2020 (4) TMI 249 - AT - Customs

Foreign Going vessel - shipping stores consumed aboard the vessel - benefit of exemption available to ship stores - Department relies upon a Certificate of Indian Registry given for the vessel registered on 21/07/1998 at Mumbai - HELD THAT - Though the Department alleges that the vessel has been on the coastal run, no evidence to that effect has been brought on record either by way of any permission granted for coastal run by Customs or D.G. Shipping or any copy of the log book of the vessel has been submitted. Moreover, we find from the judgment of the Hon'ble Supreme Court in UNION OF INDIA VERSUS VM SALGAONCAR BROS. (P) LTD. 1998 (3) TMI 134 - SUPREME COURT that such vessels which are engaged in transshipment of export cargo from the port to the mother vessels stationed at highseas are sea going vessels and are rightly eligible to be held as foreign going vessels in terms of Section 2(21) of the Customs Act, 1962. The vessel M.V. Sunrise was engaged in the carriage of goods between ports mentioned above to the high-seas. Going by the definition contained under the clause (iii) of the inclusive clause, it is found that the vessel is a foreign going vessel and accordingly, the exemption available to the ship stores is rightly held by the learned Commissioner(Appeals) to be admissible - appeal dismissed - decided against Revenue.

Summary

Issues:
- Duty on shipping stores consumed aboard a vessel engaged in export of iron ore.
- Determination of vessel's status as a foreign-going vessel.
- Applicability of exemption to ship stores based on vessel's operations.

Analysis:

1. Duty on Shipping Stores:
The case involved a dispute regarding the imposition of duty on shipping stores consumed aboard a vessel used for exporting iron ore. The Department claimed duty based on the vessel's operations, while the respondents argued that the vessel was engaged in shifting iron ore to mother vessels beyond Indian territorial waters. The Department relied on various documents to support its claim, including a Certificate of Indian Registry and declarations made by the respondents regarding the vessel's operations at different ports.

2. Status of Vessel:
The key issue was to determine whether the vessel in question qualified as a foreign-going vessel. The respondents contended that the vessel was involved in high-seas operations and not in coastal runs between Indian ports. The counsel for the respondents referenced previous judgments, including the case of MV Salgaocar Bros., to argue that vessels engaged in transshipment operations at high seas are considered ocean-going vessels. The Tribunal examined the evidence and legal definitions to ascertain the vessel's status.

3. Exemption for Ship Stores:
The Tribunal analyzed the Customs Act's definition of a foreign-going vessel, which includes vessels engaged in the carriage of goods between Indian and foreign ports. Based on this definition and the vessel's operations, the Tribunal concluded that the vessel in question, MV Sunrise, qualified as a foreign-going vessel. Consequently, the exemption available for ship stores on foreign-going vessels was deemed applicable. The Tribunal upheld the decision of the Commissioner (Appeals) regarding the admissibility of the exemption and dismissed the Department's appeal.

In conclusion, the Tribunal's judgment clarified the vessel's status as a foreign-going vessel based on its operations and the legal definition provided in the Customs Act. The decision highlighted the importance of evidence in establishing the vessel's activities and upheld the applicability of the exemption for ship stores consumed aboard the vessel engaged in exporting iron ore.