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Issues Involved:
Customs duty demand denial based on notification interpretation and license conditions fulfillment. Analysis: The appeal concerned a customs duty demand of Rs. 75,03,406/- under Sections 28 and 72 of the Customs Act, along with interest, due to the denial of duty-free clearance benefit under notification 16/2000-Cus. The dispute arose from the classification of goods covered by specific bills of entry dated 25-1-2001 as "Hull of mini bulk carrier and tug and pusher craft." The appellants, engaged in ship building, held a license for a private bonded warehouse under Section 58 of the Customs Act. They were permitted to store goods without duty payment on first importation and conduct manufacturing activities of ocean-going vessels from imported and indigenous materials. The central excise registration was also obtained for vessel manufacture under Chapter 89 of the Central Excise Tariff Act, 1985. The department contended that the goods were not eligible for duty exemption as the license was granted for ocean-going vessels' manufacture, and the hulls did not qualify as vessels under the notification. Additionally, it was alleged that the imported raw materials were not used for the intended purpose, further justifying duty imposition. A show cause notice was issued based on these grounds, leading to the Commissioner's decision confirming the duty demand. Upon hearing both parties, the Tribunal analyzed the permission granted under Section 65, which included the manufacture of hulls under the schedule. The Tribunal emphasized that the license conditions' fulfillment was crucial for determining exemption eligibility. It was clarified that the appellants' intention to manufacture hulls was evident from their application, which also mentioned repair and engineering work on ocean-going vessels. The Tribunal established that a hull qualifies as a vessel under Customs Tariff Heading 89.06, citing a relevant case law to support this interpretation. Furthermore, the Tribunal dismissed the Revenue's argument regarding the license period's expiration, as the license was valid until 20-6-2006. The Tribunal also noted that no duty demand was raised on the hull itself. Consequently, the Tribunal concluded that the raw materials used in hull manufacturing were entitled to exemption under notification 16/2000. Therefore, the impugned order was set aside, and the appeal was allowed. The cross-objection was disposed of accordingly.
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