2002 (11) TMI 150 - AT - Customs

Summary

Issues involved:
1. Special Additional Duty of Customs on imported ships for breaking
2. Classification of fuel and oil along with the ship for Customs duty
3. Levying Customs duty on foodstuff

Analysis:

Special Additional Duty of Customs on imported ships for breaking:
The appellants imported old ships for breaking and contended that the Special Additional Duty of Customs (SAD) should not be levied as the ships were imported for breaking and not for sale "as such." The exemption under Notification No. 56/98-Cus. was denied by the Department, arguing that the ships were not sold "as such." The Tribunal agreed with the Department, stating that the exemption applies only when goods are imported for sale "as such." The Tribunal differentiated between the sale of ships and the sale of materials obtained after breaking up the ships. It was noted that the scrap obtained from breaking up ships is a result of manufacturing activity and is liable to Central Excise Duty.

Classification of fuel and oil for Customs duty:
The appellants argued that fuel and oil should not be classified separately for Customs duty as per Board's Circular No. 37/96-Cus. They claimed that fuel and oil in the vessel, machinery, and engine should be considered integral parts of the vessel. However, the Department contended that fuel and oil in other parts of the vessel should be classified separately. The Tribunal agreed with the Department, stating that fuel and oil in engine room tanks are integral parts of the vessel, while fuel and oil in other tanks should be classified separately. Duty would be charged accordingly based on the classification.

Levying Customs duty on foodstuff:
Regarding the Customs duty on foodstuff, the Tribunal clarified that the provisions of Sections 86 and 87 of the Customs Act do not apply as the foodstuff in question cannot be treated as ship stores. The vessels in question were not considered foreign-going vessels, and hence, the provisions of Section 87 were not applicable. The Tribunal upheld the Board's Circular No. 37/96, which classifies ship stores, including foodstuff, separately in their appropriate headings for Customs duty.

In conclusion, the Tribunal dismissed all appeals based on the above analysis, affirming the levying of Special Additional Duty of Customs on imported ships for breaking, the classification of fuel and oil for Customs duty, and the application of Customs duty on foodstuff as per relevant provisions and circulars.