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2015 (2) TMI 645 - AT - CustomsClassification of vessel - benefit of notification No. 21/2002-Cus dated 1-3-2002 - Classification under CTH 89011010 or CTH 8903 99 90 - Rejection of transactional value - Held that - In the Provisional Class Notation Certificate issued for the vessel San Domino by the Indian Register of Shipping vide certificate dated 26-4-2011, the vessel is described as a Passenger Ship . Similarly in the Certificate dated 27-10-2011 of Indian Registry under Merchant Shipping Act, 1958 issued by the Registrar of Indian Ships, Mumbai, the vessel is classified as Steel/Passenger Ship . In the certificate of class issued by RINA at Mumbai dated 3-8-2009, the vessel is described as a Passenger ship . Similarly in the valuation cum condition survey report dated 19-11-2010 issued by M/s Ericson & Richards (Goa) who are well known ship and marine surveyors and valuers, the vessel is described as a Passenger ship . Thus from the various certificates available on record issued by the competent/concerned persons, it is seen that the vessel is consistently described as a passenger ship . If that be so, there is merit in the contention of the appellant that the correct classification of the vessel is CTH 8901 attracting 'nil' rate of customs duty at the relevant time. - though the vessel has been modified to function as a casino, the appellant has not been able to secure any licence from the Govt. of Goa for running a casino. Therefore, the vessel has not been able to function as a casino as on date. There are two contrary decisions of this Tribunal in respect of classification of a vessel used as casino. In the Waterways Shipyard case (2011 (12) TMI 127 - CESTAT, MUMBAI) relied upon by the Revenue, this Tribunal held that a passenger vessel which is used a casino merits classification under CTH 8903 as a 'pleasure vessel', while in the Ashok Khetrapal case relied upon by the appellant, a passenger vessel used as a casino was classified as a passenger ship falling under CTH 8901. Thus there are contrary decisions in respect of classification of the vessel. That itself will entitle the appellant to grant of stay as held by the hon'ble Madhya Pradesh High Court in the case of Pratap Steel Rolling Mills Ltd. case 1992 (11) TMI 109 - HIGH COURT OF MADHYA PRADESH AT INDORE . - From the balance sheet of the appellant for the year ending 31-3-2014, it is seen that the loss during the year 2013-14 is to the tune of ₹ 4.62 crore and the accumulated loss is to the tune of ₹ 38.68 crore. Thus it is seen that the appellant is facing acute financial hardship - Stay granted.
Issues: Classification of the imported vessel under CTH 8901 or CTH 8903, Valuation of the vessel
Classification Issue Analysis: The case involves the classification of an imported vessel, "M.V. San Antonio," by the appellant, M/s Creative Gaming Solutions Pvt. Ltd. The appellant contends that the vessel should be classified under CTH 8901 as a passenger ship, exempt from duty, based on its design and intended use as a passenger ship. The appellant cites a previous decision in a similar scenario supporting their classification argument. They also emphasize that the vessel had been registered as a passenger ship by various authorities. On the other hand, the Revenue argues for classification under CTH 8903 as a vessel for pleasure or sports, given the vessel's conversion into a casino. The Revenue relies on a tribunal decision and the end use of the vessel post-conversion to support their classification. Notably, there are conflicting tribunal decisions on the classification of vessels used as casinos. The tribunal ultimately grants a stay on the duty demands, considering the vessel's consistent description as a passenger ship in various certificates and the appellant's financial hardship. Valuation Issue Analysis: Regarding the valuation of the vessel, the department adopted a value of Rs. 87.5 crore based on a valuation report. The appellant challenges the rejection of the declared transaction value, arguing that the insurance value cannot be the basis for customs valuation. They highlight previous decisions supporting their stance on valuation issues. The Revenue defends the adopted value and asserts the importance of revenue interests. The tribunal notes the financial difficulties faced by the appellant and grants a waiver from pre-deposit of the dues, considering the substantial revenue involved. The tribunal also allows both parties to request an expedited appeal hearing due to the significant amount at stake. In conclusion, the tribunal's decision primarily revolves around the classification of the imported vessel and the valuation issues raised by the appellant. The classification debate between CTH 8901 and CTH 8903, along with the conflicting tribunal decisions, plays a crucial role in the final judgment. Additionally, the financial hardship faced by the appellant influences the tribunal's decision to grant a stay on the duty demands and waive pre-deposit during the appeal process.
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