JAGSON INTERNATIONAL LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) This appeal is directed against the order of the Commissioner of Customs made on 22.3.2002 declaring that the second hand jack up rig deepsea matdrill and parts imported by the appellant vide bill of entry No. 14315 dated 28.4.1993 is classifiable under Heading 8905.20 of the Customs Tariff Act, 1975, confirming the duty demand of Rs. 13,30,22,640/ - (Rupees thirteen crores thirty lakhs twenty two thousand six hundred and forty only) under Section 28 of the said Act, confiscating the said goods under Section 111(j) of the said Act with an option to the importer to redeem the same on payment of a fine of Rs. 5,00,00,000/ - (Rupees five crores only), and imposing a penalty of Rs. 2,00,00,000/ - (Rupees two crores only), under Section 112(a) of the said Act on the appellant.

(2.) THE appellant had filed bill of entry No. 14315 dated 28.4.1993, seeking clearance of one second hand jack up rig deepsea matdrill, nine leg sections for the said rig, one anchor for the rig and twenty containers for the rig (6 Nos. ). The value declared by the appellant was US 3,400,000 (C&F) equivalent to Rs. 10,79,55,397.50 (CIF) as per the bill of entry. Though initially the appellant had claimed assessment of the rig under Tariff Heading 8430.49 and claimed benefit of Notification No. 279/92 that was changed by the appellant by their letter dated 29.7.1993 to claim assessment under Heading 8905.90 read with Notification No. 133/87 attracting "nil" rate of duty. The appellant relied upon a letter of the Chief Engineer (Drilling) of the ONGC in which it was stated that the matt supported jack up rig deepsea matdrill was not a floating or submersible drilling or production platform. They also relied upon a letter from Adkins Oil Tools Inc. 2.1 As per the show cause notice, the said rig did not fall under sub -heading 8905.90 which was a residuary sub -heading ("Others"), but it fell under sub -heading 8905.20 which entry covered, "floating or submersible drilling or production platform". It was alleged in the show cause notice that such jack up rigs come under the category of self elevating platform and fell under Heading 8905.20 as per the HSN Explanatory Notes. It was alleged that the rig had a hydraulic elevating unit which, with the help of rack and opinion system enabled the drilling platform to remain above the water level while it was in operation. It was also stated in the show cause notice that the matter was discussed with the Chief Engineer of the ONGC who had issued the certificate and he had after going through the HSN Explanatory Notes said that the said rig would be covered by sub -heading 8905.20. He had stated that at the time of giving the certificate to the appellant, he was not aware that self -elevating platforms were categorized as floating platforms in the Customs Tariff and had stated that he had given the certificate solely based on the terminology used in the International Oil trade. It was further alleged in the show cause notice that Sub -heading 8905.20 did not provide that these platforms should be capable of floating at the time of drilling, for classification under the said heading. It was enough if they had such facility structurally. It was further alleged in the show cause notice that the appellant had filed suit No. 481/93 in the Court of Commercial Sub -Judge, New Delhi which came to be withdrawn. However, they again filed suit No. 449/94 in which an order was made on 2.11.94 to maintain status quo in terms of the order earlier made by the Commercial Sub -Judge, Delhi. It was, in terms, alleged in the show cause notice that the goods were cleared without payment of duty and without valid licence and, therefore they were liable to be confiscated under Section 111(d) of the said Act.

(3.) IT appears from the record that the appellant did not respond to the show cause notice and kept on threatening the adjudicating authority with contempt proceedings on the ground that they had approached the civil court in the matter and had obtained interim stay. As stated in paragraph 4 of the appeal memo, since the imported goods were not released by the Customs authorities on the basis of the classification claimed by the appellant under sub -heading 8905.90 read with Notification No. 133/87 at 'nil' rate of duty, the appellant had approached the, civil court for immediate release of goods. The Court of Commercial Sub -Judge, Delhi passed an order on 24.8.1993 in the said civil suit No. 481/93 restraining the Customs authorities from causing obstruction in the movement and operation of the said rig. A copy of that order dated 24.8.1993, which is at Annexure 4 to the appeal memo reads as under: