2017 (10) TMI 413 - AT - Customs

Tribunal overturns duty liability order, citing lack of proof; emphasizes Customs Rules over exemptions

Sesa Industries Ltd and Sesa Kembla Coal Company Ltd, Ravindra Pai, Sabukutty N Dominic, KS Venkateshwaran Versus Commissioner of Customs & Central Excise, Goa

The tribunal set aside the impugned order confirming duty liability, interest, and penalties under the Customs Act, 1962, against the appellants. It found ... Penalties u/s 112 of CA - Violation of import conditions - it is alleged that the records were manipulated to evidence generation of some quantity of ‘nut coke’ which was claimed to have been utilised in the manufacturing process, albeit by mixing with ferrous burden whereas the non-utilisable coke was transferred to the sister establishment - scope and validity of SCN - Held that: - It is an essential pre-requisite for imposition of penalty that offending goods in relation to which the noticees are alleged to have committed some act of omission or commission be held liable to confiscation. Neither does the notice propose confiscation of goods under section 111 of Customs Act, 1962 nor does the impugned order render such a finding. In the absence of such finding on the goods that are alleged to have contravened the provisions of the Customs Act,1962 leading to confiscation under section 111 of Customs Act, 1962, there is no scope for invoking the penal provisions that arises therefrom. The impugned order is incomplete to that extent. It is found from the records that the appellant-assessee was in possession of a valid Quantity-based Advance License which has been noted in the bills of entry, that a utilisation certificate had been issued by the jurisdictional officer and that a discharge certificate has been issued by the competent authority. These point out to coverage of the imports by notification no.51/2000-Cus. There is no allegation of ‘nut coke’ having been sold in the market; it is moot whether the conversion of unutilisable imported coke into utilisable coke, albeit in another location, for use by appellant-assessee would be a contravention of this notification - yet another aspect that the adjudicating authority has not considered. Matter remanded to the adjudicating authority to determine the relevant issues - appeal allowed by way of remand. Issues:Recovery of customs duty, special additional duty, and anti-dumping duty under Customs Act, 1962, penalties under sections 114A and 112 of Customs Act, 1962.Analysis:1. The case involved the recovery of various duties and penalties under the Customs Act, 1962, against the appellants based on a show cause notice dated 2nd February 2006. The impugned order-in-original confirmed the duty liability, interest, and penalties, leading to the appeal before the tribunal.2. The appellants, including a manufacturer of pig iron, were accused of diverting imported metallurgical coke containing 'nut coke' not usable in their blast furnace. The adjudicating authority found discrepancies in production records and concluded that a significant quantity had been diverted with the involvement of other appellants.3. The tribunal noted the arguments presented by both sides regarding the authority's reasoning. It highlighted the importance of establishing the liability for confiscation of goods before imposing penalties under section 112 of the Customs Act, 1962, which was lacking in the impugned order.4. The show cause notice alleged contravention of Customs Rules for diverting imported goods and manipulating records. The tribunal observed that the liability was primarily focused on the contravention of these rules rather than specific notifications related to duty exemptions.5. Exemptions under notifications dated 27th April 2000 and 19th May 2000 were discussed, pointing out conflicting conditions and objectives. The tribunal raised concerns about the lack of detailed examination of specific violations under the relevant notifications in the impugned order.6. Due to the identified deficiencies and unaddressed critical aspects in the impugned order, the tribunal set it aside and remanded the case back to the adjudicating authority for a comprehensive determination within the legal framework of the show cause notice and Customs Act, 1962.