2018 (10) TMI 768 - AT - Customs

Classification of imported goods - dredgers - benefit of N/N. 21/2002-Cus (Sr No 353) - Held that - The duty liability has to be determined on the date and time of entry of goods for importation into the country. Undoubtedly the date of entry inwards of the vessel in this case is 25.11.2006 as is evident from the documentary evidences - N/N. 21/2002-Cus has been amended by the N/N. 20/2007-Cus dated 01.03.2007, by incorporating Sl No 353A in the said Notification, which prescribes nil rate of duty. The order of Commissioner holding that exemption under Notification 21/2002-Cus Sl No 353, is admissible in the present case is not sustainable and needs to be set aside for redetermination of the quantum of duty payable in terms of the said notification as it existed on the date of importation of the said vessel. Matter remanded to the adjudicating authority for redetermination of all issues including confiscation and penalty - appeal allowed by way of remand.

Issues:
1. Determination of duty liability on upgradation cost of a dredging vessel.
2. Applicability of Notification No. 21/2002-Cus.
3. Admissibility of duty exemption under Notification No. 21/2002-Cus.
4. Correct assessable value determination for duty calculation.
5. Legal sustainability of the Commissioner's order.

Issue 1: Determination of duty liability on upgradation cost:
The case involved a dredging vessel converted from "Coastal Run Vessel" to "Foreign Run Vessel" by a foreign party under a contract. The vessel was recalled prematurely, leading to payment of compensation. The issue was whether duty was payable on the depreciated value of the upgradation cost. The department argued for duty payment based on the fair value of repairs. The Tribunal noted the duty liability determination must be on the entry date of goods for importation. The vessel's entry date was established through documentary evidence.

Issue 2: Applicability of Notification No. 21/2002-Cus:
The Notification exempted certain goods, including vessels, from duty payment. The Commissioner held the vessel was exempt under this Notification. However, the Tribunal found the exemption inapplicable due to subsequent amendments. The Notification was amended to include a new entry, 353A, which specifically exempted vessels like the one in question.

Issue 3: Admissibility of duty exemption:
The Commissioner's decision to exempt duty payment based on Notification No. 21/2002-Cus was found legally unsustainable. The Tribunal directed a redetermination of duty payable based on the Notification as it existed on the vessel's importation date. The duty exemption under the correct Notification needed to be considered for the vessel.

Issue 4: Correct assessable value determination:
The Commissioner's failure to determine the correct assessable value for duty calculation was highlighted. The Tribunal emphasized the importance of determining the correct assessable value as per the relevant Notification. The duty payable should be recalculated based on the correct assessable value at the time of importation.

Issue 5: Legal sustainability of the Commissioner's order:
The Tribunal found the Commissioner's order not legally sustainable due to the incorrect application of the duty exemption Notification. The appeal by the revenue was allowed, remanding the case for a fresh determination of all issues, including confiscation and penalty, based on the correct duty liability. The adjudicating authority was instructed to complete the proceedings within three months of the order.

This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on each aspect of the case.

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