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2013 (7) TMI 881 - AT - CustomsCondiscation of vessels - Imposition of redemption fine and penalty - Held that:- In respect of the vessels, namely, Smit Lynx, Union Boxer, Smit Borneo, Giant-2, Mastas Star, Seacor Valor and Smit Cyclone, these vessels were never seized at all and in the adjudication orders passed, the Commissioner had not confiscated these vessels inasmuch as they were not available for confiscation. However, demands of duty on these vessels have been confirmed under the provisions of Section 125(2) of the Customs Act, 1962. The said Section provides for recovery of duty only in a case where the goods are confiscated and a fine in lieu of confiscation is imposed under Section 125(1). In such a situation, the owner of such goods or the person from whom the goods have been seized would, in addition to the fine, be liable to any duty and charges payable on such goods. In other words, provisions of Section 125(2) are attracted only when goods are confiscated and an option to redeem the goods on payment of fine in lieu of confiscation is given. Demand of duty on these seven vessels is clearly unsustainable in law. In all these cases, it is seen that the duty demands were made in the show cause notices under Section 28(4). However, since the show cause notices were issued beyond the normal period of limitation and duty demands could not have been confirmed under Section 28(8), the Commissioner resorted to confirmation of duty demand under Section 125(2) which does not prescribe any time limit. From the facts of the case, it is seen that these vessels on arrival, after completing all the formalities, were converted from foreign-run to coastal-run for undertaking salvage operations. After completing the salvage operations and obtaining the requisite permissions and clearances from Customs authorities, the vessels went back within a short period of 1 to 2 months. However, the show cause notices were issued one year after the vessels went back from India (beyond the period of 6 months, the normal period of limitation for duty demand). Therefore, the duty demands are clearly time-barred as there was no suppression on the part of the appellants. In the facts of the case before us, 7 out of the ten vessels are tugs which are not designed to carry goods or passengers and 3 are barges but they were not engaged in transport of goods or passengers from one port of India to another. Thus by no stretch of imagination, it can be considered that any of these vessels were on the “coastal-run” as defined in law. Therefore, merely because permissions were given for conversion, albeit wrongly, they do not become coastal vessels as defined in law. Thus the arguments advanced by the appellant in this regard are completely misplaced and merits rejection. The concessional rate of duty prescribed is fifteen per cent. of the aggregate of the duties of customs, which would be leviable, in the case of goods which are re-exported within six months of the date of importation. In the case of goods which are re-exported after six months, but within one year of the date of importation, the rate of duty chargeable would be thirty per cent. of the aggregate of the duties of customs. To be eligible for the concession, the goods should be either machinery, equipment or tools. Tugs and barges can, by no stretch of imagination, be considered as falling in this category. They fall under Chapter 89 as “Ships, boats and floating structures”. Therefore, in our view, the appellant would not be eligible for any duty concession under the said Notification and the claim in this regard is not sustainable. The vessels, Smit Lumba, Posh Giant-I and Salvaree have been confiscated under the provisions of Sections 111(f), 111(g) and 111(h) of the Customs Act. In respect of the other 7 vessels, they have also been held liable to confiscation under the same provisions. Section 111(g) is attracted when any dutiable goods or prohibited goods are unloaded from a conveyance in contravention of the provisions of Section 32. Since the case of the Customs is that the impugned vessels are not “conveyances”, there cannot be any violation of Section 111(g) as no unloading has taken place from a ‘conveyance’. Similarly, violation of 111(h) can also not be alleged for the reason that the said section is attracted when dutiable or prohibited goods are unloaded or attempted to be unloaded in contravention of the provisions of Section 33 or 34. Confiscation under Section 111(f) is sustainable in law. Since the non-filing of the IGM and Bills of Entry were with the knowledge of the Customs Authorities and the transactions were declared to the Customs, no mens rea can be attributed to the appellants. This fact should be given due consideration while imposing redemption fine in lieu of confiscation and penalty on the appellants. Redemption fine on the 3 confiscated vessels and penalties on the importer/agent in respect of all the 10 vessels are reduced - However, Penalties on the co-appellants are set aside - Decided partly in favour of assessee.
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