TMI Blog2020 (3) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... ereon, confiscated the goods. The adjudicating authority also imposed customs duty amounting to ₹ 12,71,406/-. Further, the adjudicating authority found that tug MV Al-Vard valued at ₹ 6,75,00,000/- was found utilized in illegal import of diesel oil and ordered confiscation of the tug MV Al-Vard under sub-section (2) of section 115 of the Act of 1962. Having observed thus, the adjudicating authority in the operative portion, ordered confiscation of tug MV Al-Vard having assessable value of ₹ 6,75,00,000/- and imposed redemption fine of ₹ 1,75,00,000/- in lieu of confiscation under the proviso to sub-section (2) of section 115 of the Act of 1962 on the respondent - it is not now open to the appellant to contend that the proviso to sub-section (2) of section 115 is applicable only in the cases where conveyance is used for the carriage of goods or passengers for hire for smuggling of the goods and since the tug was not hired the proviso to subsection (2) of section 115 of the Act of 1962 is not at all applicable to the facts of the present case. The Tribunal, having regard to the proviso to sub-section (2) of section 115 of the Act of 1962, has observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso suggested that utility vessel boat MV Al-Vard was used in illegal import/smuggling of diesel oil and has been retained as bunker for its use. The investigation by the office of the Directorate of Revenue Intelligence, revealed that the respondent illegally imported diesel oil in the tug MV Al-Vard and the quantity of the said diesel was ascertained by visit on the said boat at the Jetty of Larsen and Tubro. Owing to the aforesaid investigation, actual quantity of diesel was ascertained through sounding of the bunker tanks in the vessels by the engineer and surveyor in the presence of Master of the vessel and was found to be 103.657 MT. On inquiry, the Master confirmed that they have taken 150 MT of diesel oil from one foreign going vessel Norgas Orinda on 6th November 2010 on the instructions of one Shri Zohar Mallampattiwala, director of the respondent and that they have consumed some of it in voyage. 2.3 As the tug was used in the improper import of diesel oil with willful intention to use the same in the tug MV Al-Vard, the tug MV Al-Vard valued at ₹ 6,75,00,000.00/- along with excess stock of 103.657 MT Valued at ₹ 51,82,850/- which was not declared, was pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, vide its order dated 7th August, 2018, while partly allowing the appeals, passed an order inter alia reducing the redemption fine on tug MV Al-Vard to ₹ 8 Lakhs; reducing the redemption fine in respect of goods to ₹ 8 Lakhs and; setting aside the redemption fine of ₹ 6 Lakhs as the goods were not available. The operative portion of the final order dated 7th August, 2018 passed by the Tribunal is extracted herein below: - The duty demand, interest and 25% penalty paid is maintained. The redemption fine on tug is reduced to ₹ 8 Lakhs. The redemption fine in respect of goods is also reduced at ₹ 8 Lakhs. The redemption fine of ₹ 6 Lakhs is set aside as the goods were not available. The appeals of employees Sh.P.P.Radhakrishnan and Hanzel A. Malik are allowed. The appeal of Sh.Zoharbhai A Mallampattiwala is abated. 3. Mr.Ankit Shah, learned Senior Standing Counsel, submitted that the Tribunal while erroneously interpreting the proviso to sub-section (2) of section 115 of the Act of 1962 reduced the redemption fine on the conveyance. It is further submitted that the respondent being the owner of the tug was v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he import policy and thus, the principle laid down in the case of Jain Exports Private Limited (supra), could not have been made applicable to the facts of the present case. It is further submitted that the approach adopted by the Tribunal is erroneous. The Tribunal ought to have appreciated that the provisions of the Act of 1962 are to curb the menace of smuggling on economy and when the respondent and three others have intentionally engaged themselves in the smuggling of the diesel, redemption fine and penalty should be commensurate with the offences and should have deterrent effect. 3.4 It is submitted that the gravity and enormity of the offence of smuggling the diesel oil, committed by the respondent and others was against the spirit of the Act of 1962 and considering the provisions of the Act of 1962, the Tribunal grossly erred in reducing the redemption fine which is not commensurate with the gravity of offence committed by the respondent. It is thus, submitted that the Tribunal erred in interpreting and applying the provisions of sub-section (2) of section 115 of the Act of 1962. While concluding it is submitted that the appeal deserves to be admitted on the substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so to sub-section (2) of section 115 only covers the goods where conveyance is used for the carriage of the goods or passengers for hire is misconceived and without any basis. It is further submitted that going by the proviso to sub-section (2) of section 115, the Tribunal rightly concluded that the maximum fine on the conveyance can be an amount not exceeding the market price of goods which are sought to be smuggled or the smuggled goods as the case may be. Thus, it is urged that the Tribunal has not committed any error and the findings recorded by the Tribunal cannot be said to be perverse and therefore, the appeal deserves to be dismissed since no substantial question of law can be said to arise in the present appeal. 5. Pertinently, before the Tribunal the respondent did not raise the dispute regarding the demand of customs duty and penalty. The respondent before the Tribunal only contested the quantum of redemption fine in respect of diesel, vessel and personal penalties imposed on the individuals. The Tribunal has accordingly decided the appeal. 6. Undisputedly, the total quantity of the diesel seized was 103.567 MT, the amount of duty whereof comes to ₹ 8.78 La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 106 fails to do so, except for good and sufficient cause; (d) any conveyance from which any warehoused goods cleared for exportation, or any other goods cleared for exportation under a claim for drawback, are unloaded, without the permission of the proper officer; (e) any conveyance carrying imported goods which has entered India and is afterwards found with the whole or substantial portion of such goods missing, unless the master of the vessel or aircraft is able to account for the loss of, or deficiency in, the goods. (2) Any conveyance or animal used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be liable to confiscation, unless the owner of the conveyance or animal proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance or animal: Provided that where any such conveyance is used for the carriage of goods or passengers for hire, the owner of any conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine not exceeding the market price of the goods which are sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not hired the proviso to sub-section (2) of section 115 of the Act of 1962 is not at all applicable. At this stage, the order dated 25th April, 2013 passed by the adjudicating authority, is required to be taken note of. The adjudicating authority having found that the respondent had illegally imported/smuggled 150 MT of diesel oil valued at ₹ 75,00,000/- into the tug MV Al- Vard, with an intention to use the same for plying inside the sea without payment of duty thereon, confiscated the goods. The adjudicating authority also imposed customs duty amounting to ₹ 12,71,406/-. Further, the adjudicating authority found that tug MV Al-Vard valued at ₹ 6,75,00,000/- was found utilized in illegal import of diesel oil and ordered confiscation of the tug MV Al-Vard under sub-section (2) of section 115 of the Act of 1962. Having observed thus, the adjudicating authority in the operative portion, ordered confiscation of tug MV Al-Vard having assessable value of ₹ 6,75,00,000/- and imposed redemption fine of ₹ 1,75,00,000/- in lieu of confiscation under the proviso to sub-section (2) of section 115 of the Act of 1962 on the respondent. The said operative porti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (2) of section 115 of the Act of 1962, has observed that the maximum fine on the conveyance can be an amount not exceeding the market price of the goods which are sought to be smuggled or the smuggled goods, as the case may be, and held that the maximum redemption fine which can be imposed cannot be more than ₹ 51,82,850/-. Keeping in mind the principles enunciated by the Supreme Court in Jain Exports Pvt. Ltd. (supra), the Tribunal found that the total benefit derived by the respondent was ₹ 13 lakhs, which is the duty amount; and that the respondent had deposited not only the amount of duty but also the interest payable thereon as well as penalty. The Tribunal was of the view that the redemption fine imposed was exorbitant and needed to be reduced substantially and accordingly, reduced the redemption fine on the tug to ₹ 8 lakhs. 16. Thus, the Tribunal, on a correct interpretation of the proviso to sub-section (2) of section 115 of the Act of 1962 has held that the maximum fine on the conveyance cannot exceed the value of goods sought to be smuggled or the smuggled goods; and has thereafter applied the principles enunciated by the Supreme Court in Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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