2001 (2) TMI 223 - AT - Customs

Issues Involved:
1. Whether the rig was imported into India.
2. Responsibility for filing the bill of entry.
3. Practice of not filing bills of entry for rigs.
4. Intention to contravene provisions of law.
5. Applicability of sub-section (2) of Section 125 for recovery of duty.
6. Penalty on Remy Baizan.
7. Penalty on Enron.
8. Confiscation of tugs by Great Eastern Shipping and Varun Shipping.
9. Valuation of the rig for duty purposes.
10. Applicability of Import Policy 1988-91 and OGL No. 8 of 88.
11. Eligibility for exemption under Notification 516/86.
12. Availability of drawback under Section 74 of the Customs Act.

Summary:

1. Whether the rig was imported into India:
The rig was considered imported into India as it entered Indian territorial waters and merged with the mass of goods in the country. The argument that the rig was not intended for primary use in India was rejected, and it was held that the rig was imported in 1988.

2. Responsibility for filing the bill of entry:
Sedco was held responsible for the import of the rig in 1988 and for its subsequent movement into designated areas. The argument that ONGC and Enron were the importers was rejected as Sedco caused the import into NV.

3. Practice of not filing bills of entry for rigs:
The argument that there was a practice of not filing bills of entry for rigs was not accepted. The Public Notice No. 129/1 dated 17-7-1984 did not establish a clear practice exempting such filings.

4. Intention to contravene provisions of law:
It was concluded that there was no clear requirement established for filing a bill of entry for rigs, and the Customs Department was aware of the rig's presence. The delay of 11 years in taking action was noted, and it was held that there was no intention to contravene the law.

5. Applicability of sub-section (2) of Section 125 for recovery of duty:
The provision of sub-section (2) of Section 125 was held applicable for recovery of duty as the Department did not have an opportunity to assess the goods due to the absence of a bill of entry.

6. Penalty on Remy Baizan:
No penalty was imposable on Remy Baizan as he was not in charge of the company's affairs at the relevant time.

7. Penalty on Enron:
The penalty on Enron was set aside as it was engaged in the same activity of national importance as ONGC, and there was no material to establish that Enron abetted the smuggling of the rig.

8. Confiscation of tugs by Great Eastern Shipping and Varun Shipping:
The confiscation of tugs was set aside as they acted on instructions from ONGC without knowledge of the legal implications.

9. Valuation of the rig for duty purposes:
The value of the rig for duty purposes was to be considered as of 1988, and the rate of duty applicable would be the date of payment of duty.

10. Applicability of Import Policy 1988-91 and OGL No. 8 of 88:
The rig was not entitled to be imported under paragraph 30 (1) of the Import Policy 1988-91 as it was older than seven years. The conditions of OGL No. 8 of 88 were not satisfied.

11. Eligibility for exemption under Notification 516/86:
The exemption under Notification 516/86 was not granted as the required certificates were not produced. However, the importer could pursue this claim if advised.

12. Availability of drawback under Section 74 of the Customs Act:
The argument for drawback under Section 74 was accepted in principle, and the duty liability was to be worked out after considering the drawback entitlement.

Conclusion:
The appeals of J.M. Baxi & Company, Enron, Great Eastern Shipping Company, and Varun Shipping Company were allowed, and the penalties imposed on them were set aside. The appeal of Sedco was allowed in part, with the fine for redemption of the rig reduced to Rs. 25.00 lakhs and the penalty under Section 112 reduced to Rs. 5.00 lakhs.

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