2004 (2) TMI 488 - AT - Customs

Summary

Issues: Assessment of ship stores retained on board in vessels reverted to coastal run from foreign going vessels and subsequent reversion to foreign going vessels.

Analysis:
- The appeals were filed against the Order-in-Appeal No. 6/99 (V)-Cus., dated 23-6-99, passed by the Commissioner of Customs and Central Excise (Appeals), Hyderabad. The issue involved in the appeals was the assessment of ship stores retained on board in vessels that were reverted to coastal run from foreign going vessels and then again reverted to foreign going vessels.

- The appellant's representative argued based on Public Notice 105/69 and Board's Circular No. 58/97 that duty on ship stores consumed during coastal run should not be charged, citing a previous Tribunal decision. The contention was that duty should only apply to liquor, tobacco products, and fuel, not foodstuffs or paints. However, the Revenue representative referred to Section 2(38) of the Customs Act, 1962, defining "stores" and asserted that the duty was correctly demanded for goods consumed during the coastal run of the vessels.

- The Tribunal considered both sides' submissions and noted that the duty had been demanded by Customs Authorities for stores consumed during the vessels' operation as coastal vessels. Inventories were taken at the time of reversion to coastal trade and again when reverting to foreign going vessels. The Tribunal found that Circular No. 58/97 and Public Notice No. 105/69 did not support the appellant's position. The previous Tribunal decision cited by the appellant was also deemed inapplicable as it involved a different scenario where duty was not chargeable on ship stores consumed during a compulsory coastal voyage due to coastal cargo onboard.

- In the present case, the vessels were reverted from foreign going vessels to coastal vessels, operated as coastal vessels, and then reverted back to foreign going vessels. Duty was demanded on stores consumed during the coastal run while the vessels operated as coastal vessels. The Tribunal upheld the lower authorities' decision to demand duty on these stores and rejected the appeals, stating there was no reason to interfere with the Order-in-Appeal passed by the Commissioner of Customs & Central Excise (Appeals).