Customs, Excise and Gold Tribunal - Mumbai
Atlas Shipping Co. Pvt. Ltd. vs Cc on 16 April, 1999
Equivalent citations: 1999(83)ECR158(TRI.-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. The appellant, who at the relevant time was the owner of the craft M.V. Kashi Sagar, filed two applications for transhipment permits of wireless set and accessories. The first was filed in December, 1992 an application. The applicant asked for transhipment of the goods from the Air Cargo Complex, Sahar where had arrived from Zurich for exportation per Kashi Sagar to Bombay Off Shore. The second application was filed in January, 1992 for export of similar goods arrived from United Kingdom for exportation per the same vessel. The transhipment was permitted in both the cases. Transhipment on the first permit shows that the goods in question were one on Hay Bunder. No duty was paid on the goods in question.
2. The department issued notice in March, 1993 proposing recovery of the duty on the goods. The notice alleged that the vessel was on the coastal run during the period in question and hence duty was payable on the goods permitted to be cleared without payment of duty. The extended period contained in the proviso to Section 28(1) of the Act was invoked on the ground that the importer had deliberately and wilfully cleared the two consignments without payment of duty. Penalty was proposed. In the order impugned in the appeal, the Collector has confirmed the demand for duty held the goods liable for confiscation but noted that they were not available for confiscation, and imposed a penalty on the appellant.
3. Advocate for the appellant contends that, at the relevant time, the vessel was on a time charter with the Oil and Natural Gas Commission (ONGC for short) for transport of goods and personnel from Bombay to drilling rigs located in the area of the high seas known as Bombay High beyond the territorial waters of India. This, he says, is clear from the statement dated 5.2.1992 of KM Kurian, the Managing Director of the appellant. He disputes the correctness of the Collector's view that vessels going to Bombay High for unloading the cargo or discharging personnel are not foreign going vessels for the reason that Bombay High is not a port. He relies on the definition of the term "foreign going vessel" contained in Section 2(21) of the Act, more particularly Clause (b) of that section. He contends that extended period of limitation would not apply, because it had been made clear in the application that the goods were for transhipment to Bombay High, and according to the normal practice, the goods would have been escorted up to the ship by an officer of the department.
4. The departmental representative contends that a wrong claim for transhipment has wilfully, been made by the appellant, on the ground that the goods were being taken to Bombay High, which is not a port or airport and that the second application was for loading the goods on the ship at Hay Bunder. Therefore, the extended period is clearly available. He further contends that transhipment is permitted in terms of Section 54 of the Act only when the goods are mentioned in the application for transhipment any major port or other Custom port. Transhipment therefore could not have been permitted.
5. The notice to show cause is somewhat ambiguous as to the reason for the proposed action. It seems to proceed on the basis that the ship at the relevant time was on the coastal run, that is plying between two ports in India. It does not suggest that proceeding to Bombay High constitutes a coastal run, although the Collector in his order has said so. The statement of Kurian. Managing Director is also ambiguous. He says that during the period from 1984 to the period January 1992 she also carried cargo from... (illegible) to Magdalla, Bombay to Ratnagiri, Veravel to Bombay and supplies to Bombay High for cement etc. on ONGC account...." Later on in the same statement, he says that the ship was employed "previously in Dubai/Arabian Gulf and on ONGC service Bombay High etc. during 1989-90." It is therefore not possible to say with any degree of certainty that the vessel was engaged in carrying the goods and passengers between travelling between Bombay and Bombay High in 1990. If she was, she would have to be considered as a foreign going vessel.
6. Sub-section (21) of Section 2 of the Act defines "foreign going vessel" as follows:
Foreign-going vessel or aircraft" means any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any port or airport in India and any port or airport outside India, whether touching any intermediate port or airport in India or not, and includes-
(i) any naval vessel of a foreign Government taking part in any naval exercise;
(ii) any vessel engaged in fishing or any other operations outside the territorial waters of India;
(iii) any vessel or aircraft proceeding to a place outside India for any purposes whatsoever:
It will be evident that vessels or aircraft of the types specified in each of the three clauses, need not necessarily be engaged in the carriage of goods or passengers between any port or airport in India or any port or airport outside India. Indeed a naval vessel taking part in any naval exercise is not even required to proceed outside the territorial waters. A vessel engaged in fishing outside the territorial waters would also be considered a foreign going vessel, notwithstanding that such a vessel does not call at a port outside India. Generally fishing outside India may not require a vessel to be called at any other port. This would also be true of a vessel engaged in "any other operation" outside Indian territorial waters. It appears to us that the ship which was discharging the goods and personnel in Bombay High could legitimately considered to have been engaged in that operation. Since that operation look place outside the territorial waters in India she was a foreign going vessel. We may note that the Supreme Court in its judgment in Union of India v. VM Salgaoncar & Bros. (P) Ltd. had accepted (in para 17) the contention of the counsel for the owners that a transhipper going into the high seas for the operations should be regarded as an ocean going vessel. While this was not an issue for consideration, that being that the vessel was an ocean going vessel for the purpose of notification 262/58, the fact that this has been noted by the Supreme Court is of significance.
7. The appellant had clearly stated in the first transhipment application that the goods were going to be taken to Bombay High. It was open to the department to verify the correctness of that claim and asked for evidence in support, such as the charter party or' other evidence. This has not been done. The contention of the departmental representative that the provisions of Section 54 will not apply if the goods are intended to be ultimately carried to Indian port is correct. We are not here concerned with Section 54. We are concerned with Section 86, Sub-section (2) of which provides that any stores imported in a vessel or an aircraft may, with the permission of the proper officer, be transferred to any vessel or aircraft as stores for consumption therein as provided in Section 87 or Section 90. Section 87 provides for consumption without payment of duty stores on a foreign going vessel. However, if the vessel were not proceeding to Bombay High, but, being on the coastal run was next proceeding to a coastal port, the claim for duty free clearance made on the basis that she was engaged on transport of goods to Bombay High would amount to mis-statement. Doubtless, prudence would have required verification by the officers of the department. However, having regard to the need of expeditious clearance of cargo, particularly import by air we do not think the officers should be found fault with in not accepting the statement made by the importer.
8. The position was not clouded with regard to the second application. Here the application states that the goods are for export at Hay Bunder. Advocate for the appellant says that this was a mistake that only showed that the vessel was in Hay Bunder dock of Bombay High. If this is correct, it would follow that ultimate destination of the goods was not declared. No evidence was produced before us as to the place on which the vessel was to proceed. If, as we have said, the vessel was actually engaged in travel between the drilling rigs at Bombay High and the port of Bombay for loading and unloading operation she would have been a foreign going vessel and stores on board would not be liable to duty. Advocate for the appellant undertakes to produce evidence to satisfy the Commissioner on this point within two months from the receipt of this order.
9. Accordingly we allow the appeals and set aside the impugned order. The Commissioner shall adjudicate on the merits of the issue in accordance with law.
Dictated in Court.