1999 (10) TMI 217 - AT - Central Excise

Summary

Issues:
Calculation of Light Displacement Tonnage (LDT) for duty determination based on inclusion of ballast in the weight of the vessel.

Analysis:
The case involved the import of a Drill Ship for scrapping, with the duty to be determined based on the Light Displacement Tonnage (LDT) of the vessel. The dispute centered around whether ballast should be included in the calculation of LDT. The appellants provided a certificate from the American Bureau of Shipping stating the light ship weight of the vessel. The issue arose as the Department proposed to quantify duty based on LDT including permanent ballast. Various experts were consulted, with conflicting opinions on the inclusion of ballast in LDT calculation.

The Customs sought opinions from experts, including Mazagaon Docks Ltd., a Consultant Marine Engineer, and the Director General of Shipping. The opinions varied, with Mazagaon Docks Ltd. stating that permanent ballast is part of light ship weight, while the Director General of Shipping defined LDT as displacement without ballast. The Assistant Collector relied on Mazagaon Docks Ltd.'s opinion, leading to an appeal challenging the inclusion of ballast in LDT calculation.

The Tribunal analyzed the concept of ballast in ships, highlighting its role in ensuring stability and the distinction between permanent and temporary ballast. It was established that permanent ballast is not a universal phenomenon and occurs rarely, while temporary ballast is ever-changing and not a fixed element for calculation. Expert opinions, including those from Mazagaon Docks Ltd. and the Director General of Shipping, were considered, with the Tribunal concluding that ballast, whether permanent or temporary, should not be included in LDT calculation.

The Tribunal dismissed arguments related to the value of ballast material and referenced a previous judgment where duty on permanent ballast was not considered relevant. The decision was based on expert opinions, the nature of ballast in vessel design, and the irrelevance of ballast value in determining LDT. The appeal was allowed, with the ruling that ballast should not be included in the calculation of LDT for duty determination.