2015 (12) TMI 1579 - AT - Customs

Confiscation of vessel Classified as Happy Success under CTH 8904 or as Supply Vessel under CTH 8901 N/N. 21/2002-Cus Held that - various statutory authorities have categorically certified the description of subject vessel as Supply Vessel . In the certificates shown at Sl. No. (i),(ii) and (iv), the survey of the vessel was also conducted and thereafter the classification of subject vessel was made as Supply Vessel . On going through the judgments on the identical issues, it is found that in the case of Hull Offshore Ltd. v. Commissioner of Customs (Import), Mumbai 2013 (10) TMI 409 - CESTAT MUMBAI , the classification of the vessel was decided on the basis of various certificates of different statutory authorities similarly. In the present case also the same authorities classified the subject vessel as Supply Vessel . Hence the certification of the various above authorities that the subject vessel is a Supply Vessel is absolutely in the line of the above judgment. Discrepancy in the Memorandum of Agreement is due to inadvertence at some page it was mentioned as Ocean Going Utility-cum-Offshore Supply Vessel while in other it was described as Steel Tug MV NAVIS SUCCESS . In the same agreement Supply Vessel was mentioned and the same gets confirmed on the basis of other various certificates, which establish that the Steel Tug was mentioned due to inadvertence. Therefore when statutory bodies classified the vessel as Supply Vessel , no weightage can be given to an inadvertent mistake appearing in MOA. Printout of various website - vessel categorized as Offshore Tug/Supply Vessel. Held that - the website is neither of the supplier nor of the appellants, it is maintained by some third party. Moreover when there are many statutory authorities certified the subject vessel as Supply Vessel, only unauthenticated website data can not be given credential. Chartered Engineer s report - from any material it could not be proved that the vessel has ever used as Tug. On the contrary, ample of evidences prove that the vessel is Supply Vessel and used as Supply Vessel . As regard Winch on the vessel, this alone is not sufficient to conclude the classification of the vessel as Tug. Even though the vessel has winch, this will not suffice to hold the classification of vessel as Tug. As regard non-filing of Bill of Entry - once goods is exempted by customs exemption notification, non-filing of Bill of Entry at the time of import is merely a procedural lapse as there is no mala fide intention of the appellant as no benefit accrues to the appellant by non-filing of Bill of Entry. Vessel correctly classified as supply vessel confiscation of vessel lapses decided in favor of appellant.

Summary

Issues Involved:
1. Classification of the vessel "Happy Success."
2. Non-filing of Bill of Entry at the time of import.
3. Demand of customs duty, interest, and penalties.
4. Confiscation of the vessel and imposition of fines.
5. Time-bar of the show cause notice.

Issue-wise Detailed Analysis:

1. Classification of the Vessel "Happy Success":
The main issue was whether the vessel "Happy Success" should be classified under CTH 8901 as a "Supply Vessel" or under CTH 8904 as a "Tug." The Commissioner relied on the Memorandum of Agreement, website printouts, and a Chartered Engineer's report suggesting the vessel was a Tug. However, the appellants provided various statutory certificates from recognized authorities (e.g., Registrar of Indian Ships, Director General of Shipping) categorically classifying the vessel as a "Supply Vessel." The Tribunal found these statutory certificates more credible and concluded that the vessel should be classified under CTH 8901, thereby exempt from customs duty under Notification No. 21/2002-Cus.

2. Non-filing of Bill of Entry at the Time of Import:
The appellants argued that they did not file a Bill of Entry due to a bona fide belief that the vessel was duty-exempt under CTH 8901. They also pointed out that there was confusion regarding the requirement to file a Bill of Entry for coastal run vessels, which was only clarified by the Board in 2010. The Tribunal agreed, noting that the appellants had informed customs authorities about the vessel's conversion and paid customs duty on the cargo, indicating no mala fide intention.

3. Demand of Customs Duty, Interest, and Penalties:
The show cause notice demanded duty under Section 28, but the Commissioner confirmed part of the demand under Section 125, which the Tribunal found illegal as it went beyond the scope of the show cause notice. The Tribunal also noted that the show cause notice was issued almost seven years after the import, making it time-barred. Since the vessel was correctly classified under CTH 8901 and exempt from duty, the demand for duty, interest, and penalties was unsustainable.

4. Confiscation of the Vessel and Imposition of Fines:
The Tribunal held that since the vessel was correctly classified under CTH 8901, the confiscation of the vessel on the grounds of misdeclaration was not justified. Consequently, the fines and penalties imposed were also not sustainable.

5. Time-bar of the Show Cause Notice:
The Tribunal noted that the show cause notice was issued nearly seven years after the import, well beyond the permissible period. Given the complete disclosure by the appellants at the time of conversion and the lack of suppression of facts, the notice was deemed time-barred.

Conclusion:
The Tribunal concluded that the vessel "Happy Success" was correctly classifiable as a "Supply Vessel" under CTH 8901 and exempt from customs duty. The non-filing of the Bill of Entry was a procedural lapse without mala fide intention. Consequently, the demand for duty, interest, penalties, and confiscation of the vessel was set aside. The appeals by the parties were allowed with consequential relief, and the Revenue's appeal was dismissed.