TMI Blog1999 (4) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... caused by the fire to the ship and the cargo was so extensive, that neither the ship nor the cargo could be used as such. Discussions ensued between the salver, the ship owner, and the insurers of the cargo. As a result, with the acquiescence of the cargo insurer the ship owners, gave them the ship and the cargo to the salver as his salvage fees in pursuance of the salvage agreement on condition that the ship shall only be scrapped and not used as a sea going craft and that the cargo should also be scraped and not used as spare parts. The salver in turn sold the ship and the cargo to M/s. ITC Global Holdings Pvt. Ltd. (ITC for short) at US $ 227 million, incorporating the same condition as to the disposal of the ship and the cars and undertaking to deliver them to the buyer of Alang Anchorage. The surveyor also advised the buyer that in view of the damage to the ship s decks it would be hazarduous to unload the cargo and it was advisable for the cargo and the ship to go to be berthed first. Accordingly, the ship and the cargo were both towed by a tug to Alang port. By a letter dated 4-1-1995 Espy Shipping International, Bhavnagar (Espy for short) agent of the salver informs the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Shipping. The notice proposed confiscation of the cars under clause (d) and (h) of Section 111 of the Act on the ground that they were consumer goods import of which a licence is required and also on the ground that they were unloaded in contravention of the provisions of Section 33. It proposed confiscation of the ship under sub-section (2) of Section 115 for the reason that it was carrying smuggled goods. Notice also proposed imposition of penalties on the persons for being concerned in the importation of the cargo and the ship. Each of the notices showed the cause to the Commissioner and appeared in person. The Commissioner passed order confiscating the ship and ordering recovery of fine of Rs. 1.50 crores for its redemption, in terms of the bond which was executed for the provisional release. He also ordered confiscation of the cars with an option to redeem them on payment of fine of Rs. 3.00 crores. He imposed penalties of Rs. 1.00 crore on ITC Globals, Rs. 1.50 crores on Sanjeev Jain, Rs. 50.00 lacs on Azad Jain under clause (b) of Section 112 and Rs. 75.00 lacs on each under clause (b) of Section 112 on Arihant and Ashit Shipping. 4. Mr. Vikram Nankani, Advocate for Ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to confiscation of the ship and cargo. There is no basis for the Commissioner s finding that it had abetted illegal import of burnt and damaged cars. 7. The Departmental Representative contends that the vessel was a conveyance which brought the cars into India. ITC Global had in its correspondence described with the Customs it as a conveyance and its cargo it had filed the import general manifest. The fact that damaged, or it was to be broken up did not detract from its being cargo a conveyance. The Tariff Heading 8908.10 of the Customs Tariff is for vessels meant to be broken up. It thus renamed a ship. He contends that the cars continue to retain its identity as cars despite of being damaged or burnt. Any restriction imposed by a seller towards their disposal of such cars could not have the effect of changing the classification under the import policy. He quotes from the surveyor s report in support of the contention that vehicles are cars. Clause (b) of Section 111 will apply to the fact of this case. Alang by itself is not a Customs port and it is a part of Bhavnagar port. Alang is an area in that port notified under Section 8 of the Act, for the landing of the ships to be br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner to transfer them to the salver stipulating that no parts of the cars should not be used as spare parts. It is significant that there is no stipulation that the cars should not be used as such. Obviously the damage to the car is so extensive that none of them could be used as a means of transportation, and it was not felt necessary to exclusively stipulate this condition. The extent of the damage to these cars is also made clear following the survey conducted by M/s. Ericson Richards at Alang. The survey report dated 21st, January, 1995 says that except for the fore castle the entire vessel the shell, cargo of cars, compartments, accommodation, wheel house, radio room was found completely damaged by fire. 10. The conduct of the parties also just confirms the view that they considered the cargo not to be cars in serviceable condition. We have already referred to the insurers letter on behalf of the original owner of the cargo. The owner would not have given up the cargo if there was a reasonable chance of salvaging any part of it without disproportionately high expenditure. The agreement between the vessel owner M/s. Advent Maritime (Panama) S.A. and the salvor contains the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a place approved under clause (a) of Section 8 for the unloading or loading of such goods. Section 34 provides that imported goods shall not be unloaded from, and export goods shall not be loaded on, any conveyance except under the supervision of the proper officer. 16. The cars were only unloaded after they were seized. They were physically unloaded, simultaneously with the breaking up of the ship, subsequently. Therefore, when they were unloaded, they were not unloaded by any of the appellants before us but by the department. That act of unloading therefore would not invite their confiscation under clause (h) of Section 111. The departmental representative answers by contending that the act of bringing the goods to the port of Alang constitute unloading. It is not possible to accept this proposition. Loading is defined in the Concise Oxford Dictionary as removal (from loaded vehicles etc). When the ship came on to the foreshore with its cargo, that cargo continued to be on board the ship. This is true. Any cargo on a ship continues to be on board that ship till it is physically removed from the ship and placed on the wharf. To accept the departmental representative s contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Section 29 prohibits a vessel of an aircraft call or land at any place other than a Customs port or a Customs airport, although sub section (2) provides for an exception in the case of a vessel or an aircraft which is compelled by accident, stress of weather or other unavoidable cause. 19. Talaja has been notified under Section 7 of the Act by Notification 62/94 as a port for unloading of imported goods and loading of export goods for any clause of such goods. The Collector of Customs had earlier notified certain areas in Talaja as a landing place for unloading of ships to be broked up for the purpose of scraping. The Collector of Customs, by Notification 3/93 dated 26-2-1993 notified the foreshore at Alang within the port limits of Talaja of which details were specified for the purpose of ship breaking only. This notification was subsequently amended adding to the geographical areas within such ship breaking could be done. Therefore, there was no objection to the ship itself being brought into that part of Talaja port for being broken up. Indeed, no such objection has been raised. 20. The other provisions of chapter VI of the Act relating to conveyance carrying imported ..... X X X X Extracts X X X X X X X X Extracts X X X X
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