2010 (6) TMI 479 - AT - Customs

Demand - In terms of the remand order passed by this bench it was incumbent upon the importer to adduce evidence to the satisfaction of the Commissioner about the foreign-going nature (if any) of M.V. Kashi Sagar - It is seen from the agreement that the vessel could be plied not only in the coastal waters of India but also at the Bombay High beyond the territorial waters - In respect of the goods covered by the transshipment permit dated 21-1-92, there is no evidence adduced by the respondent to show that the vessel has actually sailed between the Indian territorial waters and Bombay High during the material period - In the result, M.V. Kashi Sagar is not liable to be classified as foreign-going vessel for the purpose of Section 87 of the Customs Act, and consequently the respondent will have a duty liability - Admittedly, the demand of duty is for a period beyond the normal period of limitation prescribed under Section 28 of the Customs Act - Decided in the favour of the assessee

Summary

Issues:
1. Whether the vessel in question qualifies as a "foreign-going vessel" under the Customs Act.
2. Whether the demand of duty raised in the show-cause notice is time-barred.

Analysis:

Issue 1: Vessel Classification
The appeal by the Department challenges an order regarding the clearance of communication equipment for a vessel, M.V. Kashi Sagar, as ship spares without payment of Customs duty. The Department alleged that the vessel was not a foreign-going vessel as it was in coastal run during the material period. The Tribunal previously remanded the case for further adjudication based on evidence presented by the importer. The Commissioner, after examining an agreement between the importer and a charter company, found that the vessel was chartered for trading on Indian Coasts, including Bombay High and ONGC platforms/rigs. The Commissioner classified the vessel as a foreign-going vessel under the Customs Act, granting duty-free consumption of the ship spares. However, based on documentary evidence provided by the Department, it was established that the vessel was plying between Bombay port and Veraval port during the material period, not sailing to Bombay High. As the burden of proof was on the importer and no evidence showed the vessel's travel to Bombay High during the relevant period, the vessel was not classified as a foreign-going vessel, resulting in duty liability for the importer.

Issue 2: Time-Barred Demand
The show-cause notice did not invoke the proviso to section 28(1) of the Customs Act, and the demand of duty was for a period beyond the normal limitation prescribed under Section 28. Consequently, the demand of duty was deemed time-barred. The Tribunal dismissed the Revenue's appeal based on this finding.

In conclusion, the Tribunal upheld the duty liability for the importer due to the vessel not meeting the criteria of a foreign-going vessel and deemed the demand of duty as time-barred, resulting in the dismissal of the Revenue's appeal.