2015 (11) TMI 1023 - AT - Customs

Whether the vessel can be confiscated for non-filing of Bill of Entry in 1997 and whether duty can be demanded in 2012, the exemption having been withdrawn in 2000 - Suppression of facts - Provisional release of vessel - Section 28 - Held that - when the impugned vessel was imported 14 years ago in 1997, it was exempted from Customs duty and although IGM was filed in respect of stores when the vessel was imported at Chennai, no IGM was filed for the vessel as goods imported into India. Neither was any Bill of Entry filed for the vessel as goods. - The vessel was seized and as a precondition for provisional release, the owner was asked to file a Bill of Entry in 2012. - vessel was converted to the Indian Flag in 1998 and was granted coastal runs between Indian Ports with the knowledge of Customs. Generally, we find that Customs board a vessel when it enters the port and therefore should have been aware of import of the vessel as goods . The fact that it did many coastal runs and called on various ports in the preceding 14 years itself shows that the Customs were aware that this vessel had been imported into India. After a gap of 14 years when duty has become imposable on import of a vessel, Revenue s stand that since IGM/Bill of Entry was not filed in 1997 duty must be paid now is not reasonable. Goods on which no duty is chargeable under the tariff or by way of exemption notification will not be regarded as dutiable goods. Therefore clearly Section 111(f) is not applicable and goods are not liable to confiscation. Contravention of Section 32 is not possible as there is no question of unloading a vessel. Therefore the finding that the vessel is liable for confiscation for violation of Section 32 is also not sustainable. Import, which in terms of the definition under Section 2(23) means bringing into India from a place outside India, had got completed in 1997. Customs duty is charged under Section 12 of the Customs Act when the goods are imported into India. When by general practice the IGM/Bill of Entry was not filed for vessel imported into India when the duty was Nil, the proposition that duty may be levied after 14 years when the Bill of Entry was got filed would lead to a anachronistic situation. Let us take the case of two ships imported at the same time when there was no duty. Under one case a Bill of Entry may have been filed and in the other case a Bill of Entry is filed after 14 years when the vessel became dutiable. Charging duty from the latter when both were imported at the same time would be a most unreasonable proposition. More so when Customs never insisted on filing a Bill of Entry for the import of the vessel and Customs continued to give clearance for coastal runs. For these reasons we hold that there was no deliberate suppression of facts to invoke the provisions of Section 28(4) for demanding duty. - Decided against Revenue.

Summary

Issues Involved:

1. Confiscation of the vessel for non-filing of Bill of Entry in 1997.
2. Demand for customs duty in 2012 for a vessel imported in 1997.
3. Imposition of penalties under various sections of the Customs Act.
4. Jurisdiction of the Commissioner of Customs at Mumbai over a vessel imported at Chennai.

Detailed Analysis:

1. Confiscation of the Vessel for Non-Filing of Bill of Entry in 1997:

The vessel "Tug Ocean Garnet" was imported into India in 1997 when it was exempt from customs duty. The appellant did not file an Import General Manifest (IGM) or Bill of Entry for the vessel itself, only for the stores and fuel. The vessel was seized in 2011, and the owner was asked to file a Bill of Entry in 2012. The adjudicating authority confiscated the vessel under Section 111(f) for contravention of Sections 32 and 34 of the Customs Act. However, the Tribunal noted that the vessel was not dutiable at the time of import and therefore not liable for confiscation under Section 111(f). The Tribunal also found that there was no requirement for unloading the vessel, making the contravention of Section 32 inapplicable.

2. Demand for Customs Duty in 2012 for a Vessel Imported in 1997:

The Tribunal examined whether customs duty could be demanded in 2012 for a vessel imported in 1997 when it was exempt from duty. The Tribunal referenced multiple cases, including the High Court's observations that customs authorities had permitted the vessel's use for coastal runs for 14 years. The Tribunal concluded that demanding duty after 14 years for a technical omission is not reasonable. The Tribunal cited the Board's Circular dated 13.6.2012, which clarified that vessels imported earlier and used in coastal runs should not be required to file a Bill of Entry now. The Tribunal held that duty is not required to be paid.

3. Imposition of Penalties Under Various Sections of the Customs Act:

The Commissioner had imposed penalties under Sections 112(a), 112(a)/(b), and 114 AA of the Customs Act. The Tribunal set aside these penalties, noting that the confiscation and demand for duty were not sustainable. The Tribunal emphasized that there was no deliberate suppression of facts to invoke the provisions of Section 28(4) for demanding duty.

4. Jurisdiction of the Commissioner of Customs at Mumbai Over a Vessel Imported at Chennai:

The Tribunal addressed the preliminary objection regarding the jurisdiction of the Commissioner of Customs at Mumbai. The Tribunal found that the Commissioner at Mumbai did not have jurisdiction over the Chennai port, where the vessel was imported. Therefore, the Commissioner could not issue a Show Cause Notice or adjudicate the case. The Tribunal set aside the impugned order on the grounds of lack of jurisdiction and declared it illegal.

Conclusion:

The Tribunal set aside the confiscation of the vessel, the demand for customs duty, and the penalties imposed. The Tribunal allowed the appellant's appeals and dismissed the Revenue's appeal. The Tribunal's decision emphasized the unreasonableness of demanding duty after 14 years for a technical omission and highlighted the lack of jurisdiction of the Commissioner of Customs at Mumbai over the vessel imported at Chennai. The judgment was pronounced in court on 8/10/2015.