2023 (7) TMI 840 - AT - Customs

Benefit of exemption - foreign going Vessel - Import of ship spares in large quantity onboard the vessel after filing reshipment application instead of Bill of Entry without paying any customs duty - foreign going status only for the duty-free supply of fuel and lubricants - levy of duty on goods other than fuel and lubricants - HELD THAT - It is seen from the definition the Ocean Going Vessels includes scientific research vessel. And it is an admitted fact that FORV Sagar Sampada is a Scientific Research Vessel and hence, the question of not treating the appellant as an Ocean-Going Vessel does not arise. It is an Ocean-Going Vessel registered with the Director General of Shipping. Since, the Notification allows spares for repairs of ocean-going vessels by a ship repair unit registered with the Director General of Shipping, Government of India, and the question of denying this benefit does not arise. It is also seen from the records that F. No. 354/39/2010-TRU dated 10.05.2010, the letter categorically mentions that vessel Sagar Sampada is an Ocean-Going Vessel which is eligible for import duty exemption in respect of spares, parts and other specific items for repair of the vessel under Notification No.21/2002-Cus. dated 1.3.2002. The impugned order is set aside and the appeal is allowed.

Summary

Issues:
The issues involved in this legal judgment include the demand for customs duty on imported ship spares, the interpretation of exemption notifications for foreign going and ocean going vessels, and the eligibility of the appellant for duty-free benefits.

Customs Duty Demand on Ship Spares:
The Centre for Marine Living Resources and Ecology (CMLRE) was issued a show-cause notice demanding customs duty amounting to Rs.91,05,880 for importing ship spares onboard the vessel without paying any customs duty. The Commissioner of Customs held that all imported goods are liable for duty payment, and the vessel was only granted foreign going status for duty-free supply of fuel and lubricants, not for other items like spares. Consequently, duty on the spares was demanded, and a penalty was imposed on the Master of the vessel under Section 114A of the Customs Act, 1962.

Interpretation of Exemption Notifications:
The appellant argued that the CBEC letter declaring the vessel as a foreign going vessel did not mention spares, and therefore, the interpretation of 'Stores' to include spares was not justified. Additionally, the appellant claimed eligibility for exemption under Notification No.21/2002 meant for Ocean Going Vessels, which includes spares for repairs of ocean-going vessels registered in India.

Eligibility for Duty-Free Benefits:
The appellant contended that based on the CBEC letter and the definition of Ocean Going Vessels, which includes scientific research vessels, they should be considered an Ocean-Going Vessel eligible for duty-free benefits. The records also indicated that the vessel was categorized as an Ocean-Going Vessel eligible for import duty exemption under Notification No.21/2002-Cus. dated 1.3.2002.

Conclusion:
After considering the arguments presented, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellant's eligibility for duty-free benefits under the relevant exemption notifications. The judgment was pronounced in open court on 20.07.2023.