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Issues:
Levy of duty on ship and its stores, duty on bunker, classification of sump oil, inclusion of freight and insurance in assessable value, customs duty calculation including sales tax. Levy of Duty on Ship and its Stores: The appellant imported the vessel 'M.V. BHAVABHUTI' for breaking, purchased from Shipping Corporation of India. The dispute revolves around the levy of duty on the ship and its stores. The revenue authorities argued that the vessel remained foreign-going until reaching the breaking yard at Alang, justifying duty imposition on bunker collected at Porbunder. The appellant failed to prove whether the bunker was duty paid, crucial for determining duty liability. Consequently, the tribunal upheld the duty levy on bunker. Duty on Bunker: The dispute concerning bunker duty arises from the vessel's sale at Porbunder and subsequent bunker collection. The revenue authorities contended that duty should be levied at the time the vessel ceased to be foreign-going. The appellant's inability to demonstrate duty payment on bunker collected at Porbunder led to the affirmation of duty imposition by the tribunal. Classification of Sump Oil: Regarding sump oil, the appellant argued that it should not be classified as oil and subjected to duty, claiming it as dirty oil accumulation. The tribunal found merit in this argument and set aside the demand related to sump oil, acknowledging it as distinct from regular oil. Inclusion of Freight and Insurance in Assessable Value: The appellant contested the inclusion of freight and insurance costs up to Alang in the ship's assessable value, citing their incurrence post-vessel sale. However, the tribunal ruled that the relevant factor for assessment is the vessel's status when it ceased to be foreign-going and cleared for breaking. Consequently, the tribunal rejected the appellant's submissions on this issue. Customs Duty Calculation Including Sales Tax: A crucial objection related to the levy of customs duty considering sales tax payment. The revenue authorities relied on specific rules to justify including sales tax in the assessable value. However, the tribunal noted that domestic taxes like sales tax do not relate to the value of imported goods under Customs law. By analyzing the relevant rules, the tribunal concluded that the inclusion of sales tax in the assessable value was contrary to Customs Valuation Rules. Consequently, the tribunal set aside the duty demand associated with the inclusion of sales tax. In conclusion, the tribunal partly allowed the appeal, upholding duty imposition on bunker, rejecting freight and insurance inclusion in the assessable value, setting aside the demand related to sump oil, and ruling against the inclusion of sales tax in the assessable value based on Customs Valuation Rules.
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