2016 (4) TMI 490 - SC - Customs

Additional duty - Import of ship for breaking and for no other use - Appellant pleaded that no excise duty is payable and the product manufactured in India is exempted from excise duty - Held that - in view of the Judgement of this court in the case of Hyderabad Industries Limited v. Union of India 1999 (5) TMI 29 - SUPREME COURT OF INDIA , when excise duty is exempted, there is no question of payment of additional duty. Imposition of import duty - Purchase of vessel in auction - Held that - by no stretch of imagination, it can be treated as import when the vessel was manufactured by an Indian company and was sold to another Indian company which was using this vessel. Therefore, the CESTAT has gone totally at a tangent and has held that the appellant shall be liable to pay duty on totally irrelevant consideration. Impugned order of CESTAT set aside and custom duty paid by the appellant shall be refunded within two weeks. - Appeal disposed of

Summary

Issues:
1. Challenge against additional duty charged by customs authorities on the import of a ship for breaking.
2. Dispute regarding the imposition of import duty on a vessel manufactured in India and sold to another Indian company.
3. Refund of custom duty paid by the appellant.

Analysis:

1. The first issue involves a challenge against the additional duty charged by customs authorities on the import of a ship for breaking. The High Court initially dismissed the writ petition, but the Division Bench ruled in favor of the respondents, citing a Constitution Bench judgment that when excise duty is exempted, no additional duty is payable. The appellants did not contest this plea, leading to the dismissal of the appeals by the Supreme Court.

2. The second issue pertains to the dispute over the imposition of import duty on a vessel known as M.V. Jagat Priya, manufactured in India and sold to another Indian company. The vessel was auctioned after a decree by the Bombay High Court, and the appellant purchased it. The Customs Department sought to impose import duty, but the Supreme Court disagreed, stating that since the vessel was manufactured in India and sold to an Indian company for use within the country, it cannot be considered an import. The Court overturned the CESTAT's decision and ordered the refund of custom duty paid by the appellant.

3. The third issue involves the refund of custom duty paid by the appellant in the second case. Following the decision in Civil Appeal Nos. 5377-5378 of 2014, the Supreme Court disposed of Civil Appeal No. 9282 of 2013. The Court's order in the second case for the refund of custom duty within two weeks applies to this appeal as well, leading to its disposal based on the earlier judgment.

In conclusion, the Supreme Court ruled in favor of the respondents in the first case regarding the additional duty on ship import, and in the second case, it held that no import duty is applicable on a vessel manufactured in India and sold domestically. The refund of custom duty was ordered in the second case, with the third case being disposed of in line with the decision in the second case.