2016 (9) TMI 929 - AT - Customs

Imposition of redemption fine - provisional release of goods on payment of full differential duty and furnishing Bank Guarantee of ₹ 65 lakhs, besides executing a Bond of ₹ 33 crores - Barge - Section129E of the Customs Act, 1962 - relief sought under Section 35F - The asset has been confiscated and has been offered for redemption on payment of redemption fine. The same has been released on execution of bond and a bank guarantee. In these circumstances can the appellant continue to use the provisionally released asset without executing option of redemption? Held that - Ideally the offer of redemption should be valid for a limited period and cannot be enjoyed for unlimited period. After confiscation the ship is a property of the state. Before it was confiscated it was released to the appellant provisionally. Till confiscation the applicants could have enjoyed the benefits of the seized property provisionally released to them. After confiscation the property of the confiscated goods vests in the state. The applicants wish to enjoy the benefit without fulfilling their obligation of paying redemption fine. Therefore more stringent conditions need to be put for allowing further use of the asset. The applicants to execute bank guarantee of ₹ 2,85,00,000/- in addition to existing bank guarantee. On furnishing of such guarantee the respondents will permit the applicant s to sail out of India the barge subject to condition that the applicant shall file an undertaking before authority stating the purpose of taking out the vessel and to bring back within a period of four months from the date of release of the vessel. Petition disposed off - decided against petitioner.

Issues:
1. Relief sought by the appellant under Rule 41 of the CESTAT (Procedure) Rules, 1982 for sailing out a vessel provisionally cleared on payment of duty.
2. Comparison with previous orders granting similar relief to the appellant.
3. Consideration of redemption fine under Section 125 of the Customs Act, 1962.
4. Analysis of the necessity of executing the option of redemption for provisionally released assets.
5. Decision on the appellant's request for permission to sail out the vessel and conditions imposed by the Tribunal.

Issue 1:
The appellant, M/s Bhambhani Shipping Ltd., filed a miscellaneous application seeking directions from CESTAT under Rule 41 of the CESTAT (Procedure) Rules, 1982, to sail out a vessel provisionally cleared on payment of duty. The vessel, HALANI STAR, was imported and cleared provisionally on payment of duty as per an Order-in-Original. The appellant challenged the order before the Tribunal, which directed a pre-deposit of penalty and stayed the recovery of remaining dues.

Issue 2:
The appellant sought permission to sail out the vessel for a new Time Charter Contract, citing a previous order in their favor allowing a similar request. The Tribunal had previously permitted the appellant to take the vessel out of Indian Territorial waters for 24 months in a similar case. The appellant had paid the duty, deposited the directed amount, and applied to the Commissioner of Customs for permission to sail the vessel out of India, which was not granted, leading to the current application.

Issue 3:
The consideration of redemption fine under Section 125 of the Customs Act, 1962 was discussed. The Tribunal noted that Section 129E of the Customs Act did not address the situation, and relief under Section 35F could not be granted. The applicants sought directions under Rule 41 of the CESTAT (Procedure) Rules, 1982, citing previous orders where similar relief was granted.

Issue 4:
The Tribunal deliberated on the necessity of executing the option of redemption for provisionally released assets. The appellant had not exercised the option of redemption given in the adjudication order. The Tribunal analyzed past cases where vessels were allowed to be taken out for repair and commercial purposes, emphasizing the importance of safeguarding public revenue while allowing the appellant to deploy the asset for performance.

Issue 5:
The Tribunal decided on the appellant's request to sail out the vessel, directing the appellant to execute an additional bank guarantee and imposing conditions for sailing out the vessel, including filing an undertaking and bringing back the vessel within a specified period. The Tribunal emphasized the need for the appellant to fulfill their obligation of paying the redemption fine and imposed stringent conditions for further use of the asset.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the Tribunal's decision and the considerations taken into account for each issue raised in the case.

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