The Great Offshore Ltd vs Commissioner Of Customs, Kandla

Appeal No.C/161/2008-DB [Arising out of OIO No.KDL/COMMR/10/2008, dt.11.03.2008, passed by Commissioner (Appeals), Customs, Kandla]

The Great Offshore Ltd Appellant

Vs

Commissioner of Customs, Kandla Respondent

Represented by:

For Appellant: Shri T. Vishwanathan, Shri Manish Jain, Ms.Uma Lohray, Advocates For Respondent: Shri L. Tendupatra, Authorised Representative

For approval and signature:

Honble Mr. P.K. Das, Member (Judicial) Honble Mr. P.M. Saleem, Member (Technical)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. P.M. SALEEM, MEMBER (TECHNICAL)

Date of Hearing/Decision:29.10.2015

Order No. A/11582/2015, dt.29.10.2015

Per: P.M. Saleem

The facts of the case in the present appeal are as follows:-

Date

Events 04.12.2000 Tug arrived at Mumbai port and entry inward was granted by Customs on the same day. The tug was brought to India for temporary purposes, under a bare-boat charter. This was on the basis of permission obtained from DG, Shipping, on 31.10.2010

05.12.2000 IGM No.8191 was filed with Customs House, Mumbai

06.12.2000 Vessel arrived in Mundra, IGM 188A was filed with Mundra Customs House.

05.02.2001 Tug was converted from foreign going vessel to coastal run vessel. A Bill of Entry was filed for stores and bunkers and appropriate duty was paid. On this date, the effective duty payable on tug is Nil by virtue of exemption from payment of BCD, vide Notification No.16/00-Cus (Sl.No.298). Tariff rate of Excise duty was Nil, for goods falling under Heading 89.04.

16.07.2001 The Appellants purchased the said tug from original importer i.e. M/s Great Eastern (Fujairah) LLC-FZC, after obtaining permission from DG Shipping.

14.11.2002 Appellants requested the Department to allow them to file Bill of Entry in respect of the tug, as according to them, it is a permanent acquisition of the tug.

21.11.2002 Ld.Assistant Commissioner of Customs, permitted the Appellants to file Bill of En try for tug, on payment of penalty under Section 117 of Customs Act. This order was confirmed by ld.Commissioner of Customs (Appeals) vide Order dt.15.12.2003 and CESTAT, Mumbai vide Order dt.13.02.2006.

29.11.2002 Appellants filed Bill of Entry for the said vessel and paid Customs duty thereon. The Department applied the rate of duty prevailing in November 2002 [perhaps by virtue of Section 15(1)(c)] and applied 5% (BCD-Sl.No.353 of Notification No.21/02-Cus) and 4% SAD (Sl.No.62 of Notification No.23/02-Cus).

17.08.2007 Department issued show cause notice (the present proceedings) proposing to confiscate the tug under Section 111(f) and impose penalty, for not filing IGM for the intervening period 16.07.2001 to 29.11.2002.

2. The ld.Commissioner of Customs vide the impugned order dt.11.03.2008 confiscated the vessel with redemption fine of Rs.25 lakhs and imposed penalty of Rs.25 lakhs on the Appellant. Aggrieved by the same, the Appellants are before us.

3. Heard both sides.

The Appellant made the following submissions:-

a) The date of import continues to be December 2000.

b) Section 111(f) of the Customs Act, 1962 envisages any dutiable or prohibited goods required to be mentioned under the Regulations in an import manifest or import report which are not so mentioned, as liable to confiscation.

c) At the time of import i.e. 05.12.2000 the tug was exempt from payment of Customs Duty under Notification No.16/2000-Cus, and therefore, the tug is not dutiable goods.

d) Tug is not prohibited goods either under the FTDR Act or the Policy made thereunder. Therefore, the provisions of Section 111(f) are not attracted in the instant case.

e) Boards Circular No. 16/2012Customs, dated 13.06.2012 provides that prior to 17.03.2012 there was no requirement of filing of IGM and Bill of Entry in respect of vessels brought from abroad and converted for coastal trade. It has been clarified as follows:-

As regards the vessel for conversion into coastal run/trade as detailed in Para 3.4, since the changes in the duty structure for levy of CVD on vessels which are being converted, for coastal trade was initially imposed from 01.03.2011, and subsequently retrospective exemption has been provided for the period 01.03.2011 to 16.03.2011 vide Clause 129 of the Finance Act, 2012, the requirement for filing IGM and Bill of Entry may be insisted in all such cases w.e.f. 17.03.2012, that is the date from which levy of CVD has come into force".

f) In any case, it is undisputed that the IGM has been filed on 29.11.2002 with post facto permission of ld.Assistant Commissioner of Customs, Mundra. This IGM would relate back to the date of import. Reliance is placed on decision in case of Assistant Collector v. Associated Forest Products Pvt. Ltd. - 2000 (115) E.L.T. 37 (S.C.).

g) In Final Order dated 13.2.2006 the Tribunal held that bill of entry filed for IGM is good enough to cover the vessel imported. In that case, the Department confiscated the vessel and demanded duty on the ground that bill of entry for vessel was not filed when the vessel was brought to India.

h) Without prejudice to the above, the IGM was filed at Mumbai port and at Mundra.

i) In any case, ld.Commissioner of Customs has not dealt with the request of the appellants for amendment in the IGM in terms of Section 30(3) of the Customs Act. No prejudice is caused by carrying an amendment since the appropriate duty was paid on the tug.

4. On the other hand, the learned Authorised Representative for the Revenue strongly refuted the submissions of the Appellant and reiterated the findings of the Adjudicating authority.

5. After considering the arguments of both the sides and on perusal of the records, it is observed that the Department was aware that the vessel had been initially brought into Indian waters by its foreign owners as a foreign going vessel and was converted to coastal run vessel, on temporary basis, under a leave boat charter agreement. At that time, IGM and Bill of Entry were filed and the appropriate duty on stores and bunkers were paid. However, the vessel was sold on a later date to an Indian entity (the Appellant). The Appellant should have amended the IGM and filed the Bill of Entry and paid applicable duty on the vessel at that point of time. However, they failed to do so. On realisation of the same, they approached the Department and sought permission to regularize the matter and pay the appropriate duty. It is seen from the Note Sheet of the file of the Department, which is a part of the record of the first proceedings, that the Department accepted the request of the Appellant and they were also imposed a penalty of Rs.10,000.00. However, on a later date, the present proceedings were initiated on the ground that the IGM was not amended and proposed confiscation of the vessel which has culminated into the impugned Order-in-Original, wherein the vessel was confiscated with redemption fine of Rs.25 lakhs, alongwith penalty of Rs.25 lakhs on the Appellant was ordered.

6. We find that the Department was aware of the irregularities committed by the Appellant at the time of first proceedings, wherein the Appellants were allowed to file Bill of Entry. It also appears that penalty was imposed at that time. Therefore, not amending the IGM amounts to only a technical offence, which calls for token penalty and token fine only, under the peculiar facts and circumstances of the case. Therefore, while upholding the impugned Order-in-Original, we reduce the redemption fine to Rs.1 lakh (Rupees One lakh only) and penalty to Rs.50,000.00 (Rupees Fifty Thousands only). The appeal is allowed on the above terms.

(Dictated & Pronounced in Court)

(P.K. Das) (P.M. Saleem) Member (Judicial) Member (Technical)

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