2002 (2) TMI 542 - AT - Customs

Summary

Issues Involved:
1. Whether the dumb barge was 'goods' or a 'foreign going vessel' on the first two occasions when IGMS were filed.
2. Allegation under Section 111(d) of the Customs Act.
3. Quantum of penalty imposed on M/s. Essar Oil Ltd.
4. Penalty imposed on M/s. Modest Shipping Pvt. Ltd.

Issue-wise Detailed Analysis:

1. Whether the dumb barge was 'goods' or a 'foreign going vessel':
The Tribunal examined whether the dumb barge was 'goods' or a 'foreign going vessel' on the first two occasions when IGMS were filed. The dispute originated from the filing of the Bill of Entry on 18-3-94, where the barge was declared as 'goods for home consumption.' The Tribunal noted that the barge was used for pipe laying operations for ONGC, similar to its use on previous occasions. The Tribunal concluded that the barge was 'goods' on the earlier two occasions as well, rejecting the appellants' claim that it was a 'foreign going vessel.'

2. Allegation under Section 111(d) of the Customs Act:
The Commissioner observed that the barge was manufactured in 1958 and extensively rebuilt in 1991. Despite the Chartered Engineer's certification of a residual life of over 15 years, the Tribunal held that the age of the barge should be computed from its original manufacture date, not from the date of refurbishing. The Tribunal disagreed with the appellants' reliance on the Tribunal judgment in the case of Super Fasteners, emphasizing that age is computed from the date of coming into existence. Thus, the barge did not meet the permissible criterion and was liable for confiscation under Section 111(d).

3. Quantum of penalty imposed on M/s. Essar Oil Ltd.:
The Commissioner imposed a penalty of Rs. 2.5 crores on M/s. Essar Oil Ltd. for rendering the barge liable for confiscation. The Tribunal considered the appellants' argument that the penalty was exorbitant, citing Supreme Court judgments in Hindustan Steel and Akbar Badruddin Jiwani. The Tribunal noted that the barge was eligible for duty-free importation under the notification, which significantly impacted the penalty's quantum. Consequently, the Tribunal reduced the penalty to Rs. 25 lacs, already deposited by M/s. Essar Oil Ltd.

4. Penalty imposed on M/s. Modest Shipping Pvt. Ltd.:
The Commissioner imposed a penalty of Rs. 5 lacs on M/s. Modest Shipping Pvt. Ltd., the Steamer Agents. The appellants claimed they were unaware that M/s. Essar Oil Ltd. had purchased the barge and were under the impression that the owners were M/s. TPPL. The Tribunal noted that the Commissioner acknowledged the bona fides of M/s. Modest Shipping Pvt. Ltd. and found no mala fide intent. The Tribunal held that the Steamer Agents could not have known that the towed vessel was cargo in the absence of a Bill of Lading. Therefore, the Tribunal set aside the penalty imposed on M/s. Modest Shipping Pvt. Ltd. and allowed their appeal with consequential relief.

In summary, the Tribunal upheld the liability of the barge as 'goods' requiring a Bill of Entry, confirmed the confiscation under Section 111(d), reduced the penalty on M/s. Essar Oil Ltd., and set aside the penalty on M/s. Modest Shipping Pvt. Ltd.