TMI Blog2023 (11) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... that were required for consumption during the coastal run, is only open for consideration of the appropriate juridical authority, who in the first place allowed the conversion or by way of appeal proceedings of the said orders. That being not the case herein, the plea is not open for such an assertion. It need be pointed out that if at all any duty was required to be paid on the dumb barge at the time of conversion, the jurisdiction to collect such duty rested with Paradip Customs only and would certainly not fall within the territorial jurisdiction of the present authority. The fact that the barge was already converted from foreign to coastal run and thereafter Customs Duty was paid on the bunkers for voyage, question of any illegal import of the dumb barge Century Star-3002 into India does not arise. Any consequence flowing out of a mis-conceived assumption of jurisdiction and subjecting the appellants herein to penal consequences, confiscation and imposition of penalty on the barge and accordingly on all others concerned in facilitating the movement of the dumb barge or associated with discharge of other formalities concerned, at subsequent port of call, are not liable to be su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdered that the tug Century Star-1 was liable for confiscation under Section 115 of the Customs Act, however as the same was not available for confiscation a redemption fine of Rs. 75,00,000/- (Rupees Seventy five lakh only) under Section 125(1) of the Act was imposed. The learned Commissioner also imposed penalty under Section 112 of the Act on the Master of the tug Century Star-1, M/s. Century Star Shipping Pvt. Ltd., M/s. Atlantic Shipping Pvt. Ltd., M/s. B. Ghose Co. Pvt. Ltd. and M/s. Babaji Shivram Clearing Carriers Pvt. Ltd. 2. The broad facts of the case are set out as under: During the course of investigations concerning unauthorized import of a cruise vessel Pandaw-IV, seized by the Officers of Customs on 01.06.2009 the officers cultivated information that the tug Century Star-1, which had towed vessel Pandaw-IV, had also towed a barge Century Star-3002, in November 2008 from Mayu River, Sittwe, Myanmar and that it had detached the same at Sagar Point/Sagar Road (a virtual jetty) on 09.11.2008. Subsequently on 21.11.2008, the tug Century Star-1 reached Kolkata Port. The IGM thereof filed by M/s. Atlantic Shipping Pvt. Ltd. however, did not mention anything about the barge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much in dispute. It is an admitted position that the dumb barge Century Star-3002 was converted for coastal run vide order dated 20.10.2006, issued by the Deputy Commissioner of Customs, Paradip. The tug and the barge were grounded due to storm and the tug after being salvaged and repaired (in 2007) was engaged for carrying survey equipments to Myanmar (as per charter party agreement dated 20.10.2008). The tug Century Star-1, on its return voyage from Myanmar carried alongwith survey equipments, towed the barge Century Star 3002 (after being salvaged) and was tied at Sagar Virtual Jetty after obtaining permission from Director (Marines), Kolkata Port Trust. The barge was subsequently taken for repairs (March 2009) to the yard of Maeksin Shipping Co. Pvt. Ltd., Kakdwip, wherefrom it was seized in June 2009. It is on record that Customs Duty amounting to Rs. 6,78,284/- (Rupees Six lakh seventy eight thousand two hundred eighty four only) was paid vide T.R-6/GAR-7 Challan bearing No. 66 dated 30.11.2006 at the time of the conversion of the barge Century Star-3002, for coastal run, said to be paid towards duty on bunkers required to be consumed by tug Century Star -1 and the barge Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... got the job of transportation of carriage of cooking coal from Paradip to Haldia under the account of Electro Steel Casting Ltd. and in order to carry out this job, at Paradip port the barge and tug were converted into coastal run on 20.10.2006 and permission from the Deputy Commissioner of Customs, Paradip, pursuant to approval from DG, Shipping, Govt. of India, was obtained. (k) The value of the barge as per the Fixed Asset Schedule D of the Balance Sheet of Century Star Shipping Ltd. stood at Rs. 2,10,07,970/-(Rupees Two crore ten lakh seven thousand nine hundred seventy only). (l) The barge and the tug after return from foreign port in 2007, encountered bad weather and storm near the waters of Myanmar where both ran aground. Efforts were made to salvage the two but only the tug could be salvaged and it proceeded to Kolkata to undergo immediate repairs. Upon completion of repair work, M/s. Geo Star Surveys Pvt. Ltd. chartered the tug for carrying survey equipments from Kolkata to Myanmar and back to Kolkata. (m) M/s. Babaji Shivram Clearing Carriers were appointed by the Charterers-M/s. Geo Star Surveys Pvt. Ltd., as Clearing and Steamer Agent. (n) M/s. Babaji Shivram Clearing C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or carriage of smuggled goods and also cargo means goods carried in or on ship hence section 115(2) of the act as well as section 30 of the act, dealing with filing of an IGM, as per Import Manifest Vessels Regulation 1971, were not applicable. It was further stated that the contravention under Section 30 of the act, renders the person in charge of the vessel or any other person referred to therein, liable to penalty not exceeding to Rs. 50,000/-. Neither the said provision nor any other provision of the act provides that the contravention of the Section 30 of the act would render the vessel liable for confiscation. The tug Century Star -1 was chartered during Nov. Dec, 2008, exclusively for carrying out hydrographic survey off Sittwe, Myanmar on behalf of Essar Exploration and Production South East Asia Ltd., as evident from the copy of LOI agreement, Terms and Condition enclosed with the appeal papers. It was placed on record for the charter party that they understood that the tug carried a barge from Sittwe, Myanmar to India, however as they did not have full details (as it was not covered under their contract and agreement) and as also they were not informed by the vessel owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified (in the matter of the seized goods) and as such Section 111(d) couldn t be invoked for confiscation of the seized goods. In so far as action in terms of sections 111(f), (g) and (h) was concerned, the same was certainly not invokable for purpose of confiscation, as it had not been alleged that the seized goods are dutiable or prohibited since there was no demand of duty and no violation of import policy. The plea that non-filing of IGM would render the seized goods as prohibited goods is clearly unacceptable as being too far fetched a proposition. There is nothing in section 30 of the act to allude to such an extreme extension and interpretation in law. It may also be worth pointing out that import of barge Century Star-3002, as an ocean going vehicle is exempted from payment of duty, in terms of Notification No. 165-CUS vide Sr. No. 350. Further, it is too well known as also held in a slew of cases that the barge is classifiable as an ocean going vessel -(refer i) Essar Oil Ltd. Vs. Commissioner of Customs 2002 (142) ELT 657 (T) , ii) Collector of Central Excise Vs. Vipul Shipyard 1996 (88) ELT 640 (SC) , (iii) Bharati Shipyard (P) Ltd. Vs. Collector of Central Excise 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alling both under clauses (i) and (iii), penalty not exceeding the value of the goods or the difference between the declared value and the value and the value thereof or five thousand rupees, whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest. 115. Confiscation of conveyances (1) The following conveyances shall be liable to confiscation:- (a) any vessel which is or has been within the Indian Customs waters, any aircraft which is or has been in a Customs area, while constructed, adapted, altered or fitted in any manner for the purpose of concealing goods; (b) any conveyance from which the whole or any part of the goods is thrown overboard, staved or destroyed so as to prevent seizure by an officer of Customs; (c) any conveyance which having been required to stop or land under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92 when the rig came back from Bahrain after repairs, while it was owned by Essar; (ii) The second is when the rig was brought back from international waters by Noble and deployed at platform NE on 13-12-1997; (iii) The third when the said rig was brought back after repairs from Sharjah by Noble in the year 1999. While importers claim that the practice as mentioned above should have been equally applicable to these movements also and therefore no duty can be recovered, when Bill of Entry had already been once filed in the year 1987, the Revenue contends that the practice as admitted in Sedcos case has no application, when either the rig moves out of India to another country or when the rig ceases to be operating under the contract with ONGC. In the course of the arguments, the counsel also referred to the expression foreign going vessel defined in Section 2(21) of the Customs Act, 1962 and submitted that the rig satisfied, the definition of a vessel, and therefore once a vessel is assessed to duty, it ceases to be goods and becomes a conveyance, which was then not liable for payment of duty for movements in and out of India. It was submitted that this was the reason why ships and v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the revenue. The Hon ble Bombay High Court in the case of Pride Forma was only concerned with the interpretation of the provisions of Section 86 and 87 of the Customs Act and had accordingly, in para 32 of its judgment, noted that the definition of foreign going vessel in Section 2(21) of the Act qualified words unless the context otherwise required. The Court took a view of the matter in Pride Forma s case, while construing the provisions of Section 86 and 87 of the Customs Act in view of this opening sentence of the definition. This decision does not hold that a rig is not a vessel at all. This being the position, no duty could be demanded on the movement of vessels in and out of India once it has been assessed to duty and cleared for home consumption. The question of duty on ship stores being only different. To take a contrary view would be to unsettle, practice of last 100 years or more, as ships and vessels have been arriving in and going out of India without suffering duties of Customs from time immemorial. Many such ships, also undergo repairs just before their arrival in India. None of these vessels or the addition made to such vessels on account of repairs have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a vessel, is irrelevant in determining its duty liability under the Customs Act. It is the act of Import, which renders goods liable for duty and no owners. Once an entity has been imported and assessed to duty and cleared for Home Consumption, they cease to be imported goods. The subsequent change of ownership of such goods will not render them again liable for duty. The liability for payment of Customs duty is independent of the ownership of goods and therefore we are of the view that Noble cannot be held liable for payment of duty, merely because they became the owners of the rig. The other reasons on which duty liability has been fastened on Noble for the movement of rig in December 1997 and when it came back from repairs in 1999 is not called for have already been dealt with above. (vii) We therefore hold that in view of the Scheme of the Customs Act and the practice being followed by the Customs, the rig having already assessed to duty once in 1987, could not be held liable for payment of duty either in 1992, or in 1997 or in 1999 for its various movement in and out of India. (viii) . (ix) (e) . (f) . (g) (h) As regards the liability of the rig to confiscation for the movem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sections 34, 35 and 46, which proceed on the assumption that the rig was goods and not a vessel cannot be sustained. We, therefore, hold that the movement of the rig in September 1992 did not violate any of the provisions cited in the order and therefore the rig cannot be held liable for confiscation under the clauses of Section 111 as arrived. (i) (j) . (k) The next movement of rig on which duty has been demanded and violation alleged is one effected in December 1997 when Noble brought the rig back into Indian waters for the purposes of deploying the same at platform NE (a designated area), for which a contract had been awarded by ONGC to Neptune, who had hired the rig from Noble. The order of the Commissioner proceeds on the premises that the rig was goods, for import of which a Bill of Entry was required to be filed and other formalities relating to unloading etc. had to be complied with. For reasons recorded above, we hold that the rig ceased to be imported goods after its assessment and clearance in the year 1987 and thereafter it acquired the characteristic of a foreign going vessel and therefore it did not require any Shipping Bill or Bill of Entry to be filed for its inwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore require only the filing of an IGM or EGM, if the vessel was carrying any export or import cargo. In the absence of any such cargo being carried on board the rig, there was also no violation of the provisions of Sections 30 and 41 of the Customs Act, which require filing of IGM and EGM respectively. Consequently, the rig was not liable to confiscation under any of the clauses of Sections 111 or 113 of the Customs Act as found by the Commissioner; (g) . (h) (Emphasis Supplied) 8. With reference to invoking Section 115(b) for the confiscation of the tug Century Star-1 the plea taken was it ought to be taken as a whole goods further the dumb barge Century Star 3002, towed by the tug was never thrown overboard, staved or destroyed and also there was no allegation in the said notice that at any time any Officer of Customs was prevented by them or any notice to prevent the seizure of the goods, hence the same was non-invokable. At this point, it may be appropriate to refer to the Hon ble Bombay High Court s decision in the case of A.P. Moller Singapore Pvt. Ltd. Vs. Assistant Director, D.R.I, Bombay 2004 (174) ELT 156 Bom. , wherein it was held as under: 5. Having heard the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the act of smuggling, the Adjudicating Authority has not levied any penalty on the Owner/Captain of the vessel. There is no finding recorded in the order in original that negligence on the part of the Owner/Captain was deliberate with intent to facilitate the smuggling activity. Under these circumstances it is not possible to uphold the confiscation of the vessel. 9. It is on record that the IGM filed in the present matter, was on the basis of information and documents provided by M/s. Babaji Shivram Clearing and Carriers Pvt. Ltd. and since no Bill of Lading, was supplied either by M/s. Babaji Shivram Clearing or by the owner/charterer, hence plea for penalizing, for an act of omission under the provisions of the act was not sustainable in view of the law as propounded in Essar Oil Ltd. Vs. Commissioner of Customs, Mumbai4. Further, as regards Section 115 (b) the contention raised was that the barge Century Star-3002, was never thrown overboard, staved or destroyed therefore the section cannot be invoked. 10. It has also been strongly pressed by M/s. Century Star Shipping Ltd. that the notice did not bring out any act or omission on their part, so as to subject them to penalty und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acilitating the movement of the dumb barge or associated with discharge of other formalities concerned, at subsequent port of call, are not liable to be subjected to any failure or to any consequences of an assumed failure. 13. Under the circumstance, we are of the opinion that the confiscation of the dumb barge Century Star-3002, under section 115(2) of the Customs Act is not called for. Further, in terms of section 115(2) of the Act ibid, any conveyance used as a means of transport in the smuggling of goods is liable for confiscation, unless it is proved by the owner of the conveyance that it was so used without the knowledge of the owner or his agent, if any or the persons in-charge of the conveyance. In the present case there is not even a whisper to assert, least of all establish that the tug Century Star-1 was used as a means of transport for smuggling of goods and that too with the knowledge or connivance of the owner, agent or the captain of the vessel. It is further noted that appropriate permissions from various agencies concerned were in place, hence the charge of smuggling is clearly unsustainable. Moreover, as per the language of section 115(2), as it stood at the mate ..... 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