Appellants not liable for duty on imported goods used by ONGC as ship stores.

Schlumberger Asia Services Ltd. Versus CC (Adj.), Mumbai

Schlumberger Asia Services Ltd. Versus CC (Adj.), Mumbai - TMI Issues Involved:
1. Whether the appellants can raise the issue that they are neither importers nor owners of the goods and hence not liable to pay duty.
2. Whether the goods can be considered as ship stores and exempt from duty.
3. Whether the courier agency or the appellant is the importer in case of imports through courier.
4. Whether the passenger or the appellant is the importer in case of hand baggage.
5. Whether ONGC or the appellant is the importer in case of imports through sea.
6. Whether duty is chargeable from the appellant.
7. Whether penalties are imposable on the appellants.

Issue-wise Detailed Analysis:

1. Importer and Ownership Liability:
The appellants argued that they are neither the importers nor the owners of the goods as per Section 2(26) of the Customs Act, 1962, and hence not liable to pay duty. The Tribunal found that the imports were effected either by ONGC, courier, or hand baggage, and the appellants neither filed a bill of entry nor claimed ownership. The goods were imported for ONGC's benefit, and hence, the appellant cannot be held liable for duty. The Tribunal cited the case of UOI v. Jupiter Exports and Commissioner v. Dinesh Chhajer to support this interpretation.

2. Ship Stores Exemption:
The appellants claimed that the imported goods were used as ship stores on rigs beyond India's territorial waters, qualifying for duty exemption under Section 85 of the Customs Act. The Tribunal noted that the adjudicating authority did not dispute that the rigs operated beyond territorial waters, which qualifies them as foreign-going vessels. The benefit should not be denied due to procedural violations, as held in Repro India Ltd. v UOI. The Tribunal found that the goods were re-exported after use and thus not liable for duty.

3. Importer in Case of Courier:
The Tribunal concluded that the courier agency acts as an agent for the consignee (appellant) and is not the importer. The consignee is the importer responsible for duty, as the courier only facilitates transportation. This conclusion was based on the Courier Imports (Clearance) Regulation, 1995, which states that the courier agency handles goods on behalf of the consignee.

4. Importer in Case of Hand Baggage:
The Tribunal held that the employees bringing goods in hand baggage were acting on behalf of the appellant. The appellant directed the import and received the goods, thus being the effective owner and importer. The Tribunal rejected the argument that the passengers (employees) were the importers, emphasizing the appellant's control and ownership of the goods.

5. Importer in Case of Sea Imports:
The Tribunal found no evidence that ONGC filed the bill of entry for sea imports. The appellant admitted duty liability for these consignments, and the goods were used by the appellant for providing services to ONGC. Thus, the appellant was considered the importer and liable for duty.

6. Duty Liability:
The Tribunal held that the appellant is liable for duty as the effective importer and owner of the goods. The goods were used for providing services to ONGC and were imported under the appellant's direction. The Tribunal emphasized that the appellant's acceptance of duty liability during the investigation and the first round of litigation confirmed their responsibility.

7. Penalties:
The Tribunal imposed penalties under Section 112 of the Customs Act on the appellants for smuggling and misdeclaration of goods. The penalties were deemed appropriate given the appellant's role in directing the import and misdeclaration. The Tribunal rejected the argument to waive penalties based on the appellant's acceptance of duty liability, emphasizing the need for penalties to address the violations.

Separate Judgment Analysis:

Member (Technical) P.K. Jain:
- Disagreed with the conclusion that the appellants are not liable for duty.
- Emphasized that the appellants admitted duty liability during the investigation and the first round of litigation.
- Found that the goods were imported under the appellant's direction and used for providing services to ONGC.
- Concluded that the appellant is the importer and liable for duty and penalties.

Member (Judicial) Ashok Jindal:
- Held that the appellants are neither importers nor owners and not liable for duty.
- Found that the goods qualify as ship stores and are exempt from duty.
- Concluded that the courier agency and passengers (employees) are the importers, not the appellant.
- Dropped the penalties based on the appellant's acceptance of duty liability.

Referral to President:
Due to the difference of opinion, the matter was referred to the President to nominate a third member to resolve the issues, including the appellant's status as importer, ship stores exemption, and penalty imposition.