2017 (10) TMI 360 - AT - Customs

Ship allowed for urgent repairs with conditions for revenue security

Seamec Ltd. Versus Commissioner of Customs (Import), Mumbai

The Tribunal allowed the ship engaged in oil exploration to depart for urgent repairs at Colombo Shipyard, subject to conditions including providing a ... Urgency of repair of the ship in dry-docking in Colombo - interim modality - Confiscation of vessel - SEAMEC-I and SEAMEC-III - property of Union of India u/s 162 of CA, 1962 - demand of higher amount of Bank Guarantee - Held that: - Keeping in urgency of repair of the ship and appellant’s above undertaking to secure Revenue in the meantime till the ship returns back to India, interim modality as hereinafter stated is worked out to serve interest of justice in the extraordinary circumstance, even though Rule 41 of CESTAT (Procedure) Rules, 1982 does not expressly provide for passing such order. However, taking note of the order of Hon’ble Bombay High Court in the case of CC(I) Vs. Hind Offshore Pvt. Ltd. [2014 (3) TMI 135 - BOMBAY HIGH COURT], where the High Court has observed that permission to grant vessel to go out of India was passed in that case in exercise of inherent jurisdiction of Tribunal, we consider that following modality worked out on the facts and circumstances of the case may not be out of the jurisdiction of Tribunal. Where the appellant shows its attitude to co-operate with Revenue and it has urgency of repair of the ship in dry-docking in Colombo, above working modality has been considered proper - appeal allowed. Issues: Urgent repair of a ship engaged in oil exploration, Bank Guarantee amount, Interim order for ship release, Compliance with Customs Act, 1962, Judicial observations on passing interim orders.Analysis:1. Urgent Ship Repair: The appellant, engaged in oil exploration with a vessel named SEAMEC-II, sought permission for the ship's dry-docking at Colombo Shipyard due to urgent repair requirements. The appellant informed the Commissioner of Customs about the arrangement and the necessity of moving the ship to Colombo for repairs. The Tribunal acknowledged the urgency and outlined a modality to allow the ship to depart from India temporarily, subject to certain conditions.2. Bank Guarantee: The Revenue argued for a higher Bank Guarantee amount due to the confiscation status of other ships, SEAMEC-I and SEAMEC-III, under Section 162 of the Customs Act, 1962. The Tribunal considered the Revenue's concerns and directed the appellant to provide a Bank Guarantee of Rs. 5 crores in two installments to secure the interests of Revenue during the ship's temporary departure for repairs.3. Interim Order for Ship Release: Despite the general practice of not passing interim orders on the eve of an appeal, the Tribunal noted the appellant's urgency and the High Court's observation regarding the ship's release for dry-docking. The Tribunal, drawing reference from a previous case, devised a modality to address the extraordinary circumstances, allowing the ship's release with specific conditions, including the provision of Bank Guarantee and an insurance requirement for the departing ship.4. Compliance with Customs Act, 1962: The Tribunal emphasized the importance of complying with legal provisions and ensuring the protection of Revenue's interests while facilitating the ship's temporary departure. The modality outlined by the Tribunal aimed to balance the urgent repair needs of the ship with the statutory requirements under the Customs Act, 1962.5. Judicial Observations on Passing Interim Orders: The Tribunal cited a Supreme Court judgment highlighting the cautious approach required when granting interim orders, especially concerning public revenue and administrative functions. The Tribunal justified the interim modality based on the appellant's cooperation with Revenue, the urgency of ship repair, and the specific conditions imposed to safeguard Revenue's interests during the ship's absence.6. Conclusion: The Tribunal concluded the matter by disposing of the appeal in the specified terms, emphasizing the importance of adhering to the agreed conditions and refraining from repeating certain practices during the appeal's pendency. The order was passed with mutual understanding between the parties, ensuring no adjournments for the upcoming hearing and reiterating the compliance requirements set forth in the modality devised by the Tribunal.