Customs, Excise and Gold Tribunal - Mumbai
Export Trade Corporation Ltd., Sanjeev ... vs Commissioner Of Customs on 25 May, 2004
Equivalent citations: 2004(172)ELT489(TRI-MUMBAI)
ORDER Moheb Ali M., Member (T)
1. These appeals arose out of common order passed by Commissioner of Customs, Ahmedabad. In the impugned order the Commissioner imposed a fine of Rs. 35 lakhs on M/s. Export Trade Corporation Ltd., Hong Kong, by ordering enforcement of a provisional release bond supported by a bank guarantee. He held that the vessel in question i.e. MT Millennium and furnace oil carried by it, both of which were subsequently released provisionally are liable to confiscation under Section 111(f) and (m) of the Customs Act. He also imposed a penalty of Rs. 10 lakhs on M/s Export Trade Corporation Ltd., a penalty of Rs. 2 lakhs each on Sanjeev Jain and Sher Singh Saklani, the broker and the captain of the vessel respectively, and a penalty of Rs. 1 lakh on M/. Delta Marine Services under Section 112(a) of the Customs Act. Hence these appeals.
2. Briefly the facts are M/s. Delta Marine Services are local agents of the ship in question. They informed the Jamnagar Customs that the ship intended to arrive at port on 15-4-2000 and would be broken up. They also informed the Customs that there were no bonded stores on board and that the last port of call was in Iran. Enquiries were made with the master of the ship as to general particulars of the ship. The master inter alia declared that there was 982.46 MT of furnace oil, 140.234 MT of diesel oil, 1090 ltrs of lubricating oil, 555 kgs cylinder oil, 300 ltrs of HYD 68 oil on board the vessel. The master in his statement 5-4-2000 under Section 108 of Customs Act stated that the ship discharged furnace oil at Kandla and sailed to UAE on 9-4-2000. He was directed by the owners while at UAE that he should proceed to Bhavnagar. While he was in Kandla port the agent forwarded a package containing ships certificate, LH dues certificates and copy of port clearance of the last port of call. He was also directed to declare all furnace oil, being left over cargo, as ship stores. The chief engineer of the vessel also corroborated the statement given by the master. One thing led to the other and it ultimately transpired that the vessel had 982.429 MT of furnace oil on board when the ship arrived at Bedi. The allegation therefore is even though the ship had 982. 69 MT of furnace oil on board, the master of the vessel did not declare the existence of such furnace oil as left over cargo instead he declared it to be ship stores. The department contends that the master should have declared the goods (furnace oil) as cargo rather than ships stores. The ship along with the furnace oil on board was seized on 26.4.2000 for misdeclaration while filing the IGM. At the rime of seizure the vessel was valued at Rs. 3.75 crores and furnace oil at Rs. 60.92 lakhs. Statement of all and sundry were recorded and the furnace oil on board was sent for chemical analysis. The test report reads as follows: "The same as received in the form of black viscose liquid. It is composed of mainly furnace oil, fuel oil contaminated with high percentage of water and as such does not conform to standard furnace oil having the following characteristic. -
Water contents: 20.2%, density at 15 deg. is 0.99 gms/ml, ash - 0.52%, mineral hydro carbon 78%". Thus the test report indicate what was on board was not fuel / furnace oil.
3. M/s. Export Trade Corp. Ltd., applied for provisional release of ship and furnace oil, which was permitted on furnishing bond and bank guarantee. The ship sailed to Mumbai on 6-6-2000.
4. The allegation in the show cause notice is that the ship was brought to Bedi port, suppressing the quantity of cargo on board and suppressing the true port clearance certificate to evade customs duty. The commissioner passed the impugned order and imposed the fines and penalties as mentioned above. The commissioner found that the left over cargo i.e. furnace oil was intentionally declared as ship stores as per the directions of the representatives of the ship in order to suppress the value of the ship. Taking into consideration the above facts he held that the left over cargo was intentionally declared as ship stores with an intent to evade payment of duty to the extent of value of the furnace oil and held the owners of the vessel responsible for the act of omission and commission along with the appellants. He also observed that the seized vessel and the furnace oil which was subsequently released provisionally were cleared on payment of duty vide bill of entry No. 2742 dated 13-6-2000 by the Customs House, Mumbai.
5. Heard both sides.
6. The less said about the order of the Commissioner - the better. Firstly the test report says that what was found on board does not conform to furnace oil and was highly contaminated. As admitted by everyone concerned, the furnace oil on board was left over cargo which could not be discharged. It is also a fact that it was declared as ship store, instead of left over cargo in the manifest filed by the master. When these facts were known to the department the best course of action would have been to consider them while assessing duty on the ship when a bill of entry for breaking the ship was filed. The facts in this case reveal that no such bill of entry was filed at Bedi. At that point of time what was known was that the vessel would be broken up in India. But until a bill of entry was filed for assessment, no assessment could take place. The impugned order nowhere indicates that a bill of entry was filed. When the entire vessel was supposed to be cargo intended for import, a manifest indicating that fact has to be filed and thereafter a bill of entry is filed seeking assessment of the vessel. Merely because the master filed a manifest indicating the furnace oil on board as ship stores the vessel does not become liable to confiscation under Section 111(f) of the Customs Act. The impugned order does not also indicate how Section 111(n) is attracted in this case. We do not understand how the vessel was liable to confiscation merely because the left over cargo was declared as ship stores. The furnace oil in any case was found to be no furnace oil at all. The commissioner in his long and winding order signifying next to nothing, observed that the intention of declaring left over cargo as ship stores was to dippress the value of the vessel and thereby evade duty at the time of breaking. The commissioner was acting as if he was trying to prevent a major fraud that would have occurred in future. In this case Section 111(f) and (n) are not attracted. The vessel is not liable to confiscation along with the furnace oil. No penalties therefore can be imposed on the appellants. The order of the Commissioner is set aside and the appeals are allowed.
(Operative part pronounced in court)