2005 (2) TMI 742 - AT - Customs

Summary

Issues:
1. Whether the vessel purchased by the appellants for breaking was liable for import duty under the Customs Act, 1962.
2. Validity of the order of the Commissioner (Appeals) directing the payment of customs duty.
3. Applicability of a previous Tribunal decision in a similar case.
4. Consideration of the decision of the High Court on the appeal filed by Revenue.

Analysis:
1. The appellants, engaged in ship breaking, purchased a vessel named "Vishwa Karuna" from Shipping Corporation of India, which was built in India by Hindustan Ship Yard Ltd. and later sold to SCI. The vessel was brought to Alang Port Bhavnagar for breaking. The lower authorities demanded customs duty based on the Bill of Entry filed by the appellants, which was challenged. The appellants argued that duty cannot be imposed on a ship built in a Bonded Warehouse and subsequently sold for breaking. They relied on a Tribunal decision in a similar case and the High Court's decision not to interfere with the Tribunal's order. The Tribunal found merit in the appellants' argument and set aside the order of the Commissioner (Appeals), allowing the appeal.

2. The order of the Commissioner (Appeals) directing the payment of customs duty on the vessel was based on the values declared in the Bill of Entry filed by the appellants. However, considering the previous Tribunal decision and the lack of legal grounds for imposing duty on a ship built in a Bonded Warehouse, the Tribunal found the order of the Commissioner (Appeals) to be unsustainable. Therefore, the appeal was allowed, and the order of the Commissioner (Appeals) was set aside.

3. The Tribunal considered a previous decision in the case of Dev Krupa Ship Breakers, where a similar situation arose regarding a ship built in a Bonded Warehouse and sold for breaking. In that case, it was held that duty cannot be imposed on the Ship Breaking Firm. The Tribunal found no reason to uphold the order of the Commissioner (Appeals) based on the precedent set by the Dev Krupa Ship Breakers case, leading to the allowance of the present appeal.

4. The High Court's decision not to interfere with the Tribunal's order in the Dev Krupa Ship Breakers case was crucial in the present judgment. The High Court found no question of law requiring their intervention, indicating that the Tribunal's decision in such matters was legally sound. This consideration further supported the Tribunal's decision to set aside the order of the Commissioner (Appeals) in the current appeal.