Samudra Dredgers (UK) Ltd. Vs Commissioner of Customs (CESTAT Bangalore)
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 when the department is stating that the bill of entry ought to have been filed when the vessel was converted into coastal run from Paradeep Port; it was held in Devilog Systems India v. Collector of Customs, Bangalore: 1995 (76) ELT 520 (Kar) and NCR Corporation of India Ltd Vs CC (Prev.), Mumbai, 2002 (143) E.L.T. 349 (Tri. -Mumbai) that a Commissioner does not have the power to adjudicate over a matter where his territorial jurisdiction does not extend.
Coming to the issue of Jurisdiction, hotly contested by rival parties, we find that the impugned dredger MV Darya Manthan has been making trips in and out of Indian Ports right from 2007 onwards. Though the vessel touched the Indian port of Nagapattinam on 12.5.2011, it did not engage in any activity in that port. It reached Paradeep Port on 11.6.2011. At Paradeep Port, a Bill of Entry was filed for the ship stores and bunkers and permission for converting from foreign run to coastal run was obtained from Paradeep Customs to work at Dhamra Port. Later on it moved to Cochin Port. Cochin customs vide Order No. SAV/56/2012 dated 24.8.2012 put the vessel on restraint and the same was provisionally released on 30.8.2012. The argument of the Revenue is that the vessel though imported on 11.6.2011 at Paradeep, no Bill of Entry was filed; Bill of Entry was required to be filed and duty needed to be discharged in terms of Notification No.19/2012-Customs dated 17.3.2012. Learned Commissioner finds in the impugned order that the import duty was payable at the time of import, however, the importer volunteered to complete the act of import and pay duty in 2012 in terms of the above cited Notification. Learned Commissioner takes note of the applications dated 15.5.2013 and 22.5.2013 filed by the appellants for amending the respective Bill of Entries including the vessel, as goods. Learned Commissioner relies on the fact that the deposit towards the duty irrespective of the fact that the same is final or provisional was made with the Customs Cochin; the formality of import has been completed at Cochin and therefore, the jurisdiction of Cochin has been invoked by the appellant themselves; as such, the relevant date to issue a demand Notice would also be the date of payment of such duty. We find that the vessel under dispute did not arrive at Cochin Port from a foreign port. In fact it was already under a coastal run at Dhamra Port duly permitted by Paradeep Customs. No act of import Vis a Vis the impugned vessel has taken place at the port of Cochin. We find that there is no legal backing to come to a conclusion that the act of import has occurred/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.
We find that while demanding and confirming duty, learned Commissioner observed that separate proceedings for confiscation as regards the vessel will be initiated by Commissioner of Customs at Paradeep. We find that such an argument is incorrect. In case, Paradeep Customs can only take action in respect of the violation committed if any, by the appellants in respect of the import of the impugned vessel, we do not find what logic would support the action of Cochin Customs in demanding duty on the same without invoking the provisions laid for confiscation and penalty. As submitted by the learned counsel for the appellant, the jurisdiction of Cochin Customs has not been extended till Paradeep; Cochin Customs have also not been empowered by a specific order to exercise the powers of Paradeep Customs. We find that Section 28 has been invoked by the Customs Cochin to demand duty. The word “Proper Officer‟ needs to be understood in the context of the scheme of recovery provided under Section 28. Section 28 provides for duties not levied or not paid or short levied or short paid or erroneously refunded. Each of the words mentioned therein refer to the “Proper Officer‟, which necessarily has to be read as the officer in whose jurisdiction such non-levy, non-payment, etc, have taken place. Levy of Customs duty is on the completion of act of import. There is no dispute in the instant case that the act of import was complete in Paradeep Port where permission for conversion to coastal run was accorded by the Proper Officer after examining all the facts and circumstances of the case and after accepting the bill of entry filed for ship stores and consumables on board. Paradeep Customs were well within their rights to issue demand for customs duty non-levied and / or not paid for whatsoever reason. Simply because the Customs Paradeep have not advised the appellants to file a Bill of Entry showing the “vessel‟ as “goods‟; have accepted Bill of Entry for ship stores and consumables and have accorded permission for coastal run, it is not free for Cochin Customs to takeover 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 the Customs Act, 1962. Section 15 is relevant only for the purposes of fixing the rate of duty, and not be reckoned for issuance of a demand notice.
Further, the impugned vessel was operating in the jurisdiction of Cochin Customs. As per Cochin Customs, applicable duty has not been paid on the vessel. Cochin Customs were free to consider the impugned vessel to be “smuggled goods‟, in terms of Section 2(39) of Customs Act, 1962 and seize the vessel under Section 110 of the Customs Act, 1962 and consequent action under Section 124, 125, etc, would have followed, while intimating customs Paradeep to take action with reference to the collection of duty on the impugned vessel. We find that Section 124 does not specify any “Proper Officer‟, as in the case of Section 28. This being the legal position, the findings in the impugned order that action vis-a-vis confiscation, penalty, etc., will be taken by Paradeep Customs defies reason or logic. Moreover, we find that the impugned order confirmed duty for three periods i.e., 28.1.2012 to 10.10.2012; 16.10.2012 to 08.01.2013 and 09.01.2013 to 28.02.2013. Learned Commissioner, while holding that separate proceedings would be initiated by Paradeep Customs in respect of confiscation and penalty was silent on the duty recoverable for the period between 11-5-2011 and 28-1-2012. We fail to understand the logic of collecting duty on each change of lease, though not ordained in law, after the vessel got converted to coastal run, was not applicable for the period when the impugned vessel was in coastal run at Dhamra Port. The impugned order is silent on duty payable during the period 11-5-2011 and 27-1-2012. We find that it’s not open for Customs to demand and confirm duty for a particular period without any logic.
