TaxTMI 
TaxTMI 
2020 (8) TMI 400
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2011 and arrived in Cochin Port on 28.01.2012 on being chartered by M/s. Dharti Dredging and Infrastructure Ltd. for dredging operations at Cochin. A NIL cargo IGM No. 290/2011 dated 08.06.2011 was filed; however, it was not indicated that the dredger was imported and no duty was paid in terms of Notification No. 21/2002 or 19/2012. Statements of various persons involved were recorded and investigations were concluded. It appeared to investigation that the dredger was not covered as a foreign flag vessel in terms of Section 2(21) of Customs Act, 1962 and CBEC Circular No. 16/2012 dated 13.06.2012; no bill of entry was filed. A SCN dated 30.01.2013 was issued to the owner of the dredger i.e. M/s Manthan Dredging Ltd. and the disponent owners M/s Samudra Dredgers Ltd, U.K; M/s Universal Dredgers and their agents seeking demand of Customs duty of Rs. 3,28,42,609/- during the period 28.01.2012 to 10.10.2012 and 16.10.2012 to 08.01.2013. Another SCN dated 07.05.2013 to the owner of the dredger i.e. M/s Manthan Dredging Ltd and the disponent owners M/s Universal Dredgers and their agents seeking demand of Customs duty of Rs. 46, 73,440/- covering the period 09.01.2013 to 28.02.2013. Bot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll of entry, customs duty cannot be demanded subsequently (Para 6.3 to 6.6). (ii). Tribunal in the case of Hede Ferrominas Pvt Ltd Vs Commissioner of Customs (Import, Mumbai) 2016 (334) ELT 540, held that as regard non-filing of Bill of Entry, we find that once goods is exempted by customs exemption notification, non-filing of Bill of Entry at the time of import is merely a procedural lapse, as there is no mala fide intention of the appellant as no benefit accrues to the appellant by non-filing of Bill of Entry (Para 6.4). (iii). Tribunal in Devshi Bhanji Khona vs. CC, Cochin 2019 TIOL 3369 also held as above (Para 16.5). (iv). Tribunal in the case of Noble Asset Co. Ltd - 2006 (205) ELT 901 held that No customs duty is payable on the vessel, when it is re-imported into India. Learned Counsel submits that in the present proceedings, customs duty is not demanded for the initial imports made in 2007 and 2009 as vessel was exempt from duty; duty is demand only for the entry made in 2011, as the exemption given to dredger was withdrawn during the period in question; if the case of the department is correct, duty ought to have been demanded for the initial imports too; it is not don....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, decide and control only the commercial operations of the ship/vessel. 2.4. Learned Counsel submits that the dredger in question is a foreign going vessel and hence not liable to duty; vessel in question is a foreign going vessel at all times; as per Section 2(21) of the Customs Act, definition of foreign-going vessel or aircraft" has therefore two parts; the first part is a means definition and the other part is an inclusive definition; the means definition applies to a vessel or aircraft for the time being engaged in carrying goods or passengers between any port or airport in India and any port or airport outside India; the inclusive definition covers vessels which are undertaking activities entirely unconnected with carriage of goods or of passengers; each of the three clauses of the inclusive definition applies to various specific situations mentioned therein; a vessel may be termed a foreign going vessel either because it falls within the first part of the definition or within any of the three clauses of the latter part; in the present case the vessel in question falls under clause (ii) contained in Section 2(21); Clause (ii) of Section 2(21) treats any vessel engaged in fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ht to have been computed by applying rate of duty of 1% in terms of Notification No.1/2011-C.E; valuation adopted by the department is also not correct and not substantiated; Notification No.1/2011-C.E. (Sl.No.113) prescribes an effective rate of 1% CVD on all goods classifiable under the Heading 89.05. He relies on the decision of the Supreme Court in the case of SRF Ltd vs. Commissioner of Customs, Chennai: 2015 (318) ELT 607 (SC) (paras 6-8), wherein appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/2002; the appellants had placed on record the purchase cost of the dredger. However, the department has relied upon a news report about the controversy on Sethusamudram project and proceeded on the basis of the value indicated therein, which value is not authentic and only hearsay; in light of the same, to this extent, the differential amount of duty is to be re-calculated. 2.6. Learned Counsel submits that extended period of limitation is not invokable in terms of Section 28(4) of the Customs Act; invocation of extended period of limitation is not tenable as there is no fraud, collusion etc. Customs formalities have been complied with at the t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idling as a foreign going vessel; it was duly converted from foreign run to coastal run in Paradeep Port; if at all its opined that the dredger was imported into India for home consumption, it was in Paradeep; customs department in Cochin has no jurisdiction to demand duty on imports made at Pardeep Port; Tribunal held in favour of appellants in Samson Maritime Ltd. v. Commissioner of Customs (Import), Mumbai: 2016 (333) ELT 148 (Tri.-Mum) (Para 7); territorial jurisdiction of the Commissioner Cochin has not been extended to Paradeep, either by the Customs Act or by the Central Board of Excise and Customs; section 15(1)(c) or Section 28 also does not confer jurisdiction on customs department at Cochin to demand duty from the Appellants for the import made at Paradeep Port; this is more so when the department is stating that the bill of entry ought to have been filed when the vessel was converted into coastal run from Paradeep Port; it was held in Devilog Systems India v. Collector of Customs, Bangalore: 1995 (76) ELT 520 (Kar) and NCR Corporation of India Ltd Vs CC (Prev.), Mumbai, 2002 (143) E.L.T. 349 (Tri. -Mumbai) that a Commissioner does not have the power to adjudicate over a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould be leviable. He submits that this issue was examined elaborately in the case of M/s. SEAMEC Ltd.: 2017(12) TMI 1281- CESTAT Mumbai, this Tribunal held as follows. "62. When the vessels remained as "goods" all along i.e. from point of first entry to India and during the re-import from time to time that was classifiable under CTH 89059090, for the reasons stated hereinbefore taking the criteria of classification prescribed by the said CTH. All the vessels did not possess the character of the goods covered by CTH 89019090 not being used for carriage of cargo or passenger according to the mandate of the said CTH. Accordingly, stand of Revenue that the vessels on re-import shall be classifiable under CTH 89059090 as "goods" only is correct and that is upheld". 3.3. Learned Authorised Representative further submits that the appellant has pleaded that they had filed the declaration on stores and also obtained the conversion certificates duly; however, this does not exonerate the importers from the act of non-filing of Bill of Entry for import; in the absence of filing the IGM showing the 'dredger' included as goods and the non-filing of the Bill of Entry, the import duty needs to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ardeep port on 12.06.2011; import deemed, if any, has taken place on 12.6.2011 at Pradeep Port and thus, the Commissioner of Customs, Cochin lacks the jurisdiction to initiate action by issuance of show cause notice; CBEC has clarified vide their Circular No.16/2012-Cus dated 13.06.2012, that where foreign flag vessels are to be converted from foreign run to coastal run, bill of entry for home consumption is to be filed at that point of time and applicable duties of customs is to be paid. 4.1. Learned Counsel submits that In the instant case, it is clearly evident that the dredger was imported into India for home consumption in Paradeep port first, as evidenced by its conversion into coastal run; therefore, the customs department in Cochin has no jurisdiction to demand duty on imports made at Paradip Port; neither Commissioner Customs' was given jurisdiction; Section 15(1)(c) or Section 28 also does not confer jurisdiction on customs department at Cochin to demand duty from the Appellants for the import made at Paradip Port. This is more so when the department is stating that the bill of entry ought to have been filed when the vessel was converted into coastal run from Paradip Por....
X X X X Extracts X X X X
X X X X Extracts X X X X
....since recalled 2018 (364) ELT 611 (Tri.-Mum). 5. Heard both sides and perused the records of the case. The rival contentions in the case revolve around the following issues: (i) Whether the impugned vessel MV Darya Manthan is foreign going vessel in terms of Section 2(21) of Customs Act, 1962; (ii) Whether the appellants are entitled to the benefit of Notification No.94/96; (iii) Whether Commissioner of Customs, Cochin has jurisdiction over the import which initially occurred at the port of Paradeep on 11.6.2011; (iv) Whether the vessel MV Darya Manthan is liable to pay duty on being used for coastal run at Cochin for the period 28.1.2012 to 28.2.2013; (v) Whether the Commissioner of Customs was right in holding that separate proceedings for demand of duty and seizure of the vessel MV Darya Manthan can be initiated; and (vi) Whether Commissioner of Customs was correct in confirming the duty liability jointly on different parties. 6. Learned counsel for the appellants makes a spirited plea to the effect that the vessel is a foreign going vessel and as such, is not hit by the clarification contained in Circular No.16/2012 dated 13.6.2012. He contends that the definition of fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the appellant's claim cannot be entertained. We find that learned Commissioner has correctly observed that: "44. The vessel, thus, having illegally entered into India and not imported through a due process during any of its prior sorties, clearly falls outside the definition of a re-imported cargo as well. In any case, it is no longer res integra that re-imports do not carry a blanket exemption from customs duty. The findings of the Hon'ble Supreme Court in the matter of Super Cassettes Industries Ltd. (reported in 2008 (225) ELT 401 (SC) that on re-importation of goods assessee would be liable to pay same duty as had been paid when goods were imported for first time applies to the instant case." We find that the appellants cannot claim the benefit of a notification retrospectively, that too having not established the fulfilment of conditions envisaged in the notification. In view of the above the argument of the appellants is not acceptable. 8. Coming to the issue of Jurisdiction, hotly contested by rival parties, we find that the impugned dredger MV Darya Manthan has been making trips in and out of Indian Ports right from 2007 onwards. Though the vessel touched the Indi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....consumption in Paradeep first by its conversion to coastal run; therefore, Cochin Customs has no jurisdiction to demand duty on imports made at Paradeep Port. Learned counsel for the appellants relies upon Samsung Maritime Ltd. (supra) wherein Tribunal has held as follows: "7. Although we have opined above on merits, we would discuss a preliminary objection by the ld. Advocate that the Commissioner at Mumbai had no jurisdiction to seize and adjudicate upon a case of goods which were imported at Chennai. The case of Revenue is that the appellant did not file the IGM/Bill of Entry at the time of import at Chennai. We find that the Commissioner of Customs at Mumbai does not have jurisdiction over Chennai port. Therefore, neither could he have issued a show cause notice proposing confiscation and penalty for a contravention committed in Chennai jurisdiction. Nor could he have adjudicated the case without authority under the Act. On this ground too, we set aside the impugned order as beyond jurisdiction and illegal." 9. We find that while demanding and confirming duty, learned Commissioner observed that separate proceedings for confiscation as regards the vessel will be initiated by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in terms of Section 110A of Customs Act, 1962 when the subject vessel was restrained by Cochin Customs. Hereto, we find that the duty was not paid but was deposited along with a bond and a bank guarantee. Moreover, the duty was not paid in full as demanded. Therefore, by no stretch of imagination, the same can be deemed to be payment of duty. Such amounts deposited do not take the character of duty. In the instant case, the payment was 'not of any duty but was a deposit, that too not in full', made to secure provisional release of the vessel and the appropriation has been appealed against. Therefore, it is not free for Cochin Customs to reckon date of making of deposit as the relevant date in terms of Section 15 of the Customs Act, 1962. Section 15 is relevant only for the purposes of fixing the rate of duty, and not be reckoned for issuance of a demand notice. 10. Further, the impugned vessel was operating in the jurisdiction of Cochin Customs. As per Cochin Customs, applicable duty has not been paid on the vessel. Cochin Customs were free to consider the impugned vessel to be 'smuggled goods', in terms of Section 2(39) of Customs Act, 1962 and seize the vessel under Section 110....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubsequent lessees after the vessel is imported and is under coastal run, that too ignoring the period when the vessel was under coastal run at Dhamra Port. We find that a stand, taken even due to mistaken appreciation of law, cannot be selective. However, we find that learned counsel for the appellants has not raised this issue. Therefore, we refrain from giving any opinion on this issue. 12. We find that learned counsel has correctly replied upon decision of Tribunal in the cases of N.C.R. Corporation of India Ltd. vs. CC (Preventive) Mumbai (supra) and Devilog Systems India (supra). We also find that as held by Tribunal in Bakeman's Home Products Pvt. Ltd. vs. CC, Bombay: 1997 (95) ELT 278 (Tri.), demand and confiscation proceedings cannot be initiated in a truncated manner. In view of our discussion above, we further conclude that Cochin Customs had no jurisdiction to demand duty on the impugned vessel and we find that the show-cause notice and adjudication order have been issued without proper authority of law. Moreover, in the instant case, the vessel has been traveling between foreign ports and Indian ports. During the current Journey, the vessel arrived at Paradeep Port on ....