TMI Blog2019 (4) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... ly such approach was adopted. It is canvassed by the petitioners that there is no material before the officer for forming an opinion and the question is not being raised as regards adequacy of such material. 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. 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. The vessel has been cleared and 'out of charge&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total basic value of USD 11,102,472/- which correspond to ₹ 49,96,11,240/-. The Company i.e. MIG paid requisite import duty amounting to ₹ 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 of suspension of mining operations, it became unviable to continue to keep the said floating crane un-utilized after September 2012. It is contended that, due to this circumstance, MIG sold FC Maria Laura to a Company in Indonesia Viz. P.T. Indonesian Fortune Lloyd, Kebon Bawang VI by way of invoice dated 15.4.2013. The description of the FC Maria Laura has been recorded in the Bill of Entry dated 19.5.2011, at the time of import, as well as in the shipping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 recorded in the petition in paragraph No.22. Ultimately on 1.1.2018, the petitioners received a Notice /summons, calling upon the authorized representative of the petitioners to remain present at Mumbai on 4.1.2018. According to the petitioners, as the Chief Financial Officer of the petitioner Mr. Apurva Mishra who was conversant with the facts, was abroad and as such, by e-mail dated 2.1.2018, he informed the respondent No.2 that he would rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62. 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 quashment of the seizure memo dated 12.1.2018 on several grounds. 7. According to the petitioners, the appropriate officer, upon application of mind, having concluded that, no import duty is leviable on re-import of FC Maria Laura and having granted clearance in discharge of statutory duty, the seizure of FC Maria Laura by respondent No.2 on the ground that import duty was payable and has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich 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 does not call for payment of duty. The relevant extract of Notification Annexure-I is reproduce below:- Notification No.94/96-Cus Dated 16-12-96 Exemption on re-importation of goods exported under claim of drawback or under bond In exercise of The powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), and in super-session of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porter 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assbook Scheme (DEPB), re-importation of such goods takes place within one year of exportation or such extended period not exceeding one more year as may be allowed by the Commissioner of Customs on sufficient cause being shown; (b) the goods are the same which were exported; (c) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same floating crane without there being any change of whatsoever nature. It has been re-imported within three years from the date of its exportation. The Exemption Notification provided that the goods shall not be deemed to be the same if they are re-imported from abroad after being subjected to re-manufacturing or reprocessing 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 Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently exported to M/s P T Indonesian Fortune Lloyd vide shipping Bill dated 17.4.2013. The ownership of the vessel was transferred by Maritime Services Infrastructure to M/s P.T. Indonesian Fortune Lloyd and the said export is in fact a sale of asset. Subsequently, in the year 2016, the goods with description one-unit motor vessel MV 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents object to entertainability of the petition on the grounds:- It being premature, alternate remedy is available and no fundamental rights are shown to have been violated. 17. In the instant matter, at this stage, this Court is not called upon to consider the issue of liability of the petitioners towards payment of customs duty or the 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation 20 In the matter of K O AND IN INDIA V/S COMMISSIONER OF CUSTOMS AND EXCISE, HYDERABAD (2001 Law suit (AP) 1231 , the issue that arose before the Court for consideration 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s enjoined in the Act, had been explained by this Court in State of Gujrat v. Mohanlal Jitmalji Porwal. There this Court observed whether or not the officer concerned had seized the article under the 'reasonable belief' that the goods were smuggled goods, is not a question on which the court can sit on appeal. The circumstances under which the officer concerned entertains reasonable belief, have to be judged 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch. Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the taxpayer, the power must be exercised strictly in accordance with the law and only for the purposes for which the law authorizes it do be exercise. If the action of the officer issuing the authorization or of the designated officer is challenged, the officer concerned must satisfy the court about the regularity of his action, (emphasis 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle 226 are filed solely for the purpose of obtaining interim order and there after to prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged. 25. It is contended, relying upon the Judgment in the matter of Union of India versus Sigma Electronics 1996 Lawsuit (cal) 162 that the exercise of power by the High Court is of widest possible amplitude but that by itself does not give right to interfere 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. v. S.D. Agarwal, (1969) 3 S.C.R. 108 at 129. To similar effect is the judgment in Sheo Nath Singh v. Appellate Assistant Commissioner of Income Tax, Calcutta, (1972) 1 SCR 175 at 182. In that case it was held as under: There can be no manner of doubt that the words reason to believe suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income Tax Officer may act on direct or circumstantial evidence 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Appellants were ready with the duty/payment. Once the goods are removed by obtaining port clearance, there was no question of such confiscation under provision of section 111(j) of the Customs Act and of penalty on the Respondents. There was no loss of Duty. This is not a case that Respondents deliberately, by breaching the 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 conversio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... swered accordingly. 31. It is tried to be contended that since a grab was installed on the crane, there is a change brought about in the vessel. The argument is not acceptable for the reason that the customs authorities have examined this aspect and had also levied duty in respect of the grab and the lube oil etc. 32. It is tried to be contended that the Exemption Notification applies only in cases of re-import of goods exported under the claim of drawback or under bond category. The title of the Notification 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking of the action, which aspect has not been considered while issuing seizure memo. It would be gainsaid that the vessel is the same which was exported and that has been re-imported by the petitioners. The Exemption Notification applies to the goods and the contention as regards the entity who has exported the goods not being the same which has re-imported, does not assume any significance. 35. Even otherwise, it was open for the respondents to invoke provisions of section 28 of the Act and to assess the duty which is claimed to have 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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