2004 (12) TMI 488 - AT - Central Excise

Ship stores - Notification No. 64/95-C.E. - Interpretation of Notification - Words and Phrases

Summary

Issues: Interpretation of Notification No. 64/95 for exemption of Central Excise duty on goods supplied for ship construction.

In this case, the Appellate Tribunal CESTAT, Mumbai heard an appeal filed by the Revenue against the order of the Commissioner (Appeals). The Commissioner had held that the goods supplied by the manufacturer for the construction of a naval vessel were to be considered as components and not ship stores for consumption on board a vessel of the Indian Navy or Coast Guard. The Commissioner relied on a letter from the receiver of the goods, stating that they were builders of the vessel for the Indian Navy. The Tribunal analyzed Notification No. 64/95, which exempts goods supplied as stores for consumption on board a vessel of the Indian Navy or Coast Guard. The Tribunal noted that for the exemption, the goods should be stores for consumption on board a vessel, which was not the case here as the goods were used for the construction of a vessel, not for consumption on board. The Tribunal emphasized that the term "ship stores" had a specific meaning in marine parlance, referring to items consumed by the ship's crew for maintenance or running of the ship, not for building the ship. The Tribunal concluded that the goods supplied for ship construction did not qualify as ship stores for on-board consumption, setting aside the Commissioner's order and allowing the Revenue's appeal.

The Tribunal further observed that the terms used in Notification 64/95 could not be interpreted to exempt equipment and parts brought in by the manufacturer for ship construction. The Tribunal highlighted that the exemption was intended for ship stores to be consumed on board a ship, emphasizing the special connotation of "ship stores" in marine terminology. It clarified that ship stores were items consumed by the ship's crew for maintenance or operation of the ship, excluding supplies used in shipbuilding. The Tribunal concluded that supplies for use in the dockyard for ship construction did not fall under the definition of ship stores for on-board consumption. Consequently, the Tribunal set aside the Commissioner's order based on these findings, allowing the Revenue's appeal.