2004 (5) TMI 417 - AT - Customs

Summary

Issues:
1. Imposition of fines and penalties under Customs Act by Commissioner of Customs, Ahmedabad.
2. Allegation of misdeclaration of furnace oil as ship stores to evade customs duty.
3. Provisional release of ship and furnace oil on bond and bank guarantee.
4. Assessment of duty on the ship and clearance by Customs House, Mumbai.
5. Appeal against the order of the Commissioner.

Analysis:
1. The Commissioner of Customs, Ahmedabad imposed fines and penalties on various parties under the Customs Act, including a fine of Rs. 35 lakhs on M/s. Export Trade Corporation Ltd., penalties on individuals, and M/s. Delta Marine Services. The fines and penalties were based on the confiscation of the vessel and furnace oil under Sections 111(f) and (n) of the Customs Act.

2. The case revolved around the misdeclaration of furnace oil as ship stores instead of cargo to evade customs duty. The Commissioner found that the intentional misdeclaration was aimed at suppressing the value of the ship to evade duty. However, the Tribunal noted discrepancies in the handling of the case, emphasizing that the vessel should have been assessed for duty upon filing a Bill of Entry for breaking the ship, which was not done at Bedi port.

3. M/s. Export Trade Corp. Ltd., applied for provisional release of the ship and furnace oil, which was allowed upon furnishing a bond and bank guarantee. The ship sailed to Mumbai after provisional release, indicating the procedural aspect of the case.

4. The vessel and the furnace oil were eventually cleared by the Customs House, Mumbai, upon payment of duty through a Bill of Entry. This step highlighted the eventual clearance process of the seized items after the provisional release.

5. The Tribunal criticized the Commissioner's order, stating that the vessel and the furnace oil were not liable for confiscation under Sections 111(f) and (n) of the Customs Act. The Tribunal found no basis for the penalties imposed by the Commissioner, as the misdeclaration did not warrant such severe actions. The order of the Commissioner was set aside, and the appeals were allowed, indicating a reversal of the initial decision based on the lack of legal grounds for the penalties and confiscation.