TaxTMI 
TaxTMI 
2023 (11) TMI 424
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....nd ordered redemption thereof on payment of redemption fine of Rs. 30,00,000/- (Rupees Thirty lakh only) in terms of Section 125(1) of the Act. Vide the said order it was further ordered that the tug Century Star-1 was liable for confiscation under Section 115 of the Customs Act, however as the same was not available for confiscation a redemption fine of Rs. 75,00,000/- (Rupees Seventy five lakh only) under Section 125(1) of the Act was imposed. The learned Commissioner also imposed penalty under Section 112 of the Act on the Master of the tug Century Star-1, 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. 2. The broad facts of the case are set out as under: * During the course of investigations concerning unauthorized import of a cruise vessel Pandaw-IV, seized by the Officers of Customs on 01.06.2009 the officers cultivated information that the tug Century Star-1, which had towed vessel Pandaw-IV, had also towed a barge Century Star-3002, in November 2008 from Mayu River, Sittwe, Myanmar and that it had detached the same at Sagar Point/Sagar Road (a virtual jett....
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.... authority to re- examine the matter in the light of Tribunal's decision in the case of Nobel Asset Co. Pvt. Ltd. Vs. CC Preventive 2006 (205) ELT 901 (T-Mumbai), as upheld by the Hon'ble Bombay High Court 2008 (203) ELT 22 Bom. 4. The facts are not much in dispute. It is an admitted position that the dumb barge Century Star-3002 was converted for coastal run vide order dated 20.10.2006, issued by the Deputy Commissioner of Customs, Paradip. The tug and the barge were grounded due to storm and the tug after being salvaged and repaired (in 2007) was engaged for carrying survey equipments to Myanmar (as per charter party agreement dated 20.10.2008). The tug Century Star-1, on its return voyage from Myanmar carried alongwith survey equipments, towed the barge Century Star 3002 (after being salvaged) and was tied at Sagar Virtual Jetty after obtaining permission from Director (Marines), Kolkata Port Trust. The barge was subsequently taken for repairs (March 2009) to the yard of Maeksin Shipping Co. Pvt. Ltd., Kakdwip, wherefrom it was seized in June 2009. It is on record that Customs Duty amounting to Rs. 6,78,284/- (Rupees Six lakh seventy eight thousand two hundred eighty four onl....
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....was therefore contended that the "Barge and Tug" comprised a single unit because without the tug, the barge becomes stationary and immobile and cannot move on its own. (j) As barge is a type of vessel, used to carry goods/cargo for transportation from one place to another, after the said barge and tug were brought by Century Star Shipping Ltd., it got the job of transportation of carriage of cooking coal from Paradip to Haldia under the account of Electro Steel Casting Ltd. and in order to carry out this job, at Paradip port the barge and tug were converted into coastal run on 20.10.2006 and permission from the Deputy Commissioner of Customs, Paradip, pursuant to approval from DG, Shipping, Govt. of India, was obtained. (k) The value of the barge as per the Fixed Asset Schedule - D of the Balance Sheet of Century Star Shipping Ltd. stood at Rs. 2,10,07,970/-(Rupees Two crore ten lakh seven thousand nine hundred seventy only). (l) The barge and the tug after return from foreign port in 2007, encountered bad weather and storm near the waters of Myanmar where both ran aground. Efforts were made to salvage the two but only the tug could be salvaged and it pro....
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...., Dy. Commissioner of Customs, Paradip and D.G. Shipping were aware of the existence and plying of the barge and tug since 2006. 4.2. Pleadings were rendered to state that the barge being neither prohibited, nor dutiable goods, nor unloaded from the tug, provisions concerning confiscation of improper importation of goods section 111 read with section 2(22) of the act were not applicable. It was stated that there is no transport or carriage of smuggled goods and also 'cargo' means goods carried "in or on ship" hence section 115(2) of the act as well as section 30 of the act, dealing with filing of an IGM, as per Import Manifest Vessels Regulation 1971, were not applicable. It was further stated that the contravention under Section 30 of the act, renders the person in charge of the vessel or any other person referred to therein, liable to penalty not exceeding to Rs. 50,000/-. Neither the said provision nor any other provision of the act provides that the contravention of the Section 30 of the act would render the vessel liable for confiscation. The tug Century Star -1 was chartered during Nov. & Dec, 2008, exclusively for carrying out hydrographic survey off Sittwe, Myanmar on be....
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....ion under the said section and as it had not been specified in the show cause notice, whether the said place is a place other than a Customs port appointed under clause (a) of Section 7 of CA' 62 for the unloading of goods, and in the absence of such evidence, the said barge couldn't be confiscated under Section 111(a). Challenge to invoking section 111(d) of the act- the prohibition imposed by or under the act or any other law have also not been specified (in the matter of the seized goods) and as such Section 111(d) couldn't be invoked for confiscation of the seized goods. In so far as action in terms of sections 111(f), (g) and (h) was concerned, the same was certainly not invokable for purpose of confiscation, as it had not been alleged that the seized goods are dutiable or prohibited since there was no demand of duty and no violation of import policy. The plea that non-filing of IGM would render the seized goods as prohibited goods is clearly unacceptable as being too far fetched a proposition. There is nothing in section 30 of the act to allude to such an extreme extension and interpretation in law. It may also be worth pointing out that import of barge Century Star-3002, as ....
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....unt of penalty liable to be paid by such person under this section shall be twenty-five per cent. Of the penalty so determined. (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), penalty not exceeding the value of the goods or the difference between the declared value and the value and the value thereof or five thousand rupees, whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest. 115. Confiscation of conveyances (1) The following conveyances shall be liable to confiscation:- (a....
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....e in any event will have to be construed as a foreign going vessel and cannot be construed as "Imported goods". It would be appropriate to, extract the relevant portion of the Tribunal's decision in the case of Noble Asset Co. Ltd. Vs. Commissioner of Customs (Preventive), Mumbai2 as upheld by the Hon'ble Bombay High Court. "6. We now proceed to deal with the issues raised before us. (a)............................... (b).................................... (c)..................................... (d) As regards demands of duty, it is found: (i)......................................... (ii) However, no duty has been demanded in respect of all such movements ostensibly, on the basis of the practice referred to above in the above case. Demands are restricted on three such movements. Viz- (i) The first demand is for the year 1992 when the rig came back from Bahrain after repairs, while it was owned by Essar; (ii) The second is when the rig was brought back from international waters by Noble and deployed at platform NE on 13-12-1997; (iii) The third when the said rig was brought back after repairs from Sharjah by N....
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....mption. Therefore, once any vessel e.g. the rig in the present case, is brought into India and assessed to duty and cleared for home consumption it would cease to be imported goods. Subsequently, if it acquires the characteristic of foreign going vessel, is not liable for payment of Customs duty for the movements in and out of the country. In this regard, the definition of 'foreign going vessel' is relevant. The definition states that foreign going vessel includes inter alia any vessel engaged in fishing or any other operation outside the territorial waters of India. The Bombay High Court in the case of Amarship Management Pvt. Ltd. Vs. Union of India 1996 (86) E.L.T. 15 (Bom.), has already held that rig is a foreign going vessel. This judgment of the Bombay High Court has not been over-ruled in the case of Pride Forma Vs. Union of India 2002 (148) E.L.T. 19 (Bom.), as was contended by the ld. Counsel appealing on behalf of the revenue. The Hon'ble Bombay High Court in the case of Pride Forma was only concerned with the interpretation of the provisions of Section 86 and 87 of the Customs Act and had accordingly, in para 32 of its judgment, noted that the definition of foreign going....
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....levy of duty on vessels on their subsequent movements in and out of India evolved, i.e., once such vessel had been assessed to duty and cleared for home consumption, further levy and Drawback liabilities not called for. (vi) The question whether the change of ownership of a vessel, after its first import and clearance from Customs, would render the subsequent owner liable for payment of duty once again. This question assumes relevance as the rig was imported first in the year 1987 by Essar when a Bill of Entry was filed and the rig was cleared for home consumption. Thereafter, in the year 1996 the ownership of the rig changed hands and when the rig came back to India in December, 1997, duty has been demanded from Noble on the premise that Noble had not discharged duty on the rig as owners of the rig and that they could not take shelter in the fact that appropriate duty had earlier been discharged on the rig by its previous owner (Essar). We are unable to agree with this contention of the Revenue, as ownership of goods of a vessel, is irrelevant in determining its duty liability under the Customs Act. It is the act of Import, which renders goods liable for duty and no owner....
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....o be Port Areas of Bombay. Therefore, IGM and BE presentation was not called. It is not the case of the Revenue that at the time of arrival of the rig into EEZ from Bahrain, the rig contained cargo which needed to be declared and disclosed in the import manifest. Essar would be correct in pleading that even after certain parts and components had been replaced in the rig, such parts and components would become a part of the rig and cannot be treated as if they were being separately imported on board a rig as cargo. This is also not the case made out by Revenue. As such, in the absence of any dutiable cargo on board the rig, Essar could not be required to file an IGM at the time of its re-entry into the EEZ from Bahrain. The Commissioner finds in para 192 that there was violation of Sections 30, 31, 34, 35 and 46 of the Customs Act, 1962 and therefore the rig was liable for confiscation under various clauses of Section 111. As we have already held, no violation of Section 30 and no dutiable cargo is alleged to have been imported on board the rig. Violation of Section 31 has been found on the finding that the rig being imported goods was offloaded from vessel prior to entry inward bei....
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.... the rig as a vessel. This practice has been acknowledged and accepted in the show cause notice as well as in the order of the Commissioner. The statement made by ld. Counsel Mr. Sethna in Sedco Forex's case corroborate the existence of such practice. Now, if the revenue chooses to depart from the said practice and start treating the rig as goods (even after their Customs clearance) and not as vessels in spite of insisting and granting Port clearances under Customs Act, 1962 applicable to vessels and not goods as has been hitherto done, we cannot hold that such a change in practice will have the effect of rendering the past imports liable for confiscation or the importer liable for penalties......................................... (7) (a).......................... (b).......................... (c) That in view of the statutory definition of 'goods, 'imported goods' and 'foreign going vessel' and the scheme of the Customs Act, the rig was goods liable for duty only at the time of its initial import in 1987 and once it has been cleared for home consumption in that year, it ceased to be 'goods' and acquired the characteristic of a 'vessel' which ceased to b....
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....mittedly, the adjudicating authority has not recorded any findings that the conveyance was used as a means to transport the smuggled goods with the knowledge or connivance of the owner, agent or the captain of the vessel. Under the circumstances, the confiscating of the vessel under Section 115(2) of the Customs Act cannot be sustained. 6. It appears that the Adjudicating Authority purported to confiscate the vessel on the ground that appropriate precautionary steps had not been taken to prevent the smuggling of the goods on board the vessel. It is pertinent to note that prior to the amendment of Section 115 of the Customs Act with effect from 13th May, 1988, a vessel was liable to be confiscated even if it was proved that there was a lapse on the part of the owner to take appropriate precautionary steps. However, that provision has been deleted with effect from 13th May, 1988. The present case pertains to the period after the amendment of Section 115 of the Customs Act. Therefore, the confiscation of the vessel on the ground that the owner or the captain of the vessel have not taken sufficient precautionary measures, cannot be a ground for confiscation of the vessel. ....
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.... the case of Nobel Asset Co.Pvt. Ltd.2, A.P. Moller Singapore Pvt. Ltd.9 and Shahi Containers 2003 (158) ELT 51 (Tri-Mumbai)., as discussed in earlier paras, it is amply clear that the adjudicating authority had erred in imposing penalty and confiscating the barge Century Star-3002, even though it was allowed conversion from foreign to coastal run. The plea that the duty paid in respect of the barge was with reference to consumables alone that were required for consumption during the coastal run, is only open for consideration of the appropriate juridical authority, who in the first place allowed the conversion or by way of appeal proceedings of the said orders. That being not the case herein, the plea is not open for such an assertion. It need be pointed out that if at all any duty was required to be paid on the dumb barge at the time of conversion, the jurisdiction to collect such duty rested with Paradip Customs only and would certainly not fall within the territorial jurisdiction of the present authority. The fact that the barge was already converted from foreign to coastal run and thereafter Customs Duty was paid on the bunkers for voyage, question of any illegal import of the....
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.... case is certainly without any fraudulent intent, and at best is no more than an inadvertent omission, perhaps spurred because of the peculiarity of circumstances. For the reasons no penalty is also imposable on the owner/representatives and others concerned with, managing the affairs of the vessel. Also in view of the clear language of section 2(31) of the act, defining the person in-charge of conveyance in relation to the vessel as Master of the vessel, other agencies and individuals cannot step into the shoes of the Master of the vessel and be subjected to penalty for failure to file a full or a correct manifest or non filing thereof. 14. Further, applying the ratio of the law as propounded by the Tribunal in the case of Ramesh Amritlal Shah Vs. CC(P), Bombay 1986 (26) ELT 795 T, we are convinced that no penal liabilities can even otherwise accrue on M/s. Babaji Shivram Clearing & Carriers, as also M/s. B. Ghose & Co. Pvt. Ltd, when a nexus about role and functions required to be discharged by them alone, are not clearly established nor delineated. Even otherwise as held by this Tribunal, in the case of Essar Oil Ltd. Vs. Commissioner of Customs, Mumbai4, for imposition of pe....