TaxTMI 
TaxTMI 
2003 (1) TMI 494
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....e by filing three S/Bill Nos. 402968, dt. 24-12-1992, 407892, dt. 2-2-1993 and 403253, dt. 19-1-1993 showing the consignee as "SSK Controller of Procurement, Naval Dockyard, Bombay" and claiming exemption under Section 90 of the Customs Act, 1962. 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. Show cause notice dt. 19-12-1997 was issued by CC/ACC demanding duty of Rs. 83,18,742/-. SCN proposes for confiscation of goods valued at Rs. 71,12,305/-. Shri Kirit Kamdar and Shri Hemant Sheth, Partners were arrested on 26-11-97 and released on bail of Rs. 30,000/- each by Addl. CMM. 4. M/s. Hi-Tech Engineers and its partners Shri Kirit Kamdar and Shri Hemant Sheth filed the applications under Section 127B of the Customs Act, 1962 for settlement of their case before this Bench of the Settlement Commission. 5. The application was allowed to be proceeded with vide Interim Order No. 7/2001-Cus., dt. 27-4-2001. The applicant had admitted the duty liability of Rs. 9,22,280/-. The same was ordered to be adjusted from amount of Rs. 59,35,455/- already deposited with the DRI dur....
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....l Ship only". (4) The S/Bills were passed free of duty under Section 90 of the Customs Act, 1962. (5) The Supply Order No. CGHQ/P.C. Equipt/422/92-93, dt. 10th July, 1992 does not show any Exemption Certificate issued for Customs duty Exemption or whether they are Ship Stores. (6) The letter dt. 23-12-1998 from Deputy Inspector General, CGR, addressed to M/s. Hi-Tech Engineer's clarifies - (i) that goods are meant for Coast Guard/for on board use. (ii) Place of delivery :- at Coast Guard Depot. (7) The applicant has admitted lesser duty amount i.e. Rs. 9,22,280/- against the duty of Rs. 83,18,742/- assessed and demanded in SCN. (8) The applicant's claim of admitting lesser amount i.e. Rs. 9,22,280/- is not correct for the following reasons: (i) The Supply Order was from Coast Guard. (ii) The goods were delivered to "SSK Controller of Procurement Naval Dock Yard, Lion Gate Bombay." (iii) The S/Bills were processed under Section 90 of Customs Act, 1962....
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....lian employee is not authorised to sign any of these documents except giving receipt of items. (iii) That there is no person having designation as SSK Controller of Procurement, Naval Dockyard, Lion Gate, Bombay. (iv) That the Storekeeper is not authorised to sign on the shipping bill indicating the receipt of the goods when he is not physically warehousing the goods inside the dockyard. (13) The ld. Consultant for the applicant during the admission hearing argued that the goods supplied i.e. Dracon Barges to Indian Coast Guard will enjoy exemption under Notification No. 291/84-Cus., dt. 28-12-1984. (14) From the said notification it is clear that the goods imported i.e. Dracon Barges will not be covered since barges are not a machinery, equipment, components or raw materials which alone are exempted. (15) Hence from the above it will be clear that the "Dracon Barges" cannot be treated as stores. (16) The chart showing the total duty liability is as below :- Sr. No. Bill of Entry No. Assessable Value (Rs.) Tariff rate of duty Duty assessed in Bond B/E Description o....
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....dmittedly supplied to the Coast Guard are described as "barges". In any event, the goods mentioned in the exemption notification relied upon by the applicant also do not cover the barges. Therefore, in any event, this exemption has been incorrectly claimed by the applicant. (ii) That, the applicant was relying on the purchase/supply order No. CGHQ/PC. Equipt/422/92-93, dated 10-7-1992 issued by Commander, Jt. Dir. (Logistics), Coast Guard. As per Sr. No. 15 of the said supply order, the consignee is shown as "The officer-in-charge, Coast Guard, Store Depot, Mankhurd, Bombay-400088, whereas the applicants have obtained the acknowledgement of a Storekeeper of Indian Navy who is nowhere connected with Coast Guard. Hence the said purchase/supply order needs to be rejected as a price of evidence. On importation of the goods, the applicant (in the name of his company M/s. Hi-Tech Engineers) filed bond Bs/E claiming that the goods are ship stores. Thereafter the applicant prepared Shipping Bills and obtained signature of one Mr. P.R. Sheshadri, in charge of Naval Stores at Lion Gate, Mumbai on the face of shipping bills declaring the goods covered under Shipping....
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....r raw materials required for construction of, or fitment to, the ships of the Coast Guard. (viii) that the Hon'ble Commission held in its Interim Order No. 17/2001-Cus. issued under F. No. SC/WZ/CUS-70, 5 & 6/B.K./2000, dated 6-6-2001 as under: "What is evident on 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. In other words even though a Tug may be a vessel and a vessel may include a ship, yet, Section 90 makes specific mention of a ship of the Indian Navy and not a vessel". (ix) Similarly here also 'Barge' is a boat or a vessel and not a ship. Notification 291/84-Cus., dated 28-12-1984 makes a specific mention of a ships of the Coast Guard. Hence the exemption under the said notification cannot be made applicable to 'Barge' imported by the applicant and the same needs to be rejected. (x) that the applicant is relying on the purchase/supply Order No. C....
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....r exemption under Notification 291/84, dated 28-12-1984. 11. The Revenue submitted that the applicants cannot avail the benefit of Notification 291/84 unless they produce an authority issued by Ministry of Defence. It was further submitted that the Barge was used to control oil pollution whereas the Coast Guard was not concerned with pollution control. Since both the applicant and the Revenue needed more time for final submissions, the Commission fixed the hearing on 17-9-2002. The hearing fixed on 17-9-2002 was adjourned on Revenue's request to 23-10-2002. 12. On 23-10-2002, the applicants M/s. Hi-Tech Engineers, S/Shri Hemant Sheth and Kirit Kamdar, Partners were represented by S/Shri K.M. Mondal, Consultant, Hemant Sheth and Kirit Kamdar, Partners. 13. The ld. Consultant submitted that out of the duty demand of Rs. 83,18,742/- the applicants admitting only Rs. 9,22,280/- and the same has already been paid by the applicant. The balance amount of duty of Rs. 73,96,462/- (Rs. 83,18,742 - Rs. 9,22,280) is the duty foregone on the import of Dracone Barges. The applicant have imported these barges and had claimed the benefit of Section 90 of Customs Act, 1962 s....
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....shows the fraudulent intention of the applicant. The Revenue also had it's own doubt whether the Barges supplied to Coast Guard were the same which were imported against the order placed by the Indian Coast Guard. This being the case the ld. Advocate argued that the applicant should not be given the benefit of Notfn. No. 291/84. Hence he argued that the applicant should admit and pay the whole amount of Rs. 83,18,742/-. If it is not so then it will tantamount to not making full and true disclosure of duty liability. The ld. Advocate argued that the Commission may also not extend the immunities being sought by the applicant. 17. The Commission has gone through the records of the case and submissions made by the applicant and the Revenue. 18. The Commission has also gone through the case laws cited by the applicant. The applicant in Col. No. 11 of his application has stated the amount of duty involved as Rs. 83,18,21- and he has admitted in Col. No. 12 of his application an amount of Rs. 9,22,280/-. The applicant has stated that the goods imported vide Bill of Entry No. 6096, dt. 18-12-92 and 7582, dated 28-1-1993 have been supplied to the Coast Guard against the purc....
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....ant for Navy and availed exemption. In this background it will be relevant to reproduce the provisions of Section 90 of the Customs Act, which reads as below: - "SECTION 90. Concessions in respect of imported stores for the Navy. (1) Imported stores specified in sub-section (3) may without payment of duty be consumed on board a ship of the Indian Navy. (2) The provisions of section 69 and Chapter X shall apply to stores specified in sub-section (3) as they apply to other goods, subject to the modifications that - (a) For the words "exported to any place outside India" or the word "exported" wherever they occur, the words "taken on board a ship of the Indian Navy" shall be substituted; (b) For the words "ninety-eight per cent" in sub-section (1) of Section 74, the words "the whole" shall be substituted. (3) The stores referred to in sub-sections (1) and (2) are the following :- (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 ac....
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....ction 3 of the second-mentioned Act. TABLE (i) Machinery, equipment, components and raw materials required for construction of, or fitment to, the ships of the Coast Guard. (ii) Spares and test equipment for maintenance, testing and tuning of imported equipments. (iii) Parts required for manufacture of indigenous equipments by Indian suppliers for supply to Coast Guard service." 24. From the reading of the aforesaid notification it is apparent that the notification exempts the articles specified in the table appended to the notification if such articles are required for construction or fitment to ships of Coast Guard when imported into India by the Govt. of India or by person authorised by that Government or shipped on the order of a Department of the Govt. of India and appropriated under such order at the time of shipment. From the facts of the case as discussed supra and as admitted by the applicant the import has taken place under Section 90 of the Customs Act and not repeat not claiming benefit of Notfn. No. 291/84. At the time of import the importer is required to produce th....
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....liability of Rs. 83,18,742/-. The applicant shall pay the balance amount of Rs. 23,83,287/- within 30 days from the date of receipt of this order. (2) Fine and Penalty: The Commission finds that in the show cause notice there is indication of imposition of fine and penalty. Considering the facts and circumstances of the case the Commission finds that the applicant perhaps had bona fide belief that they are entitled to exemption of duty on goods when supplied to the Coast Guard. Considering all the facts of the case the Commission grants immunity from imposition of penalty in excess of Rs. 10,00,000/- (Ten lakhs only) on the applicant viz Hi-Tech Eng. The Commission therefore ordered payment of Rs. 10,00,000/- towards penalty. Immunity is granted from the imposition of fine. (3) Interest: The Commission finds that the applicant had imported the goods without payment of duty by wrongful representation of facts and subsequent disposal thereof and has got financial accommodation. In view of this the Commission imposes simple interest at the rate of 10% p.a. on the duty evaded from the date of removal of imported goods fr....