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2023 (11) TMI 424

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.... 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 jetty) on 09.11.2008. Subsequently on 21.11.2008, the tu....

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....se 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 only) was paid vide T.R-6/GAR-7 Challan bearing No. 66 dated 30.11.2006 at the time of....

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.... 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 proceeded to Kolkata to undergo immediate repairs. Upon completion of repair work, M/s. Geo Star Surveys Pvt. Ltd. chartered the tug for carrying survey equipments from Kolkata to....

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....r 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 behalf of Essar Exploration and Production South East Asia Ltd., as evident from the copy of LOI agreement, Terms and Condition enclosed with the appeal papers. It was placed on record for the charter party that the....

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....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 an ocean going vehicle is exempted from payment of duty, in terms of Notification No. 165-CUS vide Sr. No. 350. Further, it is too well known as also held in a slew of cases that the barge is classifiable as an "ocean....

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.... 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) any vessel which is or has been within the Indian Customs waters, any aircraft which is or has been in a Customs area, while constructed, adapted, altered or fitted in any manner for the purpose of concealing goods; (b) any conveyance from which the whole or any part of the goods is thrown overboard, staved or destroyed so as to prevent seizure b....

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........................ (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 Noble in the year 1999. While importers claim that the practice as mentioned above should have been equally applicable to these movements also and therefore no duty can be recovered, when Bill of Entry had already been once filed in the year 1987, the Revenue contends that the practice as admitted in Sedcos case has no application, when either the rig moves out of India to another country or when the rig ceases to be operating under the contract with ONG....

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....r 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 vessel in Section 2(21) of the Act qualified words 'unless the context otherwise required.' The Court took a view of the matter in Pride Forma's case, while construing the provisions of Section 86 and 87 of the Customs Act in view of this opening sentence of the definition. This decision does not hold that a rig is not a vessel at all. This being the position, no duty could be demanded on the movement of vessels in and out of India once it has been assessed to duty an....

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....ar 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 owners. Once an entity has been imported and assessed to duty and cleared for Home Consumption, they cease to be imported goods. The subsequent change of ownership of such goods will not render them again liable for duty. The liability for payment of Customs duty is independent of the ownership of goods and therefore we are of the view that Noble cannot be held liable for payment of duty, merely because they became the owners of the rig. The other reasons on which duty liability has been fastened on N....

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.... 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 being granted. We do not agree with this findings. The rig was not imported goods but a vessel. Likewise, alleged violation of Sections 34, 35 and 46, which proceed on the assumption that the rig was goods and not a vessel cannot be sustained. We, therefore, hold that the movement of the rig in September 1992 did not violate any of the provisions cited in the order and therefore the rig cannot be held liable for confiscation under the clauses of Section 111 as arrived. (i).............................. (j)..................................... ....

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....ect 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 be 'imported goods'. By virtue of being a vessel, it was no longer liable for duty of customs on any of its subsequent movements in and out of India; (d)........................... (e)............................ (f) That the alleged violations of the provisions of the Customs Act, which proceed on the premise that the rig was 'goods' and therefore required filing of Bill of Entry or shipping bill for their inward and outward movements is unsustainable and the rig was a vessel as held by the Bombay High Court in Amership Management Pvt. Ltd. and therefore require only the filing of an IGM or EGM, if the vessel wa....

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....able 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. 7. It was contended by the Counsel for the Revenue, that the negligence on the part of the Company/Captain in not replacing the lock of the cabin even after being noticed that the duplicate key has been misplaced, was sufficient to confiscate the vessel under Section 115(2) of the Customs Act. We are unable to agree with this submission, because, in the absence of a finding that the negligence on the part of the owner or the Captain of the vessel was with a view aid or abet the act of smuggling, no action could be taken against the owner of the vessel or the master of the vessel. In the present case, having found that there is no nexus between the negligence and the act of smuggling, t....

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....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 dumb barge Century Star-3002 into India does not arise. The fact of permitting such conversion incorporates within it fold satisfying all compliances required to be met at the time of initial import. In any case, in the event of any failure to so do, the jurisdiction for which would certainly vest only with the authority permitting such conversion at the last port of call, that had permitted the movement from foreign to coastal. Under the circumstances any consequence flowing out of a mis-conceived assumption of jurisdiction and subjecting the appellants herein to penal consequences, confiscation and imposition of penalty on the barge and accordingly on all others concerned in facilitating the mov....