2008 (7) TMI 374 - HC - Customs

Ship / Vessel was broken up - person liable to pay customs duty ship owner or importer - relevant date for determination of rate of customs duty - held that - ocean-going vessel which is manufactured in a warehouse is exempted from duty of customs leviable when cleared from the warehouse but such duty of customs shall be levied on the vessel if it is broken up as if the vessel were then imported to be broken up. - In the present case Shipping Corporation of India was granted permission on 4-4-1997 by the Director General of Shipping. In the circumstances the customs duty which had been deferred by virtue of notification became leviable on 4-4-1997 as laid down by the Apex Court. Merely because the Memorandum of Agreement provides for the purchaser to discharge the liability on behalf of the seller the liability in law which is fastened on 4-4-1997 cannot become the liability in law of the respondent.

Issues:
1. Liability of customs duty on vessel breaking-up
2. Interpretation of relevant notifications and judgments
3. Determination of importer liability under Customs Act
4. Applicability of specific conditions in customs notifications
5. Relevant date for customs duty liability on the breaking-up of a vessel
6. Rate of duty applicable under Customs Act

Analysis:

1. The primary issue in this case revolves around the liability of customs duty on a vessel taken for breaking-up. The appellant revenue contended that the respondent, who filed the Bill of Entry and IGM, is liable to pay customs duty as per the provisions of Notification No. 163/65-Cus. The respondent argued against this liability, leading to a dispute over the interpretation of the customs duty applicability on breaking-up vessels.

2. The interpretation of relevant notifications and judgments played a crucial role in determining the customs duty liability. The Tribunal considered the permissions granted by the Director General of Shipping for breaking-up the vessel, relying on the Apex Court decision in Union of India v. Jalyan Udyog. This reference to past judgments and notifications was essential in analyzing the legal obligations of the parties involved.

3. Another significant issue was the determination of importer liability under the Customs Act. The appellant argued that the respondent should be treated as an importer based on the filing of the Bill of Entry. However, the Tribunal's decision highlighted the specific provisions and responsibilities outlined in the Memorandum of Agreement between the respondent and Shipping Corporation of India, impacting the importer's liability.

4. The case also delved into the applicability of specific conditions in customs notifications, particularly regarding the filing of fresh Bill of Entry for breaking-up vessels. The absence of such conditions raised questions about the retrospective extension of legal fictions in customs notifications, emphasizing the importance of clarity in interpreting customs regulations.

5. Regarding the relevant date for customs duty liability on the breaking-up of a vessel, the Tribunal's decision aligned with the Apex Court's clarification that the date of breaking-up should be deemed as the date of permission granted by the Director General of Shipping. This clarification aimed to provide certainty and avoid disputes over the determination of duty rates and valuation.

6. Lastly, the issue of the rate of duty applicable under the Customs Act was addressed, emphasizing the importance of complying with procedural formalities and relevant notifications. The dismissal of the appeal was grounded in the conclusion that the liability for customs duty on the vessel breaking-up was established by law, and no substantial question of law arose from the Tribunal's order, as it aligned with the Apex Court's decision and interpretation of customs regulations.

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