The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the imported duty-free containers as per customs notification are liable to confiscation on failure to re-export within 6 months. The assessee could not re-exported some containers within six months purportedly due to some fire on the port and damage to other containers, out of 39 containers brought in at the port.
The appellant, Maersk Line India Pvt Ltd was engaged as a shipping line and import of Containers on a re-export basis from Pipavav port and was availing exemption from payment of whole of Customs duty and whole of Additional duty leviable under the virtue of Notification No. 104/94-Customs dated 16.03.1994. The intelligence collected by the officers revealed that the appellant after the import of 39 containers failed to follow the procedures as laid down in the said Notification in as much as they failed to re-export 39 containers within six months prescribed in the said notification and did not seek any extension of time limit for re-export from the proper officer.
The lower authority was of the view that the said containers are liable for confiscation for violation of the condition laid down in the Notification No. 104/94-Cus, dtd. 16.03.1994, the said 39 containers lying at M/s. Gujarat Pipavav Port Ltd (11 containers) and M/s Contras Logistics Pvt. Ltd. (28 containers) were placed under seizure on 05.11.2015 and handed over to the respective CFS for safe custody under Supratnama dated 05.11.2015.
A Show Cause Notice was issued to the appellant. After due process of law, the adjudicating authority passed the impugned order, wherein he confirmed duty amounting to Rs. 9,48,095/- along with interest. Ordered for confiscation of 39 empty containers valued at Rs.32,20,324/- under Section 111(o) of the Customs Act, 1962 and allowed to redeem the same on payment of redemption fine of Rs.3,22,000/-. It also imposed a penalty of Rs. 9,48,095/- under Section 112(a) as well as Section 114A of the Customs Act, 1962.
Counsel for the appellant submitted that for all the containers import never was completed as same had never crossed the customs barriers. Therefore, the same cannot be considered as imported into India and no duty of customs is payable by it.
Further, the appellant argued that the lower authorities had erroneously confirmed the duty under Section 28 of the Customs Act, 1962. It was admitted fact that due to one reason or another, the appellant failed to re-export 39 containers within six months prescribed in the said notification and did not seek any extension of the time limit for re-export from the proper officer, which is the prime condition of exemption Notification No. 104/1994 as amended.
A two-member bench comprising Mr Raju, Member (Technical) And Mr Somesh Arora, Member (Judicial) viewed that “the appellant has availed the benefit of Notification No. 104/94 which permits Duty-Free Import of the container subjected to the condition that they are re-exported within six months. In the instance case, the same could not be re-exported within six months purportedly due to some fire on the port and damage to other containers, out of 39 containers brought in at the port. Thus, there was a breach of the condition of exemption notification and in the absence of any remission or waiver of duty having been granted by the competent authorities and the same not having been sought by the party for a considerable length of time.”
It was found that the container was damaged due to fire and could not be re-exported. But we find that valuation has not been done with full transparency and such valuation report has not been allowed to be commented upon by the appellants. The grievance thus appears genuine.
The Tribunal held that duty in the absence of remission was payable, as import which is subject matter of levy can even take place when goods enter territorial waters. Only in normal cases, the collecting point is deferred till the Bill of Entry is filed. However, if goods get destroyed on port, the remission provision comes into play, which in this case was not sought. The assessment of duty etc, however, has to be done on proper valuation after following natural justice, therefore, the Tribunal held that containers though could be subjected to duty, but assessment has to be on proper valuation arrived as per provisions and by following of natural justice.
The appeal is allowed by way of remand. The Tribunal set aside the penalty under Section 114(A) of the Excise Act which requires malicious intent cannot be sustained in the facts of the matter specifically considering the supervening fact of fire after imports.
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