2016 (8) TMI 31 - AT - Customs

Levy of redemption fine - excess quantity of fuel oil, diesel oil and lube oil found in the ship stores in the vessel - In addition penalty of ₹ 10.00 Lakhs has also been imposed upon the Master of the vessel under section 112(a) and 112(b) of the Customs Act, 1962. - Held that - One of the arguments given by the ld.Advocate of the Appellants is that vessel was anchored at Sandheads on 05.08.2009 whereas vessel arrival report was filed on 11.08.2009. That the difference is due to oil consumption when the vessel was anchored at the Sandheads from 05.08.2009 to 11.08.2009. The explanation given by the ld.Advocate can hold to explain consumption of lube oil and other oils and the resultant quantity during physical measurement should have been lesser than the quantities indicated in vessel arrival report when some quantities of oil are consumed during anchoring at the sandheads. The argument given by the ld.Advocate is not convincing. The goods found in excess are liable to confiscation under Section 111(f) of the Customs Act, 1962. The verbal requests and written undertakings given by the Appellants can be considered as a bond/undertaking given by the Appellants for the release of the vessel with respect to excess quantities of oils found by the department. The redemption fine and penalties are correctly imposed by the adjudicating authority upon Appellant Mr.Chen Gao Sheng (Master of vessel M.V. Medi Firenze) by holding that undertakings given before the adjudicating authority are legally enforceable to recover redemption fine and penalties. Demand confirmed - Decided against the appellant.

Summary

Issues: Confiscation of excess quantities of fuel oil, diesel oil, and lube oil found in ship stores; Imposition of redemption fine and penalties; Declaration discrepancies in Import General Manifest (IGM) and vessel arrival report; Legal enforceability of undertakings for release of vessel; Imposition of penalty on the shipping agency.

Confiscation of Excess Quantities: The issue revolves around the discrepancy in the quantities of fuel oil, diesel oil, and lube oil declared in the Import General Manifest (IGM) compared to the actual quantities found during inspection. The adjudicating authority found that the quantities declared were significantly lower than the actual amounts present in the ship stores. The argument that the excess quantities were due to oil consumption during anchoring was deemed unconvincing. The excess goods were held liable for confiscation under Section 111(f) of the Customs Act, 1962.

Imposition of Redemption Fine and Penalties: The Appellant argued that since the goods were not provisionally released under bond, no redemption fine could be imposed. However, verbal requests and written undertakings made by the Appellants during adjudication proceedings were considered as a bond/undertaking for the release of the vessel. The Tribunal held that these undertakings were legally enforceable, leading to the imposition of redemption fine and penalties on the Appellant, the Master of the vessel.

Declaration Discrepancies: Discrepancies between the quantities declared in the IGM by the shipping agency and the vessel arrival report filed by the Master of the vessel were highlighted. The shipping agency declared a significantly lower quantity of lube oil in the IGM compared to the vessel arrival report. The failure to seek an amendment to the IGM when the actual quantity was discovered led to the imposition of penalties on the shipping agency.

Legal Enforceability of Undertakings: The Tribunal differentiated the present case from the precedent cited by the Appellant, emphasizing that the undertakings given by the Appellants in this case were legally enforceable for the release of the vessel. The Tribunal upheld the imposition of redemption fine and penalties based on these undertakings.

Imposition of Penalty on the Shipping Agency: The shipping agency's argument that they declared quantities in the IGM based on the Master's declaration was refuted, as discrepancies were found between the declared quantity and the actual quantity in the vessel arrival report. The failure to seek an amendment to the IGM resulted in the correct imposition of penalties on the shipping agency.

In conclusion, the Appeals filed by the Appellants were dismissed based on the findings related to the confiscation of excess quantities, imposition of redemption fine and penalties, declaration discrepancies, legal enforceability of undertakings, and imposition of penalties on the shipping agency.