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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 ..... vessels imported for use in Mundra Port and to be re-exported and appropriate duty was paid, subsequently it was found that no Bill of Entry was filed nor any duty was paid in respect of bunkers/diesel/lub oil/grease/provisions/paints etc. which were brought by these vessels into India. Accordingly, Show Cause Notice was issued to GAPL, proposing to recover the duty from them amounting to Rs. 1,02,98,597/-. The Show Cause Notice was issued to GAPL in view of the fact that it was GAPL who had filed Bills of Entry in respect of vessels and according to Clause No. 13.7 of Article 13 of the contract between VMML and GAPL, the GAPL was to pay Customs duty on the consumables which according to the definition of 'consumables' in the contract included the bunker items also. VMML had appointed M/s. Arcadia Shipping Ltd., Mumbai (hereinafter referred to as ASL) as their agent, who in turn, appointed M/s. Tauras Shipping Pvt. Ltd. (hereinafter referred to as TSPL) as their sub-agent to complete the inward/outward clearance, filing of Import General Manifest (IGM)/Export General Manifest (EGM), signing off/on crews, husbanding of vessels, inventory of stores of marine spread etc. The Show Caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned order, the Commissioner confirmed duty demand for bunker items, ordered confiscation of seized diesel, lub oils, paints, grease etc., ordered confiscation of vessels and allowed them to be redeemed on payment of fine and imposed penalty on 26 persons/firms in addition to GAPL. 2. We heard the learned advocates on behalf of various appellants and learned A.R. on behalf of the Revenue for 3 days and detailed submissions were made and various contentions were raised. Instead of taking up the arguments advanced by each party on various issues, we consider it more appropriate that we take up each issue and deal with the same and determine the liability to duty/confiscation/liability to penalty of the persons, which, in our opinion, will facilitate proper decision in accordance with the law. This is mainly because there were conflicts of interest amongst the parties since if the claim of one party is accepted, it would adversely affect the claim of another party. Therefore, instead of considering the submissions made by several parties on one issue, it would be appropriate to discuss and determine the liability if the goods for duty, confiscation and penalty of the persons concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent of import of consumables/bunkers into India, while it was admitted that the appellants were under a contractual obligation to pay the Customs duty on consumables, it was submitted that it does not mean that on this basis, the statutory liability can be imposed on the appellant. According to the ld. Counsel, the statutory liability under the said Act is on the person bringing the consumables into India from outside India and not on GAPL, just because GAPL is required to reimburse the Customs duty under a contract to VMML. It was VMML who had applied and obtained licence/approvals for coastal trade under Merchant Shipping Act, 1958 and not GAPL. The vessels at all times were under the control and possession of VMML and therefore GAPL is not liable to pay duty. GAPL has nothing to do with the supply/receipt/import of bunkers and the transactions relating to the bunkers where totally independent of the transactions relating to barges/tugs. GAPL had filed Bills of Entry in respect of barges and tugs in their name because VMML did not have the IE code and just because the GAPL filed Bills of Entry on behalf of VMML, they cannot be considered as importer particularly when all formal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of smuggled goods since the barge/tugs had become part of the land mass of Indian territory and considered to have been brought into India and therefore the stores on board barge/tugs also have to be considered as brought into India without payment of duty and without following the formalities. 9. In this case, the GAPL was the importer of the barge/tugs in the eyes of law and therefore there cannot be any dispute about that. Can it be said that an importer of the vessels/barge/tugs, is not responsible for payment of duty on the stores when a vessel is imported? The answer is clearly 'No'. It was claimed by the ld. Counsel for GAPL that the appellant GAPL had filed Bill of Entry since VMML requested them and they did not have IE code. He could not support the same with any evidence in the form of statement of any person or documentary evidence to support this claim. Moreover, the ASL and TSPL have been appointed as agents on record to complete the inward/outward clearance, filing of IGM/EGM signing off/on crews, husbanding of vessels, inventory of stores of marine spread etc. The claim of GAPL that these agents should have taken the responsibility of filing Bill of Entry for sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of diesel subsequently supplied to the barge in respect of which GAPL probably had a better case. It was rightly observed by the ld. Commissioner in the order that once the GAPL filed Bills of Entry for clearance of vessels and paid duty thereon, these vessels lost their identity as foreign going vessels and therefore were not entitled to consumption of such stores without payment of duty. As rightly observed by the ld. Commissioner, the employees of GAPL, whose statements were recorded in the course of investigation, Shri Dinesh Bansal - Assistant Manager (Finance & Accounts) and Shri Debasis Mitra, General Manager (Constructions) clearly admitted the liability of GAPL to pay duty on the consumables. Shri P.A. Vasudevan of M/s. Shakti Clearing Agency also stated that CHA as well as GAPL were aware of their liability. Shri Henry Jasiraj - Manager (Off-shore) of ASL also stated that duty on bunkers and provisions was to be paid by GAPL. Further, when we look at the contract also, it becomes quite clear that GAPL and VMML had understood that the liability to pay duty would be on GAPL only. As late as on 18-10-2005, in the amendment sheet to the agreement, it was mentioned that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Manager of GAPL. It is also on record that there was correspondence/agreement between the parties and GAPL had been requested to file Bill of Entry and in fact in respect of subsequent receipts of diesel also, Bills of Entry were actually prepared by CHA of GAPL which could not have been done without knowledge of GAPL. This shows that it is not only the Revenue who has taken a view that GAPL is the person who is liable to pay but also the GAPL itself. It has been recorded by the ld. Commissioner that transfer of fuels and supply of fuels were recorded and signed jointly by the barge Superintendent and the representative of GAPL. In view of the above discussion, we hold that the decision of ld. Commissioner that duty liability on the stores/provisions/bunkers in the barge/vessels amounting to more than Rs. 1.02 crores is on GAPL, has to be upheld. 12. Another submission was made by GAPL that in this case, conversion of foreign going vessels to coastal vessels has been made by steamer agent of VMML and therefore, they are not liable. For this purpose, they have relied upon Circular No. 58/97, dated 6-11-1997, which lays down the procedure for conversion of foreign going v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of fuel oils, samples taken for test by the chemicals laboratory should be forwarded to the laboratory as soon as the inventory is taken, and the result should be obtained by the assessing Department within a period of one week. On the basis of the test results the assessment should be completed as indicated in para 5 above. 7. The Steamer Agents should make arrangements for payment of duty within the next 5 days. 8. The post clearance for the vessel reverting to coastal trade need not be held back pending assessment of the ship stores and payment of duty. 9. In so far as the private property declarations are concerned, one copy will be retained in the Preventive Department, another copy will be given to the Steamer Agents and another to the Master of the vessel. The preventive Department should take a simple guarantee from the Steamer Agents to safeguard the revenue and the baggages are cleared in accordance with the rules when the crew are finally paid off. At the time of reversion to coastal trade, since the crew are not finally paid off, the baggage items will be retained on board after taking an undertaking from the Steamer Agents in the form appended at Annexure-B. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were not liable to pay duty. When it was their own understanding as well as understanding as per agreement and when they were getting daily progress report about receipt of the diesels and use etc., this claim is found to be totally untenable. Therefore, taking into consideration that the entire group of barge/tugs consisting of barge DLB 600 and its marine spreads was brought into India as per the contract between GAPL and VMML and were working for GAPL and GAPL had undertaken to pay all the duties, levies, fees etc. payable into India, clearly show that GAPL cannot escape from the conclusion that the it was their behest and it was with their knowledge that diesel was imported. It has also been brought out that the diesel was received in the presence of representatives of GAPL. Unlike the case of filing Bill of Entry where the importer is defined, in the case where the Bill of Entry is not filed, what is required to be seen is who is responsible for import. If GAPL feels that they are not liable to pay duty, the proper course to adopt was to inform the supplier that they will not be filing Bills of Entry. Further, the very fact that GAPL claimed that they had filed Bills of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mporary import for re-export; in such a situation, the declaration made by the master to preventive officers cannot be considered as having been made on behalf of GAPL or by GAPL but can be considered as an obligation of master only; the fact that on behalf of the vessel owner, permissions were taken for coastal trade/run from DG (Shipping) does not automatically mean that such conversion has taken place for the purpose of customs also especially in view of the fact that Bills of Entry were filed for barge/tugs treating them as goods and imported into India; nevertheless if these barge/tugs were to engage in coastal trade/coastal run without DG (Shipping)'s permission, the appropriate action should have been/might have been taken by DG (Shipping) and therefore the fact that the permission was obtained from DG (Shipping) is not obtained from DG (Shipping) or not of any relevance for the purpose of proceedings under Customs Act. Under these circumstances, it has to be held that 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. 16. As regards the quantity of diesel of 1660 MT, received in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est and 25% of the duty towards penalty and discharge the same within 30 days from the date of communication of this order. Such discharge of liability would mean that penalty liability of GAPL has been discharged in full. We make it clear that if the duty, interest and penalty to the extent of 25% of the duty are not paid within 30 days from the date of communication of this order, penalty under Section 114A of Customs Act, 1962 shall be Rs. 2,07,14,520/-. 17. The next issue which is required to be considered is the liability of barge/tugs imported for project work and the tug which supplied the diesel to DLB 600 subsequently for confiscation. The owners of the vessels have argued that no notice was issued to them and therefore the confiscation is not sustainable. For this purpose, the advocates relied upon the decision in the case of Contischepers Schiifahrts-Gesselschaft MBH & Co. - 2001 (137) E.L.T. 482 (Tri-Mumbai), to submit that failure to give a Show Cause Notice to the owner of the vessel would mean that the vessel cannot be confiscated. Paras 31 to 33 of the said judgment are relevant and are reproduced below. "31. We have earlier held that the Act of non-declaration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner and since the owner has been specifically included in Section 115 and the words used are owner himself, his agent and a person in-charge of the vessel. It is not 'or' but 'and'. Moreover, Section 124, as reproduced in the order cited above, clearly provides that unless the owner of the goods is given a notice in writing, confiscation cannot be made. It has to be noted that 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. It was argued by ld. A.R. that there was a confusion as to who is the owner of the vessel. However, this is not correct in view of the fact that the agreement and the fact before the Department were very clear and clearly showing that VMML was only a charterer. Both M/s. Great Offshore Ltd., M/s. UCO Marine Contracting WLL & Co. have not been issued specific notices. It was informed during the hearing that they had approached Hon'ble High Court of Gujarat for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would make him an active partner in evasion of duty. Under these circumstances, we consider that the sub-agent is liable to penalty. Having regard to the volume of transactions, and the consideration that the sub-agent could have received, we consider that the penalty of Rs. 10 lakhs may be harsh and therefore we reduce the penalty on M/s. Tauras Shipping Pvt. Ltd. Gandhidham to Rs. 2 lakhs only (Rupees Two Lakhs only). As regards M/s. ASL, there is nothing on record to show that they were party to omissions and commissions of the sub-agent. In the absence of direct involvement, we consider that the penalty on M/s. ASL is to be set aside. 21. As regards M/s. Shakti Clearing Agency, the CHA of GAPL, we find that Bill of Entry were filed in respect of vessels and they were following the instructions given to them regarding filing of Bills of Entry in respect of bunkers/diesel also. No evidence has been brought out to show that they deliberately abetted in importation of bunkers/diesel without payment of duty and its utilization. Therefore, the benefit of doubt has to be extended to them. 22. As regards VMML, the charterer had supplied diesel and the diesel was transferred to barge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t :- (i) Customs duty of Rs. 1,02,98,597/- with interest as applicable is to be paid by M/s. Gujarat Adani Port Ltd. is upheld. (ii) Duty of Rs. 1,04,15,923/- with interest as applicable payable on 1660 MTs of diesel confirmed against M/s. Gujarat Adani Port Ltd. is upheld. (iii) Confiscation of 866.570 MT of Diesel, Lub Oil, Hydraulic Oil, Paints, Grease etc., totally valued at Rs. 3,29,85,395/- is upheld and imposition of redemption fine of Rs. 35 lakhs in lieu of confiscation against M/s. Gujarat Adani Port Ltd. is upheld. (iv) Confiscation of vessels, Barge DLB 600, Tug Gal Ross Sea, Tug UCO-XIV, Tug Claudine, Tug Neptune Star, Tug AHT Jabbar, is set aside with consequential relief to the appellants who have executed bond/bank guarantee/paid redemption fine/paid for provisional release. (v) Penalty of Rs. 2,03,14,520/- imposed on M/s. Gujarat Adani Port Ltd. under Section 114A of Customs Act, 1962 is upheld. (vi) If the duties demanded, interest as applicable and 25% of duties demanded towards penalty are deposited within 30 days from the date of communication of this order, the penalty under Section 114A shall stand reduced to 25%. If the amount already deposited is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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