Ship stones both consumable and non- consumable are covered by Notification No. 70/77-CE - Central Excise - 89/88-CX.6

Ship stones both consumable and non- consumable are covered by Notification No. 70/77-CE Circular No. 89/88-CX.6 Dated 30-12-1988 [From F. No. 208/60/88-CX.6] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Supply of ship stores under Notification No. 70/77-CE dated 7-5-1977 regarding. I am directed to say that doubts have been raised by some Collectors regarding the interpretation of the expression "stores for consumption on board a vessel", appearing in Notification No. 70/77-CE dated 7-5-1977 (as amended). In one Collectorate, the Audit has taken the view that the above expression covers only "consumable stores" and not non-consumable items which are used on board the vessel. On this consideration, the Audit has raised objection in a case of clearance of I.C. Engines supplied without payment of duty under the above notification to a vessel of the India Navy. 2. The matter has been examined by the Board. Previous Instructions of the Board on this issue, namely, F. No. 19/15/65-CX.4 dated 4-6-1966, F. No. 19/15/65-CX.4, dated 29-6-1966, F. No. 19/15/65-CX.4, dated 23-8-1986 and No. 71/43/71-CX.2, dated 12-5-1977 indicate that initially a distinction was made between the stores meant for use of a ship of the Indian Navy and the stores supplied for use of the crew of the ship. These items were collectively referred to as "ship stores". This distinction was subsequently done away with and, thereafter, the facility continued to be extended by use of the expression "ship stores for consumption on board a vessel". Thus it is clear that it has all along been the intention of the Government to grant exemption from central excise duty not only to those excisable goods which are used for running or maintenance of the vessels of the Indian Navy but also to those excisable goods which are meant for consumption of the crew members. In view of this the supply of I.C. Engines without payment of duty to a ship of the Indian Navy, under the above notification was in order. 3. Apart from the above considerations, it is observed that the term "consumption", in Central Excise merely connotes "use". As for example, the expression "clearance for home consumption", merely means "clearance for use within the country". Thus stores for consumption, on board a vessel would cover stores, both consumable and non-consumable, meant for the use of a ship as well as the crew members. Reliance can also be placed on the definition of "stores" appearing in section 2(38) of the Customs Act, 1962. 4. Field formation may be suitable advised.