1. All these appeals are arising on the common Order-in-Original of Commissioner of Customs (Import), Mumbai and are being disposed of by this common order.
2. Certain vessels, barges, self-propelled tugs and consumable stores onboard were imported. They were chargeable to duty as follows: (i) old and used Barges shown in the annexure to the impugned order at Sr. No (1) LJB - 2 (3) GPM 240 (5) GAC-67 (7) Britoil 6 (8) Britoil - 5 (total 5 Nos. with parts and accessories carry 'Nil' rate of duty as 0per CTH No. 8901 read with exemption Notification No. 21/2002 dated 01.03.2003 Ser No 352.
(ii) Old and used Tugs shown in the annexure to the impugned order at Sr. No. (1) Sea Bulk Duke (2) Sea Bulk Hairier (3) M.V. Ronja Tug (5) M.V. Linda (6) M.V. Sea Icon - Supply Vessel (7) M.V. Britoil 29 (8) M.V. Britoil - 8 (total 6 Nos. of Tugs and 1 Supply vessel); and Self-propelled barges shown at Sr. No. (2) HD 1000 and (4) HD 60 (2 Nos.) - all with parts and accessories any 5% rate of duty as per CTH No 8905 and exemption Notification No. 21/2002 dated 01.03.2003 Sr. No. 353 read with Notification No. 27/2002 dated 1.3.2002. The effective rate of duty is computed at 0.75% (15% of 5%) actually payable in cash and for the balance 4.25% (85% of 5%) the Bank Guarantees were furnished.
(iii) Old and used M.V. Britoil - 56 Tug and Derrick Barge (DB-30) shown in the annexure to the impugned order at Sr. No. 9 with parts, accessories and consumables carry NIL rate of duty as per CTH Nos.
8901, 8905 etc, read with Exemption Notification No. 21/2002 dated 1.3.2002 Sr. No. 214 against Essentiality Certificate dated 6.12.2004 issued by Directorate General hydrocarbons, Ministry of Petroleum & Natural Gas, New Delhi.
3. These vessels and barges were imported subject to re-export condition after the work of conducting high technology laying of pipelines etc from ONGC wells in Bombay High to main land at Uran came to be completed on a contract obtained by the importers.
4. Bills of Entry were filed in all cases, after the said vessels, barges etc had first entered in Bombay Port. These BEs were noted and thereafter presented for assessment. Orders for examination were given, the goods were examined. The examination reports did not find any misdeclaration of the goods as declared on the BEs.
5. Simultaneously the Clearing Agent M/s J.M. Baxi and Co. who is one of the appellants, along with its employees, and is also working as a Shipping Agent, for various Shipping Lines, including the present importers. As a Shipping Agent, filed & THROUGH their employees obtained permission for conversion of the said vessels AS imported into vessels for coastal run which was allowed as also Port Clearance under the provisions of Section 42 of the Customs Act, 1962 was applied for and granted by the proper officer at Mumbai Custom House. The vessels were examined by the Preventive Officers of Mumbai Custom House as regards the consumable ship stores etc and inventories were taken and necessary action as applicable to such consumables, stores on vessels operating in the Bombay High Sea installations was taken by the proper officers of Preventive Department, Mumbai Custom House. After the port clearance was obtained the vessels, barges, self propels and others left for operations at the destination pre determined as per the contract in Bombay High Area.
6. For the said imports, the Clearing Agent J.M.- Baxi had also obtained necessary Bonds required and mentioned hereinabove for the clearance of the vessels. They had also obtained demand drafts and other sanctions for discharge of duty liabilities on the BEs filed.
However, the assessments on these BEs were not completed by the proper officer in the Mumbai Custom House, Appraising Group. In some of the cases it was seen that the sanctioning appraiser i.e. proper officer for assessment has given his note on assessment in the file, but the AC/DC in charge had not approved the noting & the BEs were not countersigned as having been assessed.
7. On receipt of the port clearances, obtained from the proper officer of Mumbai Custom House, vessels left Mumbai Port. Subsequently, these vessels were seized by the Customs and enquiries were launched and the present proceedings were commenced which culminated in a confiscation order under Section 111(j) of the Customs Act, 1962, as regards the vessels, stores and consumables and penal consequences on the importers & other notifies, which has caused these appeals.
8. After hearing both sides and considering the submissions made, it is found - Section 111(j) under which the Commissioner confiscated the vessels, stores and consumables is not applicable. It is patently illegal to confiscate the vessels under the said Section 111(j) in spite of there being permissions to convert the vessels for Coastal run and 'port clearances' (PC) certificates in respect of 8 vessels and DGH Essentiality Certificate (EC) in respect of 9th vessel Britoil - 56 & Derrick Barge DB-30 being on record. Hence, the confiscation is not sustainable in law.
9. A reading of the provisions of Section 42 of the Custom Act, 1962 indicates that no such order of 'Port Clearance' in writing permitting a conveyance to depart from that Customs Station will be given by the proper officer until: (a) the person-in-charge of the conveyance has answered the questions put to him under Section 38; (c) the shipping bills or bills of export, the bills of transshipment, if any, and such other documents, as the proper office, may require, have been delivered to him; (d) all duties leviable on any stores consumed in such conveyance, and all charges and penalties due in respect of such conveyance or from the person-in-charge thereof have been paid or the payment secured by such guarantee or deposit of such amount as the proper officer may direct; (e) the person-in-charge of the conveyance has satisfied the proper officer that no penalty is leviable on him under Section 116 or the payment of any penalty that may be levied upon him under that section has been secured by such guarantee or deposit of such amount as the proper officer may direct; (f) in any case where any export goods have been loaded without payment of export duty or in contravention of any provision of this Act or any other law for the time being in force relating to export of goods,- (ii) where the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied that it is not practicable to unload such goods, the person-in-charge of the conveyance has given an undertaking, secured by such guarantee or deposit of such amount as the proper officer may direct, for bringing back the goods to India.
A reading of the provisions of Section 42(2)(d) as extracted hereinabove would indicate that, it is the duty of the proper officer to have ascertained that all duties leviable on stores and on all other charges and penalties etc in respect of conveyance are discharged or safeguarded/secured. The fact of grant of Port Clearance would definitely indicate that such a safeguard and security has been obtained by the Custom House as considered fit by the proper officer.
This discretion of the proper officer arrived at cannot be re-opened and an allegation under Section 111(j) be arrived at without reviewing this permissions granted under Section 42 of the Customs Act, 1962.
(1) Save as otherwise provided in any law for the time being in force, all imported goods, unloaded in a customs area shall remain in the custody of such person as may be approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or are transshipped in accordance with the provisions of Chapter VIII.And the Mumbai Port Trust is an approved custodian under this provision for all imported goods, they have not been charged in these proceedings under Section 45(2)(b) as they as custodian have permitted the removal of the imported goods from the Customs Area of Port without the permission in writing of the proper officer. Thus unilaterally the importers or their agents and employees cannot be held responsible for having removed the vessels, barges, self propelled, barges etc from the Customs Area of Port without a permission. The Ld Counsel for the Revenue took us through the provisions of Section 47 of the Customs Act, 1962 and stressed that there has been 'no out charge order' obtained under that provisions of the Customs Act, 1962 from the proper officer permitting clearance of the goods for home consumption. We find that the words used in Section 47 is "permitting clearance of the goods for home consumption", while under Section 45 the words used are "removal from the Customs Area or otherwise deal with, 'and in Section 42, there is a stipulation that the vessels shall not be permitted to depart from the Customs Station until a written order has been given by the proper officer. The words used in Section 111(j) are any' dutiable or prohibited goods removed or attempted to be removed from a Customs Area', the term is not 'imported goods cleared from the Customs Area for home consumption'. Since the words 'removal' and 'clearance' cannot be equated, therefore, we do not find any reason to go to a conclusion that not obtaining the permission to clear the goods for home consumption under Section 47 of the Customs Act, 1962 would call for a violation of Section 111(j) which is applicable to removals & not clearances. The words have been used distinctly in a different context by the legislature and have to be given their specific different meanings. When a BE has been filed and the goods are urgently required the goods can be removed and the BE can be processed subsequently. The final assessment & out of charge order will relate back the date of clearance to the date of Removal under the Doctrine of Relating Back.
In the present case, as extracted hereinabove, it would be evident that the rate of duty read with relevant exemption notifications would be 'nil' for the major part of the goods and it is only 5% for Sea Bulk Duke, Sea Bulk Harrier, M.V. Ronja Tug, M.V. Linda, M.V. Sea Icon - Supply Vessel, M.V. Britoil 29, M.V. Britoil 8 i.e. and one supply vessel. While M.V. Britoil 56 Tug and Derrick Barge (DB 30) would be totally exempt from duty. We also find that the necessary bonds were executed and the appellants had kept considerable amount of duty amounts ready to pay to the Customs, but the same could not be paid and Bonds executed because the concerned Assistant Commissioner/Deputy Commissioner in-charge of assessment, group for reasons best known, did not approve the assessment as proposed by the scrutinizing appraiser.
It is also not contested before us that the assessments as claimed and proposed were finally arrived at and duties collected according to the declarations made. When the goods were removed, there is no misdeclaration or any other offence as regards the declaration and or the goods under import & when it is found that the appellants were ready with the duties and there is a delay in collection of duties on the ship store, consumables only because of the delay on the part of the AC/DC to accord the approval of the assessments as arrived by the scrutinizing appraiser. Then the removal after Port Clearance by itself should not call for confiscation under the provisions of Section 111(j) of the Customs Act, 1962 as arrived at and or penalty on the appellants, as there is no loss or less payment of Customs Duty.
11. The provisions of Section 111(j) of the Customs Act, 1962 on a plain reading indicate they would be applicable in cases where there is deliberate removal of unaccounted goods without written permission under any of the provisions of the Customs Act, 1962. In this case, the removals were after due permissions of conversion, Preventive Checks on Ship Stores & Port Clearances, obtained, which could have been refused, but were not refused, therefore the confiscation as arrived at cannot be upheld.12. It is a matter of record that Bills of Entry were filed in the present case. It is also not in dispute that the Vessels were examined.
The Vessels left after the conversion into coastal vessels & Preventive Checks and Port Clearance was granted. Despite this fact, the assessment was not completed. There is no explanation or reasons, whatsoever, offered on the delay in completion of the assessment after examination & between the date of 'sailing out' of the vessels and the date of seizure, which is almost 2-3 weeks later. This is more so when the duty amounts available to be tendered by the Appellants were almost as per the amount of duty assessed in respect of the Vessels. That the amounts fall short if duty on stores is reckoned cannot be a reason to conclude any grave misdemeanour All information, documents and dates required for completing the assessment were available with the Port Customs Officers before the Vessels departed. No prejudice was caused in making the assessment and the departure of the Vessels did not in any manner hamper the final assessment. The fact that there was a delay in completing the assessment does not ipso-facto establish intention on the part of the Appellants to evade payment of customs duty.
13. There is no question of evading Customs duty by the Appellants since by filing the Bill of Entry, applying for conversion of the Vessels for coastal run and obtaining Port Clearances, the Appellants had submitted themselves to the jurisdiction of the Customs Authorities. The Appellants had also tendered the Bank Guarantee for 85% of the duty amounts, which were accepted on 30th November, 2004 in some cases and on 01st & 03rd December 2004 in the other cases. Any breach thereof, would cause loss of 85% of the duty amount to the Appellants and result in the enforcement of the Bank Guarantees and the Bonds executed for full value of the Vessel as against the liability to pay only 15% of the duty amount. Commercial sense does not envisage a prudent man to take risk. These facts prove beyond doubt that at no time whatsoever there was any intention to evade payment of duty.
14. The procedure for Coastal conversion of the vessels was completed, port clearances (PC) from the Export Department of the Customs were obtained in respect of 8 vessels. According to Customs themselves, 'outer anchorage' is in the Customs area. Therefore, vessel Briloil 56 and Derrick Barge DB 30 was not removed from the Customs area. The PC in respect of the 9th vessel was not required as the same being at 'outer anchorage'. It is also pointed out that the Britoil -56 Tug and Derrick Barge DB-30 (Sr. No. 9) were fully exempt from import duties as the same is covered by the EC issued by the DGH. The assessable value of this single B/H covered by DGH certificate itself is Rs. 203,87,65,727/-. The major part of the goods are non-dutiable and non-prohibited. There was thus no effective or and mala fide removal from Custom Area to call for confiscation & penalty.
15. In making the Application for conversion of the Vessels for coastal run, the CHA indicated that the Bills of Entries have been filed and processed. Except in respect of one vessel, for the remaining vessels, the CHA also attached a copy of relevant Bill of Entry along with the Application for conversion of the vessels for coastal run. A bare perusal of the Bill of Entries would show that no 'out of charge' order has been passed and no duty also had been paid. Despite these facts, the jurisdictional Officer allowed conversion of the vessels & granted the Port Clearance for coastal run. These permissions are not being challenged.
16. It is significant to note that the words "have been filed and processed" used in these applications also do not signify that 'out of charge' order was passed. The words "out of charge orders" have a definite meaning in law and are found in Section 47 of the said Act.
This phrase cannot by any stretch of imagination be equated with the words "have been filed and processed". It is therefore, submitted that it was to the full knowledge of the competent authority, viz. the Officer who allowed conversion of the vessels for coastal run as well as the Officer who granted Port Clearance, that duty had not been paid and 'out of charge' order was not obtained, when the permissions were given, having regard to the fact that Bills of Entry were duly filed and the vessels were examined and an inventory of the consumables was prepared before allowing conversion and granting port clearances. This discretion is available with the competent authority, which allowed the conversion of the Vessels and also granted the Port Clearances.
Inasmuch as the competent authority, in exercise of discretionary powers granted the permission for removal of the vessels, there is no contravention of Section 111(j) and consequently the confiscation & penalties arrived at is bad in law.
17. The word "permission" appearing in Section 111(j) of the said Act is unqualified and unconditional. The word "permission" cannot be confired or limited in its interpretation to mean only the 'out of charge' order passed under Section 47 of the said Act. Being a penal provision, it must be strictly considered. The contention of the Revenue that the word "permission" must be read as meaning 'out of charge' order under Section 47 of the said Act is not supported by the plain reading of the statutory provision. The word "permission" refers to permission, of any kind, granted by a statutory authority in exercise of powers under the said Act. The conversion of the vessel for coastal run and the grant of Port Clearances are permissions, which are granted by the proper officer in exercise of powers vested in them under the said Act and in discharge of their obligations under the said Act. The conversion of the Vessels is provided for in Section 97 to Section 99 of the said Act and the provisions dealing with above clearances are found in Section 42 of the said Act. The Hon'ble Delhi High Court in Great Eastern Shipping Co. Ltd. v. UOI also held that port clearance is also "permission" under the said Act.
As the Vessels left the Customs area only after grant of port clearances, which was based on the approval of conversion to coastal run, the question of contravening the provision of Section 111(j) of the said Act does not arise at all.
18. There is yet another reason for not applying the said provisions of the said Act. This is because the word "permission" is not qualified by the word "prior". Accordingly, ex-post facto permission granted in the facts and circumstances of the present case, where a Bill of Entry was filed, Bank Guarantee for 85% of the duty amount and pay order for the balance 15% of the duty amount was furnished and the Vessels wore examined, the assessment at a later stage would regularize the movement of the vessels to the sites where the same were used for ONGC contracts. The Hon'ble Supreme Court of India in Life Insurance Corporation v. Escorts Limited AIR 1983 1370 SC held that where the word "permission" is not qualified by the word "prior", the ex-post facto permission is also sufficient.
19. Since goods valued at approximately Rs. 220 Crores are non-dutiable, these goods are also not prohibited for import, but are freely permissible for import. The provisions of Section 111(j) of the said Act would be applicable only where the goods are dutiable.
Confiscation of these duty free goods cannot be upheld in the facts herein.
20. After 1st check examination, port clearances, certain vessels/goods only were removed from the Customs area. On the other hand the Commissioner's contention is that the goods were removed from the customs area without obtaining "out of charge" and without payment of duties. While contending so, the Ld. Commissioner did not appreciate that the pay orders for duty amount of the vessels were existing along with import B/Es. The Customs having delayed beyond reasonable time the return of the assessed and approved B/Es to the importer to enable them to deposit the duty pay orders in the treasury and withholding the return of import B/Es, on the other hand, caused the delay in realization of the pay orders covering the full duty on the vessels apart from the avoidable difficulties to the importers in executing the projects of national importance. Although the formalities were completed in all respects leading to the assessment of the import bills of entries by the Group Appraiser, Bonds and Bank Guarantees were also duly presented and accepted by the Group Appraiser, for unknown reasons the Group D.C. had not counter-signed the B/Es for almost 35 to 41 days. This undue delay was also contested by the importers before the Ld. Adjudicating officer. The Ld Adjudicator's silence on reason for inaction on part of the Group DC & penalizing the importers are not understood.Total assessable value of goods of Hyundai is Rs. 393,75,35,582/-Less: Non-dutiable goodsSr. No. 9 against E.C. 203,71,95,389/-Barges (5 Nos.) 16.65,48,522/- Rs. 220,37,43,9 11/- _______________Tugs (7 Nos.) & Barges (2 Nos.) 158,37,59,963/-(15% of 5% duty + BGs)Consumables on merit rate 15,00,31,707/- Rs. 173,37,91,671/- _______________ Would indicate that they were ready with all that money required to be paid towards duties. There was a failure on the part of the Department in making the approved Bills of entries available to the importers to enable them to deposit duty payment into the treasury.
22. There was 'full disclosure' by the Appellants in all respects.
There were no malafides on the part of importers. Having made the pay orders and Bank Guarantees ready, the importers bonafide believed that the vessels could sail out without any problem. This belief was strengthened by the CHA M/s. J.M. Baxi & Co. when they instructed them to 'sail out' as all the Customs formalities were completed & Port Clearance obtained. It was in the knowledge of the importers that the Import Bills of Entries covering the vessels were filed and duties were tendered them by way of Pay orders purchased on 24/30 Nov. 2004 from the Bank in favour of "RBI A/c. Commissioner of Customs - Mumbai" & Bank Guarantees in favour of Commissioner of Customs furnished to CHA.The details of the pay orders and the duty amounts were shown on the letter head of the Chohung Bank, from whom the pay orders were purchased. Subsequently the same pay orders which were tendered along with the import Bills of entries in respect of the vessels were realized by the Revenue Department, whereas for the consumables and provisions the pay orders covering the duties were purchased upon return of the assessed and approved import bills of entries on 31.12.2004. In the absence of assessed and approved import Bills of entries the duties on merits of each item could not be ascertained and paid by the importers unlike in the case of vessels, the duty of which is ascertainable easily by the importer themselves is a plea made, which is accepted. It is trite law that no person can take advantage of his own wrong. Customs Department is no exception to mat. The delays in completing the assessment were entirely on the part of the Department, the appellants cannot be held to be liable for that duty.
23. In order to prove the bona fides of the Appellants the Ld. Counsel drew the attention of the Hon'ble Bench to the following relevant portions of the statements recorded Under Section 108 of the Act of Mr.
Sandeep Ail of the CHA, Mr. K.Y. Song of HHIL, Mr. S. Dulekar of CHA & Mr. Krishna B. Kotak, Partner of CHA. Extracts from the statement of Mr. Sandeep Ail, Manager (C&F) of M/s. J.M. Baxi (CHA) recorded on 21.12.2004 Q. 10: whether the goods are examined and whether there are any discrepancy found on examination vis-a-vis declared on Bill of entry? Ans. 10: the goods were examined by dock appraiser under supervision of DC docks & no discrepancy was found.
Q. 11: Whether the assessment was completed? Whether any bond & Bank Guarantees were presented by you for the subject Bills of Entry? Ans. 11: All the bills of entries were assessed by the Group Appraiser & Bond & Bank Guarantees were also presented & duly accepted by the Group appraiser, however, the B/Es were not counter signed by the group DC for the reasons not communicated to us. The assessment is" not completed.
Q. 15: If the assessment of subject B/Es was not complete and also out of charge was not obtained, then how the subject goods were removed out of Mumbai docks area/Mumbai customs station? Ans. 15 : The coastal conversion of the vessels are done & Port Clearances obtained to shift the vessels out. Herein I submit copies of copies of port clearance Nos. C-753/25.11.04, C665/05.11.04, C754/28.11.04, C752/25.11.04, C781/02.12.04, C750/25.11.04, C801/16.12.04 in respect of 7 vessels duly signed by me.
Q.24: In all these applications for conversion from Foreign to Costal, it is stated that B/E for vessel/barge, oil, corsumables has been filed & processed/cleared. Please explain what do you mean by processed? Ans. 24: By processed we meant that the B/E was examined & no discrepancy was found & it was also assessed by appraiser, normally after which the B/E gets counter signed by the Group DC & hence the term processed was used, but since the assessment was not counter signed by the DC & out of charge not granted the B/Es not completely processed.
Q.31: On whose instructions the submission in the application to Export Department for the conversion of the subject vessels/barges/tugs was made, that B/Es for vessels/barges, oil, consumables etc has been filed and processed/cleared? Ans. 31: The submission was made by us on the assumption that the B/E will get processed & out of charge will be granted. We have not taken any specific instruction from the importer in this regard.
Extracts from the statement of Mr. K.Y. Song, Coordinator (Marine Spread) of M/s. Hyundai Heavy Inds. Co. Ltd. recorded on 22.12.2004.
I am Korean National working in India for M/s. HHIL as coordinator at their office at Chembur, Mumbai. The registered office address of my company in India is Unit No. 2, Commercial Center No. 1, WTC, Cuffe Parade, Colaba, Mumbai - 400 005. I came to India to attend this project that is MUT project of ONGC around 2 months back in the month of October 2004. I am a mechanical engineer.
Q. 2: Have the duty paid to Custom department for all the above imports? Ans. 2 : Duty on the above imports is not paid so far since their import document are still pending with the customs Department for assessment, however, duty checks/pay orders are ready for payment of duty.
Q. 6: M/s. J.M. Baxi in the applications made to export Department for the conversion of these tugs and barges have made the submission that the Bills of entries for these vessels have been filed and processed/cleared at import Department of customs. Have you as importer advised M/s. J. M. Baxi to make this submission to Export Dept. of Customs? Ans. 6: we as importer have not advised M/s. J.M. Baxi to make this submission to Export Dept. and it is done by M/s. J.M. Baxi on their own.
Q.12: How you developed the belief that duty payments can be made even after the deployment/removal of the subject goods to Mumbai High? Ans. 12: Custom clearance and Port Entry of all vessels is arranged by agents, therefore we contact agent to arrange deployment after all clearance without problems at that time no advise from agents was informed therefore, we believe there is no problems with Customs.
Extracts from the statement of Shri. S. Dhulekar, Sr. Manager, M/s.
J.M: Baxi recorded on 28.12.2004.
Q. 9: It is whose duty to inform the importer regarding sailing of supply vessels, tugs, barges? Ans. 9: Duty of Proj. Coordinator to inform the importer regarding sailing of vessels/barges etc., Q.11: Therefore, you had informed M/s. HHIL and M/s. CGG Marine to sail the tugs, barges and supply vessels? Ans. 11: Once the Port Clearance was placed on board, the vessels were informed to sail.
Extract from statement of Shri. Krishna B. Kotak, Partner of M/s.
J.M. Baxi recorded on 02.01.2005.
Q.13: Do you not agree that the project coordinators had instructed the importers to clear the goods before, payment of Customs duty and before obtaining out of charge order, have violated the provisions of Section 47 of Customs Act, 1962? Ans. 13: The project coordinator deputed has given us to understand that to suggest to the importer that since the B/Es has been already filed and most of the procedures having been completed and since the importer had to call the vessels in urgency due to the project being of national importance the remaining formalities could be completed and therefore vessels could be sailed." Based on the above exculpatory statements the Ld. Counsel for Appellants urged that the importer (HHI) and K.Y. Song are not liable for any penalties under Section 112(a) of the Act. Redemption fine is not attracted as the good are not liable to confiscation Under Section 111(j) in the first place. As an alternate plea it was also submitted that the lapses/irregularities, if any, are merely procedural/technical. There was substantial compliance on the part of the Appellants. A reference was made to Dredging & Contracting v.Commissioner of Customs, Kandla & Aban Loyd Chiles offshore Ltd. v. Commissioner of Customs, Mumbai where under the penalties were fully waived and a token redemption fine was imposed since the goods have no Margin of Profit (MOP) and not marketable and are subject to re-export. We agree with these submissions, 24. The Ld. Counsel for Respondent submitted that the vessels are goods and also they are carrying cargo.
25. In the rejoinder, the appellants denied any cargo on board. There is-only 1 Crane and 1 Cement silo (i.e., constructional plant and equipment) on board of the vessels Sea Bulk duke and M.V. Ronja respectively. The same are part of the respective vessels, (subject to re-export) for which appropriate duties were tendered and Bank Guarantees were furnished.
The vessel 'Sea Icon' is a supply vessel and it was shuttling between the port and the work site (Mumbai High offshore). Attention of the Hon'ble Bench was drawn to the MbPT letter dated 17.12.2004 addressed to the Dy. Commissioner of Customs showing the name of the vessel and its arrival/departure dates and times and location.
26. The Ld. Counsel for Respondent submitted that the Port clearances were obtained by the CHA M/s. J.M. Baxi & Co. by misrepresenting that the import bills of entries were 'processed'/'cleared' even though they were not actually fully processed. The payment of duties was not made.
Merely because the pay orders were taken does not mean the payment of duties into the Govt. treasury. In rebuttal the Appellants contended that the applications for coastal conversion and Port Clearances were made by the CHA M/s. J.M. Baxi & Co. to the Export Department of Custom House, Mumbai. The applications were presented before us for perusal.
It was pointed out that the covering letter of the CHA to the applications clearly showed that the import Bills of entries were enclosed, which showed the status of the B/Es and the payment of customs duties. Hence, it cannot be said now by the Department that there was a misrepresentation on the part of the importers at any stage of processing of the customs formalities as the latter depended upon the professional CHA for discharge of their functions in accordance with law.
27. The Ld. Counsel for the Respondent submitted that the Advance port clearance for "M.V. SEA ICON" was obtained on 06th December 2004 and produced before the Bench letter dated 06th December 2004 of M/s J.M.Baxi & Co and attempted to say that it is false as the Appellants claimed the date of Port clearance is 6th December 2004 whereas the import bill of entry was dated 29.11.2004. In rebuttal the Appellants clarified that the above named vessel is a supply vessel and firstly got the Port clearance on 02.12.2004 and the same sailed on 03.012.2004 (i.e. 1 day after obtaining PC). Xerox copy of the PC is on record.
Thereafter, the said supply vessel was shuttling between the Bombay High and the port on various dates as per the investigation report given by the MbPT and placed on record and also thereafter on number of occasions. As such the PC in respect of this vessel is called as Advance Port clearance certificate, since the same is given in advance to the sailing of the vessel on working days/hours covering Sundays and holidays. This itself would indicate that there was nothing sinister in the vessels having gone into operations since, if required, they repeatedly come & leave the Port. This indicates the bona fides of the importers.
28 The Ld. Counsel for the Respondent argued that the vessels were brought back from the work place to Bombay and seized and then released provisionally on 22.12.2004. The fact is stated to be that the vessels were not brought back to Mumbai port area, since the goods were physically not available for seizure. The Department "seized the vessels technically in absentia and handed over to the owner of the goods under supratnama" this as is borne out by the seizure memos on record in respect of all vessels in question. The seizure itself is technical. There is no attempt to evade the Customs Procedure.
29 The Ld. Counsel for the Respondent submitted on 16.01.2006 certain papers. One of the papers titled "Sr. No. 1 statement" contained a footnote, which reads as follows: This is a manual B/E in which B/E moves physically from Customs House to Docks and vice versa. The Importer has never complained or met any officer for delay which was not the case in this case. The issue of delay has not been a ground of defence of the appellant even at the time of adjudication. The pay order which as per the appellants submission was only a meager amount of Rs. 4,63,429/- out of total duty of Rs. 47,70,453/- (i.e., merely 10%) which cannot justify their action." The above figures relate to only 1 import Bill of entry "Sea Bulk Duke Tug and LJB barge - 2 The above statement is found to be not true and correct. The importers had complained and contested the undue delay before the Ld.
Adjudicating officer, as is seen from reply dated 14.03.2005 of the importer and CHA's reply to SCN dated 21.03.2005.
30. The following cases were cited by the Ld. Counsel for the Respondent in support of their arguments, which were distinguished by the Appellants: a) S.P. Chenglvaraya Naidu (dead) by L. Rs v. Jagnnath (dead) by L.
Rs and Ors. 1993 (6) SCC 331.
A fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage" (Head note).
In rebuttal the Appellants distinguished the facts of the said case and contended there was no fraud or falsehood at all. In this present case the CHA applied for coastal conversation certificates and Port clearances applications mentioning that the Bills of entries were processed. Whereas the CHA also enclosed the Bills of Entries copies along with the application to the Export Department where copies of the Bills of entry which do not show that 'out of charge' was given. The Export Department having had knowledge of the status of the import B/Es issued the coastal conversion certificates and port clearances.Union of India v. Jain Shudh Vanaspati Ltd. The facts of the above case are entirely from the facts of the case on hand. The allegation of the Revenue Department is that the stainless steel containers were painted over to suppress their true nature or price of stainless steel containers, which was a banned item. The stainless steel containers were deliberately camouflaged by painting them to resemble mild steel containers, and that this was done with a view to enabling their clearance.
Whereas in the present case there is no suppression of facts by the Appellants (HHIL). The vessels/tugs/barges, oil, consumables are not prohibited items and the importer had correctly declared the same as such.N.K. Bapna v. Union of India Confiscation Goods clandestinely removed from bonded warehouse are liable to confiscation.
In rebuttal the Appellants submitted that there was no clandestine removal of any goods from the Customs area without the permission of the proper officer of the Customs.
The above case is relevant to understand the definition of goods including the vessels. The questions whether the oceangoing vessels were exempt from presenting B/E with reference to Section 46 of the Act etc., were examined by the Hon'ble SC in the above case, whereas in the case on hand it is an admitted that the import Bills of Entries. IGMs, PCs etc., were already filed. Further the Appellants submit that the heading of Chapter - VI of the Act covering Section 42 itself reads "Provisions relating to conveyances carrying imported or exported goods", which does not apply to the Appellants when read with Section 111(j) in the absence of cargo.Union of India v. Mustafa & Najibai Trading Co.
.
The Ld. Counsel for the Respondent submitted that the 'outer anchorage' was a part of Bombay port.
Whereas the Appellants submitted that the vessel Britoil -56 & Derrick Barge DB-30 in question was at 'outer anchorage' for which the import Bill of entry was already filed along with the IGM and EC of the DGH New Delhi. The said vessels are wholly exempt from duties. When the goods are not prohibited and are non-dutiable Section 111(j) cannot be invoked against the same.
1) Jindal Drilling and Indus. Ltd. v. Collector of Customs, Bombay 2001 (138) ELT 1335 (Tri- Del.).
The basic fact called in question here is in variance of the facts on hand. "The Appellants in the said case first taken port clearance and thereafter after 2 months 15 days (approx.) filed Bill of entry for home consumption. -- Permission given by the Department could be treated as qua conveyance and not as qua cargo (dutiable)".
The Appellants (HHIL) contended unlike in the above case that they had filed the Import Bills of entries and port clearances (PCs) simultaneously in the first place and tendered the duty amount pay orders. There was no cargo on the vessels except 'ship stores'/ consumables and equipment. The import Bills of entries were filed showing the vessels ship stores and consumables. This an admitted fact as already shown in the Annexure to the impugned order-in-original.
g) Mumbai Customs Public Notice No. 6/98 dated 20.01.1998 was furnished by the Respondents by which the revised procedure for the conversion of the Foreign going vessels to Costal run was contemplated.
The said Public Notice provides at para 4 ''that the permission for conversion will be granted only after payment of amount assessed on the Bill of Entry" on the other hand the said para also provides that the "permission for conversion without payment would be granted only by the Commissioner of Customs (Export)." after recording adequate reasons for nonpayment of dues. In this case such a permission has been granted by an officer working under Customs.
Duties were also already tendered to the Department and the procedure of assessment was substantially completed by the CHA except the counter signature of the Group DC. The Applications for Coastal conversion and port clearances made by the CHA M/s. J.M. Baxi & Co. together with import B/Es under a covering letter were considered by the Export Department and the permissions granted.
Thereafter the customs Department ought to be precluded from contending that they have no knowledge that the payment of duties was not made in the light of the fact that the pay orders were already tendered to them.
This none of the cases relied by Revenue would help the case of Revenue.
31. The Ld. Counsel for the Appellants cited the following cases in support of their arguments:Hetero Drugs Ltd. v. Commissioner of Customs, Airport, Chennai (relied upon - Para - 8, 12(a) & 12(b)) (c) Great Eastern Shipping Co. Ltd. v. Union of India (relied upon - Paras 24 & 26)Dredging & Contracting v. Commissioner of Customs, Kandla - (relied upon - Para 2(a)) (f) Aban Loyd Chiles offshore Ltd, v. Commissioner of Customs, Mumbai . (relied upon - para 12 & 13) 32. We find no reason to individually comment on these cases, as we have gone through them & relied on (sic) ratio as found applicable.
33. In view of the findings, the confiscation order are set aside.
There is no case or cause for penalty. The penalties on all appellant one set aside.