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Issues:
1. Interpretation of Customs duty exemption notifications for vessels manufactured in India. 2. Application of relevant legal provisions and precedents. 3. Examination of the factual circumstances regarding the vessel's clearance and manufacturing. Issue 1: Interpretation of Customs duty exemption notifications for vessels manufactured in India The case revolved around the vessel M.V. Jagat Priya, manufactured by M/s. Hindustan Shipyard Ltd. in 1975 at Vishakapatanam, declared as a Customs Bonded Warehouse. The appellants claimed the vessel to be an Indian-built vessel, seeking exemption from customs duty under Notification No. 118/59-Cus. The Collector (Appeals) held that the ship was required to pay duty under Notification 133/87, which exempted duty for foreign-going vessels but attracted duty when brought for breaking. The Tribunal, in Final Order No. 491/B-2, observed that manufacturing in the Customs Licensed Shipyard was equivalent to foreign manufacturing. Issue 2: Application of relevant legal provisions and precedents The Tribunal referred to Notification 133/87-Cus., issued after Notification 262/58-Cus., with similar provisions. Citing the Supreme Court judgment in Union of India v. Jalyan Udyog, the Tribunal dismissed the appeal, stating that duty under later notifications applied when the vessel was to be broken up, even if initially cleared under an older notification. An appeal to the Supreme Court led to a remand to the Tribunal to consider the judgment in Baijnath Melaram v. Union of India. The Tribunal, after considering arguments from both sides, upheld the duty imposition under the relevant notification. Issue 3: Examination of the factual circumstances regarding the vessel's clearance and manufacturing The appellant contended that the vessel was cleared without customs duty under Notification 118/59-Cus., indicating Indian manufacturing due to excise duty payment. They argued that duty should apply only to imported parts, not the entire vessel. However, the Revenue argued that the vessel was cleared under Notification 163/65-Cus., not 118/59-Cus., as claimed. The Tribunal found that the vessel was not cleared under the earlier notification, leading to the duty imposition under the applicable notification. The Tribunal also rejected the argument for limited duty based on imported parts, emphasizing that the law did not support such a claim, and dismissed the appeal. This detailed analysis of the judgment provides insights into the interpretation of customs duty exemptions, application of legal provisions, and examination of factual circumstances crucial to the case.
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