Custom, Excise & Service Tax Tribunal
Seamec Ltd vs Commissioner Of Customs (Imports) ... on 6 December, 2017
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NOS: C/87659 & 87660/2013
[Arising out of Orders-in-Original No. 48 & 49/2013/CAC/CC(I)/Gr. VB dated 28/03/2013 passed by the Commissioner of Customs (Import), Mumbai.]
APPEAL NOS: C/87536/2013
[Arising out of Order-in-Original No. 50/2013/CAC/CC(I)/AB/Gr. VB dated 29/03/2013 passed by the Commissioner of Customs (Import), Mumbai.]
Seamec Ltd.
Appellant
Versus
Commissioner of Customs (Imports) Mumbai
Respondent
Appearance:
Shri V. Sridharan, Sr. Advocate and
Shri T. Vishwanathan, Advocate for the Appellant
Shri K.M. Mondal, Special Consultant (AR) for the Respondent
CORAM
Honble Dr. D N Panda, Judicial Member
Honble Shri C J Mathew, Technical Member
Reserved on: 10.10.2017
Pronounced on: 06/12/2017
ORDER NO..
Per: Dr. D N Panda
All the three appeals having arisen out of similar cause, those were heard analogous and disposed by this common order.
2. Investigation noticed that no Bills of Entry were filed by the appellant in respect of all the three vessels re-imported into India on repair, modification as well as installation of machinery therein from time to time incurring freight and insurance. Assessable value of such cost of repair including freight and insurance was not declared by the appellant to Customs although such value was liable to duty under the Act (hereinafter referred to as the Act) and classifiable under Customs Tariff heading 89059000 of Customs Tariff Act, 1975 read with Notification No. 94/96-Cus dated 16.12.1996.
3. The vessels known as SEAMEC-I, SEAMEC-II and SEAMEC-III being multipurpose support deep sea vessel were intended to be used on charter contracts with different companies. Those were specifically designed and built to undertake shore based maintenance/removal and installation, platform repairs-subsea/topside, riser repairs-subsea, fire fighting, rescue and pollution control without being capable of commercially used as carriage for passenger or cargo commercially. All the three vessels, at the time of import thereof, were classified under CTH 89059090 and such classification continued to be maintained by Customs even on re-import thereof from time to time upon repair thereof abroad.
4. The vessels stated above having been registered with Director General Shipping were required to file Shipping Bill at the time of departure from India and convertible into foreign run. Similarly, Bill of Entry for such vessels on arrival in India before converting to coastal run was required to be filed under law. All Ocean Going Vessels were exempted from payment of duty till 28.02.2001. Consequently any repairs, carried out abroad till then, were chargeable to nil rate of duty. Thereafter the vessels on re-import were eligible for partial exemption from payment of duty to the extent prescribed by the Notification No. 94/96-Cus dated 16.12.1996 to the extent indicated under Sr. No. 2 thereof. Accordingly, Basic Customs duty was leviable on the vessel under CTH 8905.10 and 8905.90. From 01.03.2001, Additional Customs Duty and Special Additional Duty was also leviable on such re-import.
5. During the impugned period, in respect of SEAMEC-I and SEAMEC-III, the appellant sought permission of the Customs authorities giving undertaking without Bank guarantee to the effect that the appellant shall produce the vessel as and when required to move the vessel to Middle East and UAE stating that during the Monsoon in India without having any work in India, it intended to undertake repair. Similar permission was also sought for SEAMEC-II to move to outside India from time to time for the purpose of repair. So also undertaking Bond the appellant obliged itself to indemnify Customs in case of any lapse, to pay the duty, fine and penalty. Vessels were allowed accordingly to move out of India. When the vessels were returning back on re-import into India after repair, installing certain machinery thereto and renovating incurring freight and insurance from time to time, Customs was of opinion that duty was payable on the value of repair and machinery installed for the reason that the vessels were goods in terms of Section 2(22)(a) of Customs Act, 1962 (hereinafter referred to as the Act) and re-imported into India under Section 20 of the Act as goods. The term goods is defined by said section as under: -
SECTION 2 Definitions. In this Act, unless the context otherwise requires.
22) goods includes -?
(a) vessels, aircrafts and vehicles;
(b) stores;
(c) baggage;
(d) currency and negotiable instruments; and
(e) any other kind of movable property;
Law relating to re-import enacted in section 20 of the Act reads as under:
SECTION 20
Re-importation of goods.?
If goods are imported into India after exportation therefrom, such goods shall be liable to duty and be subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof.
6. Revenue was of the view that the following notifications were issued under Act to extend exemption from levy of Basic Customs Duty (BCD) on goods falling under specific sub-heading of Chapter 89 of the First Schedule of the Customs Tariff Act, 1975 when imported into India.
* Notification No. 133-Cus., dated 19.03.1987 8901.10, 8901.20, 8901.30, 8901.90, 8902.00, 8904.00, 8905.10, 8905.90 and 8906.00.
* As per Sr. No. 179 of the table to Notification No. 36-Cus., dated 23.07.1996- 8901.10, 8901.20, 8904, 8905.10, 8905.90 and 8906.00.
* As per Sr. No. 194 of the table to Notification No. 11/97-Cus., dated 01.03.1997- 8901, 8902, 8904, 8905.10, 8905.90 and 8906.
* As per Sr. No. 228 of the table to Notification No. 23/98-Cus., dated 2.6.1998- 8901, 8902, 8904, 8905.10, 8905.90 and 8906.
* As per Sr. No. 250 of the table to Notification No. 20/99-Cus., dated 28.2.1999- 8901, 8902, 8904, 8905.10, 8905.90 and 8906.
* As per Sr. No. 298 of the table to Notification No. 16/2000-Cus., dated 01.03.2000- 8901, 8902, 8904, 8905.10, 8905.90 and 8906.
* As per Sr. No. 322 of the table to Notification No. 17/2001-Cus., dated 01.03.2001, Basic Customs Duty @5% ad valorem was Chargeable goods falling under sub-heading Nos. 8901, 8902, 8904, 8905.10 or 8905.90.
* As per Sr. No. 353 of the table to Notification No. 21/2002-Cus., dated 01.03.2002, Basic Customs Duty of 5% continued on goods falling under sub-heading Nos. 8902, 8904, 8905.10 or 8905.90.
* By virtue of Notification No. 21/2011 dated 01.03.2011 amending Notification No. 21/2002 the Basic Customs duty for Sr. No. 353 of the table was reduced to 2.5% ad valorem. [Emphasis supplied]
7. Revenue was also of the opinion that Basic Customs Duty on Ocean going vessel imported into India was only exempt from duty in terms of Notification No. 262-Cus dated 11.10.1958, but such duty was liable to be paid after 1.3.2001 on the value of the repair/machinery installed/services availed including to and fro freight as well as insurance in terms of Rule 9 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and Rule 10 of the said Rules read with Section 20 of the Act. Accordingly, duty liability on the value of repairs/renewals and machinery installed as well as freight and insurance charges incurred, arose in accordance with Circular No. 61/95 dated 16.6.1995 as well as Notification No. 97/95 dated 26.5.1995 and subsequent amendment made thereto by Notification No. 94/96-Cus dated 16.12.1996.
8. On re-import of all the three vessels, although Bills of Entry were filed against bunker, stores and consumables on board that did not include /declare/report the cost for repairs/modifications thereof and installation of machinery thereto carried out abroad as well as freight and insurance charges incurred nor separate Bill of Entry were filed in respect thereof under Section 46 or 68 for the period 2002 to 2010 for levy of duty to the extent prescribed by law. The said sections read as under: -
SECTION 46. Entry of goods on importation.?
(1) The importer of any goods, other than goods intended for transit or transhipment, shall make entry thereof by presenting electronically to the proper officer a bill of entry for home consumption or warehousing in the prescribed form:
Provided that the Principal Commissioner of Customs or Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically, allow an entry to be presented in any other manner:
Provided further that if the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub-section, the proper officer may, pending the production of such information, permit him, previous to the entry thereof (a) to examine the goods in the presence of an officer of customs, or (b) to deposit the goods in a public warehouse appointed under section 57 without warehousing the same.
(2) Save as otherwise permitted by the proper officer, a bill of entry shall include all the goods mentioned in the bill of lading or other receipt given by the carrier to the consignor.
(3) The importer shall present the bill of entry under sub-section (1) before the end of the next day following the day (excluding holidays) on which the aircraft or vessel or vehicle carrying the goods arrives at a customs station at which such goods are to be cleared for home consumption or warehousing :
Provided that a bill of entry may be presented within thirty days of the expected arrival of the aircraft or vessel or vehicle by which the goods have been shipped for importation into India:
Provided further that where the bill of entry is not presented within the time so specified and the proper officer is satisfied that there was no sufficient cause for such delay, the importer shall pay such charges for late presentation of the bill of entry as may be prescribed.
(4) The importer while presenting a bill of entry shall make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, relating to the imported goods.
(5) If the proper officer is satisfied that the interests of revenue are not prejudicially affected and that there was no fraudulent intention, he may permit substitution of a bill of entry for home consumption for a bill of entry for warehousing or vice versa.
** ** ** ** ** **
Section 68 of the Act in the above direction reads as under although provision thereof has no applicable in the present case.
SECTION 68. Clearance of warehoused goods for home consumption.?
Any warehoused goods may be cleared from the warehouse for home consumption, if -
(a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form;
[(b) the import duty, interest, fine and penalties payable in respect of such goods have been paid; and]
(c) an order for clearance of such goods for home consumption has been made by the proper officer :
[Provided that the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish * ] penalties that may be payable?*?his title to the goods upon payment of [ * in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon : ]
Provided further that the owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force. [Emphasis supplied]
9. On the above background, investigation found that when all the three vessels were coming back to India on re-import from time to time during the impugned period with the repair/modification thereto, no Bills of Entry having been filed for the value of repair/modification carried out thereto abroad as well as freight and insurance incurred and no adjudication or assessments were ever made thereon, that has resulted in loss to the exchequer for the relevant periods, show-cause notices were issued and adjudication against SEAMEC-I resulted with following consequence of law: -
1) The vessel" Seamec I' was classifiable under CTH 89059090 and thus liable to duty.
2) The value of the repair charges of the vessel "Seamec I" was determined to be Rs.37,16,94,698/- CIF (Rupees Thirty-seven crores Sixteen lakhs Ninety four thousand six hundred and ninety eight only) for assessment purpose.
3) Demand of duty evaded was Rs. 5,68,69,285/- (Rupees Five crores Sixty eight lakhs Sixty nine thousand two hundred eighty five only) under Section 28(2) of the Customs Act, 1962, (as it existed till 08.04.2011) or Section 28(8) ibid thereafter, along with applicable interest under Section 28AB (as it existed till 08.04.2011) or Section 28AA. An amount of Rs.2,00,00,000/- deposited and credited to the government treasury vide cash memo no. 196 dated 16.12.2011 was appropriated towards the duty liability and adjusted from the total duty liability.
4) Confiscation of the vessel Seamec I was ordered and that was valued at Rs. 58.5 Crores CIF as per the statement of Hull & Machinery Insurance under Section 111 (m) of the Customs Act, 1962. However an option to the importer was given to redeem the same on payment of redemption fine of Rs. 3,75,00,000/- (Rupees Three Crores Seventy five lakhs Only). While imposing redemption fine, value of repairs was conscioused at Rs.37,16,94,698/- CIF (Rupees Thirty-seven crores Sixteen lakhs Ninety four thousand six hundred and ninety eight only).
5) Penalty was imposed on M/s. Seamec Ltd. of Rs. 5,68,69,285/- (Rupees Five crores Sixty eight lakhs Sixty nine thousand two hundred eighty five only) plus interest so determined under section 114A of Customs Act 1962. However, M/s. Seamec Ltd pays the duty and interest determined within 30 days from the date of the communication of the order, penalty was limited to 25% of the duty and interest so determined.
6) The vessel" Seamec II' was classifiable under CTH 89059090 and thus liable to duty.
7) The value of the repair charges of the vessel "Seamec II" was determined to be Rs.120,84,56,328/- CIF (Rupees One hundred and twenty crores Eighty four lakhs Fifty-six thousand three hundred and twenty eight only) for assessment purpose.
8) Demand of duty evaded was Rs. 18,48,93,808/- (Rupees Eighteen crores Forty eight lakhs Ninety three thousand Eight hundred eight only) under Section 28(2) of the Customs Act, 1962, (as it existed till 08.04.2011) or Section 28(8) ibid thereafter, along with applicable interest under Section 28AB (as it existed till 08.04.2011) or Section 28AA. An amount of Rs.6,52,00,000/- deposited and credited to the government treasury vide cash memo no. 195 dated 16.12.2011 was appropriated towards the duty liability and adjusted from the total duty liability.
9) Confiscation of the vessel Seamec II was ordered and that was valued at Rs. 99 Crores CIF as per the statement of Hull & Machinery Insurance under Section 111 (m) of the Customs Act, 1962. However an option to the importer was given to redeem the same on payment of redemption fine of Rs. 12,00,00,000/- (Rupees Twelve Crores Only).. While imposing redemption fine, value of repairs was conscioused at Rs.120,84,56,328/- CIF (Rupees Thirty-seven crores Sixteen lakhs Ninety four thousand six hundred and ninety eight only).
10) Penalty was imposed on M/s. Seamec Ltd. of Rs. 18,48,93,808/- (Rupees Eighteen crores Forty eight lakhs Ninety three thousand Eight hundred eight only) plus interest so determined under section 114A of Customs Act 1962. However, M/s. Seamec Ltd pays the duty and interest determined within 30 days from the date of the communication of the order, penalty was limited to 25% of the duty and interest so determined.
11) The vessel" Seamec III' was classifiable under CTH 89059090 and thus liable to duty.
12) The value of the repair charges of the vessel "Seamec III" was determined to be Rs.71,00,69,589/- CIF (Rupees Seventy-one crores Sixty-nine thousand five hundred and eighty nine only) for assessment purpose.
13) Demand of duty evaded was Rs. 10,86,40,641/- (Rupees Ten crores Eighty-six lakhs forty thousand Six hundred Forty one only) under Section 28(2) of the Customs Act, 1962, (as it existed till 08.04.2011) or Section 28(8) ibid thereafter, along with applicable interest under Section 28AB (as it existed till 08.04.2011) or Section 28AA. An amount of Rs.4,14,00,000/- deposited and credited to the government treasury vide cash memo no. 194 dated 16.12.2011 was appropriated towards the duty liability and adjusted from the total duty liability.
14) Confiscation of the vessel Seamec III was ordered and that was valued at Rs. 90 Crores CIF as per the statement of Hull & Machinery Insurance under Section 111 (m) of the Customs Act, 1962. However an option to the importer was given to redeem the same on payment of redemption fine of Rs. 7,00,00,000/- (Rupees Seven Crores Only). While imposing redemption fine, value of repairs was conscioused at Rs.71,00,69,589/- CIF (Rupees Seventy-one crores Sixty-nine thousand five hundred and eighty nine only).
15) Penalty was imposed on M/s. Seamec Ltd. of Rs. 10,86,40,6411- (Rupees Ten crores Eighty-six lakhs forty thousand Six hundred Forty one only) plus interest so determined under section 114A of Customs Act 1962. However, M/s. Seamec Ltd pays the duty and interest determined within 30 days from the date of the communication of the order, penalty was limited to 25% of the duty and interest so determined.
SUBMISSIONS OF APPELLANT
10. Learned Sr. Advocate Sri Sridharan submitted that these three appeals appearing in column 1 of the Table-1 below arose against the respective adjudication orders mentioned in column 6 of the said Table giving rise to the demand of customs duty, fine and penalty as mentioned in column 7 and 8 thereof against each such appeal.
TABLE I
Appeal
Vessel
Amount deposited (in Rs.)
SCN dated
Period
OIO dated
Customs Duty
Amount
(in Rs.)
Fine/ Penalty respectively Amount
(in Rs.)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
C/87659/13
M.S.V Seamec-I
2 Crores on 16.12.11
31.7.12
2002-10
28.3.2013
5,68,69,285
3,75,00,000/
5,68,69,285
C/87660/13
M.S.V Seamec-II
6.52 Crores on
16.12.11
09.8.12
2002-06
28.3.2013
18,48,93,808
12,00,00,000/
18,48,93,808
C/87536/13
M.S.V Seamec- III
4.14 Crores on
16.12.11
12.7.12
2003-11
28.3.2013
10,86,40,641
7,00,00,000/
10,86,40,641
According to appellant, the issues involved in all the three appeals are whether the vessels as appearing in TABLE -1 above were re-imported into India upon repair thereof, from time to time during the periods covered by column (5) of the said Table, shall be classifiable under the CTH 8905 9090 as claimed by Revenue or under CTH 8901 90 00 as claimed by the appellant and whether on such re-importation, value of repair so made including freight shall form part of the assessable of the such re-imported vessels and necessary duty leviable thereon under the Act. According to Revenue, the vessels so re-imported from time-to-time as per TABLE 2 below submitted by the appellant, were goods as defined by Section 2(22) of the Act and that shall be liable to duty at the appropriate rate during the material period classifying the same under CTH 89059090 on the value of repair including freight forming part of the assessable value thereof.
TABLE 2
Appeal No.
Vessel
Actual date of imports & filing of bills of entry for consumables.
Rate of Customs Duty
(1)
(2)
(3)
(4)
CTH 8901
CTH 8906
CTH 8905
C/87659/13
M.S.V Seamec-I
07.06.2002
30.09.2004
20.09.2005
14.12.2007
05.08.2010
All duties Nil
All duties Nil
BCD-5%
CVD-Nil
SAD-4%
C/87660/13
M.S.V Seamec-II
29.10.2002
02.02.2005
08.11.2010
All duties Nil
All duties Nil
BCD-5%
CVD-Nil
SAD-4%
C/87536/13
M.S.V Seamec- III
19.10.2002
21.04.2003
02.08.2005
01.04.2011
08.11.2011
All duties Nil
All duties Nil
BCD-5%
CVD-Nil
SAD-4%
11. According to appellant, the vessels as per the Table-I above were foreign-going vessel as defined in Section 2(21) of the Act and not liable to duty at all. Appropriate intimations were given to the Customs authority when the vessels left India and returned back to India as per following particulars appearing in Table 3, 4 and 5 below in respect of all the three vessels.
Seamec- I:
TABLE 3
Date on which Seamec-I came back
Bill of Entry for stores and consumables on board
Date on which the vessel was converted from foreign run to coastal run
Page No. of Appeal No. C/87659/2013 containing the Order of Superintendent of Customs
07.06.2002/Mumbai
7.6.2002
12.6.2002
147A, 147B
10.12.2003/Mumbai
10.12.2003
11.12.2003
144, 145
30.09.2004/Mumbai
29.9.2004
4.10.2004
141, 142
07.03.2005/Mumbai
7.3.2005
11.3.2005
133, 134
20.09.2005/Mumbai
22.9.2005
Page no. 83 of Volume-VII
25.07.2006/Mumbai
14.12.2007/Mumbai
18.12.2007
Page no. 90 of Volume-VII
07.10.2008/Mumbai
08.10.2008
Page no. 94 of Volume-VII
05.08.2010/Mumbai
5.8.2010
06.08.2010
Page no. 88, 89 & 84 of Volume-VII
Seamec-II
TABLE 4
Date on which Seamec II came back
Bill of Entry for stores and consumables on board
Date on which the vessel was converted from foreign run to coastal run
Page No. of appeal No. 87660/2013 containing the Order of Superintendent of Customs
29.10.2002/Mumbai
29.10.2002
30.10.2002
140, 141
02.02.2005/Mumbai
14.01.2006/Mumbai
14.01.2006
142
08.11.2010/Mumbai
9.11.2010
10.11.2010
138, 139
26.11.2011/Mumbai
25.01.2012
Page no. 98 of Volume-VII
Seamec-III
TABLE 5
Date on which Seamec III came back
Bill of Entry for stores and consumables on board
Date on which the vessel was converted from foreign run to coastal run
Page No. of appeal No. C/87536/2013 containing the Order of Superintendent of Customs
19.10.2002/Mumbai
21.10.2002
19.10.2002
171, 175
21.04.2003/Mumbai
22.4.2013
22.4.2003
181,185
02.08.2005/Mumbai
4.8.2005
161-167
01.04.2011/Mumbai
5.4.2011
6.4.2011
151, 153
08.11.2011/Mumbai
11.11.2011
01.12.2011
191, Page no. 102 of Volume-VII
12. Revenue at this stage explained that the vessels when first came to India, Bills of Entry were filed in respect of the import thereof and those were assessed to duty under law as well as converted that into coastal run vessels for specific use thereof in ONGC contract for which the vessels were specifically designed and meant for that concern without being commercially usable as passenger or cargo vessels. Those vessels were never foreign-going vessels although appellant falsely claims that to be so in terms of TABLES 3, 4, 5, 6, 7 and 8 submitted by it, as depicted below. No Bills of Entry were filed under section 46 of the Act in respect of value of repair including freight and insurance when the vessels were re-imported under Section 20 of Customs Act into India from time to time upon their repair and thereby duty payable on such value being evaded, adjudications were made to recover such duty with penal consequence of law followed.
Seamec-I:
TABLE 6
Date on which Seamec-I went out
Date on which the vessel was converted from costal run to foreign run
Page No. of appeal No. C/87659/2013 containing the Order of Superintendent of Customs
27.4.2002
21.11.2002
8.6.2004
3.6.2004
147
7.2.2005
4.2.2005
132A
25.5.2005
30.6.2006
13.5.2007
8.7.2008
6.6.2010
04.06.2010
Page no. 79 of Volume-VII
Seamec-II:
TABLE 7
Date on which Seamec II went out
Date on which the vessel was converted from costal run to foreign run
Page No. of appeal No. C/87659/2013 containing the Order of Superintendent of Customs
6.9.2002
1.12.2004
30.11.2004
135
15.7.2005
13.7.2005
133
24.6.2006
6.7.2011
1.7.2010
139A
Seamec-III:
TABLE 8
Date on which Seamec-III went out
Date on which the vessel was converted from costal run to foreign run
Page No. of appeal No. C/87536/2013 containing the Order of Superintendent of Customs
24.2.2003
7.7.2005
6.7.2005
157
17.6.2006
15.6.2006
147
20.5.2011
18.5.2011
187
13. On the above background, appellant submits that the vessel having suffered customs duty at the time of first import thereof and been subject to coastal run from time-to-time and were also cleared by Customs authorities for going abroad for repairs, there was a misconception by the Customs that the vessel came back after repair were goods although those were foreign-going vessels as per Table 3, 4, and 5 above which show that appellant had every time filed bill of entry and also given intimation to the authorities. In response to such intimations, Customs authorities have also given their report. One such sample report is exhibited by pages 131, 132, 135 of the appeal folder. This establishes that the Custom authorities had knowledge about the entry of the vessel into India and exit thereof from India. Accordingly, adjudication proceedings initiated for the period prior to 2006 in the respective appeals are time-barred and shall not sustain since the appellant has not suppressed any facts nor has committed any breach of law. But, Revenue repels such argument on the ground that mere filing of bills of entry in respect of bunker, consumables and stores on re-import, shall not immune the appellant from filing bills of entry in respect of the value of repair and freight and insurance incurred against the reimpoted vessels, which is its legal obligation under section 46 of the Act and dutiable. Thereby contravention of the provisions of law was made by the appellant and duty was evaded for which that is sought to be recovered through the adjudications.
14. Placing Para 7.3 of its synopsis, appellant submitted that the Tables above depict knowledge of the customs beginning from 2002 in respect of SEAMAC I and II and for the period beginning from 2003 against SEAMAC III. Entire operation of the appellant was within the knowledge of the Customs. Placing Para 2.1 of the synopsis filed, appellant explained that the vessels were exempts from duty for which no duty can be collected. The redemption fine imposed was unwarranted for the reason that there was no question of seizure of the vessels without violation of any of the provisions of Section 111 of the Customs Act, 1962. But show cause notice invoked Section 111(m) of the said Act even though in worst circumstances that may attract only Section111(f) or 111(e) of the said Act. So also it is well settled law that when classification issue is involved, there cannot be confiscability without finding the ingredients of the law for such confiscation being present. So also no adjudication is warranted under Section 28 of the Customs Act, 1962.
15. At this stage learned Authorised Representative for Revenue submits that the show cause notice has not only invoked under Section 28 but also Section 124 of the Customs Act, 1962 was invoked. When confiscability arose, penalty was warranted under section 124 of the Act. There is no time-bar prescribed by law for penalising an assessee.
16. Appellants further submission is that the rate of duty should be determined under law for which there is specific provision therein. Accordingly, there should be no confusion for application of different rates of duty when rates structure has been depicted by appellant in its Table No. 2 for which appellant has relied on the decision of the Tribunal in the case of Samson Maritime Ltd v. Commissioner of Customs (Import), Mumbai 2016 (333) ELT 148 (Tri. Mumbai) to contend so. Further, when there was no duty liability there shall be no question of applicability of any rate of duty.
17. Appellant reiterated that the vessels when left India with the permission of the Customs authority which is evident from page 131, 132 and 133 of the appeal folder, no presumption can be made by Customs authorities to the contrary. There was no breach of law and for no reason, whenever the vessel entered into India after repair, Customs authorities treated the vessels every time as goods baselessly. Vessels were used in Indian coast for ONGC as a transporting medium i.e. conveyance. In such circumstances the conveyance shall not be liable to tax every time when the vessel entered into India.
18. On the allegation of taxability of repair charge as well as freight and insurance charges, it was submitted on behalf of the appellant that the said expenses shall not be included in the assessable value since there was no import of goods warranting any valuation. The vessels every time re-entered only as conveyance but not goods. The appellant all along bonafide believed that original import having suffered duty the same vessel shall not suffer multiple duty every time when that was returning back after repair.
19. Relying on page 80 of volume VII of the paper book and page 81, thereof it was submitted on behalf of the appellant that the vessels were foreign-going vessels and the log book maintained for each such vessel proved that the vessels were moving from India and returning back to India clearly indicating the origin and destination thereof as a conveyance only. But, Customs department pressed the appellant to pay customs duty and that is paid under dispute and protest awaiting adjudication. Therefore discharge of the duty as an interim payment on the compulsion should not be treated as admission of the appellant against liability. Similarly, seizure of the vessel and giving custody thereof to the appellant does not mean that lawful seizure was made by Revenue. Therefore, without provision in law to hold that interim payments and seizure are basis to initiate proceeding, entire action of customs is illegal and uncalled for.
20. So far as the issue of classification is concerned, appellant submitted that Revenue failed to prove their stand that the vessels are classifiable under CTH 8905 9090. Appellant relied on the decision of the apex Court in the case of Hindustan Ferodo Ltd. v. Collector of Central Excise, Bombay - 1997 (89) ELT 16 (SC) in this regard.
21. Inviting attention to serial No. 353 to Notification No. 21/2002-Cus dated 01/03/2002, it was submitted on behalf of the appellant that there shall be no duty payable on the vessel which is classifiable under CTH 8901 90 00. It was further submitted that without any allegation on classification in the show cause notice, Customs authority attempted to bring the goods into CTH 8905 in the adjudication travelling beyond the purview of the show cause notice.
22. Placing page 1 exhibiting the photographs of the vessel appearing in Volume VII of the paper book, appellant says that the character of the vessel is evident therefrom and that is also well explained in Para 12.1 of the synopsis. What is called supply vessel has been defined in page 337 and Para 1.1.1 and 1.1.2 in Volume III of paper book. Therefore had the vessels entered into India for the first time that would have been goods. Whether the vessels were transporting medium as a conveyance vessel was ignored to deny the same as classifiable under CTH 8901 and made liable to duty without discharge of burden of proof by Revenue. Revenue failed to prove that the vessels entered into India for the first time during the periods 2007-2011. In this regard appellant relied on the decision of the Tribunal in Raj Shipping Agencies Ltd. v. Commissioner of Customs (Import), Mumbai reported in 2015-TIOL-1405-CESTAT-MUM 2015-TIOL-HC-105 and in Arcadia Shipping Ltd v. Commissioner of Customs, Ahmedabad reported in 2006 (201) ELT 139 (Tri. Mumbai).
CONTENTIONS OF REVENUE
23. Shri K.M. Mondal, learned Authorised Representative for Revenue submits that the three adjudications referred to above by the appellant in its TABLE 1 are well founded, making proper allegations in the show cause notice to the effect that the vessels imported into India by the appellant initially and re-imported thereafter from time to time, repairing the same outside India, were goods only for their specific design and character remaining unchanged all along, ruling out use thereof commercially for passenger or cargo transportation, but being only fit for use by ONGC in fulfilment of common object of both parties. Explaining the structure of the vessels, it was submitted by him that the technical literature filed by the appellant and available in adjudication records establishes from page 1, 2, 7, 8, 15 and 16 thereof that all the three vessels were specifically designed only to serve the purpose of ONGC without capable of being used commercially as a passenger or cargo carrier. Those were not at all designed for commercial use as conveyance of passengers or cargo. Therefore, appellants contention that the vessels were foreign-going vessel as defined by section 2(21) of the Act, fails to stand when those are not capable of carrying any passenger or goods but being only used as per terms of contract of the appellant with ONGC as diving support vessels.
24. Placing reliance on page 105 of the appeal record learned AR submits from reply to the show cause notice of the appellant that essential features of the vessel as per technical literature submitted by the appellant demonstrate peculiar character thereof as is evident from page 2 to page 8 and page 16 of the said literature. The encyclopaedia of Ship Technology also brings out that what diving vessel means. According to them at page 184 the meaning thereof reads as under:
Diving support vessel (DSV) A vessel provided with diving equipment and used for underwater work such as the maintenance and inspection of mobile platforms, pipelines and their connections, well-heads, etc. Todays DSV is a highly sophisticated vessel that may be of mono, multi-hull or semi-submersible construction. The DSV is fitted with a moonpool a hole in the middle of the vessel open to the sea through which divers, remotely-operated vehicles and other equipment is passed to and from the worksite. These vessels may also have A-frame at the stern, used for raising and lowering heavy pieces of equipment, including manned submersibles, into the water. These vessels can maintain an almost exact position over the worksite during these operations. In order to accomplish this, they have fitted with very sophisticated positioning equipment.
25. Even the picture of the diving support vessel appearing at page 184 of the Wartsila Encyclopedia of Ship Technology does not support the case of the appellant to contend that it was a passenger carrying or cargo carrying vessel. The terms of the contract between appellant and the ONGC starting from page 141 of volume VII of the paper book filed by the appellant, at page 172 exhibits the background of the goods as per clause 1.1 to 1.3 of Annexure A describing scope of work agreed to be carried out as per contract between the parties which reads as under:
SPECIFICATIONS, SCOPE OF WORK AND SPECIAL CONDITIONS OF CONTRACT AIR RANGE DIVING SUPPORT VESSEL (ARDSV)
SCHEDULE-I
1.1 Background.
Inspection, Maintenance & Repair (IMR) group of Offshore Logistics, the CORPORATION, Mumbai Region, Mumbai presently caters to inspection, maintenance and repair of approx. 240 offshore steel structures (process and welI platforms), 1100 risers,
5000KMs of sub-sea pipelines, 5 SPMs/SBMs, 20 PLEMs etc. The diving support vessels are deployed for inspection of platforms and to ensure that these facilities are fit for use. These diving support vessels are also required to provide the fire fighting, safety, search & rescue and pollution control support to offshore oil and gas fields.
To carry out underwater inspection ONGC has already deployed vessels with both air and saturation diving and are known as MSVs. In addition to MSVs ONGC now intends to deploy Vessel with only air diving facilities which will be known as Air Range Divine
Support Vessels (ARDSV). ARDSV is meant to carry out diving in air range only besides other Jobs as per Scope of Work.
1.2 The ARDSV is required to provide/perform the following services/operations:
1.2.1 To carry out under water and above water visual and NDT inspection, maintenance and repairs of steel structures by Air diving, in water depth of maximum 50 m.
1.2.2 To carry out under water through air diving and above water inspection, maintenance and repair of offshore structures, risers, PLEMs, tanker mooring, de-mooring, maintenance, operations, decommissioning and re-installation of SPMs/SBMs etc.
1.2.3 Deleted.
1.2.3a To carry out repair of risers of sizes 4" to 42" by using repair clamps or sectional replacement (using weld less connectors/ flange connection! direct welding to parent pipe).
1.2.4 To carry out topside (including splash zone) inspection, maintenance and repair of offshore
structure - spider deck, risers, boat landing etc.
1.2.5 To provide dive support to various offshore installations, jack up rigs and floaters etc.
1.2.6 To carry out fire fighting operations of offshore installations, rigs, vessels, tankers, etc. in offshore fields, in port and near shore areas. The maximum height of the platform would be around 50 m from MSL.
1.2.7 To provide safety and rescue support to various offshore installations, jack up rigs, floaters etc.
1.2.8 To carry out/assist in rescue operations and fulfill role of rapid intervention vessel
1.2.9 To carry out pollution control, operations.
1.2.10 To provide medical facilities within the capabilities of the vessel.
1.2.11 To accommodate additional personnel including rescued personnel as and when required.
1.212 To carry out heli-deck duty for helicopter operations.
1.2.13 To carry out transportation of personnel, material and equipment as and when required.
1.2.14 To provide crane assistance to offshore installations for transfer of material and personnel for remedial work at the boat landing area/spider deck level and crane assistance to platform within the capability of the vessel/outreach & load capacity of the crane.
1.2.15 To carry out any other services desired by the CORPORATION within the capability of the vessel.
26. According to Revenue, when page 172 of volume VII of the paper book extracted as above is read, that clearly demonstrates understanding of the appellant with ONGC. That was consumed as goods as defined by section 2(22) of the Customs Act, 1962 in the course of execution of contract with that concern. This document was relied upon by Revenue to decide the issues in dispute.
27. Shri Mondal submits that Section 2(22) of the Customs Act, 1962 defines the term goods which includes vessel within its fold. The said definition, covers the vessels of the appellant as goods. But such vessels not being designed for commercial transportation of goods or passengers nor being capable of serving such purpose, except being used for coastal run to serve the purpose of ONGC that remained all along as goods only. Although the term conveyance defined by Section 2(9) of Customs Act, 1962 includes vessels, that does not mean that the appellants vessels were conveyance being incapable of ferrying passenger or cargo in view of peculiar construction and technical details thereof revealed from page 1 to 2, 7 to 8, 15 to 16 of the technical brochure.
28. Relying on Section 31A of the Merchant Shipping Act, Revenue explained the meaning of the term coastal ship. According that law, character of the coastal ship is as under:
coasting ship means a ship exclusively employed in trading between any port or place in India and any other port or place on the continent of India or between ports or places in India and ports or places in Ceylon or Burma;
29. According to the above definition coastal ship is employed for movement from one port to another and on the continent of India or between locations on the same continent of inland ports of Indian coasts. Such definition covers the activity of the appellant carried out for ONGC under the contract as aforesaid. This is more clear from Para 1.1 to 1.3 of the annexure at page 171 of the Volume No. VII of the paper book of the appellant. Relying on the decision of the apex Court in the case of Union of India v. V.M. Salgaonkar & Bros. (P) Ltd. reported in 1998 (99) ELT 3 (SC), learned AR for Revenue says that the vessels of the appellant came as goods to India having been imported as goods, went out of India as goods only for repair thereof from time to time and re-imported as goods were not ocean going ship. That was goods only attracting section 2(21) of the Act since those were not capable of carrying any passenger or cargo for their peculiar nature being specifically built to serve purpose of ONGC contract.
30. The vessel in question being only meant for home consumption were used under a contract with ONGC for a specific purpose, without being capable of transporting any cargo or passenger commercially. Therefore, adjudication was made properly holding the vessels re-imported were goods for levy of duty. To support its contention, Revenue relies on the decision of the apex Court in the case of Super Cassette Industries Ltd v. Commissioner of Customs, New Delhi reported in 2008 (225) ELT 401 (SC) and submits that ratio of this case called for valuation of the vessel on re-import for the purpose of levy of customs duty.
31. Sri Mondal further says that the synopsis filed on behalf of Revenue forms part his argument on various points including the points on classification, valuation, levy as well as confiscation and penalties deserve consideration. He says that page 109 of appeal record brings out that appellants categorically admitted that the vessels were offshore support and diving vessels and Para 3 and 4 thereof read as under:
iii. As stated above, the said vessel Seamec-I is admittedly an ocean going/foreign going vessel. The certificate of the Indian Registry issued under section 34 of the Merchant Shipping Act described the said vessel as a vessel for multi-purpose offshore support and diving vessel.
iv. From the aforesaid, it can be seen that the navigability of the said vessel is one of the primary functions of the said vessel and hence the said vessel ought to be classified under Customs Tariff Heading 8901 which deals with crew ships, excursion boats, ferry boats, cargo ships, barges and similar vessels for transportation of persons and goods. The vessel in question being a multi-purpose offshore support vessel would primarily classify as vessel for transport would primarily classify as vessel for transport of persons and goods.
32. According to Revenue, the vessel that originally came to India was classified under CTH 8905. But when the vessels were going out of India for repair thereof, on return of such vessels, those were suddenly classified by appellant under the CTH 8901 for no reason without satisfying the conditions of the said tariff heading. Inviting attention to page 13 of the compilation of Revenue which deals with HSN classification in respect of tariff heading 8901, Revenue submitted that the goods covered therein shall be only ships, barges and similar vessels for transport of persons or goods. But the vessels of the appellant do not at all fall thereunder without being designed for the same. So far as the tariff heading 8905 is concerned that is explained elaborately by the HSN classification at page 17 and 18 of the compilation filed by Revenue reading as under:
89.05
Light-vessels, fire -floats, dredgers, floating cranes and other vessels the navigability of which is subsidiary to their main function; floating docks; floating or submersible drilling or production platforms.
8905.10
Dredges
8905.20
Floating or submersible drilling or production platforms
8905.90
Other
The tariff entry 8901 reads as under:
8901
Cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for the transport of persons or goods.
8901 10
-
Cruise ships, excursion boats and similar vessels principally designed for the transport of persons; ferry-boats of all kinds:
8901 1010
-
Ships 8901 1020
-
Launches 8901 1030
-
Boats 8901 1040
-
Barges 8901 1090
-
Other 8901 20 00
-
Tankers 8901 30 00
-
Refrigerated Vessels, other than those of Sub-heading 8901 20 8901 90 00 Other vessels for the transport of the goods and other vessels for the transport of both persons and goods.
33. Inviting attention to Para 11.2(c) of the notes of argument of the appellant, it was submitted by Revenue that the vessels were not at all meant for commercial transportation of cargo or passenger, not being built for the same nor designed for such purpose since object of the appellant was to accommodate only 89 persons which includes 42 crews and 47 specialised personnel such as workers of platform; divers; (3) surveyors; (4) welders and (5) rescue persons. When a specialised vessel is used for the work of ONGC as per drawing and design of the vessel placed by the appellant, that demonstrates that all the three vessels were not at all meant for commercial transportation of passenger or cargo nor can also be used as vessel.
34. Relying on page 333 of volume III of the paper book of appellant, Revenue submits that the vessels in question were supply vessel and those were specialised vessels serving specific purpose of appellant to serve ONGC. Also reliance was placed on the reply to show-cause notice of appellant to submit so. The supply vessel being specifically designed to serve the purpose of ONGC that was used as per terms of the contract of both parties as exhibited by the paper book. The vessel was not to carry any cargo or passenger commercially since that was specifically made for the intended purpose of ONGC. Navigation was secondary and that was not criteria for the purpose of claiming classification by the appellant since the purpose of the vessels were not to carry any passenger or cargo to the navigability.
35. Placing Para 29.6 of page 39 of the synopsis of the appellant, Revenue submitted that the vessels which are subject matter of appeals were used to assist divers in diving operations at different locations. That has also ability to navigate to different locations at any given point of time and such navigability was only for the purpose of ONGC but not for transporting passenger or cargo as a commercial activity. The appellant admits that diving operation was its main object and navigability was subsidiary to this main function. This was brought to the notice of the appellant from to time and that is admitted by the appellant in Para 1 of the reply to the show cause notice filed on 14/10/2012 (available at page 105 of the appeal folder).
36. When the vessels were made according to the specific drawing and design and imported, that was goods and rightly classified under CTH 8905. When those were going out of India for repair, those were returning with some value addition thereto upon repair. Therefore such value additions were only taxed making proper allegations in the show-cause notice.
37. Shri Mondal citing the example of 21/11/2011 urged that the vessel SEAMAC- I when re-imported was classified under CTH 8905 as is verifiable from page 394 of paper book of volume I of the appellant. The original bill of entry of the appellant filed at the time of first import of the vessel was assessed as that was presented holding the vessel to be goods and there was no appeal against that by the appellant. That reached to finality. Therefore, following decision in the case of Priya Blue Industries Ltd v. Commissioner of Customs (Preventive) 2004 (172) ELT 145 (SC), a finalised issue cannot be reopened in terms of Para 6 of the said judgment. Accordingly all the three vessels falling under CTH 8905 90 do not call for re-classification thereof under CTH 89019090 when the character, nature as well as structure thereof remained the same all along.
38. Inviting attention to Section 2(25) of the Merchant Shipping Act, 1958, Revenue submits that at no point of time the vessels were cargo ship or passenger ship as defined in terms of that law and that establishes that no passengers were carried by the appellant as its commercial operation in terms of that definition. He also relies on section 2(21) of the said Act to submit that it was not at all a cargo vessel, not serving any purpose of either cargo vessel or passenger vessel except being a diving vessel serving specific purpose of ONGC. Appellant failed to discharge its burden of proof to overturn the contention of Revenue. Revenue relied on the decision in the case of Raj Shipping Agencies v. Commissioner of Customs 2015-TIOL-1405-CESTAT-MUM and Arcadia Shipping v. Commissioner of Customs 2006 (201) ELT 139 (Tri-Mum) to support its contentions.
39. Placing para 6.1 of Raj Shipping decision (supra), Revenue says the purpose for which the vessel is designed decides classification thereof and that remains undisputed all along. But according to appellant, the requirement of the principle of law laid down in Hindustan Ferodo Ltd. v. Commissioner of Central Excise 1997 (89) ELT 16 (SC) bars Revenue without discharging its burden of proof showing that the nature and character of the vessel compelled Revenue to maintain its stand of classification as was made at the time of first import. Revenue submitted that burden of proof was discharged by it proving that the technicality and design of the vessels remained unchanged handicapping the appellant to use such vessels commercially for passenger or carge transportation and Appellant failed to contradict that. According to Revenue, appellants reliance in the case of Hal Offshore vs. Commissioner of Customs 2014 (303) ELT 119 (T) having been admitted by the Supreme Court against Tribunals order that decision is in jeopardy. However in page 36 of the decision, it is held by Tribunal that character of the vessel decides classification thereof.
40. Inviting attention to page 239 of paper book volume VII, filed by appellant, Revenue submits that scope of work carried out by SEAMEC- II is well stated at page 259 thereof. When the vessel was meant to serve that purpose it is not at all possible to hold that the vessel were cargo or passenger vessel. Further reliance was placed by Revenue on page 259 to 261 of the said volume of the paper book to contend so in respect of other vessels.
41. Filing a comparative chart, Revenue urged that the classification of the vessel and certification by Lloyds Register clearly indicates how the vessels shall be classified and appellants reliance on the technical details placed before the Tribunal itself brings out that the vessels were not at all capable of carrying any passenger or cargo commercially.
42. So far as SEAMEC-I is concerned, placing page 270 of paper book, Revenue submitted that the vessel was a supply vessel. Placing page 289, it was submitted that SEAMEC- I was not a passenger or cargo vessel and that is undisputed. SEAMEC - II and III was diving vessels only which is also undisputed. Page 286 of the said paper book supports the contention of Revenue that the character of the vessel was supply vessel. Therefore SEAMEC-II goes out of consideration to be held otherwise. Inviting attention to page 294 and 296, Revenue submits that the character of SEAMEC - III neither being cargo nor a passenger vessel, does not support case of the appellant. Relying on the decision of Honble Supreme Court in the case of Commissioner of Central Excise, Bangalore v. Srikumar Agencies 2008 (232) ELT 577 (SC) Revenue submits the facts and evidence of each case decides its fate without reliance on the decision of a different case which are not based on the given facts, evidence as well as law applicable to the given case in hand. Therefore, the present cases should be decided on the basis of their governing facts as well as the evidence that are placed in the course of argument against these appeals and law applicable to the case, taking the character of the vessel into consideration.
43. So far as the issue of confiscation is concerned, Revenues submission is that page 82 of appeal folder containing show cause notice categorically brought to the notice of the appellant about the cost of repair/modification and installation of machinery carried out not being disclosed to Revenue filing bill of entry in that behalf under section 46 of the Act, appropriate adjudication shall be made. Para 12.5 of the show cause notice brings out non-declaration/disclosure of the essential facts which was detected by investigation and came to the notice of Revenue for which the vessels were proposed to be confiscated under section 111(m) of the Customs Act, 1962. According to Revenue mere error in citation of the section or sub-section or omission thereof in the show cause notice does not make adjudication fatal following the ratio laid down by the apex Court in the case of Collector of Central Excise, Calcutta v. Pradyumna Steel Ltd 1996 (82) ELT 441 (SC). Revenue submitted that such fact can be appreciable from 11.3.1 and Para 12.15 of the synopsis of the appellant. Penalty under section 114A was bound to be imposed for the breach of law by the appellant and that has been rightly done in adjudication. So also confiscation was rightly ordered.
44. On the issue of determination and confirmation of duty liability, Revenue placed its reason at page 9, under Para E of its synopsis. According to Revenue, appellants plea that request was made to Customs by it to convert the vessel from foreign-going to coastal run was of no sense when the vessels were not at all foreign-going by their nature. Appellant filed bills of entry only in respect of the bunker and other consumables without filing any bill of entry in respect of value of repair made to all the three vessels from time to time and machinery installed therein at the time of each re-import thereof. Appellant failed to prove that that the vessels were foreign-going vessels. Bill of entry did not disclose the character of the vessel whether it is foreign-going or only coastal running for which the appellant cannot take any advantage of its false documents filed with customs. No documents of appellant showed at any time that its vessels were foreign going and were meant for passenger or cargo transporting. The value addition made to the vessels on repair being available on record that was made liable to duty. That has been done rightly in terms of the adjudication order.
45. So far as the rate of duty is concerned that shall be determinable under section 15(1)(c) of the Act as that was prevailing at the relevant time. Applicable rate of exchange shall apply. Appellant failing to discharge its obligation under law bringing out material facts to the knowledge of the Customs, penalty was rightly imposable following the decision of Tribunal in the case of Jindal Drilling & Industries Ltd v. Commissioner of Customs, Bombay 2001 (138) ELT 1335 and that has been done. Placing Para 22 to 23 of the judgment to support its contention, Sri Mondal submitted that non-disclosure of the material fact to the Customs authorities not only invites penal proceedings but also does not make the proceedings time-barred.
46. Placing volume VII of paper book of the appellant, Revenue invites attention to page 79 thereof to show that the correspondence dated 054/06/2010 communicating conversion of the vessel from coastal run to foreign run was a mere pretext when there was no scope for appellant to convert the vessel to foreign going vessel since that was not being capable of transporting any passenger or cargo commercially. Documents filed by appellant contained misrepresented facts and appellant failed to rebut all the allegations of Revenue. Relying on Para 3.3 of Shipping Corporation of India decision reported in 2014 (312) ELT 305 (Tri.-Mum), Revenue explained that whether the vessel was goods or conveyance that can be ascertained reading Para 6.3 thereof. When a vessel is goods, cost of any repair or value addition thereto shall attract duty. Of course duty if not imposable in terms of any notification benefit permissible, that shall not be done. But that does not exonerate the vessel from penal consequence of law for the breach of law made by the appellant deliberately.
47. Placing Para 6.2 at page 45 of the volume I of the paper book of appellant, it was emphasised by Revenue that the vessels re-imported into India being meant for home consumption that is goods only and liable to customs duty at the rate and value prevalent on the date of re-importation. Revenue also relied on Para 6.3 of the above document to support its contention that the vessels entered into India on re-importation were goods and those were meant for use by ONGC in India. Learned AR for Revenue relied on Para 6.5 of its notes of argument to submit that when the vessels were meat for home consumption, that has been held so as goods. Placing reliance on Para 6.7 of the Supreme Court judgment in the case of Chowgule & Co. Pvt. Ltd. v. Union of India 1987 (28) ELT 39 (SC), Revenue explained what is called coastal vessels and coastal run has been well explained in that Para. Therefore revenue prayed that taking into consideration totality of the facts and circumstances of the case, evidence on record as well as law, Revenues contentions succeeds and the vessels are classifiable under CTH 8905 and liable to duty as goods upon re-import into India from time to time as well as penal consequence of law for the breach thereof made.
REJOINDER OF APPELLANT
48. In rejoinder, learned Sr. Counsel Shri Sridharan submits that the three proceedings were time-barred and that can be appreciated from the principle of law laid down by Hon'ble Supreme Court in the case of Commissioner of Central Excise, Ahmedabad I v. M. Square Chemicals 2008 (231) ELT 194 (SC) and Navsari Cotton and Silk Mills Ltd. v. Union of India 1992 (60) ELT 110 (Guj.). The sum and substance of the judgments is that when the materials are borne by record and the appellant has disclosed what that was required to be disclosed to the Customs, there cannot be any presumption of suppression or non-fulfilment of obligations of the appellant. Show cause notice cannot be issued on mere assumptions, presumption and suspicions. The show cause notice in the present cases did not invoke section 111(l) of Customs Act, 1962 to confiscate the vessels. Section 111(m) of the said Act is not applicable for non-fulfilment of ingredients thereof. The Shipping Corporation of India decisions is not applicable to the present facts and circumstances of the case since that case related to the first import goods. Present cases of the appellant are that vessels were not original imports. After original import of vessels those were running on the coastal belt and when those were going out of India and re-imported upon their repair that is not original import for which that decision shall not apply to the appellant.
49. Relying on the decision of the Tribunal in Hede Ferrominas Pvt. Ltd. v. Commissioner of Customs (Import), Mumbai 2016 (334) ELT 540 (Tri.-Mumbai) it is submitted by learned Sr. Counsel that the age old customs practice should not be deviated, procedures should not weigh to hold that the original vessel of the appellant came to India on re-import is still goods and liable to duty, penalty and confiscation. In this regard he relied on the decision of the Tribunal in Noble Asset Co. Ltd. v. Commissioner of Customs (Preventive), Mumbai 2006 (205) ELT 901 (Tri. - Mumbai) and serial No. 12 of the compilation, in Para 60 of page 7 to support his contention that it is the established practice of the Customs which should not be deviated to hold that the appellant shall be liable to penalty and confiscation.
50. The vessel was never meant to be goods on the re-import because there were subsequent movements after the original entry into India. For this purpose filing of bill of entry is unwarranted every time. Accordingly, there is no question of confiscability. Section 15(1)(c) of the Customs Act, 1962 is not invocable following decision reported in Samson Maritime Ltd v. Commissioner of Customs (Import), Mumbai 2016 (333) ELT 148 (Tri. Mumbai). According to appellant, when penalty is linked to duty and such duty is not imposable, without section 28 being invoked, relying on the decision in L and T Sapura Shipping Pvt Ltd v. Commissioner of Customs reported in 2016-TIOL-1519-CESTAT-MUM, appellant should not face confiscation and penalty. As far as SEAMAC-III is concerned, there was a re-entry of the vessel in 2011. If at all duty is leviable, following decision of Honble Supreme Court dismissing appeal and review application of Revenue, against order of Tribunal in SRF Ltd. Vs. Commissioner Of Customs, Chennai 2015-TIOL-74-SC by order dated 15/07/2016, the appellant should not face any unwarranted levy of duty of customs and additional duty of customs equal to the quantum of excise duty not payable in India since excess over that is exempt. Therefore, Revenues levy of additional duty of customs is contrary to law. Thus he says that Section 3(5) of Customs Tariff Act, 1975 is a bar to impose duty and additional duty.
51. Placing Section 86 of the Customs Act, 1962 appellants submission is that if there is any ship stores in the ship that may be taxed but not the ship. Accordingly, that section does not levy tax on the ship. Therefore the meaning of Section 2(38) of the Customs Act, 1962 defining the term stores shall not be construed to be the vessel for which Section 86 does not warrant any filing of bill of entry.
52. The decision of the Tribunal in Arcadia Shipping Ltd. v. Commissioner of Customs, Ahmedabad 2006 (201) ELT 139 (Tri. Mumbai) is applicable to the case of the appellant. A barge with diving equipment was subject matter of decision in that case. Para 4 of the said judgment is relevant to appreciate the case of the appellant. Appellants submission is that Revenue failed to discharge its burden of proof to bring the vessel into CTH 8905. Mere navigability is not the criteria for disturbing the classification.
53. All offshore supply vessels prevent Revenue to levy duty thereon as goods reclassifying the same on re-importation thereof. The diving was one of the functions of the appellant. That does not bring the vessels for change of their classification. Accordingly, entire argument of Revenue that it has discharged its burden of proof is of no sense for which all the appeals of appellant may be allowed.
FINDINGS AND CONCLUSION OF THE TRIBUNAL
54. The contract between the appellant and ONGC reveals that appellant having marine experience agreed to carry out following activities as embodied under Schedule I & II to the Annexure-I of the agreement with ONGC (copy of the sample agreement available at page 141 of the paper book Vol. VII submitted by appellant).
SPECIFICATIONS, SCOPE OF WORK AND SPECIAL CONDITIONS OF CONTRACT AIR RANGE DIVING SUPPORT VESSEL (ARDSV) SCHEDULE-I 1.1 Background.
Inspection, Maintenance & Repair (IMR) group of Offshore Logistics, the CORPORATION, Mumbai Region, Mumbai presently caters to inspection, maintenance and repair of approx. 240 offshore steel structures (process and welI platforms), 1100 risers, 5000KMs of sub-sea pipelines, 5 SPMs/SBMs, 20 PLEMs etc. The diving support vessels are deployed for inspection of platforms and to ensure that these facilities are fit for use. These diving support vessels are also required to provide the fire fighting, safety, search & rescue and pollution control support to offshore oil and gas fields.
To carry out underwater inspection ONGC has already deployed vessels with both air and saturation diving and are known as MSVs. In addition to MSVs ONGC now intends to deploy Vessel with only air diving facilities which will be known as Air Range Divine Support Vessels (ARDSV). ARDSV is meant to carry out diving in air range only besides other Jobs as per Scope of Work.
1.2 The ARDSV is required to provide/perform the following services/operations:
1.2.1 To carry out under water and above water visual and NDT inspection, maintenance and repairs of steel structures by Air diving, in water depth of maximum 50 m.
1.2.2 To carry out under water through air diving and above water inspection, maintenance and repair of offshore structures, risers, PLEMs, tanker mooring, de-mooring, maintenance, operations, decommissioning and re-installation of SPMs/SBMs etc. 1.2.3 Deleted.
1.2.3a To carry out repair of risers of sizes 4" to 42" by using repair clamps or sectional replacement (using weld less connectors/ flange connection! direct welding to parent pipe).
1.2.4 To carry out topside (including splash zone) inspection, maintenance and repair of offshore structure - spider deck, risers, boat landing etc. 1.2.5 To provide dive support to various offshore installations, jack up rigs and floaters etc. 1.2.6 To carry out fire fighting operations of offshore installations, rigs, vessels, tankers, etc. in offshore fields, in port and near shore areas. The maximum height of the platform would be around 50 m from MSL.
1.2.7 To provide safety and rescue support to various offshore installations, jack up rigs, floaters etc. 1.2.8 To carry out/assist in rescue operations and fulfill role of rapid intervention vessel 1.2.9 To carry out pollution control, operations.
1.2.10 To provide medical facilities within the capabilities of the vessel.
1.2.11 To accommodate additional personnel including rescued personnel as and when required.
1.212 To carry out heli-deck duty for helicopter operations.
1.2.13 To carry out transportation of personnel, material and equipment as and when required.
1.2.14 To provide crane assistance to offshore installations for transfer of material and personnel for remedial work at the boat landing area/spider deck level and crane assistance to platform within the capability of the vessel/outreach & load capacity of the crane.
1.2.15 To carry out any other services desired by the CORPORATION within the capability of the vessel.
1.3 General All operations including marine & diving operations should be carried out in accordance with internationally accepted goods and safe practices, as per IMCA guidelines, the CORPORATIONs code of practice for diving & marine operations.
SCHEDULE 2 Technical requirements to carry out the above scope of work 2.1 All Diving Support vessel as per specification given in Schedule-3.
2.2 Diving equipment as per specifications given in Schedule-4 2.3 Work equipment under regular category as per specifications given in Schedule-5 and call out equipment as per specifications given in Schedule-6 2.4 Personnel as per Schedule 7 and 8.
2.5 Reporting as per Schedule 9.
2.6 Material supplies equipment, services and personnel to be furnished by the CONTRACTOR/ CORPORATION as per Schedule-10.
2.7 Documentation Requirements Schedule-11.
2.8 Contractors responsibility including breakdown clause as per Schedule-12.
2.9 Health, Safety, Environment (HSE) Policy and Fall Protection as per Schedule-13.
55. All the three vessels were dedicated vessels to render aforesaid service to ONGC only, without being capable of commercially operated as passenger or cargo carriage. For a limited purpose those were conveyance for ONGC only. Appellant was obliged to ONGC under contract to transport its working personnel and goods without providing any transportation service to general public.
56. On the basis of technical literature submitted by the appellant, it proved its case that all the three vessels were more specifically and technically designed/built which suited for specialized use of ONGC without being usable as a commercial cargo or passenger ship/vessel for carriage of cargo or passenger between any port in India or any port outside India. In such circumstance, the vessels remained as goods only not only at the time of first entry thereof into India but also during re-imports made from time to time on repair thereof. Re-import of goods under Section 20 of the Act is permitted under law when the exported goods came to India again goes back out of India for repairs. Partial duty concession/exemption is available to the re-import as is covered by the aforesaid notification. Revenue discharged its burden of proof bringing the goods to CTH 89059090 in view of technical character of vessels ruling out their adoptability by CTH 89019090.
57. It is an established fact from record that the appellant had never filed any Shipping Bill nor filed Bills of Entry in respect of cost of repair and machinery installed therein and freight and insurance incurred, upon re-import of the vessels from time to time, although filing thereof is mandatory under Section 46 of the Act. The Bills of Entry filed were only in respect of bunker, store and consumables. Such stores and consumables only suffered duty and Revenue has no grievance thereon. But, without the Bills of Entry being filed against the cost of repair and freight as well as insurance incurred, there was escapement of levy of duty, Revenue having lost the duty imposable against re-import on the value of the repair/modification and machinery installed as well as freight and insurance incurred, adjudication was made and resulted with the consequence of adjudication as stated herein before. It was the obligation of the importer in law to file the Bills of Entry under Section 46 of the Act on import as well as re-import under Section 20 of the Act.
58. According to law of Customs on import and re-import, when Bill of Entry is filed in respect of the goods imported, necessary particulars of import are furnished therein for examination by Customs. Descriptions relating to import appearing in the Bill of Entry are required to be verified by the importer as to the truthfulness thereof. Customs Authority has been vested with the power to call for the invoice and any other documents related to import of goods covered by the said Bills of Entry to examine truth of the declaration in the Bill of Entry. Appellant failed to file Bills of Entry in respect re-import of all the three vessels made from to time to examine whether there were any repair/renewal/ modification was done to the vessels and machinery installed if any, installed thereon as well as freight and insurance charges incurred for the to and fro journey undertaken by the vessels. Accordingly, Customs Authority was prevented to know the cost of such repair, cost of installed machines, freight and insurance charges incurred in respect of these vessels when entered into India on re-import. Thereby interest of Customs was prejudiced.
59. Appellant pleaded that when vessels were arriving during the impugned period, authorities having taken inventory of the store in the vessel as exhibited by the sample copy of the document at page 81 of the paper book, Volume-VII, it was within their knowledge that vessels have entered into India on re-import. But such plea of appellant is devoid of merit for the reason that appellant failed to discharge its obligation under law to without filling Bills of Entry disclosing value of repair, freight and insurance even though Section 46 of the Act read with Section 20 thereof specifically require the appellant to file Bills of Entry in respect of the repair and renovation cost made to the vessel including freight and insurance incurred and machinery installed, if any, to receive examination of Customs following the mandate of the Notification No. 94/96-Cus dated 16.12.1996 to order for levy, if any imposable. Revenue is correct to submit that the appellant never filed any Bills of Entry in respect of the value of such repair and modifications done to all the three re-imported goods i.e. vessels from time to time in absence of any evidence in that regard.
60. Appellants further plea that copy of the documents at page 80 and 81 of the Paper book, Vol-VII exhibits that at the time of moving the vessels out of India, those were converted from coastal-run to foreign-run and foreign-run to coastal-run in return is of no help to the appellant to avoid the duty liability arose in the manner indicated above for the reason that the vessels remained as goods only all along and never been foreign-going vessel as defined under Section 2(21) of the Act, which reads as under: -
(21) 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 exercises;
(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 purpose whatsoever; [Emphasis supplied]
61. In view of above mandate of law, mere filing of the documents at page 80 and 81 of the paper book does not exonerate the appellant from its duty liability without filing the Bills of Entry disclosing the value of the repair/renewal/modification and installation of machinery done to the vessel including freight and insurance charged incurred. Therefore, there was violation of law made by the appellant relating to filing of Bills of Entry which is well established. Similarly, merely because the vessel was running from one coast to another during its movement while executing contract with ONGC, that does not entitle the appellant to plead that the vessels were foreign-going vessels. Accordingly the re-imports were not immune from levy.
62. When the vessels remained as goods all along i.e. from point of first entry to India and during the re-import from time to time that was classifiable under CTH 89059090 for the reasons stated hereinbefore taking the criteria of classification prescribed by the said CTH. All the vessels did not possess the character of the goods covered by CTH 89019090 not being used for carriage of cargo or passenger according to the mandate of the said CTH. Accordingly, stand of Revenue that the vessels on re-import shall be classifiable under CTH 89059090 as goods only is correct and that is upheld.
63. Appellant raised the question on the rate of duty, which can be well ascertainable under Section 15 of the Act, which reads as under: -
SECTION 15. Date for determination of rate of duty and tariff valuation of imported goods. (1) [The rate of duty [* * *] and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force, -
(a) in the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section;
(b) in the case of goods cleared from a warehouse under section 68, on the date on which [a bill of entry for home consumption in respect of such goods is presented under that section];
(c) in the case of any other goods, on the date of payment of duty :
[Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft [or the vehicle] by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be.] (2) The provisions of this section shall not apply to baggage and goods imported by post. [Emphasis supplied].
64. Revenue having categorically said in the show-cause notice that the Basic Customs Duty on Ocean going vessel being payable along with the additional duty and other levies as envisaged by Notification No. 94/96-Cus dated 16.12.1996, that shall be ascertainable in accordance with law and any duty exemption under law is permissible. Therefore, in so far as levy of duty on the value of repair undertaken is concerned, value of machinery if any, installed therein and freight and insurance charges incurred, there shall be no difference to such proposition of Revenue. That shall be recomputed by learned adjudicating Authority in accordance with guide lines given by this order and in accordance with the law.
65. For the violation of law made by appellant, as stated herein before for no filing of Shipping Bills and Bills of Entry against exit from time to time and re-imports in respect of cost/value of repair and freight and insurance incurred, appellant was bound to face the consequences of adjudication as has been directed by adjudication order, which does not call for interference except to the extent modified by this order. Accordingly, it may be stated that Revenues plea that disclosure of stores and consumables for inventorization by the Customs upon re-import of the vessel, shall not exonerate the appellant from levy of duty in law, has force and sustains.
66. Plea of the appellant on limitation that in any circumstance, duty liability beyond 5 years of the date of show-cause notice is not recoverable deserves consideration on the facts of the case and law applicable. Learned adjudicating authority shall take such proposition into consideration and issue demand notice accordingly. It may be stated that bar is only against recovery but not against the levy which arises when event of levy occurs. Normal period shall be subject to levy and recoverable on the basis of rate of duty applicable on the dates of re-import during the impugned period. Basic Customs Duty, Additional Duty of Customs and Special Additional Duty shall be leviable and recoverable for such normal period in accordance with law. Learned adjudicating authority shall re-compute the liability and issue notice of demand accordingly.
67. In the case of Tata Tea Ltd. v. Commissioner of Customs, Chennai reported in (1999) 14 ELT 775 (SC), it has been held that section 20 of the Act read with the definition of import as given in Section 2(23), imported goods would include re-imported goods as well and therefore the goods sent/exported out of India and re-imported would also be liable to payment of duty in the same manner in which it would have been liable if imported for the first time in India. A reading of Section 20 makes it abundantly clear that the goods re-imported after exportation would be liable to duty and be subject to all the conditions and restrictions to which goods of the like kind and value are liable or subject, on the importation thereof. Accordingly, filing of Bill of Entry is mandatory in case of re-import. Supreme Court in Para 7 of the judgment in the above said case held as under:
Having heard the learned counsel for the parties, we are of the opinion that the order of the Tribunal cannot be found fault with. Under Section 20 of the Customs Act, 1962 read with the definition of import as given in clause (23) of Section 2 imported goods would include re-imported goods as well and therefore the goods sent out of India and re-imported would also be liable to payment of duty in the same manner in which they would have been liable if imported for the first time in India. In the matter of goods sent out for repairs only there is Exemption Notification No. 204/76. The benefit thereof has been taken by the appellant..... [Emphasis supplied]
68. The principle of law laid down in Tata Tea Case (supra) was followed in the case of Super Cassettes Industries Ltd. V. CC, New Delhi 2008 (225) ELT 401 (SC). Therefore Appellant fails to succeed in its pleading that there is no requirement of filing of bill of entry on re-import when that is mandate of section20 read with section 46 of the Act.
69. It has been held by Apex Court in the case of Priya Blue Industries Ltd. Vs. C. C. Preventive (2004) 172 ELT 145 (SC) that where an order is appellable under the statute and the party aggrieved did not choose to exercise the statutory right of filing an appeal, then the order is not liable to be questioned and the matter is not to be reopened in a proceeding for refund which if we may term it so is in the nature of execution of a decree/order. Therefore appellant has no ground to argue further that the vessel on re-import needs to be reclassified when no Bill of Entry was filed by the appellant on re-import of the vessels for there was escapement of levy.
70. Relying on the ratio laid down by Apex Court in the case of Harbans Lal Vs. C. C. E. & C 1993 (67) ELT 20 (SC) Revenue has also correctly submitted that the validity of notice under Section 124 of the Act, cannot be questioned on limitation for which no period has been laid in law within which it is required to be given. The Court further held that the ratio laid down in the case of Charandas Malhotra 1983 (13) ELT 1477 (SC) settles the position of law that section 124 is independent. The Bombay High Court in? M/s. Mohanlal Devdanbhai Choksey and Others v. M.P. Mondker and Others [AIR 1977 (Bombay) 320 = 1988 (37) E.L.T. 528 (Bom.)], correctly appreciating and following Charandas Malhotras case (supra) held that, section 124 of the Act contains substantive provisions relating to confiscation of goods etc. and imposition of penalty. Under Section 124 issue of a show cause notice prior to passing an order of confiscation or imposition of personal penalty is mandatory, but the language of Section 124 is clear and precise and no restriction or limitation or even a fetter is imposed as regards the time when proceedings may be initiated by issue of a show cause notice.
71. Appellants argument that the vessels re-imported on repair were not imported for home consumption, as the commodity remains intact, without any alteration, even after it is put to use, fails to stand for the reason that the Word consumption may involve in the narrow?sense using the article to such an extent as to reach the stage of its non-existence. But the word consumption in fiscal law need not be confined to such a narrow meaning. It has a wider meaning in which any sort of utilization of the commodity would as well amount to consumption of the article, albeit that article retaining its identity even after its use, following the ratio laid down by Apex Court in the case of Union of India V. V. M. Salgaoncar & Bros. (P) Ltd 1998 (99) ELT 3 (SC). A Constitution Bench of Apex Court has considered?the ambit of the word consumption in Article 286 of the Constitution in M/s. Anwarkhan Mahboob Co. v. State of Bombay (now Maharasthra) and Others [1961 (1) SCR 709]. Their Lordships observed thus:
Consumption consists in the act of taking such advantage of the commodities and services produced as constitutes the utilization" thereof. For each commodity, there is ordinarily what is generally considered to be the final act of consumption. For some commodities, there may be even more than one kind of final consumption ........................................... In the absence of any words to limit the connotation of the word consumption to the final act of consumption, it will be proper to think that the Constitution-makers used the word to connote any kind of user which is ordinarily spoken of as consumption of the particular commodity."[Emphasis supplied] In another decision a two Judge Bench of Honble Supreme Court considered the scope of the words consumption vis-a-vis use. (vide Kathiawar Industries Ltd. v. Jaffrabad Municipality : AIR 1979 SC 1721). There it was held that the precise meaning to be given to those words would depend upon the context in which they are used. It is in a primary sense that the word consumption is understood as using the article in such a manner as to destroy its identity. It has a wider meaning which does not involve the complete using up on the commodity.
72. Whenever an order confiscating the imported?goods is passed, an option, as provided under sub-section (1) of Section 125 of the Customs Act, is to be given to the person to pay fine in lieu of the confiscation and on such an order being passed according to sub-section (2) of Section 125, the person shall in addition be liable to any duty and charges payable in respect of such goods. A reading of sub-sections (1) and (2) of Section 125 together makes it clear that liability to pay duty arises under sub-section (2) in addition to the fine under sub-section (1). Therefore, where an order is passed for payment of customs duty along with an order of imposition of fine in lieu of confiscation of goods, it shall only be referable to sub-section (2) of Section 125 of the Customs Act. It would not attract Section 28(1) of the Customs Act which covers the cases of duty not levied, short levied or erroneously refunded etc. The order for payment of duty under Section 125 (2) would be an integral part of proceedings relating to confiscation and consequential orders thereon, on the ground as in this case that the importer had violated the conditions of notification subject to which exemption of goods was granted, without attracting the provisions of Section 28(1) of the Customs Act. A reference may beneficially be made to a decision of this Court reported in Mohan Meakins Ltd. v. Commissioner of Central Excise, Kochi, 2000 (115) E.L.T. 3 (S.C.) = (2000) 1 SCC 462 wherein it has been observed in Para 6 .. Therefore, there is a mandatory requirement on the adjudicating officer before permitting the redemption of goods, firstly, to assess the market value of the goods and then to levy any duty or charge payable on such goods apart from the redemption fine that he intends to levy under sub-section (1) of that section. This follows the principles of law laid down by Apex Court in the case of C.C.(Imports), Mumbai Vs. Jagdish Cancer & Research Centre 2001 (132) ELT 257 (SC).
73. Appellants plea that Show Cause Notice intended confiscation under section 111(m) of the Act instead of section 111(e) and 111(f) of the Act is of no significance for the reason that there is no dispute that the officer who made the demand was competent to make demands under law as well confiscate the gods. Following the principle of law laid down in the case of J. K. Steel Ltd. Vs. UOI 1978 (2) ELT J355 (SC) if the exercise of a power can be traced to a legitimate source, the fact that the same was purported to have been exercised under a different power does not vitiate the exercise of the power in question. This is a well-settled proposition of law. In this connection reference may usefully be made to the decisions of this Court in P. Balakotaiah v. The Union of India, 1958 SCR 1052 = (AIR 1958 SC 232) and Afzal Ulah v. State of U.P., 1964 - 4 SCR 991 = (AIR 1964 SC 264). Apex Court in the case of Collector of Central Excise, Calcutta vs. Pradyumna steel Ltd.- 1996 (82) E.L.T. 441 (S.C.) has also held that it is settled that mere mention of a wrong provision of law when the power exercised is available even though under a different provision, is by itself not sufficient to invalidate the exercise of that power.
74. So far as imposition of redemption fine is concerned, taking into account that confiscation was warranted on the facts and circumstances of the case and law applicable, exercise of option in lieu of confiscation being permitted by law under Section 125 and learned authority having determined the value of cost of repair and freight which remained undisputed by appellants, that shall be as under as is mentioned in column 3 of Table below: -
Appeal No. (1) Redemption fine imposed in adjudication in Rs.(2)
Redemption fine imposed by this order by Tribunal in Rs.(3)
C/87569/13 3,75,00,000 1,00,00,000 C/87660/13 12,00,00,000 3,00,00,000 C/87536/13 7,00,00,000 2,00,00,000
75. So far levy of penalty is concerned; learned adjudicating authority had rightly considered such levy on the established violation of law as discussed above. He imposed penalties under Section 114A of the Customs Act which should be equal to the amount of duty evaded as prescribed by that section. Accordingly that shall be recomputed by him taking into consideration of the duty liability re-determined in the manner indicated above by this order.
76. We have not ordered penalty and redemption fine whimsically but ordered so, following the ratio law laid down by Apex Court in the case of Mansi Impex 2011 (27) ELT 631 (SC) on the facts and circumstances of the case.
77. Interest, if any, on the duty demand shall follow.
78. In view of the settled position of law as stated above and having decided the appeals on the statutory principles as well as first principles of law, further discussions on other citations is considered redundant and not to burden this order, in the fitness of the circumstances of the case and all the pleadings of appellant except bar of limitation is dismissed being devoid of merit.
79. With the above directions, findings and observations, appeals are partly allowed to the extent indicated above, holding as under: -
(1) All the vessels remained as goods only even on re-import thereof and classifiable under CTH 89059090. Those were not foreign going vessels.
(2) Value of repair and renewals carried out to the vessels, machinery if any installed therein including insurance and freight charges incurred for to and fro journey of the vessels shall be dutiable.
(3) Redemption fine and penalty shall be imposable to the extent indicated above.
(4) There shall be no recovery of the levy beyond five years of date of show cause notice.
(Pronounced in the Open Court 06/12/2017) (C J Mathew) Technical Member (Dr. D N Panda) Judicial Member as/* 1210 1 43 1