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2019 (1) TMI 1290 - AT - CustomsClassification of imported goods - import of vessels Lewek Altair and Lewek Atlas - whether classified under CTH 8905 90 90? - the Commissioner has imposed a meagre amounts of redemption fine under section 112 (a) which is less than 1% of the value of the vessels and this needs to be enhanced - benefit of exemption N/N. 12/2012-Cus, dated 17.03.2012 as amended. Held that - The vessels in question are meant to support the ONGC s oil drilling platform and were imported as such - As is evident from all available documents that the vessels carry out this function by carrying personnel and equipment from shore to the platform and back. Such a function is essential for the off shore oil drilling platforms which are located far away from the shore. In such a factual matrix, it cannot be held that the navigation of the vessels is not the primary function. The navigation indeed, is the primary function of the vessels and dynamic positioning system helps to perform this function efficiently. Similarly, loading or unloading goods or embarking or disembarking personnel are incidental to the transportation. Therefore, the vessels in question are rightly classifiable under Customs Tariff Heading 8901 9000 as claimed by the appellant. The vessels cannot, by any stretch of imagination, fall under CTH 8905. Consequently the benefit of exemption notification No. 12/2012-Cus is also admissible to the appellant - The demand of duty under CTH 8905 9090 denying the benefit of exemption notification No. 12/2012-Cus, dt. 17.03.2012 by Ld. Commissioner needs to be set aside - confiscation and redemption fine set aside - penalty set aside - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of imported vessels under Customs Tariff Heading. 2. Eligibility for exemption under Notification No. 12/2012-Cus. 3. Confiscation of vessels under Section 111(m) of the Customs Act. 4. Imposition of penalties under Sections 112(a) and 114AA of the Customs Act. 5. Enhancement of redemption fine under Section 112(a) of the Customs Act. Detailed Analysis: 1. Classification of Imported Vessels: The primary issue revolves around the correct classification of the imported vessels "Lewek Altair" and "Lewek Atlas." The assessee classified these vessels under Customs Tariff Heading (CTH) 8901 9000, claiming they are used to transport personnel and equipment to offshore oil rigs. The Revenue contended that the vessels should be classified under CTH 8905 9000, arguing that their primary function is platform support, not transportation. The Tribunal examined the functions of the vessels and found that their primary function is indeed navigation, transporting personnel and equipment to and from offshore platforms. The dynamic positioning system aids in this navigation. Consequently, the Tribunal concluded that the vessels should be classified under CTH 8901 9000, not CTH 8905 9000. 2. Eligibility for Exemption under Notification No. 12/2012-Cus: Since the Tribunal classified the vessels under CTH 8901 9000, it held that the benefit of exemption under Notification No. 12/2012-Cus, dated 17.03.2012, is admissible to the appellant. The demand for customs duty under CTH 8905 9090, denying the exemption, was set aside, and no interest was payable on such demand. 3. Confiscation of Vessels under Section 111(m): The Revenue argued that the vessels were liable for confiscation under Section 111(m) because the classification in the Bill of Entry was incorrect. The Tribunal disagreed, stating that an incorrect classification claim does not render goods liable to confiscation. The Tribunal emphasized that the Bill of Entry classification is a self-assessment by the appellant and subject to reassessment by customs officers. Therefore, the confiscation of vessels and the imposition of redemption fines were set aside. 4. Imposition of Penalties under Sections 112(a) and 114AA: The Tribunal found no basis for imposing penalties under Section 112(a) since the classification claimed by the appellant was upheld. Regarding penalties under Section 114AA, the Tribunal clarified that claiming an incorrect classification or ineligible exemption does not constitute making a false or incorrect statement. Thus, no penalties were imposable under Section 114AA. 5. Enhancement of Redemption Fine under Section 112(a): The Revenue's appeal sought an enhancement of the redemption fine, arguing that the imposed fine was less than 1% of the vessel's value. Given the Tribunal's decision to set aside the confiscation and penalties, the Revenue's appeal for enhancement of the redemption fine was rejected. Conclusion: The appeals filed by the assessee were allowed, and the Revenue's appeals seeking enhancement of the redemption fine were rejected. The impugned orders were set aside, providing consequential relief to the assessee.
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