9911796707
TMI Blog1995 (9) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... rprises Ind. Ltd., Liberia. The said vessel arrived in Visakhapatnam from Australia carrying a bulk consignment of 27,000 M.Ts. of Cocking Coal. The vessel discharged part of cargo (15,000 M.Ts.) at Visakhapatnam and left for Haldia to discharge the balance cargo of 12,000 M.Ts. On arrival at Visakhapatnam Port, the importers filed Bill of Entry No. 280/31-10-1986 for the clearance of the said vessel. The department extended the exemption benefit in terms of Notification No. 262/58-Cus., dated 11th Oct., 1958 and the vessel was released free of duty, treating the vessel as ocean going vessel . Later, it came to the notice of the department that the vessel was not merely an ocean going vessel but also utilised as an up-topper. In view of the same, the department opined that the vessel was not eligible for duty exemption in terms of the said Notification as such a demand notice dated 28-1-1987 was issued to the importers for payment of Customs duty of Rs. 11,38,72,297.56. The department vide their letter dated 5-2-1987 had informed the importers that the vessel cannot be treated as an ocean going vessel for the reason that it is also designed for uptopping/transhipping operations an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34, dated 30-9-1986 classifying the vessel `Maratha Deep a Bulk carrier - Deep sea. They also submitted a classificatory letter dated 22-7-1993 from M/s. Bureau Veritas certifying that the above classification is issued self-propelled or non-propelled ships and units which are capable of deep sea navigation in any area and at any period of the year. (v) They also furnished the General period Licence PI-123/86, dated 30-10-1986 issued by the Director General of Shipping, Bombay in terms of Section 406 Part XIV, of the Merchant Shipping Act, 1958, which applies only to sea going vessels. This licence specifically grants permission for carrying over International Trading and/or Coastal trading and up-topping. (vi) The importers also furnished, inter alia, the following sea-worthy and safety certificates issued by different Governmental authorities : (a) Certificate of Survey dated 28-10-1986 under Section 27 of the Merchant Shipping Act, 1958. (b) Interim International load line certificate dated 30-9-1986 issued under Sections 316(1) and 318(1) of Merchant Shipping Act, 1958. (c) Cargo ship safety construction certificate issued under the provisions of International conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EP sailed with a consignment of coal from Australia to India (Visakhapatnam Port). Thus at the time of arrival there was no doubt about the character of the vessel - as that of an ocean - going bulk carrier. The vessel subsequently made over 12 international voyages. It is also highlighted by the importers vide their letter dated 30th July, 1993 that the vessel so far spent 34% of its total time for foreign voyages and only 29% of its total time was spent for coastal and uptopping operations. This also goes to substantiate the fact that Maratha Deep is an ocean going vessel. (x) The importers also maintained that in the absence of any definition of the expression `Ocean Going any vessel which is a sea going vessel under the Merchant Shipping Act, 1958 must be deemed to be an ocean going vessel. They also submitted that the expressions `sea going used in the Merchant Shipping Act, 1958 and `ocean going used in Notification 262 of 1958 are synonymous. There is no warrant to restrict the expression `ocean going only to `foreign going vessels . In other words, a vessel would be an ocean going vessel whether or not it is a foreign going vessel so long as it is registered and cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , they had pointed out that any post import use for the purpose of the notification. Alternatively, they maintained, if at all post import use is relevant, the use for up-topping operation is not a prohibited use for entitlement of the exemption as only the end use of breaking up prohibits entitlement for exemption of duty. It had been pleaded that under the said notification, Customs duty on an ocean going vessel could be recovered only if it was imported for the purpose of being broken up. If any ocean going vessel was not imported for the purpose of being broken up, the Customs duty could only be recovered on the vessel if and when it was subsequently broken up. Therefore, it was pleaded that the vessel `Maratha Deep would still attract Customs Duty but only at a stage if and when it was subsequently broken up. The notification read as follows : Ocean going vessels other than vessels imported to be broken up, are exempt from the whole of the duty of Customs leviable thereon which is specified in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) and from the whole of additional duty leviable thereon under Section 3 of the said Customs Tariff Act. Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he predominant use of the vessel was up-topping/transhipping. The reason they had given was that the present vessel was acquired for making ocean voyage as a `foreign going vessel. The vessel had made 12 voyages including the initial voyage from Japan to Australia to India in Oct., 1986. They have been produced attested documents in support of their contention that the vessel `Maratha Deep was predominantly used in international trade as it had spent 34% of its total time (from the date of its acquisition in Oct., 1986) for international voyages as against 29% for up-topping and coastal trade. It had also been brought to the notice of Assistant Collector that Govt. of India had chartered 12 international voyages including Ministry of Transport or by the Public Sector Undertakings of the Govt. of India like M.M.T.C., S.A.I.L. etc. The Asstt. Collector after examining the facts and documents upheld their contention and held that the Supreme Court Judgment rendered in the appellant s own case in respect of `Maratha Transhipper as reported in 1987 (28) E.L.T. 39 (SC) = AIR 1987 S.C. 1176 was clearly distinguishable in as much as that the Supreme Court had upheld that `Maratha Transh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion bulk carrier-deep sea has been explained by Mr. Sharma through an affidavit. (viii) The imported vessel carries several other certificates which are applicable only to ocean-going vessels. (ix)The delivery document describes the vessel as an ocean-going bulk carrier. (x) An expert opinion from a consultant engineer has been filed pertaining to the nature of vessel. On the nature of vessel and arrival, the following grounds have been made : (i) It is common ground that the vessel first arrived in India at the port of Vishakhapatnam carrying coal from Australia, part of which was discharged at Vizag Port. The vessel then sailed to Haldia where she discharged the balance cargo of coal. (ii) The vessel, when she first arrived in India, was carrying coal under Charter to the Steel Authority of India and carried coal from Hay point, Australia, which was discharged in part at Vishakhapatnam, and in part at Haldia. They have produced an extract of Log Book and Charter Party. On the nature of vessel, post arrival the importer has been placed the following grounds : (i) Since arrival the vessel has been treated by public authorities as any other vessel carrying cargo. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of importing is a material factor for the purpose of classification as to under head, duty will be leviable. Further reliance is also placed on the judgment of Glaxo Laboratories as reported in 1985 (21) E.L.T. 72, 77 wherein it has been observed that the article must be judged on the basis of its nature at the time of importation . The next submission made by the appellants is that the end-use is irrelevant and in this context, large number of judgments have been relied namely : (i) Dunlop India Ltd. v. Union of India - 1983 (13) E.L.T. 1566 (SC) = A.I.R. 1977 S.C. 597 (ii) Porrits Spencer (Asia) Ltd. v. State of Haryana - 1983 (13) E.L.T. 1607 (S.C). (iii) Glaxo Laboratories (India) Ltd. v. Union of India - 1985 (21) E.L.T. 72. (iv) Sainet Pvt. Ltd. v. Union of India - 1984 (18) E.L.T. 141 (Bom. H.C.) The next submission made by the appellants is that the end-use can never be relevant for interpretation of notification. They have submitted that similar matters came up before the Tribunal and the Tribunal after duly interpreting the terms of the notification has held that the capacity of the vessels has to be seen and not its intended use, the following judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsport, Mercantile Marine Dept. clarifying that the vessel is registered under Part V of Merchant Shipping Act, 1958 and is in possession of all statutory certificates and she is a sea-going ship. Ld. DR submitted that this letter does not show that the vessel is an ocean-going vessel. Ld. DR submitted the end-use is inbuilt in the notification itself and the judgment of the Supreme Court in the importer s own case has been rightly applied by the ld. Collector. The ld. DR also pointed out that earlier imported ship `Maratha Transhipper was destroyed in the storm and therefore, they had applied for replacement and the present imported vessel is a replacement of the previous one and therefore, it has to be considered as goods for home consumption and not as an ocean-going vessel. 8. We have carefully considered the submissions made by both the sides and have perused the enormous documents placed before us. The controversy before us as to whether the exemption Notification No. 262/58, dated 11-10-1958 can be extended to the imported vessel `Maratha Deep . The classification of the imported vessel has been done under sub-heading 8901.90 as other vessel for transport of goods , whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The ld. Counsel has drawn our attention to the classification in respect of vessels dealt with by the Tribunal. In these judgments as can be seen, the Tribunal has dealt with similar vessels and has clearly held those vessels to be `ocean-going vessels . In the case of Collector of Customs v. M/s. Dredging Corpn. of India Ltd. by Order No. 882/86-B2 , the Tribunal has considered the case of drager being entitled to the benefit of Notification No. 262/58-Cus. or not. The Tribunal rejected the revenue s plea and their appeal. It will be appropriate to refer to the paras 20 to 27 of the Tribunal s order, the same is noted herein below : 20. The same Notification which we are considering now, viz. 262-Cus./58 came up for examination before the Tribunal in a matter relating to the same respondent who were appellants in that case. (Order No. 845/83-B, dated 16-9-1983 of CEGAT) in Appeal No. 438/83-B. In that appeal, the question that came up was whether Tugs were `ocean going vessels and, therefore, entitled to the exemption Notification or not. The Tribunal held that Tugs were entitled to the duty exemption as `ocean going vessels . The Tribunal while arriving at this conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this term. One was Notification No. 234/85 (Item 32). The Collector of C.E. Bombay issued a Circular No. 11(F)/(NES)(3)/84, dated 7-3-1984 taken from the Trade Notice. (This also was reproduced in 1985 (19) E.L.T. 122 (Tribunal) is reproduced below : It is considered that the ocean-going vessels" under the Notification No. 234/82-C.E., dated 1-11-1982 was under consideration. It is considered that the `Ocean-going vessels under Notification No. 234/82-C.E., dated 1-11-1982 will include the following : (a) Liners; cargo-vessels for various kinds including refrigerator vessels for the transport of meat, fruit etc. vessels specified for the transport of particular goods (grain, coal, ores, etc.) tankers (petrol, wine, etc.) yachts and other sailing vessels; cable ships, ice breakers, floating factories of all kinds (for processing whales preserving fish, etc.); whale catchers, trawlers and other fishing vessels, lifeboats, scientific research vessels, whether ships, vessels for the transportation and mooring of buoys pilot beats, hopper-barges for the disposal of dredged material, etc. (b) warships of all kinds including submarines; (c) tugs, dredgers, fire floats and sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tariff ruling issued by the Government, the Dredgers are to be classified under Item 73B at a machinery and not as an item falling within 76.1. We have considered this argument but as we observed earlier, the Notification exempts Dredgers not by reference to Tariff classification but by mentioning `ocean going vessels . Therefore, we are unable to give weight to this argument. 27. The ld. Counsel for the respondent also argued that the Notification in question does not place any restriction on the question of primary use or end-use but merely refers to `ocean going vessels . He submitted that no other condition can be placed on the exemption other than what the notification itself placed. After a careful perusal of the notification, we agree that this is the correct position. In the absence of definition of the term `ocean going vessels and in view of all the other evidence which the respondents placed before us and also in view of the Case Law cited and discussed (supra), we hold that in this case, for the purpose of interpretation of the exemption Notification, the Dredgers have to be considered as `ocean going vessels . The design of the vessel, documentation placed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to ocean going vessels. The appellants had intended to purchase this vessel by seeking permission from the Secretary, Govt. of India, Ministry of Shipping Transport, New Delhi by their letter dated 6-8-1985. By this letter, they had brought to the notice of Govt. about the `Maratha Transhipper which was built in 1945, becoming useless due to running a ground on a rocky shoal at Mormugao Harbour during the storm which hit Goa on 28-5-1985. They had submitted that they need to purchase an ocean going vessel. They had given the details of the payment that would be made by them to purchase it. This had been again followed up by a letter dated 18-12-1985 which gives the details of the vessel to be purchased to be used by them, as an ocean going vessel. In response, the Ministry of Commerce by their letter dated 3-12-1986 granted permission to purchase second-hand ocean going vessel fitted with barge discharging and ship loading equipment for boosting export of iron ore from Marmugao Harbour. Thereafter the appellants have obtained certificate of Survey dated 28-10-1986 as required under Section 27 of Merchant Shipping Act, Certificate of Interim International Load Line dated 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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