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Failure to File Transshipment Bill Deemed a Technical Lapse: CESTAT overturns Duty Demand and Penalties as unjustified [Read Order]

CESTAT ruled that failure to file a transshipment bill was a procedural lapse and does not justify duty demands or penalties

Kavi Priya
Failure to File Transshipment Bill Deemed a Technical Lapse: CESTAT overturns Duty Demand and Penalties as unjustified [Read Order]
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The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that failure to file a transshipment bill was deemed a technical lapse and does not justify imposing duty demands or penalties. JM Baxi & Co, the appellant, acted as an agent for salvaging operations of MSC Chitra, a vessel involved in an oil spill near Mumbai in 2010. The appellant...


The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that failure to file a transshipment bill was deemed a technical lapse and does not justify imposing duty demands or penalties.

JM Baxi & Co, the appellant, acted as an agent for salvaging operations of MSC Chitra, a vessel involved in an oil spill near Mumbai in 2010. The appellant facilitated the import and transfer of salvage equipment for use in the operation, which was claimed to qualify as "stores" for a foreign-going vessel under the Customs Act, 1962.

The equipment was cleared under customs authorization but without filing a bill of transshipment. Customs authorities later issued show-cause notices stating that the goods were neither exempt from duty nor exported and demanded duties along with penalties citing alleged violations under Sections 111 and 114 of the Customs Act.

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Aggrieved, the appellant appealed before the CESTAT arguing that the goods were transshipped under proper customs permissions and used exclusively for salvaging MSC Chitra. The appellant’s counsel argued that the failure to file a transshipment bill was a mere procedural oversight without revenue implications.

The appellant also submitted evidence including certifications from the Salvage Master to establish the deployment of the goods in the salvage operation.

The department’s counsel argued that the goods did not meet the definition of "stores" under the Customs Act and that MSC Chitra, being a wreck, could not be considered a foreign-going vessel. The department’s counsel claimed that the procedural lapse in filing the transshipment bill was sufficient grounds for duty liability and penalties.

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The two-member bench comprising C.J. Mathew (Technical Member) and Ajay Sharma (Judicial Member) observed that the movement and usage of goods were properly authorized by customs authorities and that no evidence suggested domestic use of the goods. The tribunal clarified that transshipment is a procedural matter and a failure to file the bill does not invalidate the clearance granted by customs.

The tribunal further observed that the goods were used for salvaging a vessel in distress, and their classification as "stores" was consistent with the legislative intent of the Customs Act. The tribunal held that imposing duty demands and penalties in this matter lacked merit and legal basis. The tribunal set aside the orders imposing duties and penalties. The appeal was allowed.

To Read the full text of the Order CLICK HERE

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