Custom, Excise & Service Tax Tribunal
Vinit Shah vs Commissioner Of Customs (I) on 18 April, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/85180 & 85181/2013
[Arising out of Order-in-Original No: 2012/CAC/CC(I)/AB/Gr.VB dated 24th December 2012 passed by the Commissioner of Customs (Import), Mumbai]
For approval and signature:
Honble Shri M V Ravindran, Member (Judicial)
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Arcadia Shipping Ltd
Vinit Shah
Appellants
versus
Commissioner of Customs (I)
Respondent
Mumbai Appearance:
Shri S N Kantawala, Advocate for the appellant Shri K M Mondal, Special Counsel for the respondent CORAM:
Honble Shri M V Ravindran, Member (Judicial) Honble Shri C J Mathew, Member (Technical) Date of hearing: 18/04/2016 Date of decision: 18/10/2016 ORDER NO: ____________________________ Per: C J Mathew:
Two appeals arising out of common order-in-original no. 2012/CAC/CC(I)/AB/Gr.VB dated 24th December 2012 passed by the Commissioner of Customs (Import), Mumbai are disposed off by a common order. The main plea of the appellants is that the proceedings were vitiated by lack of jurisdiction to adjudicate upon the matter of alleged illicit import of vessel MT Navdhenu Sana and sought quashing of the impugned order on this ground. We, therefore, take up this issue for determination before proceeding to consider the other pleas of the appellants.
2. MT Navdhenu Sana, an anchor handling tug built in China and registered by its owners at Singapore under the name and style of GB Sea Snapper, was bought and taken delivery of in January 2011 by M/s Arcadia Shipping Ltd. As it was now owned by an Indian entity and as required under Merchant Shipping Act, 1958, a provisional registration was accorded. It arrived at Mumbai on 24th February 2011 and was lying at the Great Offshore Docks for repairs after permission for entry was accorded upon filing Import General Manifest no. 200750 dated 25th February 2011 when it was subjected to investigation and seized on 5th October 2011 under section 110 of Customs Act, 1962.
3. The seizure was effected in the reasonable belief that it, being an Indian-registered vessel, was required to discharge of duties of customs on import and had failed to do so, to file manifest as goods upon import and to file bill of entry for import and hence are smuggled goods liable for confiscation under section 111 of Customs Act, 1962. The vessel, valued at Rs 26,25,21,979 for assessment, was allowed provisional release on 12th December 2011 subject to payment of customs duty of Rs 3,99,31,876, furnishing of bank guarantee of Rs 5,25,00,000/- and on execution of bond for assessable value. Reportedly, the vessel sailed out on 10th January 2012 after change in name and registry owing to transfer of vessel to foreign owner on 3rd January 2012. In the meanwhile, permanent registration in the Indian Register of Shipping (IRS) was accorded on 13th April 2011. Bill of entry no 4846251 was filed on 5th October 2011 against Import General Manifest no 2013841 dated 13th June 2011.
4. Appellant-company had intimated to Director General Shipping vide letter dated 2nd November 2010 that the vessel, scheduled for delivery by early January 2011, was, as required under Merchant Shipping Act, 1958, intended to be registered under Indian flag. On an application, provisional General Trading Licence permitting worldwide and coastal trade was issued on 12th January 2011 which was extended on 14th June 2011 for a further period of six months till 11th January 2012. As early as December 2010, they had also applied for a licence for a period of sixty months.
5. It is the contention of the appellants that the vessel was brought into India to tow a ship imported for breaking and that it was intended for use outside India. We note that the vessel has been subjected to payment of duty and that it was exported. The dispute over levy of this duty and adjudication thereof, in the context of section 74 of Customs Act, 1962, appears to be academic.
6. Learned Counsel for appellant-company contends that the adjudicating Commissioner lacked jurisdiction to adjudicate upon the matter in view of the decision of this Tribunal in Shipping Corporation of India v. Commissioner of Customs (Import), Mumbai [2015 (317) ELT 74 (Tri-Mumbai)] and Samson Maritime Ltd. & anr. v. Commissioner of Customs (Import), Mumbai [2016-TIOL-93-CESTAT-MUM]. That the competent jurisdiction was not Mumbai is clear from the impugned order itself admitting that the vessel had, indeed, called at Bhavnagar and had sailed out for Fujairah from there on a foreign run is the concomitant contention on behalf of the appellant.
7. Learned Special Counsel, Mr Mondal, appearing for respondent-Commissioner fervently opposed this line of argument and contended that the decisions relied upon are not applicable to the facts in dispute. The appellants in re Shipping Corporation of India and re Samson Maritime Ltd had imported exempted goods and, hence, the question of plying smuggled vessels did not arise as occurred in the matter now before us. He also argued that a careful reading of the proceedings would reveal that it was not for the offence at Alang that proceedings were initiated but for non-filing of Import General Manifest for the vessel as goods on arrival at Mumbai which negates the claim of lack of jurisdiction.
8. We have, once again, at the behest of Mr Mondal perused the show cause notice and impugned order but find ourselves unable to appreciate the latter contention of his. An Import General Manifest for the vessel as conveyance had been filed upon arrival at Mumbai on 24th February 2011. The logic of his inference that the master of the vessel was also mandated to include the vessel as goods would empower every Commissioner at every port of call to invoke jurisdiction at any time during the sailing life of the vessel. The said provision, undoubtedly, requires declaration of goods but such declaration is for the limited purpose of ensuring that section 32 is complied with. Even if the law prescribes that only manifested cargo can be unloaded at the specified port, there is no converse mandate that cargo manifested for that port have necessarily to be unloaded there; failure to land manifested cargo is not visited with confiscation under section 111 but under section 116 of Customs Act, 1962. There is, therefore, no logic for insisting that all cargo on board have to be declared or any legal requirement to do so. Even if the prescribed form requires declaration of transhipment and same bottom cargo, it would appear that a floating conveyance can hardly be called same bottom or transhipment cargo. It is patent that ships, literally and figuratively, are not of the same standing as other cargo for the expression vessels finds inclusion within the definition of goods and conveyances in section 2 of Customs Act, 1962. It appears from the contention of the Learned Special Counsel that the dual identity contrived by law is now diagnosed as schizophrenia requiring medication for remedying. Even if the argument of Mr Mondal that the vessel lying within the jurisdiction of Mumbai was not absolved of its duty liability is to be accepted, then confiscation only follow a finding that duty liability had not been discharged in accordance with section 47 of Customs Act, 1962. In the contention of the allegation that the vessel, as goods, had not discharged its liability was goods and was liable to be subject to recovery action the issue of jurisdiction to invoke section 28 of Customs Act, 1962 cannot be avoided. Even though the impugned order has invoked section 125 of Customs Act, 1962 which normally is invoked at place of seizure to demand the duty, we find that this action is questionable given that it does not find mention in the show cause notice. This aspect requires some discussion.
9. It is now settled law that goods that as per section 125 of Customs Act, 1962 have been confiscated and allowed to be redeemed on payment of fine in lieu of confiscation is denied the privilege unless appropriate duty has been paid. This is considered to be a provision in the Customs Act, 1962 parallel to section 28 of Customs Act, which, incidentally, was invoked in the show cause notice, with the substantive difference of there being no bar on limitation and sans the requirement of determination of duty not-paid or short-paid devolving on the proper officer. Section 125 itself does not mandate determination by the proper officer but requires compliance with liability to discharge duty; consequently, consequently in the absence of assessment at the time of import the adjudicating authority is required to follow the procedure for assessment because duty liability cannot be fastened de hors section 12 of Customs Act, 1962 and section 17 of Customs Act, 1962. In the instant case, appellant-company had been directed to file the manifest, as well as bill of entry, and this direction had been complied with. Confiscation has been ordered by invoking section 111 (f) of Customs Act, 1962 which reads thus:
(f) any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned. It is an admitted fact that Import General Manifest no. no. 200750 dated 25th February 2011 was filed on arrival at Mumbai and, admittedly, it failed to declare that the vessel, itself, was goods. This was rectified by filing of another Import General Manifest no 2013841 dated 13th June 2011 incorporating the vessel as goods. We find in section 30 (3) of Customs Act, 1962 that (3) If the proper officer is satisfied that the import manifest or import report is in any way incorrect or incomplete, and that there was no fraudulent intention, he may permit it to amended or supplemented. which would render the invoking of section 111(f) of Customs Act, 1962 to be without factual grounding. Once there are no grounds for initiating confiscation proceedings, there is no authority to require duty payment to be a condition of redemption of the vessel.
10. Even if the confiscation was valid, fastening of duty liability as a condition for release requires either determination of the duty by the proper officer or determination of duty by the person who avails of the offer of redemption. It is seen that the bill of entry no. 4846251 dated 5th October 2011 was pending for assessment at the time of sailing of the vessel and issue of port clearance. From a plain reading of section 125, the legislative intent is clear in that the offending goods are liable to be held back till duty is paid with duty liability being assessed in the manner prescribed in law. Consequently, for invoking the duty payment clause of section 125, the jurisdiction to determine duty liability is sine qua non; else section 125(2) will remain non-workable. Confiscation may be invoked under the manifold and variegated clauses, not all germane to liability to duty even if restricting the jurisdiction to, inter alia, dutiable goods, of section 111 of Customs Act, 1962 and, in instances of duty foregone having been noted at the time of import, responsibility for discharge of duty liability can be fastened without further recourse to assessment of duty. There is, as yet, no provision in law for determining duty liability sans compliance with the procedure prescribed for assessment. And that, verily, is inextricably linked with jurisdiction of Bhavnagar to assess duty. The contention of Learned Special Counsel that the jurisdiction question that arose in re Shipping Corporation of India and re Samson Maritime Ltd does not arise here is not acceptable.
11. We find that in re Shipping Corporation of India and re Samson Maritime Ltd, the issue of duty liability was also considered along with the issue of jurisdiction. So it is here, too, as the appellant has claimed to be a foreign-going vessel which, while on foreign run, was compelled to make landfall at Mumbai owing to emergency. Appropriately, the decision of this Tribunal in re Shipping Corporation of India, i.e , 5.1?From the show cause notice, it is evident that the charge against the appellant is that they did not file IGM or Bill of Entry when the vessel first arrived at Sikka Port on 14/11/2010. Sikka port is situated in Gujarat and, therefore, offence, if any, has taken place in Gujarat. The Customs Commissioner at Bombay does not have jurisdiction over the Sikka port and, therefore, he could not have issued any show cause notice proposing confiscation and imposition of penalty in respect of an act which was committed beyond his jurisdiction. On this ground alone, the impugned order is liable to be set aside.
5.2?Secondly, it is seen that the vessel, even if treated as goods were not liable to any Customs Duty as the same was exempt from payment of duty under Notification No. 21/2002-Cus. Thus, the total duty implication was nil. Therefore, the vessel could not be considered as dutiable goods, in the light of the Apex Courts decision in the case of Associated Cement Companies, cited supra, and the Tribunals decision in the case of Jay AR Enterprises (supra). If the goods are not dutiable, and there is no prohibition in importing oil tankers to India, the provisions of Section 111(f) are not at all attracted. Consequently, the appellant is not liable to any penalty under Section 112(a)/(b) of the Customs Act, 1962 either, will apply to the present dispute
12. Consequently, we hold that the impugned order is unsustainable in law and allow the appeals with consequential relief.
(Pronounced in Court 18 /10/2016) (M V Ravindran) Member (Judicial) (C J Mathew) Member (Technical) */as 8 2