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TMI Blog2003 (6) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ansit or transhipment is required to be mentioned in the manifest. Clause (g) will also be attracted as the goods were unloaded without the permission of the proper officer as required in Section 32. The goods were also loaded or unloaded except under supervision of a proper officer. Clause (h) will therefore apply. Clause (j) also will apply as the goods were removed without the permission of a proper officer. The rig therefore becomes liable to confiscation. We do not find any deliberate intention on the part of the importer to contravene these regulations although there has been clear negligence and disregard of the rules. Having regard to these facts, we reduce the fine for redemption of the rig from Rs. 2 crores to Rs. 10 lakhs. Having regard to the fact that there was no deliberate intent to evade duty attributed to the importer, we do not think any justification for penalty upon the importer or its employees. We set aside these penalties. In our decision in Sedco Forex, we had found that the owner of the towing vessel could not be expected to be aware of the complexity of the law, and noting the absence of any intent, set aside the confiscation of the towing vessel and penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se appellants, alleging that the importation that took place in 1996 and 1998 were contrary to the provisions of law, and proposing confiscation of the rig under clauses (a), (b), (g), (h), (j) and (o) of Section 111 of the Act and clause (a) of Section 113 of the Act, demanding duty amounting to Rs. 27.91 crores, proposing interest under Section 28A on the duty amount and penalty on the importer under Section 112 of the Act. Copies of the notice endorsed to M.A. Abraham, appellant's Chairman and Managing Director, P. Venkateswaran, its Vice-President, and A.P. Sandhu, its General Manager, and proposed penalties on them under Section 112. Penalty was also proposed upon ONGC under Section 112 and confiscation, under Section 115, of the three vessels, Malaviya IV owned by Great Eastern Shipping Co. Ltd., SCI-05 owned by Shipping Corporation of India Ltd. and Nand Heera owned by Essar Shipping Ltd., which were utilized for towing the rig in 1996 and 1998. After considering the causes shown by the parties, the Commissioner has passed the order impugned in these appeals. He has found that the rig was carried and brought to Mumbai on three occasions, in February, 1996, on 9th November, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, has not been considered. Confiscation of the vessels is questioned on the ground that permission was sought by appellant's letter dated 12th February, 1996 for importing the rig into India for repairs and re-exporting it and the notice itself acknowledges that permission was granted by the Assistant Commissioner under Section 43 of the Act. Hence there is no contravention of any of the provisions of Section 111. Penalty is also questioned. 3.The Departmental Representative contends that the judgment of the Bombay High Court in Amership Management Pvt. Ltd. would not be relevant because the Court has not considered whether a rig was a foreign going vessel when it operates in the territorial waters of India. In a subsequent judgment in Pride Foramer v. UOI Others - 2002 (148) E.L.T. 19 (Bom.) = AIR 2001 Bom. 332, the High Court, after taking into consideration the judgment in the case of Amership Management Pvt. Ltd., has held that the rigs operating in designated areas were not foreign going vessels as the designated areas are deemed to be Indian territory. Therefore, when the rig was brought into Indian territorial waters, it ceased to be a foreign going vessel. As to valuati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. It concluded that the spare parts imported for transhipment and shipment to these rigs would therefore be stores and entitled to be cleared without payment of duty. This judgment therefore is the authority for the proposition that a drilling rig, when engaged in drilling operations outside the territorial waters of India, is a foreign going vessel. 5.In Scindia Steam Navigation Co. Ltd. v. CC - 1988 (36) E.L.T. 581, a learned single judge of the Calcutta High Court held that a foreign going vessel which was dry-docked in Calcutta Port for purposes of repairs did not lose its character as a foreign going vessel during the period of dry-docking and repairs. He accepted the contention of the petitioner that even while the vessel was undergoing repairs, preparations were made to carry the cargo to foreign ports. Therefore, it did not cease to be a foreign going vessel. In Pride Foramer v. UOI - 2002 (148) E.L.T. 19 (Bom.) = AIR 2001 Bom 332, the Bombay High Court, after taking note in the judgment in Amership Management Pvt. Ltd., said that the imported stores supplied to a rig located in an area designated under the Act 80 of 1976 would not fall within Section 86 of the Act. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first part of the definition and would be as such a foreign going vessel throughout the length of its voyage, if, during its voyage between these two ports, it touches other Indian ports. The judgment in Scindia Steam Navigation Co. Ltd. is based on the view that, despite being dry-docked for repairs, the ship was still engaged in the carriage of goods between Calcutta and the foreign port. A rig has been held in Amership Management Pvt. Ltd. as a foreign going vessel because it was engaged in the operations outside Indian territorial waters in view of clause (2) of the extended definition. It would not be appropriate to apply the first part of the definition while considering the second. Each of the three clauses of the extended definition has nothing to do with the main part of the definition and applied in different situations of facts. Each of these situations must thus be considered on its own merit. It would therefore not be possible to say that a craft which is anchored without undertaking any operation whatsoever for long periods outside the territorial waters is a foreign going vessel. So also, when a rig enters Indian territorial waters for purposes of repairs, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere to be used in Indian territorial waters for topping of bulk carriers could be said to be vessels for home consumption merely on that account. It said that for the purposes of levy of customs duty in order to determine whether imported goods are "goods for home consumption." It said, "The primary intended use of the goods when they are brought into Indian territorial waters has to be ascertained. "If the goods are intended to be primarily used in India, they are goods for home consumption notwithstanding that they may also be used for the same or other purposes outside India. The question whether goods not intended to be primarily used in India but used occasionally for short periods in India also fall within the meaning of the expression "goods for home consumption" has not been examined. We have only considered the question whether the goods brought into India for use primarily or goods for home consumption notwithstanding that they are occasionally or incidentally used outside India." In UOI v. V.M. Salagaonkar Bros. Pvt. Ltd. - 1998 (99) E.L.T. 3, the Supreme Court said that in the context in which the expression "home consumption" is used in Section 46, it does not warrant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without such entry being planned due to circumstances beyond the control of its owners or charterers. Therefore, applying the common ratio of these judgments, it will follow that its import had not been completed. The question of payment of duty on the rig also will not arise. We may however mention in passing that even if the rig was liable to duty, it will be entered into drawback under the provisions of Section 74 of the Act, since it was not used in the country for the short duration. This is in fact what had been held in Sedco Forex. The fact that a shipping bill was not filed for its clearance therefore will not, as we have held earlier, be an obstacle. 12.This brings the question of liability of the rig to confiscation and the penalty imposed on its owners and others. The Commissioner has found contravention of the provisions of clauses (f), (g), (h) and (j) of Section 111 of the Act. These clauses relate respectively to any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import manifests which are not so mentioned; the goods which are unloaded from a conveyance in contravention of the provisions of Section 32; dutiable or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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