2013 (3) TMI 144 - AT - Customs

Importer - Bill of Entry for vessel filed by GAPL, but claiming that it was filed on behalf of its charterer, VMML, who did not have IE code - Held that - As no evidence produced to accept that GAPL had filed Bill of Entry on behalf of its charterer, VMML as shipping agent and sub-agents appointed by VMML to complete import formalities could not be said to be responsible for filing Bill of Entry for stores. In that view, as GAPL had accepted liability for vessels on ground that IE code was not available, on the same logic, they should have filed Bill of Entry in respect of stores since both stores and vessels were imported simultaneously. Having held themselves as an importer in respect of the vessel, GAPL had to be considered as importer of stores therein, and their failure to file Bill of Entry for same, was suppression of facts and mis-declaration. Liability of GAPL to penalty - Held that - the declaration made by the master to preventive officers cannot be considered as having been made on behalf of GAPL - penalty under Section 114A has rightly been imposed on GAPL in respect of stores/diesel etc. found in barge/tugs at the time of their importation. Quantity of diesel of 1660 MT, received in barge DLB 600 and transfer to tugs and marine spreads - Held that - As per the records diesel was received in presence of representatives of importer, and as per agreement, they were liable for all duties, levies, etc. - Importer of vessel was responsible for bringing diesel into India, its transfer into vessel and utilization thereafter, and having rendered it liable to confiscation, they were liable to pay duty and penalty - According to the decision of Akash Fashion Prints Pvt. Limited (2009 (1) TMI 113 - GUJARAT HIGH COURT) option extended to GAPL to calculate the duty payable on bunkers/diesel imported with interest and 25% of the duty towards penalty and discharge the same within 30 days from the date of communication of this order. Liability of barge/tugs imported for project work and the tug which supplied the diesel to DLB 600 subsequently for confiscation - Vessel used in smuggling - Held that - Owner of vessel has to be given opportunity to show that it was so used without his or his agent s knowledge. Section 124 does not speak of importer but owner. Under these circumstances, since no notice has been given to the owners of the vessels and VMML is only a charterer of the vessel and GAPL is only an importer, the confiscation of the vessels has to be set aside on the technical ground of failure to issue Show Cause Notice to the owners of the vessels - Also, under Section 124 ibid is the owner of goods, and not the importer, who has to be given a notice in writing for confiscation - Thus as notice had been given only to charterer and importer of vessel, and not to its owner, confiscation of vessel set aside. Penalty imposed on agents & sub-agents of charterer of vessels responsible for fulfilling of all obligations relating to barge/tugs - vessels caught transferring diesel even before Bill of Entry was filed and cleared - Held that - Sub-agent did not fulfil their statutory obligations as agents of charterer - They were party and active agent in diversion of diesel to fishing boat engaged in shipping within Indian territorial water without payment of duty as they had obligation to ensure that Bills of Entry were filed in respect of bunkers of the vessel before it was put to use - In that view, imposition of penalty upheld - However, in view of volume of transactions and consideration that he could have received, penalty of Rs 10 lakhs reduced to Rs. 2 lakhs only. Penalty on charterer of vessel who had transferred diesel to a fishing boat, without payment of duty and filing of Bill of Entry - Held that - Charterer was liable to penalty as GAPL was informed to file Bill of Entry and was required to file Bill of Entry, does not help the charterer since the diesel should have been unloaded only after the Bill of Entry was filed and duty was paid. The fact that diesel was transferred to barge DLB 600 and the vessels were allowed to utilize with bunkers/diesel, and no Bill of Entry has been filed and no duty has been paid on bunkers would go against the appellant. According to Section 87 of Customs Act, 1962, the imported stores can be consumed without payment of duty as stores only during the period when such vessel is a foreign going vessel - penalty on charterer upheld. Penalties imposed on employees, masters, seamen of all the parties - Held that - Unless employees, masters, or seamen were partners in crime and benefited from it, and they were shown not to be following direction of their employer or in league with them in doing the mischief, it is not appropriate to impose penalty on them - It was more so on facts as penalties had been imposed on companies/firms involved wherever applicable, and there was no detailed discussion of role of employee - set aside the penalties imposed on the employees, who are in appeal. Penalty on CHA on import of vessel filed Bills of Entry following instructions given to them in respect of bunkers/diesel - Held that - As there is nothing on record to show that CHA have deliberately abetted import of bunkers/diesel without payment of duty and its utilization, benefit of doubt given to CHA - penalty deleted.

Summary

Issues Involved:
1. Liability of GAPL for customs duty on bunkers and consumables.
2. Responsibility for filing Bills of Entry for imported goods.
3. Conversion of foreign-going vessels to coastal vessels.
4. Confiscation of vessels and goods.
5. Imposition of penalties on various parties and individuals.

Detailed Analysis:

1. Liability of GAPL for Customs Duty on Bunkers and Consumables:
The core issue was whether GAPL was liable to pay customs duty on bunkers and consumables imported with the vessels. The tribunal held that GAPL, having filed Bills of Entry for the vessels, was responsible for the duty on the stores as well. The tribunal noted that the definition of "importer" under Section 2(26) of the Customs Act, 1962, includes the owner or any person holding themselves out to be the importer. Since GAPL filed the Bills of Entry for the vessels, they were deemed the importer and thus liable for the duty on the consumables.

2. Responsibility for Filing Bills of Entry for Imported Goods:
The tribunal addressed GAPL's argument that they were not responsible for filing Bills of Entry for the bunkers. It was found that GAPL had an obligation under the contract with VMML to pay customs duty on consumables. The tribunal concluded that GAPL's failure to file Bills of Entry for the bunkers amounted to suppression and mis-declaration, making them liable for the duty and penalties.

3. Conversion of Foreign-Going Vessels to Coastal Vessels:
GAPL argued that the conversion of vessels to coastal trade was done by VMML's steamer agent, thus absolving them of liability. The tribunal found no evidence of the detailed procedure for conversion being followed as per Customs norms. The tribunal held that the declaration by the master of the vessel and the verification by Customs officers did not suffice to establish proper conversion under the law, thus upholding GAPL's liability.

4. Confiscation of Vessels and Goods:
The tribunal set aside the confiscation of vessels on the technical ground that no Show Cause Notice was issued to the owners of the vessels, as required under Section 124 of the Customs Act. However, the confiscation of 866.57 MT of diesel, lubricants, paints, and grease was upheld, along with the imposition of a redemption fine of Rs. 35 lakhs.

5. Imposition of Penalties on Various Parties and Individuals:
The tribunal upheld the penalties imposed on GAPL under Section 114A of the Customs Act for failing to file Bills of Entry for the bunkers and for the subsequent import of 1660 MT of diesel. The penalty of Rs. 2,07,14,520/- was upheld, with an option for GAPL to pay 25% of the duty along with interest within 30 days to reduce the penalty. Penalties on M/s. Tauras Shipping Pvt. Ltd. were reduced to Rs. 2 lakhs, while penalties on M/s. ASL and M/s. Shakti Clearing Agency were set aside. The penalty on VMML was upheld at Rs. 10 lakhs. Penalties on individual employees were set aside due to lack of detailed discussion on their roles and benefits from the alleged misconduct.

Conclusion:
The tribunal's judgment comprehensively addressed the liabilities and penalties arising from the import of vessels and consumables by GAPL and associated parties, upholding significant penalties and duties while setting aside certain confiscations and penalties on technical grounds.