500,000. The Tribunal held that the value declared by the appellants, supported by a Chartered Engineer's Certificate and a quotation for a new identical barge, was the true transaction value. The Tribunal rejected the adjudicating authority's reliance on the insurance cover and an earlier invoice, emphasizing that these did not reflect the market value at the time of import.

5. Eligibility for Exemption under Notification No. 21/2002-Cus:
The Tribunal concluded that the appellants were entitled to the exemption under Notification No. 21/2002-Cus. The essentiality certificate issued by DGH was valid, and the value declared by the appellants was correct. Thus, the appellants were eligible for the exemption, and the demand for duty and penalties was not justified.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals with consequential relief. The essentiality certificate was upheld, the declared value was accepted, and the appellants were granted the benefit of exemption under Notification No. 21/2002-Cus. The penalties and duty demands were nullified. The stay application was also disposed of in these terms.

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