2018 (9) TMI 676 - HC - Customs

Provisional release of seized ship - Import of ship for breaking and its parts - ship was seized as being prohibited from entering any port of Member State - The case of the Department is that the vessel imported by the petitioner at the time of its import was subjected to such sanctions. India being one of the signatories to the convention was required to honour such sanctions. Held that - By the time the seizure memo was issued on 3.5.2018 by the respondents, the ship was partially broken. This can be gathered from the seizure memo itself which refers to the fact that when the officers of the DRI visited the site, the imported vessel was found broken. Photographs of the condition of vessel are also attached to the seizure memo. Pending further investigation and adjudication continued seizure of the ship would result into great hardship to the petitioner beside mounting port charges, it would also delay the completion of ship breaking. In half broken condition it would also not be possible to remove the ship from the yard for being sent away. The respondents are directed to provisionally release the goods by lifting both the seizure memos on the condition that the petitioner shall deposit with the Customs Authority 25% of the declared value of the ship and provide bond for the remaining amount - Petition allowed in part.

Summary

Issues:
Challenge against the seizure of an imported ship for breaking and the prayer for provisional release of the goods pending further consideration by the authorities.

Detailed Analysis:
1. Background: The petitioner challenged the seizure of a ship imported for breaking and sought provisional release of the goods. The ship was imported without cargo for ship breaking purposes and was later seized by the respondent authorities based on intelligence received regarding sanctions imposed by the United Nations Security Council.

2. Petitioner's Case: The petitioner contended that they were unaware of the sanctions at the time of import, the ship was already in the process of being dismantled when seized, and the sanctions were lifted after the seizure. The petitioner argued that the sanctions were for ships carrying fuel, which was not the case with their ship.

3. Respondent's Defense: The respondents argued that the ship's name was changed, leading to the Customs Department being unaware of the sanctions. They claimed that clearance was given under a mistaken belief, and the ship was seized upon the correct facts being brought to light.

4. Legal Analysis: The Security Council had imposed sanctions on the ship to deter illicit export of crude oil from Libya. The Department asserted that at the time of import, the ship was subject to sanctions, which India, as a signatory to the convention, was obligated to honor. The court noted that even if the sanctions were later lifted, the legality of the import at the time needed proper adjudication.

5. Customs Act Provisions: Sections 111, 112, and 110 of the Customs Act 1962 were referenced, pertaining to confiscation of improperly imported goods, penalties for improper importation, and seizure of goods with provisional release terms, respectively.

6. Judicial Decision: Considering the peculiar facts of the case where the ship was partially broken at the time of seizure, the court directed the provisional release of the ship. The court emphasized that continued seizure would cause hardship to the petitioner and delay the ship breaking process. The release was subject to conditions, including depositing 25% of the ship's declared value with the Customs Authority.

7. Conclusion: The court ordered the provisional release of the ship, lifting the seizure memos, and imposing conditions for the petitioner to comply with to safeguard government revenue. The decision aimed to balance the interests of all parties involved while ensuring proper adjudication of the matter in due course.