Confiscation of converted dumb barge and tug vessel set aside due to lack of territorial jurisdiction and evidence

CESTAT Kolkata allowed appeals against confiscation of dumb barge and tug vessel, setting aside penalties imposed by lower authority. The tribunal held that barge was already converted from foreign to coastal run with duty paid on bunkers, making confiscation under section 115(2) of Customs Act unjustified. Authority lacked territorial jurisdiction as conversion was handled by Paradip Customs. No evidence existed of smuggling or fraudulent intent in non-filing of IGM, which was deemed inadvertent omission. Confiscation and penalties were unsustainable, with lower authority's order suffering from inherent legal weaknesses.

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Issues Involved:
1. Confiscation of the dumb barge Century Star-3002.
2. Imposition of redemption fine and penalties.
3. Applicability of various sections of the Customs Act, 1962.

Summary of Judgment:

Issue 1: Confiscation of the dumb barge Century Star-3002
The Tribunal examined the facts and found that the dumb barge Century Star-3002 was imported and converted for coastal run in 2006. The barge was towed by the tug Century Star-1 and tied at Sagar Virtual Jetty with proper permissions. The barge was seized in June 2009. The Tribunal noted that the barge was neither prohibited nor dutiable goods, and there was no evidence of unloading at a non-Customs port. The Tribunal concluded that the barge could not be confiscated under Section 111(a), (d), (f), (g), or (h) of the Customs Act, 1962, as there was no violation of import policy or demand for duty.

Issue 2: Imposition of redemption fine and penalties
The Tribunal found that the imposition of penalties under Section 112 of the Customs Act on various parties, including the Master of the tug, M/s. Century Star Shipping Pvt. Ltd., M/s. Atlantic Shipping Pvt. Ltd., M/s. B. Ghose & Co. Pvt. Ltd., and M/s. Babaji Shivram Clearing & Carriers Pvt. Ltd., was not justified. The Tribunal emphasized that there was no evidence of fraudulent intent or knowledge of any contravention of the Customs Act. The Tribunal referred to the case of Essar Oil Ltd. Vs. Commissioner of Customs, Mumbai, and concluded that penalties could not be imposed for mere negligence or inadvertent omissions.

Issue 3: Applicability of various sections of the Customs Act, 1962
The Tribunal analyzed the applicability of Sections 111, 112, and 115 of the Customs Act. It was noted that the dumb barge Century Star-3002 was classified as an "ocean-going vessel" and exempted from duty under Notification No. 165-CUS. The Tribunal referred to the case of Nobel Asset Co. Pvt. Ltd. Vs. Commissioner of Customs (Preventive), Mumbai, and concluded that once a vessel is assessed to duty and cleared for home consumption, it ceases to be imported goods and becomes a conveyance. Therefore, no duty could be demanded on subsequent movements in and out of India. The Tribunal also found that the tug Century Star-1 could not be confiscated under Section 115(2) as there was no evidence of its use in smuggling goods with the knowledge or connivance of the owner or captain.

Conclusion:
The Tribunal set aside the order of confiscation and penalties imposed by the adjudicating authority, allowing the appeals with consequential reliefs as per law. The judgment emphasized the importance of proper jurisdiction and the absence of malicious intent in determining penal liabilities under the Customs Act, 1962.

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