2017 (4) TMI 1202 - AT - Customs

Smuggling - vessel on foreign run had been brought into India and diverted for repairs - smuggling of diesel oil paint thinner out of the ship in the night - removal of hardener from the vessel immediately prior to the arrival of Customs officers on board the vessel in the morning of 20.10.2012 - the quantity of paint on board exceeded the declaration by 41 liters and the quantity of thinner by 5 liters - Held that - the impugned order to the extent of confiscation of the vessel M.V. Minnath under Section 111(f) 111(g) and 111(h) of the Customs Act is justified and its release on payment of redemption of the vessel on payment of 6, 00, 000/- under Section 125 of the Customs Act 1962 is justified and legal - Similarly the confirmation of duty demand on the vessel M.V. Minnath represented by Steamer Agent M/s. Costal shipping Link (I) Pvt. Ltd. to the extent of 6, 65, 072/- is also legal and proper. The confiscation of the stores and consequent demand of duty and the redemption of 1 lakh is not justified because the Revenue has not produced any evidence on record to show that it is a smuggled goods and it is also a fact that after the repair the vessel left along with stores. In this context the Revenue can only demand duty for mis-declaration as there was some discrepancy in the stores declared by the Master of the vessel and the actual store recovered. Even though the vessel was carrying 6180 litre of diesel 1045 litre of paint and 225 litre of thinner only 5627 litre of diesel 280 litre of paint and 80 litre of thinner were declared by the vessel. Therefore as per the Commissioner actual quantities of import appeared to have been mis-declared with the object of implementing a predetermined scheme of subsequent illegal diversion of the goods. In my opinion the appellants are liable to pay the duty with regard to the excess quantity not declared by them. With regard to imposition of penalty of 50, 000/- on the vessel M. v. Minnath representative of M/s. Coastal Shipping Link (I) Pvt. Ltd. and the Steamer Agent under Section 112(a) of the Customs Act 1962 and penalty of 10, 000/- on Shri Mohammed Adam the Master of the vessel under Section 112(a) and 112(b) of Customs Act and also imposition of penalty of 50, 000/- on the M/s. Coastal Shipping Links (I) Pvt. Ltd. Steamer Agent for the vessel under Section 112(a) and 112(b) of the Customs Act 1962 is justified and is upheld. Though the Commissioner has also imposed penalty of 10, 000/- on M/s. Sea Blue Shipyard under Section 112(b) and 117 of the Customs Act but the said party has not filed any appeal before this Tribunal. The original authority is directed to re-quantify the duty and fine as per the direction above and appropriate the same from the deposit made by the appellant - appeal allowed by way of remand.

Summary

Issues Involved:
1. Confiscation of the vessel and stores.
2. Imposition of redemption fine and penalties.
3. Mis-declaration of goods and duty demand.
4. Compliance with customs procedures for foreign-going vessels undergoing repairs in India.

Issue-wise Detailed Analysis:

1. Confiscation of the vessel and stores:
The Commissioner ordered the confiscation of the vessel M.V. Minnath and the stores found on the vessel, allowing redemption on payment of fines. The vessel was seized under Section 110 of the Customs Act, 1962, on the belief that it was liable for confiscation under Section 111 of the Customs Act, 1962. The search revealed discrepancies between the declared and actual quantities of diesel, paint, and thinner on board, leading to the conclusion that these items were illegally removed and liable for confiscation.

2. Imposition of redemption fine and penalties:
The Commissioner imposed a redemption fine of ?6,00,000/- for the vessel and ?1,00,000/- for the stores. Additionally, penalties were imposed: ?50,000/- on the vessel M.V. Minnath, ?10,000/- on the Master of the vessel, and ?50,000/- on M/s. Coastal Shipping Links (I) Pvt. Ltd. under Section 112(a) and 112(b) of the Customs Act, 1962. The Tribunal upheld these penalties, stating they were justified based on the evidence of mis-declaration and illegal removal of goods.

3. Mis-declaration of goods and duty demand:
The Tribunal found that the vessel had mis-declared the quantities of diesel, paint, and thinner, which were significantly higher than declared. The Commissioner’s observation that the mis-declaration was intended for illegal diversion of goods was upheld. Consequently, the duty demand of ?6,65,072/- on the vessel was confirmed as legal and proper. However, the Tribunal found no evidence to support the confiscation of the stores as smuggled goods, thus, only the duty for mis-declared quantities was justified.

4. Compliance with customs procedures for foreign-going vessels undergoing repairs in India:
The appellant argued that the vessel was treated as a foreign-going vessel and complied with customs formalities, including submitting various declarations and obtaining Entry Inwards. The Tribunal noted that the vessel was brought for repairs and should have been declared as an item of import in the IGM, as per Section 2(22) of the Customs Act, 1962. The Circular No.16/2012-Cus. dated 13.6.2017 clarified that vessels for repair must file IGM and Bill of Entry, which was not done in this case. The Tribunal upheld the Commissioner’s order of confiscation and penalties based on non-compliance with this requirement.

Conclusion:
The Tribunal dismissed appeals No. C/27023/2013 and No. C/27024/2013, upholding the confiscation, duty demand, and penalties imposed by the Commissioner. However, appeal No. C/27022/2013 was partly allowed, directing re-quantification of duty and fine, and appropriation from the deposits made by the appellant. The original authority was instructed to refund any excess amount following due procedure.