2002 (12) TMI 431 - AT - Customs

Ship stores - Dutiability - Foreign going vessel - Vessel for breaking up - Appeal to Appellate Tribunal - Additional grounds

Summary

Issues:
1. Customs duty on stores and bunkers in relation to the LDT of a ship for breaking.

Analysis:
The appeal before the Appellate Tribunal revolved around the question of whether customs duty is separately leviable on stores and bunkers or if these goods should be included in the LDT (light displacement tonnage) of the ship brought for breaking. The Appellant, represented by Shri A.D. Maru, argued that the oil stored in the engine room tanks should not attract separate duty as it is considered an integral part of the vessel's machinery and engines. Reference was made to the definition of LDT of a ship and relevant publications to support this argument. Additionally, it was contended that food-stuff consumed by the crew members during the ship's stay period till beaching should not be subject to customs duty under specific provisions of the Customs Act.

On the other hand, the Respondent, represented by Shri Atul Dixit, countered these arguments by highlighting the classification guidelines under Board Circular No. 37/96, which differentiate between fuel and oil contained in the vessel's machinery and engines and other ship stores. It was emphasized that the fuel kept in the engine room cannot be considered part of the engine and machinery, leading to separate classification. The Respondent also pointed out that the provisions of Sections 86 and 87 of the Customs Act regarding the consumption of stores on board foreign-going vessels do not apply in the case of a ship imported for breaking, as it ceases to be a foreign-going vessel.

After considering the submissions from both sides, the Tribunal analyzed the classification of oil, fuel, and food-stuff in the context of the Customs Act and relevant circulars. It was concluded that the fuel and oil in the engine room tanks are to be classified with the ship under a specific heading, while the remaining fuel and oil in other tanks, along with food-stuff, are to be charged duty separately. The Tribunal upheld the classification principles outlined in the Circular and rejected the Appellant's argument regarding the assessment of the Bill of Entry at this stage of the appeal, citing a relevant legal precedent.

In conclusion, the Tribunal dismissed the Miscellaneous Application filed by the Appellants, maintaining that they cannot challenge the assessment of the Bill of Entry at this stage. The appeal was disposed of based on the classification principles established for oil, fuel, and food-stuff in relation to the LDT of a ship imported for breaking, as per the Customs Act and relevant circulars.