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TMI Blog2013 (3) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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. - C/83-84, 87-88, 76-79, 111-112 and 475/2008 - A/1612-1622/2012-WZB/AHD - Dated:- 8-11-2012 - Shri M.V. Ravindran and B.S.V. Murthy,JJ. Shri Naresh Thacker, P.M. Dave, P.V. Sheth, S.N. Kantawala, Paritosh Gupta and Dhaval Shah, Advocates, for the Appellant. Shri Jeetesh Nagori, AR, for the Respondent. ORDER M/s. Gujarat Adani Port Ltd. (hereinafter referred to as GAPL) and M/s. Valentine Maritime (Mauritius) Ltd. (hereinafter referred to as VMML) entered into an agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kers totally valued at Rs. 3,29,55,395/- which was found on-board various vessels forming part of barge DLB 600 and its marine spread. The confiscation was proposed on the ground that no import duty was paid at the time of filing of Bill of Entry in respect of these vessels. In addition, the Show Cause Notice also proposed confiscation of vessels viz. Maqdeem-II, Vicky-II Zakhar Victory and the barges/tugs for having stored the bunkers without payment of duty and dealt with diesel and supplied it to other barges without following the Customs procedure. The Show Cause Notice also proposed imposition of penalty on GAPL, VMML, ASL, TSPL and M/s. Shakti Clearing Agency (a CHA of GAPL) for various omissions/commissions by them. Penal action was also proposed against Shri Debasis Mitra - General Manager (Constructions) of GAPL, Shri Dinesh Bansal - Assistant Manager (Finance Accounts) of GAPL, Shri Anil K. Singh - Vice-President Marine) of GAPL and Shri K.V.V. Prasad - Assistant Manager of GAPL, Shri Saeed Abu Hassan - Sr. Project Manager of VMML, Capt. Sandeep Datta - CEO of TSPL, Shri Henry Jasiraj - Manager (Off-shore) of ASL, Shri P.A. Vasudevan - Power of Attorney for CHA M/s. Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of barges and tugs at the time when they were brought into India and Bill of Entry was filed for payment of duty by GAPL. Further, it was also found that 1660 MT of diesel had been supplied by VMML through Maqdeem-II etc. as detailed above, on which also no duty was paid. The duty liability on the bunkers and provisions in barge DLB 600 and other tugs has been fixed on GAPL and has been demanded from them. The question to be determined is whether GAPL is liable to pay duty or not. 4. The first submission on behalf of the GAPL was that GAPL in this case cannot be considered as importer at all. According to Section 2(26) of Customs Act, 1962, importer in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself but to be the importer. It was submitted that insofar as the consumables land bunkers are concerned, GAPL did not place any orders for the same nor they were responsible for bringing the same into India from outside India and therefore they were neither owners nor any person holding them out to be the importers of the consumables/bunkers. It was also submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods in Section 2(22) of Customs Act, 1962, the vessels are included in the definition. Section 87 of Customs Act, 1962 permits utilization of imported stores on board vessels during the period when such vessels are foreign going vessels. The moment Bill of Entry is filed in respect of the vessels and import duty is paid, the vessels cease to be foreign going vessels. Therefore, the diesel and other provisions on board the vessel cease to enjoy the benefit of exemption available to such items in stores in foreign going vessel since after filing Bill of Entry on payment of duty, the vessel ceases to be a foreign going vessel and becomes an Indian vessel and therefore the liability of import duty on the provisions/stores in the vessel arises. When the Bill of Entry is filed for the goods, the definition of importer as submitted is relevant. If no Bill of Entry is filed and the goods are imported in contravention of provisions of law, they become smuggled goods. According to Section 2(39) of Customs Act, 1962, smuggling , in relation to any goods means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113 of Customs Act, 1962 . Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into coastal trade from foreign trade. This would show that the master of the vessel had declared and the Customs officers had verified the quantity of stores on board vessel. Unfortunately, whether IGM was filed in respect of these barge/tugs, could not be clarified by any of the parties to the dispute. In any case, if IGM was filed, it was for the parties to produce, because it is their claim that IGM has been filed. According to the Customs regulations relating to import manifest, the cargo manifest is required to be filed in terms of Regulation 3 and it has to be delivered in separate sheets in respect of different categories of cargo viz. cargo to be landed, unaccompanied goods/barges, goods to be transhipped, and same bottom cargo or retention cargo. Another view that is possible and in our opinion, may be applicable is the fact that the vessels were imported as goods in this case and if they were imported as goods, a Bill of Entry has to be filed for the vessels as well as stores separately as done in the case of ship brought for breaking. Whatever way we look at the facts and circumstances, the person who holds himself out to be the importer of the barge/tugs is the one w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantity consumed by the barges/vessels was required to be monitored by GAPL as it emerges from the agreement and therefore the GAPL cannot claim ignorance of quantity received; further, duty is not demanded from the supplier of goods at the time of importation into India; in this case, once the GAPL files Bill of Entry for the vessels, they becomes the receiver of the goods and vessel owners/charterers become the suppliers; in respect of the imported goods, it is receiver of the goods on whom the liability arises. We have already discussed the difference between the imported goods and smuggled goods above. In the light of definition and in the light of practice followed in collection of import duty, it was always the receiver of the goods or the person who holds himself to be out to be the importer/to be the receiver of the goods, i.e. GAPL who became liable for import duty and no one else. The contract also clearly provides that all the duties, levies other than on erection equipments are to be paid by GAPL only. In fact, the Clause 13.10 clearly provides that all taxes, duties, cess, fees, levies etc. applicable outside India shall be paid by VMML. Thus, the contract also does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire bonded stores carried by the vessel; or, the quantum of bonded stores that they would like to take out for the crew etc. on payment of duty and keep the remaining under Customs seal in terms of Imported Stores (Retention on Board) Regulations, 1963. 2. As per the request of the Steamer Agents, the Preventive Department will take an inventory of the stores. If the request is for taking out only a portion of such stores, the Preventive Officer concerned should supervise the quantity that is taken out and make an inventory of the same. Inventory of the private property of the crew would similarly be taken separately. In regard to the inventory of fuel oil, lubricant, etc., the quantity remaining on board the vessel at the time of reversion would be noted separately for HSD, furnace oil, lubricants, etc. 3. The inventory so taken as well as the PP (Personal Properties) declaration shall be signed by the Master/representative of the Steamer Agents and the Preventive Officer making the inventory as to its correctness. On copy of the inventory and declaration would be kept in the Preventive Department, another copy would be sent to the Import/Export Department and the third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation anywhere in the records. There is no indication that detailed procedure was followed for conversion of foreign going vessels to coastal vessels as per Customs norms. The only evidence available on record is the declaration of bunkers by the masters of the vessels and the declaration by them that the vessels will be converted to coastal vessels and acknowledgement and verification of the same by Customs officers. Nowhere, Assistant Commissioner is in the picture. Therefore; this defence has no basis at all. 14. Next issue is the duty liability on 1660 MT of diesel subsequently supplied by the owner to the barge/tugs and marine spreads. Employees of GAPL Shri Dinesh Bansal and Shri Debasis Mitra have clearly admitted that the liability was of GAPL to pay the duty on consumables; Shri P.A. Vasudevan, Power of Attorney holder of CHA, in his statement dated 30-3-2005, stated that the CHA and GAPL were aware that duty on provisions is to be paid by them; in search conducted in the Ahmedabad on 6-2-2005, a copy of Bill of Entry for diesel brought by Tug M/V UCO-XIV was also found with duty calculation; the diesel was received by DLB 600 in the presence of Shri Dinesh Bansal; the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scation and become liable to pay duty and penalty. 15. Now, We have to consider the liability of GAPL to penalty. As far as the diesel and bunker provisions are concerned, the Commissioner in the impugned order has imposed penalty under Section 114A of Customs Act, 1962. The facts and the analysis of facts made by us above would show that GAPL filed Bills of Entry in respect of barge/tugs but failed to file Bills of Entry in respect of bunkers/stores; it cannot be said that GAPL was not aware of the liability in view of the specific provision in the contract entered into by them with VMML; in respect of barge/tugs, clearly GAPL held themselves out as an importer to the Department and therefore the obvious conclusion would be that GAPL itself has to be considered as an importer of bunkers/stores in barge/tugs; it was the duty of GAPL to file Bill of Entry and failure to do so is clearly suppression of facts on their part and since they have declared the barge/tugs as goods, failure to declare the bunkers/stores in these barge/tugs is clearly a mis-declaration also; the fact that there was a certificate issued by the master of barge/tugs does not help GAPL since that was an obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh, Vice President (Marine). Shri K.V.V. Prasad had filed daily progress report and diesel was supplied to the barge. This would show clearly that not only barge/tugs were imported by GAPL but loading of diesel to DLB 600 was supervised and monitored by getting report from their Manager. Further, the agreement also provides that actual quantity imported and actual quantity used will be calculated and suitable adjustment regarding liability to Customs duty will be made as per the amendment carried out to the agreement in October 2005. This would show that even after issue of Show Cause Notice, the understanding between VMML and GAPL was that the duty paid for import will be adjusted after ascertaining the quantity actually consumed. The above observations would show that the GAPL is liable to penalty under Section 114A of Customs Act, 1962 in respect of diesel imported and supplied to barge DLB 600 without payment of duty. Therefore, the penalty of Rs. 2,07,14,520/- imposed on GAPL under Section 114A of Customs Act, 1962 also has to be upheld. However, we find that the Commissioner has not given the details of option available to GAPL to pay duty liability on bunkers/diesel with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c) is given reasonable opportunity of being heard in the matter : Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the person concerned be oral. 33. For any confiscation to be adjudged, it is necessary that the owner (emphasis supplied) should be given a show-cause Notice. The Owners of the Vessel are Conti-Schepers-gessellschaft mb H Co. as mentioned in para 13 above. They have filed an appeal in that capacity. However, they have not been named as a Noticee in the Show-cause Notice. In view of the grave legal infirmity in the show-cause notice, the orders of confiscation of the vessel do not survive and are set aside. Curiously, this infirmity was not brought to the notice of the learned Commissioner. No arguments have been made by the counsel before us, on this ground, although in the grounds of appeal, this grievance was made. 18. It can be seen that according to Section 115(2) of Customs Act, 1962, a vessel used in smuggling of goods is liable to confiscati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility on vessels fixed on GAPL have been upheld even though the same were vehemently contested, in view of the fact that this issue has not been contested and has been treated as corollary of the main issue of duty liability of bunkers/diesels which has been held against GAPL, the redemption fine imposed in respect of diesel etc. has also to be upheld. The total value of the goods (bunkers/diesels) is Rs. 3,29,85,395/- and having regard to the facts and circumstances of the case, the redemption fine cannot be said to be excessive. 20. M/s ASL, Mumbai and M/s. TSPL, Gandhidham have been imposed with penalty of Rs. 10 lakhs each. These were the agent and sub-agents respectively of VMML and were responsible for fulfilling of all obligations relating to barge/tugs. The fact that one of the vessel was caught transferring the diesel to a fishing boat and the fact that the diesel was transferred to barge DLB 600 even before a proper Bill of Entry was filed and cleared, would clearly show that the sub-agent, M/s. TSPL did not fulfil their statutory obligations cast on them as agents of the charterer. The attempted transfer of diesel to a fishing boat would clearly reflect the fact that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stores only during the period when such vessel is a foreign going vessel. Section 86 permits the stores imported in a vessel to remain on board while it is into India subject to provisions of Section 87. A combined reading of Sections 86 and 87 would show that VMML should have ensured that the duty was paid on bunkers and diesel before the barge/tugs were put to use. If the liability to pay duty was on GAPL, before using the goods which are not duty paid, it was the duty of VMML to ensure that duty was paid by GAPL or by itself. Further, the fact that the diesel was attempted to be transferred to a fishing boat and was caught in such an act, would show that VMML clearly intended to divert diesel to fishing boat without payment of duty and are in profit. Under these circumstances, penalty of Rs. 10 lakhs imposed on VMML, in our opinion, is sustainable and has to be upheld. 23. Penalties have also been imposed on employees, masters, seamen of all the parties. We feel that unless it is shown that the employees were the partners in the crime and benefited therefrom and were not following the direction of the employer or they were in league with employer in doing mischief, it would no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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