Tribunal upholds Customs duty on vessels, directs re-computation. Confiscation upheld with reduced fines.

The Tribunal upheld the Customs duty demands on three vessels (Smit Lumba, Posh Giant-I, and Salvaree) but directed a re-computation considering drawbacks. Duty demands on the other seven vessels were set aside. Confiscation of the three vessels under Section 111(f) was upheld, with reduced redemption fines and penalties for the appellants. Penalties on co-appellants were set aside.

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Issues Involved:
1. Whether Customs duty was payable on the import of 10 foreign flag vessels by treating them as "goods."
2. Whether the vessels were "conveyances" or "goods" under the Customs Act.
3. Applicability of Board's Circulars and Public Notices regarding the filing of Bill of Entry and payment of duty on vessels.
4. Legitimacy of duty demands under Sections 28(8) and 125(2) of the Customs Act.
5. Validity of penalties and confiscation orders imposed by the Commissioner.

Detailed Analysis:

1. Customs Duty on Imported Vessels:
The main issue is whether Customs duty was payable on the import of 10 foreign flag vessels by treating them as "goods." The appellants argued that the vessels were "conveyances" and not "goods," thus no Bill of Entry was required. They followed all formalities for conveyances, including filing prior IGM, Bill of Entry for bunkers and stores, obtaining licenses, and seeking conversion from foreign-run to coastal-run. The vessels were used for salvage operations and emergency towing, and after completing assignments, they were re-exported following due procedures.

2. Vessels as "Conveyances" or "Goods":
The appellants contended that the vessels were "conveyances" and not "goods," thus not liable for Customs duty. They cited compliance with Chapter IV of the Customs Act, which deals with conveyances carrying imported/exported goods. The Revenue argued that the vessels were imported for home consumption and should be treated as "goods." The Tribunal noted that the vessels were not carrying cargo or passengers, thus not "conveyances." The vessels were imported for salvage operations, making them "goods" subject to Customs duty.

3. Applicability of Board's Circulars and Public Notices:
The appellants relied on Circular No. 16/2012, which clarified that foreign flag vessels used as conveyances did not require filing Bill of Entry before 17-3-2012. The Tribunal observed that the circular applied to vessels carrying cargo or passengers, not to vessels imported for salvage operations. The circulars did not exempt the vessels from being treated as "goods" for home consumption.

4. Legitimacy of Duty Demands:
The Tribunal examined the duty demands under Sections 28(8) and 125(2). For seven vessels not seized, the demand under Section 125(2) was unsustainable as there was no confiscation. The demands were time-barred under Section 28(4). For three seized vessels (Smit Lumba, Posh Giant-I, and Salvaree), the duty demands were upheld as they were imported for home consumption. The Tribunal directed the Revenue to re-compute the duty liability considering the drawback under Section 74.

5. Penalties and Confiscation Orders:
The Tribunal upheld the confiscation of Smit Lumba, Posh Giant-I, and Salvaree under Section 111(f) but reduced the redemption fines and penalties. For the seven vessels not confiscated, the penalties were reduced. The Tribunal set aside penalties on co-appellants, who were employees of the appellants.

Conclusion:
1. Customs duty demands on Smit Lumba, Posh Giant-I, and Salvaree are upheld but to be re-computed considering the drawback.
2. Duty demands on the remaining seven vessels are set aside.
3. Confiscation of three vessels under Section 111(f) is upheld.
4. Redemption fines and penalties on appellants are reduced.
5. Penalties on co-appellants are set aside.

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