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The Commissioner of Customs (Imports) Versus M/s. Hyundai Heavy Industries Co. Ltd. M/s. Boskalis West-minister Middle East Ltd. M/s. CGG Marine M/s. J.M. Baxi & Co., Shri K.Y. Song, Coordinator (Marine Spread) Shri Arjan Schrijen Shri Serge L, Shore Representative Shri Krishna B. Kotak, Partner M/s. J.M. Baxi & Co. Shri A Pais, Senior Executive and Authorised Signatory M/s. J.M. Baxi & Co. Shri Sandeep Ail Manager (clearing & Forwarding) M/s. J.M. Baxi & Co. Shri S Dhulekar Shri R.M. Bakshi Shri K.C.M. Giri, Shri D.K. Shrivastava

2017 (8) TMI 346 - BOMBAY HIGH COURT

Mis-declaration of goods - imported vessels and barges - confiscation - penalty - Held that: - the power and scope of High Court to interfere with the findings so arrived at, by the CESTAT. Having once noted above, we have gone through the reasons while setting aside the order of confiscation and penalty. The CESTAT has considered the issue of “port clearance” and its procedure, as prescribed under Section 42 (2)(d) read with Section 111(j) of the Customs Act. It is noted that the fact of grant .....

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ons to clear the goods would not be in violation of Section 111(j), which is applicable to “removals” and not to the “clearance”. - There is no justification and explanation on record as to why those permissions and clearance were not revoked or set aside. There is no denial to the fact of granting clearances and permissions and release of vessels with goods. There is no case of declaration or mis-declaration. The necessary documents were with the concerned department, even at the time of s .....

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breach for penalty or confiscation - in the present case, the Department /revenue failed to discharge its burden, as required under the law. There is no case made out of any “willful” or intent to evade duty to bring in the case of “fraud” and “collusion”. There is no case of stated “misstatement” or “suppressing of fact”. The impugned order, therefore, needs no interference, even on the ground of stated delayed decision. - Appeal dismissed - decided against Revenue. - Customs Appeal No. 2 .....

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s, Excise and Service Tax Appellate Tribunal ('CESTAT') whereby, the order of imposing penalty and confiscation passed by the Commissioner of Customs (Imports) Mumbai, has been set aside. All the Respondents were the Appellants before the Commissioner of Customs. The other connected appeals are also listed with this Appeal. 3. This Court on 18th July, 2007, admitted the departmental Appeals on following common questions of law: Admit on the following substantial questions of law: a) Whet .....

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the fact that Bills of Entry were filed by importers for home consumption under section 46 of the Customs Act, 1962 for clearance of such goods wherein permissions were statutorily to obtained for clearance of the goods as per the provisions of section 47 of the Customs Act, 1962? c) Whether the CESTAT was correct in treating the goods imported only as foreign vessels, requiring permissions for conversion and port clearance instead of treating them also as imported cargo whereas the importers ha .....

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nd nowhere in the Act the terms 'removal' and 'clearance' have been defined. e) Whether the CESTAT was correct in holding that the confiscation under section 111(j) was not correct since the importers had the pay orders ready for payment of duty whereas, as per section 47 of the Customs Act, 1962, the importer on filing the Bills of Entry can clear the goods only after the payment of import duty as assessed thereon and any charges payable under the Act? ADDITIONAL QUESTION OF LAW .....

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ithin a period of 6 weeks from today and shall keep the same alive pending hearing and final disposal of the appeal. ii. The existing bank guarantee already given by the respondent No.1 to the appellant to be returned on the respondent No.1 furnishing the bank guarantee as indicated in the order. iii. This order is subject to the final order in this petition. 3. Notice waived on behalf of respondent No.1 to 14. Restricted background of litigations, for deciding the appeal on law points: 4. The I .....

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#39;M.V. Echo Star' of Importer M/s. CGG Marine from Foreign Run to Coastal Run as the Bill dated 03.11.2004 was filed at Import Department and cleared. On 06/11/2004, the Importer M/s. CGG Marine cleared the goods after obtaining the conversion of the Vessel and port clearance. The goods of the Bills were examined on first check. As stated, they had not discharged the duty liability and the goods were not ordered Out of charge from the proper officer of the Customs. On 20.11.2004, the goods .....

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mporter M/s Boskalis Westminister Middle East cleared the goods as stated, without payment of custom duty and obtaining the Out of charge from the proper officer of the Customs. 7. On 24.11.2004, M/s. J.M. Baxi requested the Export Department to issue instructions to convert the vessel/barge of M/s. Hyundai Heavy Industries from Foreign Run to Coastal Run as the Bill dated 23.11.2004 filed and processed at Import Department of Customs. As stated, the goods of the Bills were not examined on first .....

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stoms area without payment of duty and without obtaining the Out of charge from the proper officer of the Customs. 10. On 22.12.2004/ 23.12.2004, request was made for provisional release of the subject goods/vessels by Respondent Nos.1, 2 and 3 and the goods were provisionally released on execution of PD Bond supported by Bank Guarantee of 10% of Assessable Value of the goods. 11. On 22.02.2005, common Show Cause Notice under section 124 of the Customs Act No.SG/INF4/ DC2004 SIIB(I) was issued b .....

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imposed on all the Respondents i.e. 1 to 14 of the Appeals. 13. On 31.10.2005, encashment Letter was issued by the Appellant to Chouhang Bank in case of M/s. Hyundai Heavy Industries. On 24.11.2005, Writ Petition No.2745/2005 was filed against the action initiated by the department for encashment of BG. On 24.11.2005, Judgment in Writ Petition No.2745/2005 was passed by this Court, directing Respondent No.1 in this appeal to approach CESTAT. 14. On 28.11.2005, encashment of BG was executed by M .....

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he CESTAT order dt.15.12.2005 and judgment was passed. 16. On 22.12.2005, M/s. Hyundai Heavy Industries extended their both Bank Guarantees amounting to ₹ 39.37 crores for another one year i.e. upto 22.12.2006. On 30.12.2005, Misc. Application for Transfer of Bench was filed before CESTAT. 17. On 12.01.2006, this Court dismissed Writ Petition (L) No.3054/2005 as the Tribunal had started the hearing of the main appeals filed by Respondent Nos.1 and 5. On 19.1.2006, Revenue filed Writ Petiti .....

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ed 14.8.2006 wherein the confiscation was set aside. Therefore, on 08/12/2006, a prayer was made to cancel the B.G. of ₹ 39.37 crores. 19. On 13.12.2006, the Customs Appeal was filed by the Department challenging the CESTAT order dated 14.08.2006, making all the noticees/ the Respondents herein as party. On 14.12.2006, this Court gave date for hearing of Customs Appeal on 20.12.2006 alongwith W.P. No.3046/2006 of M/s. Hyundai Heavy Industries. On 15.12.2006, the Notice of Motion was filed, .....

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cers of Customs, removal of the same was in contravention of provisions under section 47 of the Customs Act and therefore, liable for confiscation under 111(j) and penalty under section 112(a) of the Customs Act. The reference was made to other provisions of the Customs Act. The crux is that and as submitted the action of Respondents of getting the Vessels/Barges/Tugs, removed in contravention of provisions by misrepresentation . The Respondents have denied the same and participated in the proce .....

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conveyance to leave without written order. (1) The person-in-charge of a conveyance which has brought any imported goods or has loaded any export goods at a customs station shall not cause or permit the conveyance to depart from that customs station until a written order to that effect has been given by the proper officer....... Section 47. Clearance of goods for home consumption.- [(1)]Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and .....

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(a) Penalty for improper importation of goods, etc.Any person.... (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or....... Reasons in support of operative part of this Judgment: 22. CESTAT, being a statutory Appellate Tribunal of exports, has considered, keeping in mind the provisions of law and the documents so available on record, and so also t .....

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ad first entered in Bombay Port. The bills were noted and thereafter presented for assessment. Orders for examination were given. The goods were examined. The examination reports did not find any mis-declaration of the goods, as declared on the bills. The permissions and clearances, so granted never revoked: 23. The Respondents, Clearing Agent (Shipping Agent), has completed the formality and obtained the permissions for conversion of vessels as imported into vessels for coastal run, which was a .....

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nces were by following the due procedure at the relevant time and were subject to the satisfaction, therefore, permitted the vessels, barges and self propels and others, and accordingly it left for operation, at the destination so fixed as per the contract in Bombay High area. The Agent had also obtained necessary bonds required for clearance of the vessels. The Demand Draft and other sanctions for discharge of liabilities on the vessels were filed. The assessments on the Bills were not complete .....

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importers or its agents were in breach of the provisions. This is in the background that all necessary permissions, sanctions and clearances have been obtained by the Respondents and the vessel was left accordingly. 24. The question of penalty and other confiscation will come, only if, there is a breach and/or contravention of the basic provisions so raised and referred. The act of release and/or selling of vessels, barges from Mumbai port, just cannot be overlooked especially when every mechani .....

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he vessel, no way can be stated to be in contravention of any provisions. The relevant time, there was proper compliances from the side of the Respondents, now it cannot be the foundation of misrepresentation. The delay to the assessment by the Appellant's Officers, cannot be the reason for taking such action of seizing and confiscating and imposing of penalty. Admittedly, though there are procedures and powers provided under the Customs Act to the Appellant of reviewing and/or challenging a .....

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g and revoking those permissions. Having not done so, the action initiated on the basis of mere allegations on facts in the show cause notices against the Respondents only is unsupportable and untenable. The burden is upon the Department to prove the misrepresentation. The law is settled that the allegations of misrepresentation require the specific details and particulars for specific actions and against the specific involved persons. There is nothing on record to show that the Appellant has ta .....

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dingly, as the Appellant's Officers permitted them to do so. The supportive reasons of the CESTAT No case of perversity and illegality: 27. We have to keep in mind the provisions and the power and scope of High Court to interfere with the findings so arrived at, by the CESTAT. Having once noted above, we have gone through the reasons while setting aside the order of confiscation and penalty. The CESTAT has considered the issue of port clearance and its procedure, as prescribed under Section .....

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clear the goods for home consumption under Section 47 of the Customs Act. The permissions to clear the goods would not be in violation of Section 111(j), which is applicable to removals and not to the clearance . We also endorse these reasons. 28. The CESTAT has noted that even, the no action of appraisal, cannot be a reason to hold the Respondents liable. It is noted that this is not the case of mis-description and of any breach regarding the declaration. The goods were under import. The Appell .....

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missions were placed on record. The nature of contract and short duration and the purpose and object of these imports and practical part of removal of vessel with goods through the port, after getting the clearances and permissions, cannot be overlooked while considering the allegation of the breach of provisions of the Act. All the departmental officers of the respective Departments, ought to have taken decisions simultaneously. As noted, even by the CESTAT that the removal were after due permi .....

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d or set aside. There is no denial to the fact of granting clearances and permissions and release of vessels with goods. There is no case of declaration or mis-declaration. The necessary documents were with the concerned department, even at the time of such permissions and clearance stage. Both the parties, including the concerned officers have knowledge of the documents and the supportive material. It is an admitted position that the payment of duty has been made before issuing show cause notic .....

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port/Custom's area after due permission, under Section 42 of the Customs Act. All the vessels were subsequently cleared for home consumption also. Therefore, the penalty and the confiscation order is rightly set aside by the CESTAT. 31. It is settled that, mere nonpayment of duties, even if any, cannot be treated and read for meaning collusion or willful misstatement or suppress of facts . M/S. Uniworth Textiles Ltd vs Commissioner of Central Excise, Raipur. 2013 (9) SCC 753, (2013) 288 ELT, .....

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