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M/s. Priya Blue Industries Pvt. Ltd., Plot No.V-1, Sosiya
(hereinafter referred to as "the importer") hold import export
code number and also Central Excise Registration. It imported
vessel MV VLOO ARUN under OGL for the purpose of breaking.
The vessel weighing 40,017 LDT had been purchased for US$
68,49,839.00 i.e. @ US$ 167 per Long Ton. Importer got a
letter of Credit bearing No.58 IDC 21.97 dated 12.8.1997
opened in favour of Ruby Enterprise Inc., 2018, Antwerp,
Belgium, the foreign sellers for US$ 68,49,839.00 which
amount was remitted by the Vysya Bank Ltd., Mumbai to the
beneficiaries on 12.8.1997 itself. The importer had thereafter
sought and been granted permission for beaching the vessel at
the designated plot by the proper officer of Customs. On
account of heavy current and storm the vessel got dragged
towards Plot No. V-5 Sosiya and got grounded there. The
importer vide its application dated 24.6.1997 requested the
Assistant Commissioner of Central Excise Division, Bhavnagar
for extension of time for filing the Bill of Entry for home
consumption in respect of the aforesaid vessel. The requisite
permission was granted by the jurisdictional
Assistant Commissioner. The importer, however did not file the
Bill of Entry and sought further extension of time which was
declined by the Assistant Commissioner, Bhavnagar. The
importer thereafter entered into a memorandum of
understanding on 10th September, 1997 with Udyani Ship
Breakers Ltd. ("the appellant" herein) who are the owners of
Plot No.V-5, Sosiya in front of which the vessel was grounded
for sale of the ship for Rs.12,01,00,000/-. An agreement to
sell was executed on 11th September, 1997 and the sale was
effected by Bill of sale on 26th December, 1999.