2016 (12) TMI 1207 - AT - Customs

Tribunal permits M/s Seamec Ltd to move vessel 'MV Seamec III' for Dubai project despite past issues

The Tribunal allowed M/s Seamec Ltd to take the vessel 'MV Seamec III' out of the country for a project in Dubai, considering the vessel's history and the ... Release of confiscated goods subject to conditions - confiscation - redemption fine - bank guarantee as security - bond for value of the vessel - protection of public revenueRelease of confiscated goods subject to conditions - bank guarantee as security - bond for value of the vessel - protection of public revenue - Permission to allow MV Seamec III to be taken out of the country for commercial deployment and dry docking on specified security and conditions - HELD THAT: - The Tribunal exercised its discretion to permit temporary release of the confiscated vessel for commercial deployment and essential dry docking while safeguarding the public revenue. The Tribunal noted the vessel was confiscated in 2013, that the appellant had not exercised the option to redeem by payment of the redemption fine, and that a pre-deposit had been appropriated towards the duty demand. Reliance was placed on earlier orders permitting temporary removal of the vessel and a co-owned vessel on execution of bank guarantees of specified values; those precedents showed the Tribunal has allowed release for maintenance and commercial purposes subject to adequate security. Balancing the appellant's interest in avoiding deterioration and earning deployment revenue against the paramount need to protect public revenue, the Tribunal directed conditional release only upon execution of an appropriate bank guarantee and bond. The security fixed was intended to approximate the protection afforded by the redemption fine and earlier composite guarantees, and the permitted duration was limited to six months.MV Seamec III is allowed to be taken out for commercial purpose and dry docking for six months upon execution of a bank guarantee of Rs. 7,00,00,000 in favour of the Commissioner of Customs, Mumbai and a bond for the value of the vessel.Final Conclusion: Miscellaneous application allowed; MV Seamec III may be temporarily taken out of the country for six months for commercial deployment and dry docking subject to execution of the specified bank guarantee and bond to secure public revenue. Issues:1. Permission to take the vessel out of the country for a project.2. Confiscation of the vessel, redemption fine, and penalty under section 114A of the Customs Act, 1962.3. Previous instances of taking the vessel out for repair and commercial purposes.4. Consideration of bank guarantees for release of the vessel.5. Public revenue safeguard and appellant's plea for release.Issue 1: Permission to take the vessel out of the country for a project.The appellant, M/s Seamec Ltd, sought permission to take the vessel 'MV Seamec III' out of the country for a project in Dubai. The vessel required dry docking as per statutory regulations, and the appellant highlighted the need to offset maintenance costs by undertaking the project. The Tribunal considered previous instances of allowing such deployments and the vessel's history of investigation for wrong classification and non-inclusion of repair values in assessable value.Issue 2: Confiscation of the vessel, redemption fine, and penalty under section 114A of the Customs Act, 1962.The vessel was confiscated in 2013, with a redemption fine imposed and penalty under section 114A of the Customs Act, 1962. The appellant had not exercised the option to redeem the vessel since confiscation, and previous stay applications were disposed of without granting a stay. The Tribunal noted the history of allowing the vessel to be taken out for repairs and commercial purposes, with varying bank guarantee amounts.Issue 3: Previous instances of taking the vessel out for repair and commercial purposes.The Tribunal reviewed past instances where the vessel was allowed to be taken out for dry dock, repairs, and commercial undertakings. Different bank guarantee amounts were imposed based on the purpose of the vessel's deployment, with a focus on safeguarding public revenue while balancing the appellant's need to utilize the asset effectively.Issue 4: Consideration of bank guarantees for release of the vessel.In assessing the appellant's request for release, the Tribunal considered the necessity of bank guarantees to secure public revenue interests. Previous orders regarding bank guarantees for similar vessels were referenced to determine the appropriate value for the bank guarantee required for the release of the vessel 'MV Seamec III' for a commercial purpose and dry docking.Issue 5: Public revenue safeguard and appellant's plea for release.While acknowledging the appellant's need to deploy the asset for performance, the Tribunal prioritized safeguarding public revenue. The appellant's pre-deposit towards duty liability was considered, and the Tribunal decided to allow the release of the vessel for a period of six months for commercial purposes and dry docking upon the execution of a specified bank guarantee and bond to ensure the interest of justice and public revenue protection.This detailed analysis of the judgment addresses the issues involved comprehensively, outlining the Tribunal's considerations and decisions regarding the appellant's request for permission to take the vessel out of the country, the vessel's confiscation, redemption fine, bank guarantees, and public revenue safeguarding.