2024 (6) TMI 1015 - AT - Customs

Rejection of appeal of the appellant against the final assessment order - Misinterpretation of Coastal Cargo under Chapter-XII of the Customs Act, 1962 - Classification and duty assessment of tug and bunkers under the Customs Tariff Act, 1975. HELD THAT - As per the facts of the case there is no dispute that the tug was brought to Alang port for breaking therefore the same is correctly classified under 8908.00.00 of the Custom Tariff Act, since the tug was brought for breaking up the same cannot be classified in different head i.e. the tug under 8908 and bunker under different heading. The Bunker of the tug was considered by both the lower authority as the goods considering during the coastal run. However, as per the facts of the present case the tug along with the Bunker was presented for assessment. Therefore, the entire tug including the Bunker must be assessed for the purpose of breaking up hence on Bunker and other goods duty cannot be demanded separately. The whole case is based on the interpretation of coastal run only for the reason that the tug has first gone to Nhavasheva there after Fuzerah UAE then it came to Alang for clearance as tug for breaking up. On the identical facts this Tribunal has considered the case of COLLECTOR OF CUSTOMS, AHMEDABAD VERSUS SHIPPING CORPORATION OF INDIA LTD. 1986 (12) TMI 216 - CEGAT, BOMBAY wherein issue has been decided in favour of the assessee by holding that ' The fact that to begin with the respondents themselves had applied for conversion of the vessel as a coastal vessel cannot be held against them as estoppel once they realised their mistake in view of the High Court judgments and took remedial action in time. The point that Customs duty was demanded by the officers at this port or that is hardly material.' From the above decision and the facts involved therein, it can be seen that the facts of the present case is also identical to above decision. Therefore, Ratio of the above decision is applicable in the present case. The impugned order is not sustainable - Appeal allowed.

Summary

Issues Involved:

1. Misinterpretation of Coastal Cargo under Chapter-XII of the Customs Act, 1962.
2. Classification and duty assessment of tug and bunkers under the Customs Tariff Act, 1975.

Summary:

Issue 1: Misinterpretation of Coastal Cargo under Chapter-XII of the Customs Act, 1962

The appellant argued that the Adjudicating Authority misconstrued the definition of coastal cargo under Chapter-XII of the Customs Act, 1962. The appellant contended that the tug Hurricane-III was imported solely for breaking purposes and not for commercial business. They emphasized that the vessel and its contents, including bunkers and provisions, should be classified under Chapter sub-heading 8908.00 of the Customs Tariff Act, 1975, which pertains to "Vessels and other floating structures for breaking up." The appellant further argued that the import general manifest was correctly filed for home consumption, and the lower authorities wrongly interpreted the terms "coastal duty," "coastal goods," and "coastal cargo."

Issue 2: Classification and Duty Assessment of Tug and Bunkers under the Customs Tariff Act, 1975

The appellant maintained that since the vessel was imported for breaking, the bunkers should not be classified separately or subjected to coastal duty. They relied on several precedents, including the cases of Collector of Customs, Ahmedabad v/s Shipping Corporation of India Ltd. and Jain Marine Services v/s CC, Jamnagar, to support their argument that the entire tug, including the bunkers, should be assessed as a single entity for breaking purposes. The Tribunal found that the tug was correctly classified under 8908.00.00 of the Customs Tariff Act and that the bunkers should not be assessed separately. The Tribunal referred to the case of Shipping Corporation of India Limited, where it was held that the voyage and the nature of goods carried determine whether a vessel is considered a foreign going vessel or engaged in coastal trade.

Conclusion:

Following the established precedents and detailed analysis, the Tribunal concluded that the impugned order was not sustainable. The appeal was allowed, and the order was set aside. The Tribunal pronounced the judgment in the open court on 21/06/2024.