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TMI Blog2002 (12) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... er the importer filed three Shipping Bills 455942, dt. 12-7-93; 459722, dt. 26-7-93 and 459721, dt. 26-7-93 claiming the exemption under Section 90 of the Customs Act, 1962. 3. On the basis of information received by DRI that the goods cleared have in fact been diverted to local market, the case was investigated by DRI, Mumbai. 4. During the investigation, the office premises of M/s. B.K. Industrial Corpn. & Motiwala Bros. CHA, was searched on 17-10-1997 and during the search incriminating documents were recovered and seized under Panchanama dt. 17-10-1997. 5. During the Investigation conducted by DRI the statements of : (1) Shri Kirit Kamdar, (2) Shri Hemant Sheth, (3) Shri P.R. Sheshadri, (4) Shri S.T. Motiwala, (5) Capt. Stanley A. O'Leary were recorded. 6. The Gist of statements are as follows : (1) The statement of Shri Hemant Sheth, Partner of M/s. Hi-Tech Engineers, was recorded u/s of 108 of the CA, 62 on 20-10-97, 24-10-97, 28-10-97 wherein he, inter alia, stated that, he and Shri Kirit Kamdar were partners in M/s. B.K. Industrial Corporation, since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , etc. 2. 3028/8-2-90 Accessories for Electric measuring inst. 16,000/- 3. 10179/28-6-93 Electron Tubes 7,97,196/- 4. 9522/26-3-92 Batteries 12,61,684/- 5. 10988/31-12-92 Tools 7,85,797/- 6. 2635/10-5-1993 "O" rings, washers 4,500/- Shri Hemant Sheth further stated that, he was not able to tell as to whom the goods imported and cleared in the name of Indian Navy had been sold in the local market; that Shri Kirit Kamdar would only be able to state as to whom these goods were sold, that they did not have any purchase orders from Indian Navy in respect of the six consignments mentioned above. (2) Statement of Shri P.R. Sheshadri, Storekeeper, at Naval Dockyard, from the office of the Controller of Procurement, Indian Navy, Mumbai was recorded on 22-10-97, under Section 108 of the Customs Act, 1962, wherein he, inter alia, stated that he was posted to S H 1 B, Naval Dockyard, Tiger Gate, from end of 1992 to middle of 1994 as Storekeeper; that he was carrying out various duties namely receipt and issue of stores from Ship Chandler, suppliers, etc., issuing the same to various ships and establishments as per the purchase order; that he took over the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pected at Naval Dockyard, Bombay, that as per his memory all the packages supplied by M/s. B.K. Industrial Corporation and Hi-Tech were meant for Vizag, that the goods had not come inside the Tiger Gate as the same were taken over by the party for sending the same to Vizag after obtaining his signature; that all the goods shown as received in the Shipping Bills wherein he had put his signature were diverted to Vizag and the goods had not entered the gate. (3) Statement of Shri Suryakant Tribhovandas Motiwala, Partner, M/s. Motiwala Bros., CHA 11/627, was recorded on 24-10-97 under Section 108 of the Customs Act, 1962, wherein he, inter alia, deposed that Shri Kirit Kamdar was conducting business in the name two firms (i) M/s. B.K. Industrial Corporation, and (ii) M/s. Hi-Tech Engineers, that most of their consignments were imported at Air Cargo Complex, Sahar and as per their instruction he used to file warehousing Bills of Entry, that after the goods were deposited in CWC's warehouses he used to get the shipping bills duly typed and bearing the stamp and signature of Incharge, Storehouse, Naval Dockyard certifying that the goods are meant for Indian Navy that the Shipping Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey used to take the package to their office and from there it was sent by air to destination. (5) Shri Kirit Kamdar was shown the 48 Bond Bills of Entry recovered from M/s. Motiwala Bros., CHA, under panchanama dated 17-10-97 and after going through these Bills of Entries he stated that the goods imported under all the 48 Bills of Entry had been cleared without payment of customs duty by filling shipping bills showing "SSK Controller of Procurement", Naval Dockyard, Lion Gate, Bombay as consignee; that out of the goods cleared under the said 48 Bills of Entry, only the goods cleared under 38 Bills of Entry had been supplied to Indian Navy and Coast Guard; that the goods imported under 10 Bills of Entries as detailed under had not been supplied to Indian Navy or Coast Guard. Sl. No. B/E & Date Description Value in (Rs.) 1. 11259/30-4-90 Ship Stores, Electronic Sensors, Range, etc. 2,79,239/- 2. 3028/8-2-90 Accessories for Electric measuring inst. 16,090/- 3. 10179/28-6-93 Electron Tubes 7,97,196/- 4. 9522/26-3-92 Batteries 12,61,684/- 5. 10988/31-12-92 Tools 7,85,797/- 6. 2635/10-5-1993 "O" rings, washers 4,500/- 7. 7422/22-9-92 Spares for Stabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Storekeeper is not authorised to sign on the Shipping Bills indicating the receipt of the goods when he is not physically warehousing the goods inside the dockyard. His further statement was recorded on 6-2-1998 wherein he, inter alia, stated that, for entering the goods into Naval Dockyard Gate the documents like copy of Shipping Bills/Invoice is held with the security at the gate. To take out the goods from the gate a signed gate pass is required at the gate. The gatepass is signed by an Officer from the Controller of Procurement. 7. Based on the investigation, conducted by the DRI SCN dt. 8-7-1998 was issued by CC/ACC demanding duty of Rs. 93,88,432/-. The SCN alleged that the applicants imported several consignments of parts, spares and equipment's, etc., and after warehousing these goods they used to file Shipping Bills showing the consignee as "SSK Controller of Procurement, Naval Dockyard, Lion Gate, Mumbai". The goods were cleared without payment of duty under Section 90 of Customs Act, 1962. The Shipping Bills were signed and stamped by Storekeeper who was not authorised to sign. The goods were taken back from the gate and diverted to local market and some goods were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship of the Indian Navy. Whereas the purpose of Section 90 of the Customs Act, 1962 such good when imported without payment of duty only if they are consumed on board a ship of the Indian Navy. 15. The final hearing was held on 23-10-2002. 16. The Applicants, M/s. B.K. Industrial Corporation, Mumbai, Shri Hemant Sheth and Shri Kirit Kamdar, Partners of M/s. B.K. Industrial Corporation, Mumbai were represented by Shri K.M. Mondal, Consultant, Shri Hemant Sheth and Shri Kirit Kamdar. 17. The ld. Consultant on behalf of the applicants referred to the Interim Order dated 1-6-2001 of the Commission wherein the Commission has opined as below :- "What is evident on a combined reading of Section 90 and Section 2 (38) is that even though stores may mean goods for use in a vessel yet for the purpose of Section 90, such stores when imported could be without payment of duty only if they are consumed on board a ship by the Indian Navy. The emphasis here is not on a "vessel" or "vessels", but on a ship of the Indian Navy. In other words, even though a Tug may be a vessel and a vessel may include a ship, yet, Section 90 makes the specific mention of a ship of the Indian Navy a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner (Investigation) and the reply by the Revenue dated 31-12-2001 which has already been submitted to the Commission. 25. The Revenue further submitted that the goods were cleared through one Mr. Seshadri of Naval Dockyard and the same was sold in the open market. Therefore, the applicant may not be given the benefit of Section 90 at all. 26. The Commission has gone through the case records and submissions made by the applicant and the Revenue. 27. The Commission observes that the applicant has imported the goods referred to in the show cause notice declaring them as ship stores. This is apparent from statements recorded at the time of investigation by the Revenue. The Revenue in para 26 to the show cause notice has called upon the applicant as below : "M/s. B. K. Ind. Corpn., S/Shri Kirit Kamdar, Hemant Sheth and P. R. Seshadri are hereby called upon to explain and show cause in writing to the Adjudicating authority i.e. Commissioner of Customs, Air Cargo Complex, Sahar Airport, Mumbai - 99, within 30 days from the date of receipt for his notice as to why : (i) the goods mentioned in the annexure to this show cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of duty be consumed on ship by the Indian Navy. The stores referred to in this section are :- (a) stores for the use of a ship of the Indian Navy; (b) stores supplied free by the Government for the use of the crew of a ship of the Indian Navy in accordance with their conditions of service. Section 2(38) of Customs Act, 1962 defines stores as follows :- '"Stores" means goods for use in a vessel or air-craft and includes fuel and spare parts and other articles of equipment, where or not for immediate use." 29. From the aforesaid abstract it is apparent that Section 2(38) of the Act defines the stores. This definition of the store is different from the store as referred to in Section 90. No doubt, it is an accepted principle of law, the term defined in the Act shall weighed for same meaning but when the legislature decides to give a restricted definition with reference to a particular provision in the Act, the restricted definition shall hold goods. In this case sub-section (3) states that stores refer to in sub-section (1) and sub-section (2) of Section 90, are the following :- "(1) stores for the us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute shall be constituted strictly : " In a Taxing Act one has to look merely at what is clearly said. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used" (Cape Brandy Syndicate v. IRC, (1921) 1 KB 64, p. 71 (Rowlatt, J.) Relying upon this passage Lord Upjohn said : "Fiscal measures are not built upon any theory of taxation." (Commr. of Customs v. Top Ten Promotions, (1969) 3 ALL ER 39, P.90(HL). 33. In view of this the clarifications submitted by the applicant is not correct. On the contrary, the explanation in part 1(b) of the letter dated 17-8-2001 signed by Cdr. Manager, Dockyard Purchase, addressed to M/s. B. K. Industrial Corporation, Mumbai is quite revealing. The said letter states that "the equipment are capable of arresting floating oil spillage in harbour as well as high seas. Oil spills does not occur in high seas except in case of accidents. In such case the equipment are installed in sea going ships and taken to the spillage site. In normal circumstances, the spillage occur in the harbour due to various reasons like bilge pumping, removal of equipment for repair etc. As tugs are the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 38. The matter was investigated by Commissioner (Investigation). The said Commissioner has observed as below : "The applicant cannot be given the benefit of exemption from payment of customs duty because as per Notification No. 195-Cus., dated 2-8-1976 the goods required for construction of, or fitment to, ships of the Indian Navy, when imported into India by the Government of India or by a person authorised by the Government of India or shipped on the order of a Department of the Government of India and appropriated to such order at the time of shipment. There is no proof regarding any procurement certificate/exemption certificate having been issued to the Applicant for importation of the said goods without payment of duty. Hence the applicant is required to pay Rs. 93,88,432/- towards the duty liability." 39. Considering the facts and law on the subject the terms of settlement are as follows : Duty of Customs :- The case is settled for an amount of Rs. 93,88,432/-. The applicant has disclosed in admission application an amount of Rs. 9,72,579/- which was appropriated from the deposits of Rs. 59,35,445/- deposited by him. The Commission directs that the Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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