2011 (8) TMI 562 - AT - Customs

Notification No.21/2002 - Held That - Appellant made import of a handset only, which is to replace the defective handset of communication system of ocean going vessel, thus entitled to exemption benefit.

Summary

Issues:
- Benefit of Notification No.21/2002-Cus dated 28/02/2001 disallowed for goods declared as hand set for communication system in bill of entry.
- Interpretation of notification for exemption from duty for repair of ocean-going vessels by a ship repair unit.
- Comparison with a previous case where similar benefit was allowed for a different system.
- Dispute over whether replacement of a handset of a communication system constitutes repair of a vessel.

Analysis:
1. The appellant challenged the disallowance of the benefit of Notification No.21/2002-Cus for goods declared as a hand set for a communication system in the bill of entry. They argued that as a registered ship repair unit, importing the handset to replace a defective one on an ocean-going vessel should qualify for the duty exemption under the notification.

2. The appellant relied on the provisions of the notification which exempt goods falling under Chapter 89 or any other chapter for repair of ocean-going vessels by a ship repair unit registered with the Director General of Shipping, Government of India. They also cited a previous Tribunal decision where a similar benefit was allowed for a different system imported for ship repair, emphasizing the intent and scope of such notifications.

3. The revenue contended that the replacement of a handset of a communication system does not constitute repair of a vessel, supporting the lower authority's decision to deny the benefit. However, the Tribunal noted that the notification specifically includes capital goods, spares, raw materials, and consumables for repairs of ocean-going vessels by a registered ship repair unit, which aligns with the appellant's situation.

4. Upon analyzing the facts and the notification's conditions, the Tribunal found that the appellant, being a registered ship repair unit and importing the handset to replace a defective one on an ocean-going vessel, indeed qualifies for the benefit of the notification. Drawing parallels with a previous case where a similar benefit was allowed, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, emphasizing the entitlement to the duty exemption under the notification.

5. In conclusion, the Tribunal's decision highlights the importance of interpreting notifications in line with their intended purpose and providing exemptions for essential repairs to support the maritime industry. The judgment underscores the significance of registered ship repair units benefiting from duty exemptions for necessary replacements and repairs on ocean-going vessels, ensuring compliance with relevant regulations and promoting the efficiency of repair operations within the sector.