TaxTMI 
TaxTMI 
2020 (12) TMI 379
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....962. 3. Case of the petitioner is that it is a company incorporated under the laws of Republic of Panama, having its registered office at Panama City. It is the owner of a vessel called MT Global Rani (referred to as 'the vessel' hereinafter). 4. In the course of business, petitioner had to carry a cargo of Bitumen from Bandar Abbas Port, Iran to Mumbai. It is stated that as per existing trade practice, due to banking restrictions all ship owners carrying cargo from Iran change documentation to show that the cargo originated in Iraq. On 15.09.2020, the cargo of Bitumen was loaded onto the vessel of the petitioner. The seller was Synergy Petrochem FZE, Sharjah and the buyer was Agarwal Industrial Corporation Limited, Taloja in the State of Maharashtra. 5. Petitioner's vessel arrived at Mumbai Port on or about 24.09.2020. On arrival, Senior Intelligence Officer, Special Intelligence and Investigation Branch (1), Mumbai issued summons to Shri. Ranjeet Singh, master of the vessel under section 108 of the Customs Act, 1962 (briefly 'the Customs Act' hereinafter). It was mentioned therein that the Senior Intelligence Officer was making an enquiry with respect to the vessel and called ....
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....purpose. This practice is being followed by all such importers and carriers and does not in any manner affect the revenue. There is no embargo in importing Bitumen from Iran. In two recent incidents, vessels, viz, MT Clayton and MT R-Ocean had brought similar product from Iran shown as originating from Iraq. While in one case no action was taken, in the other case, the vessel was released on furnishing of bond of equivalent amount as that of the vessel and cash deposit of certain amount. Vessel in question is a specialized one having high daily operating cost. Because of the seizure, petitioner is incurring heavy expenditure. 11. After filing of the writ petition on 23.10.2020, Additional Commissioner of Customs (Import-II), New Custom House, Mumbai passed order dated 28.10.2020 rejecting the request of the petitioner for provisional release of the vessel. As per this order, the agent of the petitioner M/s. Preetika Shipping Agency Pvt. Ltd. was informed that provisional release could be given only to the owner. Its locus standi as agent was doubtful. The owner should apply for provisional release and execute a bond besides furnishing bank guarantee for an amount equivalent to fiv....
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....ived at Mumbai Port on 22.09.2020 and had obtained permission from the proper officer to discharge the goods whereafter all the goods on board the vessel were discharged. Statement of the master of the vessel was recorded on 25.09.2020 where he admitted that the goods were loaded at Bandar Abbas Port, Iran and not at Basrah Port, Iraq; the vessel had never entered Iraqi waters. Bogus documents to that effect were prepared. 14.2. Therefore, the vessel never entered Iraqi waters and the related documents depicting that the goods had originated from Iraq were forged by the petitioner. 14.3. Basic stand of respondent No.1 is that the goods were loaded from Bandar Abbas Port, Iran but declared port of loading as Basrah Port, Iraq. Related documents were manipulated. Port of loading was misdeclared. Thus, goods became smuggled goods liable for confiscation. Reference has been made to sections 111(m) and 115(2) of the Customs Act. Regarding the two instances mentioned by the petitioner it is stated that in so far the vessels MT R-Ocean and MT Clayton are concerned, in the absence of relevant facts and documents, no comparison can be made and no conclusion could be reached. Locus standi ....
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....ng to section 111(m) of the Customs Act read with section 2(16), he submits that under the said provisions, only the goods imported can be seized and not the vessel. In this connection, he has also referred to section 46 of the Customs Act. Referring to the definition of 'smuggling' in section 2(39), he submits that under the proviso to sub-section (2) of section 115 even in case of confiscation of conveyance, the owner is mandatorily required to be given an option to pay in lieu of confiscation of the conveyance, a fine not exceeding the market price of the goods which are sought to be smuggled or have been smuggled. Referring to clause (d) of section 111, he submits that under no circumstances the vessel can be seized after clearance of the imported goods. In so far release of two other vessels placed in identical situation, he submits that answer given by respondent No.1 is totally evasive. Instead of responding to the specific averments of the petitioner, respondent No.1 has tried to shift the burden to the petitioner when it has already furnished the details of the two identically placed vessels. 17. Per contra, Mr. Jetly, learned senior counsel for the respondents submits th....
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.... extracted hereunder:- " Date: 26.09.2020 SEIZURE MEMORANDUM Whereas, M. T. Global Rani under the flag of Cook Islands Voyage No.13/20 filed IGM bearing No.2262875 dated 21.09.2020 with declared port of loading as Basrah, Iraq for 2865.42 MTS of Bitumen Grade VG30 in bulk to be discharged at Mumbai port arrived and berthed at Mumbai port on 22.09.2020. M/s. Agarwal Industrial Corporation Ltd. (IEC 0309060052) have filed Bill of Entry No.8896841 dated 21.09.2020 for 2865.428 MTS of the said item. 2. On the basis of intelligence, the officers of this office boarded the said vessel on 25.09.2020 and scrutinized the documents of declaration filed through their agent M/s. Preetika Shipping Agency Pvt. Ltd. and also made enquiries with the Master of the said Vessel, Shri. Ranjeet Singh. During the preliminary investigations, it has been revealed that the said cargo, 'Bitumen Grade VG3 in Bulk'has not been loaded at Basrah Port, Iraq as per the import documents filed for clearance of the goods. The documents found from the possession of the master and the statement of the Master of the vessel clearly establish that the said cargo was not loaded from Basrah Port, Iraq but ins....
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....r of the vessel Shri. Ranjeet Singh who was directed not to remove, part with or otherwise deal with the vessel except with the permission of the Special Intelligence and Investigation Branch. 21. Before proceeding further, we may also mention that from the pleadings and submissions it is evident that the imported goods i.e., Bitumen was cleared for home consumption under section 47 of the Customs Act before seizure of the vessel. Infact, in the hearing, Mr. Jetly had categorically submitted that respondents are not concerned with the consignment but with the vessel. 22. Keeping the above in mind, we may now advert to section 115 of the Customs Act which deals with confiscation of conveyances. While sub-section (1) deals with the instances when conveyance shall be liable to confiscation, sub-section (2) mandates that any conveyance or animal used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be liable to confiscation unless the owner of the conveyance or the animal proves that it was so used without the knowledge or connivance of the owner or his agent or the person in charge of the conveyance or animal. As per the proviso wh....
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....e conveyance. However, no ownership documents have been tendered along with the application. Your locus standi as an agent is not free from doubt in absence of legally enforceable contract between the foreign company claiming to be the owners and the Indian agent. It has come to notice that the vessel owners have an office in India. Therefore, they alone should apply for provisional release and execute bond and bank guarantee for an amount equivalent to five times the market value of the vessel as provided under Section 114 AA of the Customs Act, 1962 to secure the likely penalty imposed upon the eventual adjudication of the case. Moreover, additional BG equivalent to market price of the goods being carried by the vessel has to be executed to secure the Redemption Fine likely to be levied under Section 115(2) of the Act ibid. It has also come to notice that the vessel Global Rani is engaged in repeated offence and this particular voyage carrying the Iranian origin bitumen is the fourth such incidence. Statement of the Master of the vessel has not been recorded under Section 108 covering all such past offences. Therefore, the vessel cannot be released till the investigation is....
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....gaged in repeated offence, the present one being the fourth, carrying Iranian origin Bitumen. Investigation in this regard is not yet completed; 4. Vessel is under detention by Directorate General of Shipping since 24.09.2020 as being not sea-worthy. Therefore, the vessel cannot be released without no objection from the Directorate General of Shipping; 5. As per circular dated 16.08.2017 of the Board, provisional release under section 110-A shall not be allowed in the case of prohibited goods; and finally, 6. Offences made by the petitioner are very grave and of serious nature likely to prejudicially affect trade and friendly relations with the United States of America or companies of United States of America. Therefore, such imports have been rendered prohibited under section 11 of the Customs Act. 27. Before we deal with the above grounds, it would be apposite to advert to section 110A of the Customs Act. By the Taxation Laws (Amendment) Act, 2006, section 110-A was inserted in the Customs Act with effect from 13.07.2006. Since this provision is relevant, the same as it stands today is extracted hereunder:- "110A. Provisional release of goods, documents and things seized....
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.... Court clarification reliance placed by respondent No.1 on the Board's circular dated 16.08.2017 is totally misplaced. To that extent it would not be necessary to examine the vires of the said circular. 30. Regarding the ground given that the vessel in any case is under detention by the Directorate General of Shipping and therefore, cannot be released without having no objection from the said authority, we are of the view that the same would not preclude exercise of power under section 110A of the Customs Act. As pointed out by learned counsel for the petitioner that is a separate issue not raised in the present proceeding. Therefore, Court is not called upon to adjudicate or deliberate upon the said aspect. 31. Regarding the allegation that the vessel has been engaged in repeated offence and that investigation in this regard is not yet complete, the same in our view would also not come in the way of exercise of power under section 110-A of the Customs Act. That apart, what the customs authorities are stating through this ground is that the vessel has been engaged in carrying Iranian origin Bitumen. While mis-declaration of country or port of origin could be a matter of investiga....
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....or exportation of goods. Sub-section (1) makes it abundantly clear that if the central government is satisfied with any of the purposes specified in sub-section (2), it may, by notification in the official gazette, prohibit the import or export of goods of any specified description either absolutely or subject to such conditions. The purposes mentioned in sub-section (2) includes amongst others prevention of dissemination of documents containing any matter which is likely to prejudicially affect friendly relations with any foreign state or is derogatory to national prestige (clause t). First and foremost, it is the job of the central government whether to prohibit importation or exportation of any goods; the central government must be satisfied that such prohibition has become necessary to prevent dissemination of documents containing any matter likely to prejudicially affect friendly relations with any foreign state or is derogatory to national prestige which certainly would not be applicable to the present case; finally, upon satisfaction of the central government, notification has to be issued in the official gazette. 33.1. Respondent No.1 in his affidavit has admitted that no ....
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.... and vehicles; (b) stores; (c) baggage; (d) currency and negotiable instruments; and (e) any other kind of movable property. 34.5. So as per this definition, in an appropriate case, "goods" would include vessels. 34.6. We have already referred to and analyzed section 115 more particularly sub-section (2) thereof and the proviso to sub-section (2). If a conveyance is used as a means of transport in the smuggling of any goods, it shall be liable to be confiscated. However, it will not be confiscated if the owner proves that it was so used without his knowledge or connivance or that of his agent and the person in charge of the conveyance. As per the proviso, where such conveyance is used for carriage of goods or passengers on hire, the owner of the conveyance has to be given an option to pay fine in lieu of confiscation of the conveyance. The fine shall not exceed the market price of the goods which are sought to be smuggled or the smuggled goods, as the case may be. 35. A conjoint reading of sections 114AA and 115 in the backdrop of the definition of "goods" given in section 2(22) would go to show that the goods referred to in those two sections are goods which are sought....