1999 (11) TMI 681 - AT - Customs

Summary

Issues involved:
1. Interpretation of Notification No. 234/82-CE regarding exemption for "Ocean-going vessels" for Central Excise duty.
2. Consideration of whether ship breaking constitutes a process of manufacture.
3. Dispute over the levy of countervailing duty on imported vessels meant for breaking ships.

Issue 1: Interpretation of Notification No. 234/82-CE
The appeals arose from a common Order-in-Appeal holding that vessels imported for breaking ships were not entitled to the exemption under Notification No. 234/82-CE for Central Excise duty. The focus was on whether the vessels qualified as "Ocean-going vessels" as per the notification. The appellant argued that the vessels were indeed Ocean-going vessels and should be exempt from countervailing duty. The respondent contended that the vessels were not meant for ocean-going purposes but for breaking ships, thus not eligible for the exemption.

Issue 2: Ship Breaking as a Process of Manufacture
The question of whether ship breaking constitutes a process of manufacture and if countervailing duty can be levied on such activity was raised. The appellant cited legal precedents to support the argument that ship breaking does not amount to manufacturing, hence countervailing duty should not be levied. The respondent, however, pointed out other judgments suggesting that ship breaking could be considered an activity of manufacture.

Issue 3: Dispute Over Countervailing Duty
The authorities had not considered whether countervailing duty could be levied on the imported vessels meant for ship breaking. The appellant relied on judgments indicating that countervailing duty should only apply if the imported goods were manufactured or produced in India. The Tribunal found that the Commissioner had misapplied certain judgments and failed to address the issue of whether ship breaking qualifies as a process of manufacture, necessitating a remand to the original authority for a fresh consideration.

In conclusion, the Tribunal allowed the appeals by remanding the matter to the original authority for a detailed reconsideration. The decision highlighted the misapplication of judgments, the need to determine if ship breaking constitutes manufacturing, and the interpretation of the exemption notification for Ocean-going vessels. The case underscores the importance of a thorough examination of legal principles and precedents in resolving disputes related to customs duties and exemptions.