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2015 (11) TMI 1023 - CESTAT MUMBAI

2015 (11) TMI 1023 - CESTAT MUMBAI - 2016 (333) E.L.T. 148 (Tri. - Mumbai) - Whether the vessel can be confiscated for non-filing of Bill of Entry in 1997 and whether duty can be demanded in 2012, the exemption having been withdrawn in 2000 - Suppression of facts - Provisional release of vessel - Section 28 - Held that:- when the impugned vessel was imported 14 years ago in 1997, it was exempted from Customs duty and although IGM was filed in respect of stores when the vessel was imported at Che .....

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t of the vessel as goods . The fact that it did many coastal runs and called on various ports in the preceding 14 years itself shows that the Customs were aware that this vessel had been imported into India. After a gap of 14 years when duty has become imposable on import of a vessel, Revenue’s stand that since IGM/Bill of Entry was not filed in 1997 duty must be paid now is not reasonable.

Goods on which no duty is chargeable under the tariff or by way of exemption notification will .....

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ty is charged under Section 12 of the Customs Act when the goods are imported into India. When by general practice the IGM/Bill of Entry was not filed for vessel imported into India when the duty was Nil, the proposition that duty may be levied after 14 years when the Bill of Entry was got filed would lead to a anachronistic situation. Let us take the case of two ships imported at the same time when there was no duty. Under one case a Bill of Entry may have been filed and in the other case a Bil .....

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eal No. C/89941, 89940, 90075/2014-Mum - Final Order Nos. A/3297-3299/2015-WZB/CB - Dated:- 8-10-2015 - Mr. P.S.Pruthi, Member (Technical) And Mr. Ramesh Nair, Member (Judicial) For the Petitioner : Shri Sujay Kantawala, Advocate For the Respondent : Shri D.K.Sinha, Assistant Commissioner (A.R) ORDER Per : P.S. Pruthi This appeal is directed against Order-in-Original No. 91/2014/CAC/CC(I)/AB/Gr. VB dated 22/8/2014. 2. The Tug Ocean Garnet was imported and brought into India on contract with Hard .....

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of as mentioned in the IGM (IGM No. 1295/97 dated 5/11/1997 and Rotation No. 1324/97) for dutiable items. Customs authorities did not insist on filing of Bill of Entry at that time. By Notification No. 17/2001 dated 1/3/2001 complete exemption from payment of Custom duty was withdrawn and duty of 5% was introduced. 2.1 The Tug was abruptly seized on 20/12/2011 by Customs Preventive. However it was allowed provisional release under Section 110A of the Customs Act on the condition of filing the Bi .....

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ities have permitted the use of the vessel all these years as imported goods Custom authorities are not justified in abruptly seizing the vessel in question The Revenue is not justified in demanding duty for provisional release of the vessel,prima facie it is not undisputed that on the date of initial import on all these ocean going vessels there was total exemption on payment of duty. In adjudication the Commissioner confiscated the vessel with option to redeem on payment of redemption fine of .....

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on the following grounds: (i) Duty ought to have been charged under Section 28(4) of the Customs Act and not under Section 125(2) which is only an enabling provision for recovery of duty. The importer willfully suppressed the fact that the vessel was imported as goods for home consumption. (ii) Therefore penalty equal to the duty amount ought to have been imposed in terms of Section 114A of the Act. (iii) The vessel was liable to confiscation under Section 111(j) also because the same was remo .....

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he vessel at that time and vessel was given Customs clearances for movement inward and outward from the Indian Ports all these years. The Tug become part of the land mass of the country and was regularly in and out of the Custom barriers, therefore duty cannot be demanded now for the mere technical failure of not filing Bill of Entry at the time of initial import. He relied on PRIYANKA OVERSEAS PVT. LTD.Versus UNION OF INDIA[1991(51) ELT 185 (SC)] in which the Hon ble Apex Court laid down the pr .....

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ion 125(2) alongwith appropriate interest which was not the proposal in the show cause notice. He placed reliance placed on the observations of the Honble High Court in judgment dated 11/1/2012 in Writ Petition No. 2921/2011 filed by Seamac Ltd. holding that for securing provisional release of the vessel under Section 110(A), Revenue would not be justified in taking original value of the vessel. Reliance is also placed on the High Court judgment in Writ Petition No. 104/2012 dated 13/2/2012 in .....

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dia vide order A/1709/14/CSTB/C-I dated 5/11/2014 in which it was held that the vessel brought for the first time into India at Port Sikka was not required to file IGM or Bill of Entry in terms of Circular 16/2012 dated 13/6/2012; further it was held that the Commissioner of Customs at Mumbai not having jurisdiction over Sikka Port could not issue show cause notice proposing confiscation as the act was committed beyond his jurisdiction. 5. Ld. A.R. appearing on behalf of Revenue reiterates the f .....

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ustoms duty and although IGM was filed in respect of stores when the vessel was imported at Chennai, no IGM was filed for the vessel as goods imported into India. Neither was any Bill of Entry filed for the vessel as goods. 6.2. The vessel was seized and as a precondition for provisional release, the owner was asked to file a Bill of Entry in 2012. The question which arises for our consideration is whether the vessel can be confiscated for non-filing of Bill of Entry in 1997 and whether duty can .....

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or import report. - (1) The person-in-charge of - (i) a vessel; or carrying imported goods or any other person as may be specified by the Central Government, by notification in the Official Gazette, in this behalf shall, in the case of a vessel or an aircraft, deliver to the proper officer an import manifest prior to the arrival of the vessel or the aircraft, as the case may be, and in the case of a vehicle, an import report within twelve hours after its arrival in the customs station, in the p .....

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ereinafter referred as Regulations) which provide the format and procedure for filing the Import Manifest in respect of the imported goods. The finding is that if the vessel was brought as imported goods itself and not as a conveyance only, it should have been specifically mentioned in the IGM. This was not done; instead the IGM only declared the imported cargo, that is, the ship stores and fuel. In other words, the IGM showed the vessel as a conveyance carrying stores and fuel and not as goods. .....

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2 states that no imported goods required to be mentioned under the Regulations in an import manifest shall be unloaded at any Customs station unless they are specified in such manifest. Section 34 states that imported goods shall not be unloaded from any conveyance except under the supervision of the proper officer. We note that in the case of a vessel, the concept of unloading is not the same as the usual concept of unloading of goods from a vessel. The moment a vessel enters the port, and a .....

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not be shown by either side to us. The fact remains that the vessel was converted to the Indian Flag in 1998 and was granted coastal runs between Indian Ports with the knowledge of Customs. Generally, we find that Customs board a vessel when it enters the port and therefore should have been aware of import of the vessel as goods. The fact that it did many coastal runs and called on various ports in the preceding 14 years itself shows that the Customs were aware that this vessel had been import .....

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is treated as goods, it was not liable to duty at the time of its import in 1997. Therefore, the vessel cannot be treated as dutiable goods. In the case of Associated Cement Companies Ltd. Vs. Commissioner of Customs 2001 (128) ELT 21 (S.C.) it was held that goods on which no duty is chargeable under the tariff or by way of exemption notification will not be regarded as dutiable goods. Therefore clearly Section 111(f) is not applicable and goods are not liable to confiscation. Contravention of .....

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terms of Section 15. And because the Bill of Entry was filed on 22.3.2012 duty is payable because vessels were leviable to duty on this date. We find that Board issued a Circular (supra) dated 13.6.2012 to remove confusion on the subject and explain the procedures for import of Indian flag vessels and filing of IGM/Bill of Entry. In paras 3.1 & 3.3, while enumerating categories of vessels, it requires that for vessels entering into India for the first time on arrival in the country for regi .....

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the vessel admittedly was imported in 1997 and remained on coastal runs thereafter. Board Circular does not require that vessels imported earlier and used in coastal runs should file Bill of Entry now. Instead of acting on Board instructions issued for streamlining the procedures,, the Customs showed misdirected enthusiasm in asking vessels which were imported when there was no duty , to pay duty now. Such over enthusiasm leads to harassment. In our view duty is not required to be paid. Accordi .....

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vied after 14 years when the Bill of Entry was got filed would lead to a anachronistic situation. Let us take the case of two ships imported at the same time when there was no duty. Under one case a Bill of Entry may have been filed and in the other case a Bill of Entry is filed after 14 years when the vessel became dutiable. Charging duty from the latter when both were imported at the same time would be a most unreasonable proposition. More so when Customs never insisted on filing a Bill of Ent .....

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that the vessel is also imported at nil; rate of duty. The matter attained finality by passing of CESTAT Order A/1190/2014/CSTB/C-I dt. 2.7.2014. We also note that the Indian National Shipowners Association made a Reference No. CEO/145/2011 dt. October 12, 2011 to CBEC giving a list of about 200 vessels out of which more than 100 were imported before 2001 when duty was introduced. It was made clear that Bill of Entry were not filed in these cases. The Association requested for condoning the del .....

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rt observed that In the case of UOI v. V.M. Salgaonkar Bros. (P) Ltd. reported in AIR 1998 SC 1367 = 1998 (99) E.L.T. 3 (S.C.), the dispute was whether the customs authorities were justified in holding that on importation of transhippers the importer was liable to file B/E and whether the transhippers are ocean going vessels exempt from payment of customs under the then prevailing exemption notification. The Apex Court accepted the contention of the petitioners therein and held that the tranship .....

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s formalities save and except the filing of the B/E at the time of initial import. It is also not in dispute that at the relevant time the Customs authorities were also under the belief that it is not necessary to file B/E, where there is total exemption. In the case of Seamac Limited & Anr. (supra) the Hon ble High Court observed that On this amount, the duty liability assessed provisionally works out to ₹ 12.77 crores. As regards the value of the vessel ofRs.53.55 crores, prima faci .....

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uring the provisional release of the vessel under Section 110A, the Revenue would not be justified in including the value of the vessel of ₹ 53.55 crores. In the appellant s own case at the time of seizure the Hon ble High Court of Mumbai observed that If the duty was not payable on the date of import and customs authorities have permitted use of the vessels all these years as imported goods, in our opinion, the customs authorities are not justified in abruptly seizing the vessels in quest .....

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