TaxTMI 
TaxTMI 
2019 (4) TMI 539
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....India and Fomento Associated Singapore Holdings Pvt Ltd, a Company incorporated in Singapore, who purchased and imported a floating crane namely FC Maria Laura in India, Goa in the year 2011. Marine Infrastructure Goa Private Limited (herein after referred to 'MIG') purchased FC Maria Laura crane which was newly constructed in Batam, Indonesia from Orchard Maritime Services Pte Limited, a company incorporated in Singapore pursuant to Bill of Sale in the year 2011 for a total basic value of USD 11,102,472/- which correspond to Rs. 49,96,11,240/-. The Company i.e. MIG paid requisite import duty amounting to Rs. 7,95,45,874/- on 26.5.2011 pursuant to the examination and appraisal of custom duty duly made by the appraiser of customs, Customs House, Goa, by considering the Bill of Entry for Home consumption dated 19.5.2011 and other documents. 4. The Customs authority issued statutory clearance for home consumption in the form of 'Out of Charge' order dated 14.6.2011. According to the petitioners, the floating crane is employed for loading and unloading of cargo. FC Maria Laura was used in September, 2012 for loading of iron ore exported from State of Goa from Mormugoa port. On account....
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....learance of FC Maria Laura for home consumption in terms of section 47 of the Customs Act, after assessment by way of examination order. According to the petitioners, the appraiser officer being satisfied that FC Maria Laura was not prohibited from being exempted and also upon being satisfied that no export duty was payable on the sale price of FC Maria Laura, was pleased to pass LET Export Order permitting clearance of FC Maria Laura for export. The date of export is 18.4.2013 (LET Export order) and the date of re-import is 5.2.2016 (Out of Charge Order). According to the petitioners, no import duty was payable on re-import of FC Maria Laura and as such, Out of Charge Order has been issued by the Competent Authority. 5. The action of the respondent of seizure of the vessel under a Seizure Memorandum dated 12.1.2018 is a matter of challenge in the instant petition. The petitioners contend that, after lapse of two years, from the Entry of FC Maria Laura in Indian water, the office bearers of the petitioners received a call from Office of DRI to explain the transaction of re-import of FC Maria Laura in the month of August, 2017. The sequence of events after telephonic call have been....
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.... Laura" totally valued at approximately Rs. 66,01,26,405/- had been imported in contravention of the provisions of Section 111 of the Customs Act, 1962. Therefore, the said 'One Unit of Motor Vessel MV Maria Laura now renamed as MV Maria Laura 1" totally valued at approximately Rs. 66,01,26,405/- imported vide Bill of Entry No.3989260 dated 21.01.2016 is hereby seized under the section 110(1) OF THE CUSTOMS Act, 1962. Therefore, in exercise of powers conferred on me under Section 110(1) of the Customs Act, 1962, I, Shri Rajesh Dabas, Senior Intelligence Office, Directorate of Revenue Intelligence, Goa Regional Unit, F-3, F-4, Block-A, Cacullo enclave, St. Inez, Panaji, Goa, hereby seize the above said "One Unit of Motor Vessel MV Maria Laura now renamed as MV Maria Laura 1" and hereby direct not to remove, part with or otherwise deal with the said vessel in any manner except with the prior permission from the Deputy Director, CI Cell, Directorate of Revenue Intelligence, Mumbai Zonal Unit. Sd/- (RAJESH DABA) SENIOR INTELLIGENCE OFFICER, DRI, GOA REGIONAL UNIT, PANJI, GOA" 6. The petitioners are objecting to the action of seizure of the vessel and are seeking quas....
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....etitioners to satisfy the authority and without recording the reasons, it was arbitrary and inappropriate to take harsh measures. 8. Section 20 of the Customs Act, 1962 relates to re-importation of goods, which reads, "If goods are imported into India after exportation there-from, such goods shall be liable to duty and be subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof." Section 25(1) of the Act relates to power to grant exemption from duty which reads thus:- "Section 25. Power to grant exemption from duty - (1) If the Central government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty or customs leviable thereon. " 9. The petitioners contend that, since the vessel is reimported after the export, Notification No.94/96 dated 16.12.1996 has applicability and the case is covered by Entry Sr. No.3 which....
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....ter had intimated the details of the consignment re-imported to the (Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise) in charge of the factory where the goods were manufactured and to the licensing authority regarding the fact of re-importation and produces a dated acknowledgement of such intimation at the time of clearance of goods. (iv) The manufacturer - exporters who are registered with Central Excise Department may be permitted clearance of such goods without payment of Central Excise duty under transit bond to be executed with the customs authorities, such bond will be canceled on the production of certificate issued by Central Excise authorities about receipt of reimported goods into their factory. 2 Goods, other than those falling under Sl. No.1 exported for repairs abroad Duty of customs which would be leviable if the value of re-imported goods after repairs were made up of the fair cost of repairs carried out including cost of materials used in repairs (whether such costs are actually incurred or not), insurance and freight charges, both ways. 2A Goods (exported) under Duty Entitlement Passbook (DEPB) Scheme Amount of Central Excis....
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.... in the case of goods falling under Sr.No.2 of the Table there has been no change in ownership of the goods between the time of export of such goods and re-import thereof; (d) in the case of the goods falling under Serial numbers 1, 2A and 3 of the Table and where the value of exported goods was counted towards fulfillment of export obligation, the amount of customs duties leviable on the duty free inputs obtained from Nominated Agencies but for the exemption availed under the Ministry of Finance (Department of Revenue) notification No.56/2000-Customs dated the 5th May, 2000 (vide G.S.R. 399 (E), dated the 5th May, 2000) and notification No.57/2000-Customs dated the 8th May, 2000 (vide G.S.R.413 (E) dated the 8th May, 2000] shall also be paid in addition to amount of duty specified in column (3) of the Table]; [(e) in the case of goods falling under Sl.No.2C of the TABLE, the goods are returned to the owner of the aircraft without any sale]. Provided further nothing contained in this notification shall apply to re-i-ported goods which had been exported - (a) by a hundred percent export-oriented undertaking ora unit in a Free Trade Zone as defined under section 3 of the Central....
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....sing through melting, recycling or recasting. FC Maria Laura has been imported in the same status and state in which it was exported. There was no re-manufacturing or reprocessing taken place. 11. Section 110 of the Customs Act, 1962 authorizes proper officer, if he has a reason to believe that goods are liable to confiscation under the Act, he may seize such goods. Section 111 refers to confiscation of improperly imported goods. Clause '(o)' of section 111 refers to category of goods brought from place outside India liable to confiscation which reads, "any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer " According to the petitioners, clause (o) of Section 111 also would not be attracted. 12. The goods are exported neither levying any duty, nor there is any prescription in respect of import under the Act or any other law, for the time being in force, in respect of the condition which is not observed. The petitioners contend that even i....
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....V Maria Laura was purchased by M/s Fomento Resources Pvt. Ltd. From P.T. Indonesian Fortune Lloyd, Indonesia. According to the respondents, the said transaction was an independent commercial transaction. The respondent contend that the import transaction has been again branded as re-import and the custom duty has been evaded. According to the respondents, the petitioners cannot claim the import of the vessel as a re-import by them. The respondents also contend that since it is not a case of re-import because the entities i.e. MIG and Fortune Lloyd are different entities, the benefits under the Exemption Notification cannot be claimed. The respondents also contend that unless the goods are re-imported under duty drawback, rebate or bond and those goods that were rejected abroad and had to be reimported and secondly those goods that were exported for the purpose of repairs and were re-imported after such repairs only are entitled to claim exemption on re-import. According to the respondents, since the petitioners have purchased vessel, they cannot claim that it is a case of re-import entitling to exemption under Notification No.94/96 dated 16.12.1996. The respondents, thus contend th....
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....he penalty and the proceedings initiated by the respondents are yet to be concluded. This Court also is not proposing to interfere in the matter of continuation of the proceedings for assessment of liability of the petitioners. It would be open for the respondents to initiate or continue the proceedings and arrive at conclusion as permissible in law. The issue that is being dealt with is only as regards the correctness of the extreme and exceptional action taken by the respondents of seizure of the vessel. The petitioners also neither contemplate in the instant petition, interference in the ongoing proceedings, nor the issue as regards permissibility of the imposition of extreme action of seizure and penalty arising therefrom, since the decision is yet to be taken by the respondents. The limited issue that is required to be considered is, regarding the correctness of the action of the seizure of the vessel. There would be absolutely no interference in the proceedings for recovery of dues and by entertaining the instant petition absolutely, no hindrance is created in the on going proceedings. 18. Reliance is placed on the Judgment in the matter of Assistant Collector of Central Exc....
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....onsideration was, as regards the validity and legality of seizure of certain goods intended to be exported to Libya. Reference is made to paras No.8 and 9 of the Judgment, which read thus:- "{8} The impugned seizure of the goods is effected under sub-section (1) of Section 110 of the Act. It reads: "110. Seizure of goods, documents and things (1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods: Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer." {9} The condition precedent to invoke the power of seizure under Subsection (1) of section 110 is that the appropriate officer should have reason to believe that goods sought to be seized are liable to confiscation under the provisions of the Act. The phrase 'reason to believe' occurring in sub-section (1) of Section 110 of the Act fell for consideration in large number of cases. In Narayanappa and Ors. v. Commissioner of Income Tax, Bangalore, the S....
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....ged from his experienced eye who is well equipped to interpret the suspicious circumstances and to form a reasonable belief. See also M.A. Rasheed v. State of Kerala and Barium Chemicals Ltd. v. Company Law Board. It must be reiterated that the conclusions arrived at by the fact-finding bodies, the tribunal or the statutory authorities, on the facts, found that cumulative effect or preponderance of evidence cannot be interfered with where the fact-finding body or authority has acted reasonably upon the view which can be taken by any reasonable man, courts will be reluctant to interfere in such a situation. Where, however, the conclusions of the fact-finding authority are based on no evidence then the question of law arises and that may be looked into by the courts but in the instant case the facts are entirely different. See the principles enunciated by this Court in M/s Mehta Parikh and Co. v. commissioner of INCOME TAX. The same view was expressed by this court in Pukhruj v. D.R. Mohli where while dealing with the provisions of the Sea Customs Act, 1878, this court held that S.178 of the said Act imposed the onus of proof that the gold was not smuggled, on the party if it was sei....
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....mphasis supplied). If the action is maliciously taken or power under the section is exercised for a collateral purpose, it is liable to be struck down by the Court, if the conditions for exercise of the power are not satisfied, the proceeding is liable to be quashed. But, where power is exercised bonafide, and in furtherance of the statutory duties of the Tax Officer, any error of Judgment on the part of the offices will not vitiate the exercise of the power. Where, the Commissioner entertains the requisite belief and/or reason recorded by him authorizes a designated officer to enter and search premises for books of account, the documents relevant to or useful for any proceeding under the Act, the Court in a petition by an aggrieved person cannot be asked to substitute is own opinion whether an order authorizing search should have been issued. Again any irregularity in the course of entry, search and seizure committed by the officer acting in pursuance of the a authorization, will not be sufficient to vitiate the action taken, provided the officer has in executing the authorization acted bonafide. 24. Reliance is placed on the Judgment of the Honourable Supreme Court in the matter....
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....ere without there being any infringement of any right. There must be breach of legal right and the law is well settled by this Court. It is contended that relying upon the Judgment in the matter of Union of India versus Auto Ignition Limited and another 2003 1 BCR 305 that the dispute as to classification of goods and as to whether or not they are covered by exemption notification relates directly and proximately to the rate of duty applicable thereto for purpose of assessment and thus it is urged that the petition shall not be entertained. 26. It is contended that, the seizure memo does not indicate that the proper officer was possessed of any material to form his opinion that the vessel is liable for confiscation under the Act. The terms 'the reason to believe' appearing in section 110 does not mean the subjective satisfaction of the officer concerned. The officer has to act in a reasonable manner and the exercise of power shall not be arbitrary and the powers are liable to be used in accordance with the restraints imposed by law. 27. Reliance is placed on the Judgment of the Apex Court in the matter of Tata Chemicals Ltd. v. Commissioner of Customs (2015 (11) SCC 628)....
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....idence but not on mere suspicion, gossip or rumour. The Income Tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The Court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the Court." See also Bar Council of Maharashtra v. M.V. Dabholkar, [1976] 2 S.C.R. 48 at 51. N. Nagendra Rao & Co. v. State of A.P. (1994) 6 SCC 205 at 216. 28. Drawing parallel inference in the instant matter, it does appear that the proper officer has not indicated any reason to believe that the goods are liable to confiscation. It is not a matter of controversy that by application of Exemption Notification, no duty was levied and 'out of charge' order was issued two years back. Even otherwise, it was open for the respondent authorities to initiate proceedings under section 28 of the Customs Act, however, without taking the steps permissible in law, the extreme action of seizure of goods has been resorted to which appears to be high handed and arbitrary. 29. It is the contention of ....
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....basic provisions of law, had removed unaccounted goods, without written permissions. The show cause notices itself noted that, all supporting documents, materials and requisite permissions 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 permission of conversion, preventive checks on ship stores and port clearance obtained, which in a given case could have been refused and revoked by the authorities, immediately before the show cause notice and the actions taken. We have declined to accept the case of corruption by evasion of custom duty by the Respondents, as alleged without supporting material and /or the prior inquiry. 30. Applying the ratio laid down in the aforesaid Judgments, in the instant matter also, the vessel has been cleared and 'out of....
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....ication refers to the claim of drawback and the bond. Clause (1) Sr.No.1 of the Notification applies to goods exported under the claim of drawback on any customs or excise duty levied by the Union and the amount of duty to be levied is amount of drawback and the customs or excise duty allowed at the time of export. As far as clause Sr.No.3 is concerned, it does not refer to any drawback and is in itself a category not covered out by Sr.No.1, 2-A, 2-B and 2-C. Even otherwise, on perusal of the Bill of Entry for home consumption dated 5.2.2016, it records import details, wherein, there is a reference to Exemption Notification No.94/96 and the entry Sr.No.3. It does appear that the petitioners have claimed exemption under the Notification. The title of the statute or Notification, in itself cannot restrict or control the plain and clear meaning of the words. In the matter of M/s Frick India Limited versus Union of India and others reported in 1990 1 SCC 400, in para No.8 of the Judgment, the Honourable Apex Court has observed thus:- "8. It is well settled that the headings prefixed to sections or entries cannot control the plain words of the provision; they cannot also be referred to....
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....ve not been paid and on the face of availability of power under section 28 of the Act, the extreme action of seizure ought not to have been taken after lapse of two years from the date of issuance of 'out of charge' order and without recording anything in the seizure memo as regards the proper officer having possessed of the reasons to believe that the goods are liable for confiscation under the Act. 36. The respondent authorities are not prohibited from reassessing the custom duty and claim recovery. 37. During pendency of the petition, by way of an interim order passed on 16.11.2019, the petitioners were permitted to use FC Maria Laura for loading/export operation within the jurisdiction of respondent No.4. It was directed that the vessel shall not be moved beyond the jurisdiction of 4th respondent till further orders. A request is made in MCA No.971/2018 to permit the petitioners to take the vessel out of the jurisdiction of Goan water to Port Redi and to bring back the said floating crane within a period of 14 days from the date of passing of the order. This Court, by order dated 28.11.2018 permitted the petitioners to take the vessel out of territorial jurisdiction o....