TMI Blog2017 (12) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... ll clearly indicate the destination of the goods for home consumption at port of discharge or for transhipment to another customs station or on transit to another customs station or place outside India. Needless to say, goods that are described as spares/stores in the airway bill may well be destined to other customs stations or locations outside India with the liability to duty also deferred accordingly till due arrival at such destination. In the absence of such details, goods that have been found to be excluded from stores cannot be subject to duty liability unless it has been destined for home consumption in India. The impugned order has proceeded to recover duty and visit the appellants with detrimental consequences after considering the nature of the goods and holding that these are not ship spares ; however, there is a marked lack of material pertaining to the goods or any finding on the ultimate disposal of the goods. Taking note of the submission of the appellants that the vessel is a research vessel for which research equipment are 'ship stores', the adjudicating authority finds that the vessel, even if under a foreign flag, does not become a foreign going vessel merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned to the Master, MV Mezen c/o M/s JM Baxi by M/s Experimental Design Bureau of Oceanological Engineering of Russian Academy Sciences, a federal state company of Russia vide invoice no. 1 dated 30th May 2003 and was shipped from Moscow to Mumbai against airway bill no. 07454820942 dated 5th June 2003 manifested for Mumbai Air Cargo in import general manifest no. A-8769 filed with Air Customs Mumbai for flight no. NW-042 that arrived on 8th June 2003. On application of M/s JM Baxi dated 9th June 2003 and upon execution of bond dated 10th June 2003 by them on behalf of Master, MV Mezen, the goods were placed under customs escort on board the vessel vide tranship permit no. 1352 dated 11th June 2003. 3. The proceedings devolved upon M/s JM Baxi Co by deeming them to be the agent of M/s Laboratory of Regional Geodynamics Ltd, held to be the importer, and who was, it appeared, embroiled in insolvency proceedings. It is alleged that the goods were transshipped on board by recourse to the permit procedure in the guise of ship stores though they were not and though required to clear the goods on payment of duty against an assessed bill of entry bill of entry did not. Furthermore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical. According to Learned Counsel, the goods having been placed on board the vessel operating in international waters and ultimately departing the Indian waters for good, there could not be any doubt that duty should not be recovered. 5. Learned Authorized Representative impressed upon us that the goods, being restricted owing to the requirement of license from the Department of Telecommunications, Government of India, were imported without producing a license and had, thus, violated the provisions of the Foreign Trade Policy rendering them liable to proceedings under section 111 and section 112 of Customs Act, 1962. It is her contention that the impugned goods were not intended to form a part of the vessel and were procured for the project in which the vessel was engaged but not for the vessel itself; this is stated to be apparent from the agreement between the National Centre for Antarctic and Ocean Research and Laboratory of Regional Geodynamics Ltd. It is also the submission of Revenue that these goods would not, by any stretch, meet the requirements laid down in section 2(38) of Customs Act, 1962 defining stores as these were not goods for use in the vessel and inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, it is necessary for us to recall the provisions of Customs Act, 1962, to revisit the incident that led to the present proceedings and to refer to the records. 9. Doubtlessly, Customs Act, 1962 is a taxing statute that confers empowerment on the Central Government, and its officers, the legal authority to collect duties of customs on imports and on exports of those commodities enumerated in the Schedules of the Customs Tariff Act, 1975. With the extensive land and sea frontiers posing a gargantuan challenge to the perfect execution of this mandate, the rules of engagement envisages a channel that confers legality to such entry and presumption of illegality on all others with detrimental consequence upon discovery. Likewise, licit procurement is subject to ascertainment for conformity with prescriptions - statutory and non-statutory - before they are cleared on payment of duty. This policing arrangement capacitates customs officers to implement other statutory provisions enacted to insulate the country, its interests and its people from baneful consequences. 10. Again, there can be no doubt that import duties are leviable on arrival of goods in India. However, the necessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus (31) person-in-charge means- (a) in relation to a vessel, the master of the vessel....' and in section 29, 30, 38, 40, 41, 42 and section 116 that imposes obligations on the master while master is referred to in section 31 and 39 for similar purpose. Similar references to master are to be found in chapter XII of Customs Act, 1962 pertaining to vessels that carry coastal goods. Section 115 enables a master to claim restricted immunity from confiscation of vessels in specified circumstances, The obligations, as well as the consequences that follow infringement of obligations, can be laid at the door of the agent of the master under section 148 which is distinguishable from section 147 which pertains to owner/importer/exporter of goods. Thus a vessel, through its master can be transact commerce independent of its owner. 12. Ship stores are accorded a special treatment in chapter XI of Customs Act, 1962 owing to the universal recognition of a ship as a travelling community of crew and/or passengers that are far from its home port. Section 85 allows, contrary to the requirement of assessment for warehoused goods to be assessed under section 17 and 18 upon ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson-in-charge of conveyance to the importer acknowledging the latter as possessor of right to clear the goods. The manifest will clearly indicate the destination of the goods for home consumption at port of discharge or for transhipment to another customs station or on transit to another customs station or place outside India. Needless to say, goods that are described as spares/stores in the airway bill may well be destined to other customs stations or locations outside India with the liability to duty also deferred accordingly till due arrival at such destination. In the absence of such details, goods that have been found to be excluded from stores cannot be subject to duty liability unless it has been destined for home consumption in India. 14. Transhipment is not defined in Customs Act, 1962 but it is clear that, while both immunize the respective goods from leviability to duty, chapter VIII of Customs Act, 1962 which covers transit or transhipment goods and chapter IX of Customs Act, 1962 covering stores are mutually exclusive. Section 54 of Customs Act, 1962 envisages duty deferment of goods transshipped to another customs station, major port or international airport as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not paid under section 28 (1) of Customs Act, 1962, and recovery of interest thereon under section 28 of Customs Act, 1962. At the same time, the penal provisions have been sought to be invoked separately against the company under section 112 and section 114A of Customs Act, 1962 and against M/s JM Baxi Co, Shri Robin Pereira and Shri DK Srivastava under section 112 of Customs Act, 1962. 17. No bill of entry was filed for the goods and, therefore, no entity identifiable as one holding out to be the importer. The airway bill records Master, MV Mezen as the consignee and, there being a commercial invoice, it would appear that the goods were ordered on behalf of the vessel. The goods were not subjected to seizure under section 110 of Customs Act, 1962. The proceedings pertain, therefore, to absent goods. 18. M/s Laboratory of Regional Geodynamics Ltd is not in appeal before us as there is no determination of detriment to them in the impugned order. Neither did the participate in the adjudication process even though the notice sought to recover duty along with interest and to impose penalty under section 112 and 114A of Customs Act, 1962. Insofar as M/s JM Baxi Co is concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom scope of engagement in foreign trade. Rejecting the claim of the appellants that these are ship stores covered by the inclusive portion - other articles of equipment - on the ground that 20. The impugned goods are not used in M.V.Mezen though it may have been used for the purpose for which the vessel was intended (i.e. for survey work) but a placed on the sea bed. Secondly, as per the definition, the equipments are to be fitted. The fitting may or may not be immediate but fitting is a must. In this case, these goods are with stands and floats which was stationed in the sea independent the vessel on the sea bed and thus they were not fitted or meant to be fitted with M.V. Mezen. Therefore, in my firm opinion, the impugned goods do not confirm (sic) to the definition of stores as per Customs Act, 1962. the impugned order, thereafter, examined the eligibility to transhipment even if they were considered to be stores and, with reference to section 54 (2) of Customs Act, 1962, holds that, export being a vital requirement for the privilege of exemption from duty under that provision, these are not eligible owing to being engaged in execution of a contract with an Indian enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich restricted for import under FTP. Since they do not possess any import license, they have violated foreign trade policy in importing the said restricted goods into India. Therefore, the goods are liable to confiscation under section 111(d) read with 111(f) and 111(n) of the Customs Act, 1962. 22. With the contractor having absented itself from proceedings, the adjudicating authority, placing reliance on section 147 of Customs Act, 1962, transferred the duty liability to M/s JM Baxi Co as deemed agent of the contractor inferred from the inclusion of their name in the commercial invoice and in the airway bill, the filing of application for transhipment permit and the execution of transhipment bond on behalf of the Master of MV Mezen - all of which, according to her, would bring them under the ambit of agent. The correspondence and electronic mail are cited by the adjudicating authority to conclude that the appellants were all aware that they were circumventing the provisions of Customs Act, 1962 and, hence, by acts that rendered the goods liable to confiscation, they were subject to the penalties under section 112 of Customs Act, 1962. 23. There appears to be gaps in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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