KESHODWALA STEELS Vs. COMMISSIONER OF CUS. (PRE.), AHMEDABAD

JUDGEMENT

(1.) AS per facts on record, appellant purchased in auction, an abandoned consignment of rubber tyres, tubes and flaps loaded in the ship which had been grounded near Veraval. It was found that the consignment was meant for export by M/s. Modi Rubber consigned to M/s. Afghan National Bank (Pak) Ltd., Karachi. The ship left Mumbai Port on 20 -10 -1988 for Karachi but the ship got grounded the next day near Veraval Port. The grounded ship was badly damaged due to fire, rough sea, rocky grounding position etc. The ships bottom was broken and sea water entered into the ship. The cargo of rubber tyres, tubes and flaps was deteriorated due to sea water, diesel oil, weather conditions and also due to hazardous chemical which was also loaded into the ship. The shipper M/s. Atlantic Shipping Co., Mumbai abandoned the ship and voyage. The importer, i.e., Afghan National Bank (Pak) Ltd., Karachi made the payment of the said consignment to M/s. Modi Rubber and subsequently preferred to claim against the insurance company M/s. United India Insurance Company Ltd. and on survey of the cargo, it was found in totally destroyed condition resulting into total constructed loss, payment was made by the insurance company to the importer and accordingly the importer relinquished the rights, title and interest on the said cargo in favour of M/s. United Insurance Company Ltd. Having been transferred the ownership and to stop further deterioration, since the cargo remained in sea water about 10 months, the insurance company M/s. United India Insurance Company Ltd. decided to dispose of the same on as is where is basis considering the entire cargo of the ship as constructed loss. On tenders being invited from interested parties for the sale of said salvaged goods, the offer of the appellants for the Rs. 8 lakhs was accepted being the highest offer. The salvaged goods was sold to the appellants on as is where is basis for which the appellants paid Rs. 8 lakhs.

(2.) IN between number of developments occurred which are not being referred to as the same are not important. The short issue involved is as to whether the appellant, who cleared the said auctioned purchased goods by filing a bill of entry are required to pay duty by considering the clearance of the goods as re -import. It is seen that Revenue entertained the view that the ship in question had crossed the territorial waters of India and as such the goods have to be considered as exported goods. It is only after crossing the territorial waters of India, the ship developed a snag and was diverted to India. It remained in the territorial waters of India for a period of ten months and thereafter the goods were salvaged and sold by the insurance company. As such it is the Revenues contention that the goods were exported and the subsequent clearance was by filing bill of entry and they have to be considered to be re -imported goods and liable to pay duty. Accordingly, Show Cause Notice was issued to the appellant on 26 -6 -1991 for confirmation of Customs duty. The said Show Cause Notice was adjudicated by the original adjudicating authority vide which after giving discount of 10% on account of damage etc., demand of duty of Rs. 1,12,92,590/ - was confirmed.

(3.) ON an appeal against the above order, Commissioner (Appeals) upheld the appellant liability to pay duty. However, he observed that the transaction value at which the appellant purchased the damaged goods from the insurance company has to be treated as an assessable value for the purposes of confirmation of demand of duty. Accordingly he held that the demand to be quantified at the rate prevalent on the date of filing the bill of entry. The said order of the appellate authority is impugned order before us.