2012 (8) TMI 55 - HC - Customs

Import of vessel - vessel was sent out of the territorial waters for the purpose of repairs seizure of vessel provisional release of vessel petitioner liable to pay duty in respect of the modification/upgradation that has taken place which amount is computed on a provisional basis Held that - Petitioners would be required to pay duty assessed provisionally in the amount of Rs. 12.77 crores and for that purpose, they would be at liberty to avail of the credit Bank guarantee reduced from 20% to 10%

Summary

Issues:
1. Seizure of vessel Seamec II by Directorate of Revenue Intelligence
2. Provisional quantification of duty liability on repairs and machinery/equipment
3. Dispute regarding duty liability computation and utilization of credit under Served from India Scheme
4. Imposition of conditions for provisional release under Section 110A of the Customs Act, 1962

Analysis:
1. The Petitioners claimed ownership of vessel Seamec II, seized on 1 December 2011 by Directorate of Revenue Intelligence. The dispute revolved around duty liability quantification and release under Section 110A of the Customs Act, 1962. Seamec-III was not under seizure, directing the Petitioners to approach DRI for any action related to it.

2. The Assistant Commissioner of Customs provisionally quantified duty liability on repairs and machinery/equipment for Seamec II at Rs.20.54 crores. The Petitioners contested this, arguing duty should only apply to modifications post-July 6, 2011, not the vessel's exempted value at Rs.53.55 crores from 1988. The Petitioners sought to utilize the Served from India Scheme credit towards duty payment.

3. The Assistant Commissioner of Customs justified the duty demand, including the vessel's original value in the computation. The Revenue argued for a reduced Bank Guarantee of 10% instead of 20%. The Court acknowledged the duty on modifications but exempted the vessel's original value from duty payment. It allowed the Petitioners to use Served from India Scheme credit for duty payment.

4. The Court modified the conditions for provisional release. The Petitioners were required to pay duty provisionally at Rs.12.77 crores and submit a Bank Guarantee of 10% of assessable goods value, excluding the vessel's value. The Petitioners undertook not to alter the vessel's charter without Customs authorities' permission during adjudication. The Court disposed of the Petition, modifying the release conditions without costs, ensuring interests of both parties pending final adjudication.