2017 (12) TMI 1281 - AT - Customs

Levy of customs duty - reimport into India after repair/modification - investigation found that when all the three vessels were coming back to India on re-import from time to time during the impugned period with the repair/modification thereto, No Bills of Entry having been filed for the value of repair/modification carried out thereto abroad as well as freight and insurance incurred and No adjudication or assessments were ever made thereon, that has resulted in loss to the exchequer for the relevant periods - case of Revenue is that those vessels were never foreign-going vessels although appellant falsely claims that to be so - whether on such re-importation, value of repair so made including freight shall form part of the assessable of the such re-imported vessels and necessary duty leviable thereon under the Act? - classification of vessel. Held that - All the three vessels were dedicated vessels to render aforesaid service to ONGC only, without being capable of commercially operated as passenger or cargo carriage. For a limited purpose those were conveyance for ONGC only. Appellant was obliged to ONGC under contract to transport its working personnel and goods without providing any transportation service to general public - the vessels remained as goods only not only at the time of first entry thereof into India but also during re-imports made from time to time on repair thereof. Re-import of goods under Section 20 of the Act is permitted under law when the exported goods came to India again goes back out of India for repairs Partial duty concession/exemption is available to the re-import as is covered by the aforesaid notification. Revenue discharged its burden of proof bringing the goods to CTH 89059090 in view of technical character of vessels ruling out their adoptability by CTH 89019090. Mere filing of the documents at page 80 and 81 of the paper book does not exonerate the appellant from its duty liability without filing the Bills of Entry disclosing the value of the repair/renewal/modification and installation of machinery done to the vessel including freight and insurance charged incurred. Therefore, there was violation of law made by the appellant relating to filing of Bills of Entry which is well established. Similarly, merely because the vessel was running from one coast to another during its movement while executing contract with ONGC, that does not entitle the appellant to plead that the vessels were foreign-going vessels. Accordingly the re-imports were not immune from levy. For the violation of law made by appellant, as stated herein before for No filing of Shipping Bills and Bills of Entry against exit from time to time and re-imports in respect of cost/value of repair and freight and insurance incurred, appellant was bound to face the consequences of adjudication as has been directed by adjudication order, which does not call for interference except to the extent modified by this order. Accordingly, it may be stated that Revenue s plea that disclosure of stores and consumables for inventorization by the Customs upon re-import of the vessel, shall not exonerate the appellant from levy of duty in law, has force and sustains. Time limitation - Held that - It may be stated that bar is only against recovery but not against the levy which arises when event of levy occurs Normal period shall be subject to levy and recoverable on the basis of rate of duty applicable on the dates of re-import during the impugned period. Basic Customs Duty, Additional Duty of Customs and Special Additional Duty shall be leviable and recoverable for such normal period in accordance with law. In view of the settled position of law and having decided the appeals on the statutory principles as well as first principles of law, further discussions on other citations is considered redundant and not to burden this order, in the fitness of the circumstances of the case and all the pleadings of appellant except bar of limitation is dismissed being devoid of merit.

Issues Involved:
1. Classification of vessels.
2. Duty liability on re-imported vessels.
3. Filing of Bills of Entry for re-imported vessels.
4. Applicability of exemption notifications.
5. Confiscation and imposition of penalties.
6. Limitation period for duty recovery.

Detailed Analysis:

1. Classification of Vessels:
The vessels, SEAMEC-I, SEAMEC-II, and SEAMEC-III, were specifically designed for ONGC operations and were not capable of being used commercially for passenger or cargo transport. Thus, they were classified under CTH 89059090 as "goods" and not under CTH 89019000 as claimed by the appellant. The vessels were used for specialized purposes such as diving support, fire fighting, and pollution control, which ruled out their classification as commercial transport vessels.

2. Duty Liability on Re-imported Vessels:
The vessels, upon re-import after repairs, were liable to duty on the value of repairs, machinery installed, and freight and insurance charges incurred. This is in accordance with Section 20 of the Customs Act, 1962, which mandates duty on re-imported goods. The Tribunal upheld the duty liability as per the applicable notifications and Customs Valuation Rules.

3. Filing of Bills of Entry for Re-imported Vessels:
The appellant failed to file Bills of Entry for the cost of repairs, modifications, and installations done abroad, as well as for freight and insurance charges incurred during re-import. This was a violation of Section 46 of the Customs Act, 1962. The Tribunal noted that filing Bills of Entry for bunker, stores, and consumables did not exempt the appellant from filing for the cost of repairs and other charges.

4. Applicability of Exemption Notifications:
The Tribunal considered various notifications that provided partial exemption from duty on re-imported vessels. However, it concluded that the appellant did not comply with the conditions of these notifications, particularly the requirement to file Bills of Entry for repairs and modifications, which led to the denial of exemption benefits.

5. Confiscation and Imposition of Penalties:
The vessels were ordered to be confiscated under Section 111(m) of the Customs Act, 1962, with an option to redeem them on payment of redemption fines. Penalties were imposed under Section 114A for evasion of duty. The Tribunal upheld the confiscation and penalties, noting that the appellant's failure to file the necessary Bills of Entry and disclose the value of repairs constituted a breach of law.

6. Limitation Period for Duty Recovery:
The Tribunal acknowledged the appellant's plea on the limitation period and directed that duty recovery should not exceed five years from the date of the show-cause notice. This was in line with the statutory provisions for the recovery of duty.

Conclusion:
The Tribunal concluded that:
1. The vessels remained classified under CTH 89059090 as "goods" and were not foreign-going vessels.
2. Duty was payable on the value of repairs, renewals, machinery installed, and freight and insurance charges incurred.
3. Redemption fines and penalties were imposed for the breach of customs laws.
4. Duty recovery was limited to five years from the date of the show-cause notice.

The appeals were partly allowed to the extent of modifying the redemption fines and penalties, while upholding the duty liability and classification of the vessels.

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