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TMI Blog2024 (3) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of JAJU PETRO CHEMICAL PVT. LTD. ANOTHER VERSUS THE COMMISSIONER OF CUSTOMS (PORT) OTHERS [ 2017 (7) TMI 633 - CALCUTTA HIGH COURT] , considered the issue with regard to the demand raised under Section 28 of the Customs Act, 1962 when the assessment was only provisional. It was observed that when the duty to be paid is yet to be finalised the importer cannot be saddled with the guilt of not paying the duty or short paying the duty. In the present case, the Show Cause Notice is issued under Section 18 read with Section 124 of the Customs Act, 1962. There is no invocation of Section 28 for recovery of short paid duty. However there is proposal for recovery of differential CVD. There is no requirement for issuing a Show Cause Notice under Section 18 for finalisation of assessment. At the time of finalisation, the Department is free to look into all factors and finalise the Bills of Entry. The Show Cause Notice has been issued invoking Section 18 and 124 proposing to confiscate the goods, proposing to recover the differential duty and for imposing redemption fine and penalties. The appellant has added the additives to make the Petrol branded after filing the ex-bond Bill of Entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Intended for sale without a brand name; (ii) other than those specified at (i) 1.20/Ltr. 7.50/Ltr. 35/2012-CE dtd. 14.09.2012 2.70/Ltr. 3.85/Ltr. 22/2014-CE dtd. 12.11.2014 4.95/Ltr. 6.10/Ltr. 24/2014-CE dtd. 02.12.2014 8.95/Ltr. 10.10/Ltr. 03/2015-CE dtd. 16.01.2015 5.46/Ltr. 6.64/Ltr. 12/2015-CE dtd. 01.03.2015 9.48/Ltr. 10.66/Ltr. 04/2016-CE dtd. 30.01.2016 1.3 From the above, at Sl.No. 70, it can be seen that there are two rates of CVD applicable for Motor Spirit at the time of import, depending on the intended use subsequent to its import as under:- (i) If the goods are intended for sale without a brand name , then the applicable CVD could be anywhere between Rs.1,20/litre to Rs.9.48/litre, as prescribed by the relevant notifications from time to time; and (ii) For any purpose other than (i) above, the applicable CVD could be anywhere between Rs.3.85/litre to Rs.10.66/litre, as prescribed by the relevant notifications from time to time. 1.4 In case the imported goods are intended for sale under a brand name, then the goods are liable to CVD at the rates as mentioned in Sl.No. 70 (ii) of the Notification No. 12/2012-CE dated 17.03.2012 at the time of import. 1.5 The appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17.03.2012 (c) consequent to finalisation of Bills of Entry, proposing to recover the higher amount of CVD along with interest (d) to appropriate the amount already paid by the appellant (e) to hold the goods liable for confiscation under Section 111(o) of the Customs Act, 1962 (f) to impose penalty under Section 112 of the Customs Act, 1962. 1.7 After due process of law, the original authority finalised the Bills of Entry and passed the impugned order wherein the concessional rate of CVD claimed at the time of import was denied. The enhanced CVD as proposed in the Show Cause Notice was confirmed. The original authority also ordered for confiscation of the goods giving an option to redeem the same on payment of fine of Rs.50,00,000/- under Section 125 of the Customs Act, 1962 and penalty of Rs.38,00,000/- was also imposed under Section 112 of the Customs Act, 1962. Aggrieved, the appellant is before the Tribunal. 1.8 The operative part of the impugned order is reproduced as under:- I. I deny the concessional rate of CVD claimed by M/s. Shell India Market Private Limited under Sr. No. 70(1) of Notification No. 12//2012-CE dated 17.03.2012, for the quantity of imported goods under B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y DRI is valid and proper. The appellant has filed an Affidavit to this effect on 19.06.2023. It is also submitted that the appellant is not contesting the confirmation of enhanced CVD or the appropriation thereof and is only contesting the order for confiscation of the goods and the redemption fine and penalties imposed. 2.2 At the outset, the Ld. counsel submitted that confiscation and the penalties proposed in the Show Cause Notice and confirmed vide the impugned order is unsustainable when the assessment was only provisional and not finalized. The assessment of the Bills of Entry were only provisional and not finalized as admitted in the Show Cause Notice and the impugned order itself. When the assessment of Bills of Entry is provisional, for all purposes of assessment it is to be considered as provisional and not just for the purpose for which Bills of Entry were provisionally assessed. To support his argument, the Ld. counsel relied on the decision in the case of Commissioner of Customs (Pre-import), Chennai Vs. Volvo India Pvt. Ltd. [2019 (365) ELT 802 (Mad.)] and Denso Haryana Pvt. Ltd. Vs. Commissioner of customs, New Delhi [2004 (176) ELT 548 (Tri.-Del.)]. 2.3 It is submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself is premature for this reason and without authority of law. Following cases were relied:- i. Jaju Petro Chemical P. Ltd. vs. Commissioner of Customs (Port) Ors., [2017 (7) TMI 633-CALCUTTA HIGH COURT] ii. Commissioner of Customs (Import) vs. Mahesh India, [2006 (7) TMI 306 - BOMBAY HIGH COURT] iii. Collector of Customs vs. Kussum Marodia, [1995 (77) E.L.T. 808 (Cal.)] iv. Lan Esenda Ltd. vs. Commissioner of Customs, Mumbai, [2005 (192) E.L.T. 305 (Tri.-Mumbai)] - affirmed in [2010 (258) E.L.T. 3 (S.C.)] v. Kevin Infotech (P) Ltd. vs. Commissioner of Customs (Port), Kolkata, [2007 (216) E.L.T. 435 (Tri.-Kolkata)] vi. Mangalore Refinery Petrochemicals Ltd. vs. Commissioner of Customs, Mangalore, [2002 (145) E.L.T. 689 (Tri.-Bang)] 2.5 The Ld. counsel submitted that Section 111(o) of the Customs Act, 1962 provides that goods imported by availing exemption benefit shall be confiscated if the conditions of exemption are not fulfilled. In the present case, as the condition for availing concessional rate, which is that the Petrol is intended for sale without a brand name has been satisfied. The Ld. counsel referred to Sl.No. 70 (i) of Notification No. 12/2012-CE dated 17.03.2012 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of import, the appellant is not able to estimate the quantity that they may sell after branding by adding additives to the imported Spirit. It is only after filing the ex-bond Bill of Entry they add the additives to brand the Motor Spirit and therefore there is no violation of the conditions of the Notification. At the time of import, as the goods were intended only for sale as unbranded goods, the CVD duty paid is proper. The appellant has voluntarily paid up the higher CVD duties and do not intent to claim refund of the same. At the time of import, the Petrol was indeed intended for sale without branding but was unanticipatedly sold subsequently as branded Petrol. The condition in the Notification only provides that there has to be intention for sale and not for actual sale. The appellant has fulfilled the conditions satisfactorily and the confiscation under Section 111 (o) of Customs Act, 1962 is not sustainable. In this regard, the appellant relied on the decision of Clough Engineering Ltd. Vs. Commissioner of Customs (Import), Mumbai [2006 (198) ELT 457 (Tri.- Mumbai)] as affirmed in [2006 (202) ELT A59 (SC)] wherein it has been held that when the exemption notification does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ationship between the importer and the supplier by SVB of Customs, Chennai. The appellant voluntarily paid up the short paid duty (CVD) along with interest. This clearly shows that they have wrongly availed the concessional rate of CVD. For this reason itself the confiscation of the goods and redemption of fine is legal and proper. 3.2 The appellant had knowingly and deliberately availed irregular concession / exemption of CVD. The manner adopted by the appellant for mis-declaring the impugned goods for the purposes of claiming concessional CVD indicates mens rea on the part of the appellant. If the appellant had declared the fact that some part of the imported goods are not intended for sale without brand name, the concessional rate of duty would have been denied at the time of import itself. The appellant has deliberately suppressed the true facts and availed the concessional rate of duty for which reason, the Show Cause Notice issued is legal and proper. 3.3 As per the budget speech highlights and further explanatory notes, the intention to lower the rate of duty for unbranded Petrol and higher rate of duty for branded is made in the interest of the public. The condition in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lties is against the provisions of law. In the case of AS Syndicate (Warehousing) P. Ltd. (supra), the Hon ble jurisdiction of High Court had occasion to analyse the issue as to whether the demand under Section 28 of the Customs Act, 1962 can be raised before the finalisation of assessment. The Hon ble High Court after referring to the analogous provisions under Rule 9-B (1) of Central Excise Rules, 1944, held that there being no final assessment, the demand-cum Show Cause Notice is without jurisdiction and quashed the same. The relevant Paragraphs reads as under:- 4 . Between March, 1997 and October, 2000, consignments of the said goods imported by the petitioners, covered by 54 bills of entry, were provisionally assessed under Heading 21.06 as per the order of the Commissioner of Customs (Port) in File No. S202 Gr. I (P) 29/97A dated 27th March, 1997. 5 . However, after provisional assessment, the Department contended that the goods imported by the petitioners should be classified under residuary item 2208.90 and since the petitioners did not have the licence required for import of goods falling under the aforesaid tariff item, the said goods became liable to confiscation. 6 . Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraphs reads as under:- 2. The dispute in the present case pertains to the show cause notice issued by the Directorate of Revenue Intelligence unit of the customs department ( D.R.I. for short) on 22-3-93 in respect of the goods admittedly cleared on provisional assessment basis. 3. By an order-in-original dated 9th February, 1996, the Commissioner of Customs, Mumbai had held that the above show cause notice issued by DRI was bad in law because the goods were provisionally assessed and moreover final assessment order has been passed on 22-6-94 that is after the impugned snow cause notice by DRI. . . . 6 . It is true that in the light of the Judgment of this Court in the case of Electron Textile Exports (P) Ltd. Anr. (supra), the findings recorded by the Tribunal that the officers of D.R.I. are not entitled to issue show cause notice under Section 28 and 124 of the Customs Act cannot be sustained. However, in view of the finding given by the Tribunal that on the date on which the impugned show cause notice was issued, the goods were provisionally assessed, the impugned notice was not maintainable. Therefore, even if the D.R.I, had jurisdiction to issue show cause notice, in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned to inform the duty leviable on the goods imported as finally assessed. In the present case, a final assessment of the duty has not happened. Nothing has been placed on record to suggest otherwise. The Customs Authorities have invoked Section 28 of the Act of 1962 without a final order of assessment. Section 28 of the Act of 1962 allows the Customs Authorities to recover duties not levied or short-levied or erroneously refunded. In the present case, none of the situations contemplated under Section 28 has arisen. The duty is yet to be finally assessed for the petitioner to be said to be guilty of not paying the duty or paying short-levy of the duty payable. The question of refund does not arise at all. Therefore, a failure contemplated under Section 28 of the Act of 1962 not happening, the authorities should not have invoked Section 124 of the Act of 1962. Section 124 of the Act of 1962 allows issuance of show cause notice before confiscation of goods. 5.6 The Tribunal in the case of Lan Esenda Ltd. Vs. Commissioner of Customs, Mumbai [2005 (192) ELT 305 (Tri.-Mumbai)] held that the penalties imposed alleging under valuation of goods before finalisation of assessment cannot sust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery of differential CVD. There is no requirement for issuing a Show Cause Notice under Section 18 for finalisation of assessment. At the time of finalisation, the Department is free to look into all factors and finalise the Bills of Entry. The Show Cause Notice has been issued invoking Section 18 and 124 proposing to confiscate the goods, proposing to recover the differential duty and for imposing redemption fine and penalties. The facts in the case of AS Syndicate (Warehousing) P. Ltd. (supra) reveal that when the Bills of Entry were assessed provisionally, the Department entertained a view that the classification of the goods adopted by the importer is incorrect and also that the goods have been imported without a license making the goods liable for confiscation. The Hon ble jurisdictional High Court observed that while the goods are under provisional assessment, the Show Cause Notice issued is without jurisdiction. 5.8 The decision of the jurisdictional High Court in the case of Collector of Central Excise, Madras Vs. India Tyre Rubber Co. Ltd. [1997 (94) ELT 485 (Mad.)] has been adverted to by the Ld. counsel to argue that once a provisional assessment is made it has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the refinery stage. Where the motor spirit is cleared, as intended for retail sale after blending, the manufacturers/ refineries shall remove such motor spirit to the depots/terminals by paying central excise duty as applicable for blended motor spirit. (ii) Where the refinery removes motor spirit as intended for retail sale to the depots for blending after payment of duty as applicable to blended motor spirit, the following procedure must be followed : (a) The refinery shall furnish a running bond equal to the differential duty on the quantity removed from the refinery to the jurisdictional Central Excise Commissioner with an undertaking to pay the differential excise duty along with interest as applicable. (b) Payment of differential duty along with applicable interest on the quantity sold as unblended from depots shall be made by 6th of the following month based on actual clearances of quantity of unblended motor spirit from the depots. (c) A reconciliation statement, certified by the statutory auditor, shall be submitted to the jurisdictional Commissioner of Central Excise by the manufacturer/refinery by 10th of the month for every preceding quarter. (d) After such reconcili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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