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TMI Blog2020 (8) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond Indian territorial waters for any purpose. Therefore, the appellants cannot take recourse to the definition contained in Section 2(21) (ii) of Customs Act, 1962, to claim that the impugned vessel is a foreign going vessel. Therefore, the impugned vessel cannot be treated as a foreign going vessel during the impugned period. Whether the appellants are entitled to the benefit of Notification No.94/96? - HELD THAT:- The first import has taken place in 2007 when there was no duty leviable on such dredgers. Thereafter, the subsequent visits to the Indian Ports by the impugned vessel should be treated as reimport and benefit of Notification No.94/1996-Cus should be made available and duty should be charged to the extent of repair or maintenance charges incurred - this argument is not tenable - the import and export activities as claimed by the appellant are not recorded. The appellants themselves agree that no Bills of Entry and Shipping Bills have been filed. In the absence of clear record to correlate the import and export of the vessel and the extent of repairs claimed to have been undertaken, the appellant s claim cannot be entertained - the appellants cannot claim the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad no jurisdiction to demand duty on the impugned vessel and we find that the show-cause notice and adjudication order have been issued without proper authority of law. Moreover, in the instant case, the vessel has been traveling between foreign ports and Indian ports. During the current Journey, the vessel arrived at Paradeep Port on 11-5-2011. If duty was chargeable on vessels as per change in law if any, and if a Bill of entry was needed to be filed in view of the circular issued by CBEC, it was incumbent upon Paradeep Customs to advise the appellants. Paradeep Customs have not only permitted costal run for the vessel but also have accepted bills of entry for ship stores, bunkers etc. Proper officers have boarded the vessel and inspected the documents at various places. Every movement and intention of the vessel was known to the department. Therefore, extended period cannot be invoked in this case - the action cannot be taken on a vessel imported in 2011 on the basis of a clarification issued vide circular in 2012. If the department can view the issue differently at different periods of time, the appellants also can understandably, entertain a bona fide belief on the taxability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012 onwards). Investigation conducted by SIIB of Cochin, Customs reveals that the dredgers was having a foreign flag; arrived in India in May 2011; reached Paradeep Port on 11.06.2011; it was chartered on lease by M/s Dhamra Port Co. Ltd. for dredging at Dhamra Port, Channel for the period 06.06.2011 to 15.01.2012; was converted into coastal run on 12.06.2011 and arrived in Cochin Port on 28.01.2012 on being chartered by M/s. Dharti Dredging and Infrastructure Ltd. for dredging operations at Cochin. A NIL cargo IGM No. 290/2011 dated 08.06.2011 was filed; however, it was not indicated that the dredger was imported and no duty was paid in terms of Notification No. 21/2002 or 19/2012. Statements of various persons involved were recorded and investigations were concluded. It appeared to investigation that the dredger was not covered as a foreign flag vessel in terms of Section 2(21) of Customs Act, 1962 and CBEC Circular No. 16/2012 dated 13.06.2012; no bill of entry was filed. A SCN dated 30.01.2013 was issued to the owner of the dredger i.e. M/s Manthan Dredging Ltd. and the disponent owners M/s Samudra Dredgers Ltd, U.K; M/s Universal Dredgers and their agents seeking demand of Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee s as well as the customs department never insisted on the filing of bill of entry, as far as vessels are concerned. He relies upon the following cases in his support. He submits that (i). This Tribunal, in the case of Samson Maritime Ltd Vs Commissioner of Customs (Import), Mumbai 2016 (333) ELT 148 (Mum), held that where customs never insisted on filing of bill of entry, customs duty cannot be demanded subsequently (Para 6.3 to 6.6). (ii). Tribunal in the case of Hede Ferrominas Pvt Ltd Vs Commissioner of Customs (Import, Mumbai) 2016 (334) ELT 540, held that as regard non-filing of Bill of Entry, we find that once goods is exempted by customs exemption notification, non-filing of Bill of Entry at the time of import is merely a procedural lapse, as there is no mala fide intention of the appellant as no benefit accrues to the appellant by non-filing of Bill of Entry (Para 6.4). (iii). Tribunal in Devshi Bhanji Khona vs. CC, Cochin 2019 TIOL 3369 also held as above (Para 16.5). (iv). Tribunal in the case of Noble Asset Co. Ltd 2006 (205) ELT 901 held that No customs duty is payable on the vessel, when it is re-imported into India. Learned Counsel submits t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily rejected this contention solely on the ground that the costs could not be verified; this is a flimsy ground to deny the exemption; the other ground to deny the exemption is that there is change in the ownership, which is factually incorrect; Manthan Dredging Ltd. continue to be the owners of the dredger and have not transferred the ownership to any other persons; other disponent owners, decide and control only the commercial operations of the ship/vessel. 2.4. Learned Counsel submits that the dredger in question is a foreign going vessel and hence not liable to duty; vessel in question is a foreign going vessel at all times; as per Section 2(21) of the Customs Act, definition of foreign-going vessel or aircraft has therefore two parts; the first part is a means definition and the other part is an inclusive definition; the means definition applies to a vessel or aircraft for the time being engaged in carrying goods or passengers between any port or airport in India and any port or airport outside India; the inclusive definition covers vessels which are undertaking activities entirely unconnected with carriage of goods or of passengers; each of the three clauses of the inclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector of Customs for Exports-II 1999 (110) ELT 484 (Cal) and followed by the Tribunal in CC Vs Emirates Trading Agency 2005 (184) ELT 98 (Tri) wherein the vessel operating within the harbour for unloading the cargo from bigger vessel is treated as foreign going vessel. 2.5. Learned Counsel further submits that duty demanded by applying rate of duty of 6% as CVD is not correct. CVD ought to have been computed by applying rate of duty of 1% in terms of Notification No.1/2011-C.E; valuation adopted by the department is also not correct and not substantiated; Notification No.1/2011-C.E. (Sl.No.113) prescribes an effective rate of 1% CVD on all goods classifiable under the Heading 89.05. He relies on the decision of the Supreme Court in the case of SRF Ltd vs. Commissioner of Customs, Chennai: 2015 (318) ELT 607 (SC) (paras 6-8), wherein appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/2002; the appellants had placed on record the purchase cost of the dredger. However, the department has relied upon a news report about the controversy on Sethusamudram project and proceeded on the basis of the value indicated therein, which value is not aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not survive; hence, upon re-import, duty would be restricted only to the cost of repair abroad as per Sl. No.2 of Notification No.94/1996-Cus. 2.7. Learned Counsel further submits that Commissioner of Cochin does not have jurisdiction to demand duty in the present case, just because the vessel was seized at Cochin; the vessel entered India in May 2011 through Nagapattinam wherein it was idling as a foreign going vessel; it was duly converted from foreign run to coastal run in Paradeep Port; if at all its opined that the dredger was imported into India for home consumption, it was in Paradeep; customs department in Cochin has no jurisdiction to demand duty on imports made at Pardeep Port; Tribunal held in favour of appellants in Samson Maritime Ltd. v. Commissioner of Customs (Import), Mumbai: 2016 (333) ELT 148 (Tri.-Mum) (Para 7); territorial jurisdiction of the Commissioner Cochin has not been extended to Paradeep, either by the Customs Act or by the Central Board of Excise and Customs; section 15(1)(c) or Section 28 also does not confer jurisdiction on customs department at Cochin to demand duty from the Appellants for the import made at Paradeep Port; this is more so w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive import duty for dredgers which are on lease. 3.2. Learned Authorised Representative submits that M/s Manthan Dredging have contended that No duty is payable on vessel re-imported into India, as the vessel ceases to be goods, when re-imported into India: the vessel was first imported in 2007 as goods , and thereafter, on re-import, it assumed the character as conveyance , and hence no duty would be leviable. He submits that this issue was examined elaborately in the case of M/s. SEAMEC Ltd.: 2017(12) TMI 1281- CESTAT Mumbai, this Tribunal held as follows. 62. When the vessels remained as goods all along i.e. from point of first entry to India and during the re-import from time to time that was classifiable under CTH 89059090, for the reasons stated hereinbefore taking the criteria of classification prescribed by the said CTH. All the vessels did not possess the character of the goods covered by CTH 89019090 not being used for carriage of cargo or passenger according to the mandate of the said CTH. Accordingly, stand of Revenue that the vessels on re-import shall be classifiable under CTH 89059090 as goods only is correct and that is upheld . 3.3. Learned A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eep, requesting for conversion of the vessel to coastal run. (ii). copy of permission dated 8.06.2011 granted to M.V. Darya Manthan by the DG Shipping. Learned Counsel submits that it is evident from the documents that it was clearly disclosed to the customs officers that the dredger will be taken to Dhamra Port for carrying out the dredging operations; the dredger was converted from foreign run to coastal run in Pardeep port on 12.06.2011; import deemed, if any, has taken place on 12.6.2011 at Pradeep Port and thus, the Commissioner of Customs, Cochin lacks the jurisdiction to initiate action by issuance of show cause notice; CBEC has clarified vide their Circular No.16/2012-Cus dated 13.06.2012, that where foreign flag vessels are to be converted from foreign run to coastal run, bill of entry for home consumption is to be filed at that point of time and applicable duties of customs is to be paid. 4.1. Learned Counsel submits that In the instant case, it is clearly evident that the dredger was imported into India for home consumption in Paradeep port first, as evidenced by its conversion into coastal run; therefore, the customs department in Cochin has no jurisdiction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, has been acknowledged by a number of decisions of the Tribunal; invocation of extended period of limitation is not tenable as there is no fraud, collusion etc, as all facts were disclosed before the customs department at Paradip and the vessel was also boarded by the customs officers at Dhamra Port; Department s reliance on SEAMEC Limited Vs CC (Imports), Mumbai, 2017 (12) TMI 1281 CESTAT Mumbai is misplaced as this decision has been since recalled 2018 (364) ELT 611 (Tri.-Mum). 5. Heard both sides and perused the records of the case. The rival contentions in the case revolve around the following issues: (i) Whether the impugned vessel MV Darya Manthan is foreign going vessel in terms of Section 2(21) of Customs Act, 1962; (ii) Whether the appellants are entitled to the benefit of Notification No.94/96; (iii) Whether Commissioner of Customs, Cochin has jurisdiction over the import which initially occurred at the port of Paradeep on 11.6.2011; (iv) Whether the vessel MV Darya Manthan is liable to pay duty on being used for coastal run at Cochin for the period 28.1.2012 to 28.2.2013; (v) Whether the Commissioner of Customs was right in holding that separate pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able and duty should be charged to the extent of repair or maintenance charges incurred. We find that this argument is not tenable. We find that the import and export activities as claimed by the appellant are not recorded. The appellants themselves agree that no Bills of Entry and Shipping Bills have been filed. In the absence of clear record to correlate the import and export of the vessel and the extent of repairs claimed to have been undertaken, we find that the appellant s claim cannot be entertained. We find that learned Commissioner has correctly observed that: 44. The vessel, thus, having illegally entered into India and not imported through a due process during any of its prior sorties, clearly falls outside the definition of a re-imported cargo as well. In any case, it is no longer res integra that re-imports do not carry a blanket exemption from customs duty. The findings of the Hon ble Supreme Court in the matter of Super Cassettes Industries Ltd. (reported in 2008 (225) ELT 401 (SC) that on re-importation of goods assessee would be liable to pay same duty as had been paid when goods were imported for first time applies to the instant case. We find that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccurred/completed at Cochin. The only change in circumstances with regard to the vessel at Cochin is that either the disponent and/or the lessee has changed, vis a vis its position in Dhamra Port, where the vessel was already in coastal run as permitted by Paradeep Customs. Per contra, the appellants submit that it is accepted by the department that in May 2011 when it was converted into coastal run; it is evident that the dredger was imported into India for home consumption in Paradeep first by its conversion to coastal run; therefore, Cochin Customs has no jurisdiction to demand duty on imports made at Paradeep Port. Learned counsel for the appellants relies upon Samsung Maritime Ltd. (supra) wherein Tribunal has held as follows: 7 . Although we have opined above on merits, we would discuss a preliminary objection by the ld. Advocate that the Commissioner at Mumbai had no jurisdiction to seize and adjudicate upon a case of goods which were imported at Chennai. The case of Revenue is that the appellant did not file the IGM/Bill of Entry at the time of import at Chennai. We find that the Commissioner of Customs at Mumbai does not have jurisdiction over Chennai port. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the powers of Paradeep Customs. Learned Commissioner, in the impugned order, has taken the argument that since the duty, whether provisional or final, was paid in the jurisdiction of Cochin Customs, it can be assumed that the importers have declared their intention to complete the act of import within Customs Cochin jurisdiction. We find that this argument is not supported by Law. It is very clear that the appellants have deposited an amount to obtain provisional release in terms of Section 110A of Customs Act, 1962 when the subject vessel was restrained by Cochin Customs. Hereto, we find that the duty was not paid but was deposited along with a bond and a bank guarantee. Moreover, the duty was not paid in full as demanded. Therefore, by no stretch of imagination, the same can be deemed to be payment of duty. Such amounts deposited do not take the character of duty. In the instant case, the payment was not of any duty but was a deposit, that too not in full , made to secure provisional release of the vessel and the appropriation has been appealed against. Therefore, it is not free for Cochin Customs to reckon date of making of deposit as the relevant date in terms of Section 15 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the vessel continued to be in the coastal run throughout the period. We find that the Notification No.19/2012 dated 17.3.2012, did not envisage any such collection of duty from different lessees during the period. Moreover, customs duty is charged when the act of importation is done. Understandably, the act of import is not evident during the three periods. At the most it would be in the first period itself. It is not understood as to how Customs duty could be charged on subsequent lessees after the vessel is imported and is under coastal run, that too ignoring the period when the vessel was under coastal run at Dhamra Port. We find that a stand, taken even due to mistaken appreciation of law, cannot be selective. However, we find that learned counsel for the appellants has not raised this issue. Therefore, we refrain from giving any opinion on this issue. 12. We find that learned counsel has correctly replied upon decision of Tribunal in the cases of N.C.R. Corporation of India Ltd. vs. CC (Preventive) Mumbai (supra) and Devilog Systems India (supra). We also find that as held by Tribunal in Bakeman s Home Products Pvt. Ltd. vs. CC, Bombay: 1997 (95) ELT 278 (Tri.), demand an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manthan , M/s. Manthan Dredging Ltd., Hong Kong and disponent owner M/s. Samudra Dredgers (UK) Ltd. and M/s. Samudra Dredgers Ltd., London, UK. He also confirmed duty of ₹ 46,73,440/- jointly on the owner of the dredger MV Darya Manthan , M/s. Manthan Dredging Ltd., Hong Kong and the disponent owner M/s. Samudra Dredgers (UK) Ltd. and M/s. Universal Dredgers Ltd., London, UK. We find that such a joint confirmation has no sanctity of law, inasmuch as the exact amount payable by the individual noticees is not given. The order is not enforceable also for the said reason. On this count also, the impugned order is liable to be set aside. 14. The appellants have also submitted without prejudice to the other submissions that the duty demanded at the rate of 6% CVD is not correct. CVD at the rate of 1% is applicable in terms of Notification No.1/2011. They also submit that the value of the dredger is inflated, relying on a news report about the controversy on Sethusamudram Project, even though the appellants have placed on record the purchase cost of the dredger. We find that this issue does not require consideration, as we hold that the impugned order is not maintainable on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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