2019 (10) TMI 18 - AT - Customs

Illegal import - the ship carried on board propane gas was not declared - the supporting documents in respect of the undeclared cargo not produced - contravention to Section 30 of the Customs Act, 1962 read with regulation 5 of the Import Manifest (Vessel) Regulation, 1971 - appellant submitted that said propane gas carried on in the vessel was not cargo and hence was not required to be declared in cargo declaration. HELD THAT - The propane was not declared at all in the original declaration. The presence of propane gas was noticed on the vessel first declared as Cargo however, Atlantic later on declared that it was not cargo but ship store. In this context, it is observed that the propane gas was ship store - It is apparent that the quantity of coolant required for the purpose is 41.4MT to make the vessel ready for loading. In the aforesaid set of facts it cannot be denied that propane gas is for use as ship store and for the purpose of making the ship fit for carrying the said cargo of Butane. The propane gas is necessary for cooling the tanks in which the cargo is loaded. The Regulation 3 of the Import Manifest (Vessel) Regulation, 1971 requires declaration of cargo in Form-III and vessel stores listed in Form-IV - In the instant case, the allegation is that the propane gas was not declared in the cargo declaration in the Form-III - it is apparent that propane carried on was not cargo but ship store. In these circumstances, there was no requirement to include the propane gas in the cargo declaration in Form-III. Confiscation set aside - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confiscation of goods, imposition of redemption fine, penalties, appeal against dropping of penalty.

Confiscation of Goods and Penalties:
The case involved appeals by two companies against the confiscation of goods, imposition of redemption fine, and penalties. The Customs officers found undeclared Propane Gas on a vessel, leading to the detention of the cargo. The appellants were alleged to have contravened Customs Act provisions and regulations. The seized goods included 509MT of Propane Gas. Statements from the Master of the vessel and a company representative were recorded, explaining the purpose of the gas onboard. The appellants argued that the gas was not cargo but a ship store necessary for cooling the cargo tanks. The Tribunal examined relevant documents and concluded that the Propane Gas was indeed a ship store and not required to be declared as cargo. As a result, the confiscation of goods was set aside, and the penalty on the Master of the vessel was upheld.

Legal Arguments and Precedents:
The arguments presented by the parties revolved around the necessity of declaring the Propane Gas as cargo. The Revenue contended that non-declaration constituted a clear act of omission and commission, warranting penalties. They cited legal provisions and previous court decisions to support their stance that mens rea was not a necessary element for imposing penalties. However, the Tribunal analyzed the facts, including declarations made by the vessel's Master and subsequent corrections by the appellants. The Tribunal found that the Propane Gas was essential as a ship store for cooling cargo tanks, as per the vessel's certification and pre-loading conditions. Therefore, the failure to declare the gas as cargo was justified, leading to the dismissal of the Revenue's appeal and the allowance of the appellants' appeals.

Conclusion:
The Tribunal's detailed analysis focused on the nature of the Propane Gas onboard the vessel, determining it to be a ship store rather than cargo. This distinction was crucial in deciding the case, as the gas was deemed necessary for vessel operations and not subject to cargo declaration requirements. By considering the vessel's certification and operational needs, the Tribunal overturned the confiscation of goods and upheld the decision to drop the penalty on the Master of the vessel. The judgment highlighted the importance of understanding the specific context and purpose of goods onboard in Customs cases to ensure fair and accurate adjudication.