1. M/s. Indian Oil Corporation (M/s. IOC in short) have an oil terminus at Paradeep which is licenced under Section 9 of the Customs Act, 1962 for the purpose of warehousing of imported petroleum products. The bonded products are partly cleared for home consumption on payment of duty and partly transferred under Bond from that warehouse to another warehouse through tankers. They imported Kerosene Oil from Saudi Arabia which was transhipped into Vessel Jag Praja and arrived at Paradeep Port on 19.10.95 for loading of imported High Speed Diesel (HSD) lying at bonded warehouse at Paradeep. On 22.10.95, a quantity of 3234.560 M.T. of HSD oil was loaded from bonded warehouse at Paradeep to M.T.Jagpraja for transfer to the bonded warehouse at Budge Budge. Earlier on 18.10.95, M/s. IOC Ltd. had filed two shipping Bills "Duty free goods Ex-bond" alongwith a Bond for transfer of the goods under Section 67 in respect of 8,000 M.T. of HSD. which was imported in M.T. Albert Ekka and 3250.868 M.T. which was imported in M.T. Ascot and were assessed provisionally under warehousing Bills of Entry dated 17.10.95 and 13.9.95 respectively. These goods were supposed to have been loaded in M.T. Jag Praja at Paradeep Port. On 19.10.95 M/s. I.O.C. Ltd. submitted two applications to the Custom Department for permission to remove the goods from Paradeep Warehouse to Budge Budge Warehouse in respect of these quantities of HSD. The Bonds as well as Shipping Bills so filed were received by the Superintendent of Customs on 21.10.95 and processed by him on the same date and sent to the Assistant Commissioner of Customs, Cuttack for counter-signatures.
2. At this stage the programme of loading of 8,000 M.T. and 3250.868 M.T. of H.S.D. on the Vessel was modified and it was decided to load only 3234.578 M.T. This quantity was covered by the Shipping Bills already filed by the appellants.
3. On 22.10.95, the vessel M.T. Jagpraja berthed at S.Q.Jetty of Paradeep Port and the Custom Officers boarded this vessel to complete the formalities. By a letter of even date, M/s. Great Eastern Shipping Co. Ltd.-the owners of the ship, informed the Assistant Commissioner of Customs about the berthing of the vessel and submitted a Cargo Certificate.
4. On 22nd. and 23rd. October, 1995, the HSD Oil was loaded on the vessel and this was recorded in Daily Traffic Report (DTR) minutes and surveyed by the Surveyors. After loading of HSD oil on the vessel on 23.10.95, it was shifted to outer anchorage on the direction of the port authorities as there was a long queue of vessels at the jetty. On the same date, however, the customs officers directed the vessel to be called back from outer anchorage to jetty and the vessel was detained by the customs officers. However, on request of the party, the Commissioner of Customs allowed the release of the detained goods on 9.11.95 on execution of a bond and on deposit of a sum of Rs. 85 lacs.
5. After release of the vessel and the goods on 9.11.95, the vessel reached its destination at Budge Budge and the goods were re-warehoused. The goods were finally cleared on payment of customs duty of Rs. 76,22,618/- on 29.12.95.
6. The appellants M/s. IOC were issued a show cause notice dated 30.10.95 by the Assistant Commissioner of Customs, Paradeep in which the aforestated facts were narrated. It was alleged that M/s. IOC had contravened the provisions of Sections 34,36,39,40,50 & 67 read with Sections 71 & 72 of the Customs Act, 1962; that the act of bringing the vessel to the port and subsequently loading of the dutiable cargo without a proper shipping bill had rendered the goods liable for confiscation under Section 113 of the Custom Act and the vessel was also liable for confiscation under Section 115. They were, therefore, called upon to show cause why 3234.570 M.T. of HSD oil shout not be confiscated under Section 113 and why a customs duty of Rs. 75,18,530/- should not be demanded from them and penalty should not be imposed on them under Section 114.
7. The Commissioner of Customs, Bhubaneswar issued another show cause notice on 26.4.96 i.e. after about six months of the first show cause notice to the following notices:- (vi) Shri B. Srinivas, Agent, M/s. Jagpraja Atlantic Shipping Agency, (vii) Shri J.C.Rajgopalan, Manager, M/s. International Shipping & Clearing Agency, (x) Shri R.N. Murmum, Deputy Traffic Manager, Paradeep Port Trust and 8. In this notice, it was alleged that M/s. IOC without completing the formalities had moved the vessel out of the port limit on 23.10.95 with active connivance of all the persons including concerned officials of Paradeep Port Trust. It is stated that 3234.570 M.T. of HSD had been loaded on to the vessel without customs clearance. It is alleged that all the above organisations/persons were responsible for evading customs duty and offences under Sections 34,36,39,40,42,50,67 and 71.
Therefore, they have been called upon to show cause as to why a penalty should not be imposed on them under Sections 112,114 and 117. The notices, at serial Nos.(i) to (iii) in preceding para, have been called to show cause why the HSD oil and vessel MT Jagpraja should not be held to be liable for confiscation under Sections 111J, 113 and 115 of the Customs Act, 1962.
9. On considering the replies of the Notice-parties, the Commissioner of Customs, Bhubaneswar vide his order dated 24.5.2000 held that the imported dutiable warehoused goods were removed from the bonded warehouse without permission of the proper officer, without getting the shipping bills passed, without acceptance of the Bond for permitting removal from the warehouse, without payment of customs duty in contravention of Sections 67 and 71 and loaded into the impugned tanker, without supervision of Customs Officer as required under Section 34. It is observed that actions that contravened the provisions of Sections 67 and 71 amounts to smuggling as they rendered the goods liable to confiscation under Section 111(j) and actions that contravened the provisions of Section 34 amounts also to smuggling, for they rendered the impugned goods liable to confiscation under Section 113(f). It is further held in his order that these contravention amount to smuggling and the impugned goods being smuggled goods have rendered the vessel M.T. Jagpraja liable for confiscation under Section 115(2).
In view of these findings, the commissioner has passed the order in which: (i) He has confiscated 3234.570 M.T. of HSD oil valued at Rs. 1,74,84,953/- under Sections 111(j) and 113(f) of the Customs Act, 1962. However, since HSD Oil and the Tanker were provisionally released to M/s. IOC Ltd. on execution of Bond of a face value of Rs. 1,74,84,953/- and Rs. 42,00,000,00/- with a security of Rs. 10,00,000/- and Rs. 75,00,000/- respectively, the Commissioner under Section 125 has given M/s. IOC - the owners of the HSD Oil and Tanker - and option to get the confiscated HSD oil and vessel released on payment of fines of Rs. one crore and Rs. ten crores respectively. He has also ordered for appropriation of Rs. 85 lakhs of security deposit towards these fines.
(ii) He has confirmed the customs duty amounting to Rs. 76,22,618/- under Section 72 for the HSD oil.
(iii) He has imposed a penalty of Rs. 77 lakhs on M/s. IOC under Sections 112 and 114.
(iv) A penalty of Rs. 10,00,000/- is imposed on M/s. Atlantic Shipping (Pvt.) Ltd. under Section 112 and 114.
(v) A penalty of Rs. 10,000/- is imposed on Shri M. Sreenivas, Manager of M/s. Atlantic Shipping Pvt. Ltd. under Section 114.
(vi) A penalty of Rs. 1,00,000/- is imposed on Captain A.E. Lala under Section 112 and 114.
(vii) A penalty of Rs. 10,000/- is imposed on Shri D. Mishra, Traffic Manager, Paradeep Port Trust under Section 112, 114 and 117.
(viii) A penalty of Rs. 5,000/- is imposed on Shri R.N. Murmu, DTM of Paradeep Port Trust under Sections 112, 114 and 117.
(ix) A penalty of Rs. 5,000/- is imposed on Pilot Premanand Rout under Section 112, 114 and 117.
(x) A penalty of Rs. 20,000/- is imposed on Shri B.D. Majhi, Deputy Manager (MO) of M/s. IOC under Section 112 and 114 and (xi) A penalty of Rs. 10,000/- is imposed on Shri F. Kosipotta, Deputy Manager (Terminal) of M/s. IOC under Section 112.
10. All the above parties are in appeal against the order passed by the Commissioner. We have heard the learned counsels for the appellants as per the particulars given below:- (i) Shri Bhasker Sen, Sr.Adv. and Shri P.K. Das, Advocate for M/s.
IOC Ltd.,.
(ii) Shri D.S. Ray, Consultant for M/s. Atlantic Shipping pvt. Ltd. and M. Sreenivas, Manager, (iii) Shri P.K. Das, Advocate for Shri B.D.Majhi and Shri F.Kispotta; (vi) The appellants Shri D. Mishra and Captain Premananda Rout are not represented.
11. We have carefully considered the submissions made before us. The facts as narrated int eh opening paragraphs of this order are not in dispute. The appellants intended to transfer the HSD Oil from their warehouse under Customs Bond at Paradeep port to their Budge Budge Warehouse for which they had filed shipping bills indicating "Duty free goods ex-bond" alongwith a bond for transfer of goods under Section 67 of the Customs Act, 1962 with the Superintendent of Customs on 18.10.95. The vessel M.T. Jagpraja arrived at Paradeep Port on 19.10.95 and on the same date M/s. IOC submitted two applications to the Customs department for permission to remove 8,000 M.T. and 3250.868 M.T. of HSD oil from Paradeep Warehouse to Budge Budge Warehouse. m/s. Atlantic Shipping (Pvt.) Ltd. - The Shipping Agents of M/s. IOC vide their letter dated 20.10.95 also informed the Assistant Commissioner of Customs that they had filed booking list for 8,000 M.T. of HSD. They further filed a supplementary booking list for 3250.868 M.T. of HSD on this date.
12. The shipping bills and the Bond were received by the Superintendent of Customs on 21.10.95. These were processed on the same date and sent to the Assistant Commissioner of Customs, Cuttack on 21.10.95. On 22.10.95 the Vessel M.T. Jagpraja berthed at S.Q.Jetty of Paradeep Port. However, as against the quantity earlier intended to be loaded, the IOC received the direction to load only 3234.578 M.T. and this quantity was loaded on to the vessel on 22-23.10.1995 which is also recorded in the DTR minutes and surveyed by the Surveyors. At this stage the vessel was shifted to outer anchorage on 23.10.95 at the advice of the Port authority as there was a long queue of vessels at the jetty and the vessel awaited for clearance documents from customs and other authorities. This loading of the vessel with the HSD oil and its shifting from the jetty to outer anchorage has been taken great offence by the customs authorities and the Customs Commissioner has ordered for confiscation of the goods and the vessel with heavy penalties on the IOC and the shipping agents. He also imposed penalties on Port Trust officers dealing with the movement of the vessel and also on the Master of the vessel. In our view, in the face of the given facts and the provisions of law, such drastic action is wholly unwarranted. That vessel had moved from jetty to the outer anchorage within the port area for the reason of a long queue of the waiting vessels is not only vouched by the Port Trust documents but is also confirmed in the statements of various port officials. It is even part of the show cause notice dated 30.10.95 in which it is stated, "The following day the vessel was shifted to roads and is still on the anchorage". The main thrust of the charge against all the notice-parties is that the vessel was loaded without getting the assessed copies of the shipping bills. But it is not in dispute that the shipping bills and the Bond in respect of the loaded goods were already filed even prior to the arrival and berthing of the vessel at Paradeep port on 22.10.95. Moreover, the goods were duly accounted for in the bond at Paradeep and after transfer the same would again have been put into a Bond at Budge Budge. It is not the case of the department that any discrepancy was found in the quantity of the goods as against that reflected in the customs documents. For the purpose of documentation, may be the prescribed document for transfer of bonded goods from one coastal warehouse to another in india is a shipping bills, but that does not mean that such goods are being exported. The expression "export" is defined in Section 2 (18) of the Customs Act, 1962 viz:"export", with its grammatical variations and cognate expressions, means taking out of India to a place outside India. In the present case, the goods were neither being taken out of India nor were they meant for taken to a place outside India.
13. The Commissioner in his order has strenuously argued that the act of moving the vessel and loaded cargo by the appellants from jetti without permission of the customs authorities and without approval of the shipping bills is 'smuggling' and has ordered the goods to be confiscated under Section 111(j) and Section 113(f) for violation of the provisions of Section 67 and Section 71. Section 67 provides that the owner of any warehoused goods may, with the permission of the proper officer remove them from one warehouse to another subject to such conditions as may be prescribed for the due arrival of the warehoused goods at the warehouse to which removal is permitted.
Similarly Section 71 provides that no warehoused goods shall be taken out of a warehouse except on clearance for home consumption or re-exportation, or for removal to another warehouse, or as otherwise provided by this Act. While alleging the violation of these provisions, one cannot loose sight of the fact that M/s. IOC had already filed the documents seeking permission to remove the warehoused goods and the permission from the A.C. of Customs, Cuttack was awaited. It is not the case of the department and there is no such allegation that the bonded goods were loaded on to the vessel for removal and disposal without payment of duty. The admitted facts in this case are that the bonded HSD oil was loaded on the vessel from Paradeep warehouse for transporting it to the bonded Warehouse at Budge Budge. The cargo infact was ultimately transported with due permission of the Customs authority by the same vessel to Budge Budge, re-warehoused there and cleared on payment of appropriate duty. In view of these facts where there is no malafide intention, the technical infraction, if any, of the statutory provisions has to be viewed in its proper perspective. In this view of the matter, the confiscation of the goods under Section 111(j) is not warranted. Further the provisions of Section 113 applied by the Commissioner for the confiscation of the goods are also not available to him since these provisions provide confiscation of goods attempted to be improperly exported etc. In this case, we have already held that the impugned goods were not export goods and therefore the question of pressing into service of the provisions of this Section would not arise. It is not stated in the order as to under which provisions of law the vessel M.T. Jagpraja is ordered to be confiscated. However, since we have held above that on the basis of the facts obtaining in this case, there is no warrant to confiscate the impugned goods, the same finding shall apply to the order of confiscation of vessel. The same is the reason to not to sustain the penalties imposed under Section 112 and 114 of the Act on the other notices-parties. A penalty under Section 112 is liable to be imposed on a person who, in relation to any goods does any act or omission which would render such goods liable to confiscation under Section 111 or abates the doing an omission of such an act. Similarly, a penalty under Section 114 can be imposed on a person who in relation to any goods does any act which would render such goods liable to confiscation under Section 113 or abates the doing or omission of such act. Since in this case, we have held that the goods are not liable to confiscation, the penalties on the appellants imposed under these provisions of the Customs Act, 1962 must also go.
14. In the result, the entire order of the Commissioner is liable to be set aside and we order accordingly. All the appeals are allowed. The appellants shall be entitled to the consequential relief, if any.