Judgment:
1. For a project called as SEA-ME-WE-2 (South East Asia-Middle East-Western Europe - 2) under the Sea Cable Communication Network, M/s VSNL, the appellant herein entered into a consortium with 13 others to lay and use under the Sea Communication Cable to be provided in place by the contractor from the territorial point of the appellant into and under sea throughout from Singapore to Western Europe. M/s VSNL filed Bills of Entry and have discharged duty on the terrestrial length of the cables so used and also on the declared length of 23.10 km for undersea length of cable as imported and placed by the contractor. The declarations were made as per two invoices issued by M/s STC (contractor of consortium). However, subsequent enquiries revealed that the actual length of the cable laid would be more than the declared length of 2.4.41 kms. which was declared as well as the investigation revealed that on a repairs and replacement length of cable used separately, M/s VSNL has not paid any duty on the fresh imported cable used in such repairs/replacement under sea areas off Bombay Coast. Duty on that account worked out approx Rs 77.62 lakhs and Rs 7 lakhs (approx) respectively. M/s VSNL were also imposed a penalty of Rs 1,40,24,082/- along with a duty demand of an equivalent amount of Rs 1,40,24,082/-. M/s Tyco Submarine System were imposed a penalty of Rs 82,37,055/- under Section 114A of the Customs Act 1962 equivalent to the amount of duty determined.
2. M/s Sub Marine Systems are not before us to day in spite of notice.
Their appeal is dismissed for non prosecution.
3. After hearing the Ld Advocate for M/s VSNL and the Ld D.R. for Revenue, it is found: (a) the plea of M/s VSNL that the entire system of laying the cable which were initiated in 1993 was completed in 1993 and the repairs and replacement by 1996 and they were within the knowledge of the department and therefore the demands issued in the present case being beyond the period as prescribed under Section 28 of the Customs Act should be considered to be barred by limitation, is not upheld, since the department no doubt, was aware about this project of National importance, yet they had no means of verifying the actual length of cable that were being laid by foreign contractor, and or being replaced as repairs, in fact even the hydro graphic certificate, about the distance as per charts states that the notification fixing the base lane was yet to be issued. The Ld D.R. read through the agreement which very specifically detailed the mode of payment based on unit length of the cable used in the terrestrial mode and such payments were required to be effected on a regular instalment basis, as and when the cables were being laid. The plea that for the under sea links, the consortium was to bear the cost and that cost was not known to M/s VSNL in advance does not impress us to absolve M/s VSNL from the liability to penalty, but it cannot absolve them from payment of duty on actual length of cable freshly laid. Since M/s VSNL was the importer for such cables for the Project and for which they filed Bills of Entry. It was therefore their responsibility to discharge duty on the length of the cable to be used after ascertaining the same, if any additional length have been used as was in this case, they are required to discharge the duty liability. If M/s VSNL could not ascertain the exact length and declare the same for duty purposes, it is far fetched to give the benefit of bar of limitation only, on account that the project of laying the cable under sea was within the knowledge of Customs & therefore the demands should be held to be barred by limitation. We cannot accept this plea of limitation being urged the liability to duty on the length of cables which has been laid under sea would squarely rest on the shoulders of M/s VSNL who had caused the import thereof & filed the Bills of Entry. Merely because they are part of consortium and the cable under sea belonged to the consortium of 14 such persons will not absolve M/s VSNL from the duty liability under the Customs Act, 1962, being the importer. The duty demands on such cables which have been laid afresh is therefore to be upheld. (b) On the earlier cable laid, M/s VSNL, fully knew that repairs and replacement work was being carried out on a large scale and was supervising the repairs and replacement work of the existing undersea cables. Therefore, there is no reason for us to conclude that M/s VSNL were innocent of the duty liability on such imported cables used for replacing for repairing the earlier cables. No Bills of Entry declaration for these quantities were made. The duly demand on such cables used for replacing the old and earlier laid cable is therefore squarely to be upheld on M/s VSNL and the Commissioner's order confirming the duty demand thereon cannot be disputed. They are to be upheld. We order accordingly.
(c) We find that the imports in this case took place sometime in 1993 and the penalty imposed under Section 114A which was introduced somewhere in 1996 therefore cannot be upheld, since there cannot be a retrospective operation of penal clause. We would therefore set aside imposition of penalty under Section 114A of the Customs Act, 1962 as arrived at in this case. We are also aware of the Tribunal's decision in the case of Western Coal Fields Ltd v. CCE, Nagpur 2003 (161) ELT 768 (Tri. Mumbai) and ONGC v. CCE, Vadodara 1995 (79) ELT 117 (Tribunal) wherein a view was taken that being a Public Sector Undertaking wholly owned by the Government of India, they could not have evaded the duty and therefore a harsh penalty cannot be imposed, is a submission made by the Ld Advocate. At the relevant time M/s VSNL was a Public Sector Undertaking and would be entitled to the benefit of these two decisions as regards penalty. However, Since we are not upholding the penalty under Section 114A of the Customs Act, 1962, we give the benefit of these two decisions, which the Ld Advocate for M/s VSNL relies upon to not accept the plea made by the Ld DR to remand the case for de novo adjudication of a penal liability under Section 112 of the Customs Act, 1962.