2009 (6) TMI 479 - HC - Customs

Court orders release of seized vessel with specified terms: bank guarantee, bond, completion of adjudication. Barge to sail upon compliance.

The court decided to treat the vessel as seized but ordered its release under specified terms and conditions. These conditions included providing a bank ... Seizure- The accommodation barge Morayo was imported but did not file IGM based on bill of lading and bill of entry. In these circumstances the barge is liable for confiscation under Section 111(f) and (m) of the Customs Act, 1962 and the importer M/s. Sarku Engineering Respondent No. 3 is liable for penalty under Section 114A of the Customs Act, 1962.held that- if the vessel is treated as seized as on today subject to whatever formal steps the respondents may take, the said barge is released on the following terms and conditions: (1) The Petitioners to furnish bank guarantee in the sum of Rs.55 lacs. In favour of Respondent No. 2 and to keep it alive till the completion of the adjudication proceedings. (2) The Petitioner also to furnish usual bond. (3) On furnishing bank guarantee and bond, the respondent to forthwith allow the vessel to sail subject to Petitioners having other documentations from the concerned authorities. (4) The respondent to release the documents whereby the vessel was converted from coastal run to foreign run after furnishing the guarantee and the bond. The document be released to the Petitioner. Issues:1. Seizure and detention of Accommodation Barge 'MV Morayo' by customs authorities.2. Allegations against the importer and the charterer of the vessel.3. Contention regarding release of the vessel and exemption from duty.4. Revenue implications and conditions for release of the barge.Analysis:1. The Petitioner approached the court alleging that the respondents were preventing the sailing of the barge 'MV Morayo' under the flag of Sierra Leone, which was imported after complying with customs formalities and changed from coastal run to foreign run with permission but remained in Indian waters. Respondents argued that the barge was liable for confiscation under Customs Act sections 111(f) and (m) for not filing necessary documents, and the importer was liable for penalty under section 114A. The court considered the possibility of seizure and confiscation but noted that if entitled, the respondents should release the barge under certain terms.2. The department admitted no case against the Petitioner but against the importer and the impugned goods, clarifying the purchase of the vessel by the Petitioner from a different entity. The court did not delve into the merits but focused on the release of the barge, subject to the legal procedures. The Petitioner's plea for a detention certificate was not considered at that stage.3. The Petitioners argued for release based on a Customs Act notification exempting goods from duty under specified conditions, claiming their entitlement to such exemption. The respondents raised concerns about potential revenue loss if the goods were released unconditionally. The court acknowledged the exemption possibility and set conditions for the release of the barge, including the furnishing of a bank guarantee and a bond by the Petitioners.4. In light of the above considerations, the court decided that justice would be served by treating the vessel as seized but releasing it under specified terms and conditions. These conditions included providing a bank guarantee, furnishing a bond, and ensuring the completion of adjudication proceedings. Once the necessary documentation and guarantees were provided, the respondents were directed to allow the barge to sail, maintaining the legal requirements and formalities for the release of the vessel.