Provisional release granted for seized vessels under Customs Act

The court ordered the provisional release of the seized vessels M.V. Sangita and M.V. Ocean Garnet upon compliance with specified conditions under Section 110A of the Customs Act, 1962. It directed the customs authorities to refrain from coercive actions until adjudication and urged expedited resolution of the representation by the Indian National Shipowners Association. Both writ petitions were disposed of with no order as to costs.

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Issues Involved:
1. Challenge to public notice No.81/2011-12 and seizure of vessels M.V. Sangita & M.V. Ocean Garnet.
2. Requirement to file Bill of Entry (B/E) for vessels imported prior to 2001 under the Customs Act, 1962.
3. Justification for the customs authorities' seizure of vessels for non-filing of B/E.
4. Conditions for provisional release of the seized vessels.
5. Demand for customs duty and submission of bank guarantee for provisional release.
6. Adjudication and pending representation by the Indian National Shipowners Association.

Detailed Analysis:

1. Challenge to Public Notice and Seizure of Vessels:
The petitioners challenged public notice No.81/2011-12 dated 22/9/2011 and the seizure of their vessels M.V. Sangita and M.V. Ocean Garnet under seizure panchanamas dated 12/1/2012 and 20/12/2011 respectively. The petitioners argued that the vessels were imported over a decade ago when customs duty on ocean-going vessels was exempt, and no Bill of Entry (B/E) was filed based on the consistent practice of the customs authorities at that time.

2. Requirement to File Bill of Entry (B/E) for Vessels Imported Prior to 2001:
The court examined whether the customs authorities were justified in directing the importers to file B/E for vessels imported prior to 2001, especially considering the exemption from customs duty that was in place at the time of import. The court noted that it was mandatory to file B/E under the provisions of the Customs Act, 1962, even if the customs duty was wholly exempt. However, prior to the withdrawal of the exemption in 2001, the consistent practice was not to insist on filing B/E for ocean-going vessels.

3. Justification for Seizure of Vessels for Non-Filing of B/E:
The court considered whether the customs authorities were justified in seizing the vessels for non-filing of B/E. The petitioners contended that the customs authorities had not insisted on filing B/E at the time of import due to the exemption, and they were now willing to file B/E without paying duty. The customs authorities argued that the vessels were declared as 'conveyance' rather than 'goods', misleading the authorities, and that the petitioners failed to file B/E despite public notices.

4. Conditions for Provisional Release of the Seized Vessels:
The court directed the customs authorities to consider the provisional release of the seized vessels under Section 110A of the Customs Act, 1962. The Commissioner of Customs permitted provisional release subject to:
- Filing B/E for home consumption with payment of duty.
- Providing a bank guarantee of 10% of the assessable value.
- Submitting a bond for 100% of the assessable value.
- Giving an unconditional undertaking regarding the identity of the goods and not removing the vessel from Indian territorial waters without permission.

5. Demand for Customs Duty and Submission of Bank Guarantee:
The petitioners' grievance was restricted to the demand for duty and submission of a bank guarantee for provisional release. The court found that demanding duty before adjudication was unwarranted given the historical context of exemption and compliance with other customs formalities. The court referenced a similar case (SEAMEC Limited v. Union of India) where it was held that duty was not payable on the original value of the vessel imported under exemption.

6. Adjudication and Pending Representation by the Indian National Shipowners Association:
The court noted that the issue of filing B/E and the associated duty liability was yet to be adjudicated. It directed the customs authorities to investigate and pass appropriate orders within six months. The court also urged the Central Board of Excise & Customs (CBEC) to expedite the decision on the representation made by the Indian National Shipowners Association to resolve the long-standing controversy.

Conclusion:
The court ordered the provisional release of the seized vessels upon compliance with specified conditions and directed the customs authorities to refrain from coercive actions until adjudication. The court emphasized the need for a timely resolution of the representation by the Indian National Shipowners Association to address the decade-old issue. Both writ petitions were disposed of with no order as to costs.

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