2022 (6) TMI 627 - AT - Customs

Classification of imported goods - used motor boats describing the same as Excursion Boats - to be classified under CTH 89011030 or under CTH 89039200? - boat can be classified as yacht or not - country of origin - HELD THAT - It can be seen that the boat to be considered as a pleasure vessel or boat is to be owned and used by an individual or a body corporate for themselves or a group of people who are duly authorized or permitted - Whereas in the instant case, the boat is used for tourism purposes. It can be seen that Government of Andhra Pradesh, Port Department, Kakinada have issued a provisional certificate of registration to the boats imported by the appellants. The Department of Tourism, Government of Andhra Pradesh, Visakhapatnam have certified that the boats are imported by the appellants for the purpose of creating excursions and itineraries in Vizag to facilitate development of promotion of tourism in adventure. This being the case, it is not open for the department to consider the boats to be pleasure yachts to be used by a person or group of persons. The excursion boats are classifiable under 8901. Therefore, the classification arrived at by the Revenue cannot be sustained. The impugned order argues that boats or vessel are not registered with MMD. It is seen that in response to an application made by the appellants MMD inform that in terms of Merchant Shipping Act, 1958, the boats cannot be registered as they are more than 20-25 years old and are of less than 20 tonnage and as the area of operation is in Vizag, MMD Chennai cannot register them and they are to be registered locally only. It is found that the boats are registered by the Port Authority at Kakinada. As submitted by the appellant, there is no report given by MMD that the impugned boats are yachts. The impugned order, has erred in concluding that the imported boats are yachts classifiable under CTH 8903, cannot be sustained - the same are classifiable under CTH 8901 - Appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of imported motor boats under Customs Tariff Heading (CTH) 89011030, exemption availed under Notification No.50/2017-Cus., differential duty confirmation, consideration of boats as pleasure yachts, registration, and classification under CTH 8903.

Classification under CTH 89011030 and Exemption Claim:
The case involved the classification of imported motor boats by M/s. E-Factor Adventure Tourism (P) Ltd under CTH 89011030 and the availing of exemption under Notification No.50/2017-Cus. The department sought to reclassify the goods under CTH 89039200, leading to a confirmation of differential duty. The appellant challenged this reclassification, arguing for the original classification and exemption due to the purpose of the boats for tourism.

Consideration of Boats as Pleasure Yachts:
The appellant contended that the department erroneously classified the boats as pleasure yachts, emphasizing that the boats were intended for tourism purposes based on permissions granted by relevant authorities. The definition of pleasure vessel under the Merchant Shipping (Vessels in commercial use for sports and pleasure) 1998 was examined to determine whether the boats met the criteria for pleasure vessels, concluding that the purpose of the boats for tourism precluded their classification as pleasure yachts.

Registration and Classification under CTH 8903:
The department argued for the classification of the boats as yachts based on registration in the country of origin and absence of registration by the Mercantile Marine Department (MMD). However, the Tribunal found that the boats were registered by the Port Authority in Kakinada for tourism purposes, and the MMD confirmed that registration locally was appropriate due to the age and tonnage of the boats. The Tribunal rejected the classification under CTH 8903 and upheld the classification under CTH 8901 for excursion boats.

Judicial Precedent and Final Decision:
The Tribunal referred to a similar case involving M/s. Nanda Agency House Shipping Services Pvt. Ltd., where the classification of boats as yachts was rejected based on the purpose of commercial use. Additionally, the Tribunal highlighted that the boats in question were not registered with MMD due to their age and tonnage, supporting the classification under CTH 8901 for transport vessels. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief as per law, emphasizing the correct classification under CTH 8901 for the imported motor boats used for tourism purposes.