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Issues: (i) Whether the Commissioner of Customs (Preventive), Mumbai had jurisdiction to initiate adjudication and confiscation proceedings in respect of rigs operating beyond the territorial waters but within the exclusive economic zone; (ii) Whether duty could be demanded by resort to section 12 of the Customs Act, 1962 when recovery under section 28 of the Customs Act, 1962 was time-barred; (iii) Whether confiscation, redemption fine and penalties could survive when the goods were not available for seizure or confiscation.
Issue (i): Whether the Commissioner of Customs (Preventive), Mumbai had jurisdiction to initiate adjudication and confiscation proceedings in respect of rigs operating beyond the territorial waters but within the exclusive economic zone.
Analysis: Jurisdiction under the Customs Act, 1962 is conferred by statutory assignment and is confined to the territorial limits of the officer's notification. The presence of goods in the waters beyond the land boundaries of Mumbai, Thane and Raigad did not enlarge the Commissioner of Customs (Preventive)'s jurisdiction by reference to the definition of India or Indian customs waters. The assigned jurisdiction over designated areas in the exclusive economic zone was specific to the Commissioner of Customs, Mumbai, and could not be appropriated by the preventive commissioner.
Conclusion: The proceedings were without jurisdiction and unsustainable against the assessee.
Issue (ii): Whether duty could be demanded by resort to section 12 of the Customs Act, 1962 when recovery under section 28 of the Customs Act, 1962 was time-barred.
Analysis: Section 28 is the statutory provision for recovery of duty not levied, not paid or short-paid, and contains its own limitation period. The charging provision in section 12 does not authorise a fresh demand in place of the recovery mechanism of section 28. The decision relied upon for the Revenue only explained that procedural defects in section 28 do not destroy jurisdiction, but it did not sanction substitution of section 28 by section 12 for recovery. The demand was also beyond the statutory period prescribed for recovery.
Conclusion: Duty could not be demanded under section 12, and the demand failed.
Issue (iii): Whether confiscation, redemption fine and penalties could survive when the goods were not available for seizure or confiscation.
Analysis: Section 125 operates where confiscation is authorised and redemption is possible; it does not create an independent power of assessment or recovery where duty has not already been properly determined. Since the rigs were not available for seizure or confiscation and were no longer in existence for the purpose of redemption, the basis for redemption fine disappeared. The penalties were consequential to the invalid duty demand and confiscation.
Conclusion: Confiscation, redemption fine and penalties were not sustainable.
Final Conclusion: The adjudication lacked jurisdictional foundation, the duty demand was unauthorised, and the consequential confiscation and penalties could not stand; the appeals were allowed in full.
Ratio Decidendi: A customs demand must be made only by the officer having statutory territorial jurisdiction and through the recovery mechanism prescribed by the Act; where the officer lacks jurisdiction and the statutory recovery provision is unavailable, duty demand, confiscation and consequential penalties cannot be sustained.
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