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TMI Blog2013 (10) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... l are enumerated - technical paper makes it abundantly clear that Offshore support vessels are nothing but supply vessels for the supply of cargo and personnel to offshore platforms with additional features of underwater diving and inspection, fire-fighting operations, etc. The vessels under importation have some of these additional features so that they can perform the various operations that are required and expected of offshore support vessels. The contract given by ONGC requires certain operations to be performed in addition to supply and transport of cargo and personnel. Nevertheless, these vessels remain supply vessels designed for transport of cargo and persons and therefore, they are rightly classifiable under CTH 8901 and we hold accordingly. Extended period of limitation - Held that:- The goods were examined by the Customs before assessment and all the type approval certificates given by the statutory authorities and the technical data relating to the vessels were made available to the customs authorities. The allegation of the customs is that the copies of the contract entered into with the ONGC were not made available. There is no statutory requirement for submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second hand supply vessel Malaviya Thirty Six (Ex- Skandi Bergen) with an assessable value of ₹ 215,74,74,030/- seeking classification under CTH 8901 9000 with applicable duty at Nil rate. The goods after examination by the customs were classified under CTH 8901 9000 and assessed accordingly. 3. Intelligence gathered by the Officers of the Central Intelligence Unit of the Custom House suggested that there has been gross-misdeclaration by both the importers at the time of import and accordingly investigations were carried out by the customs authorities which revealed the following: 1) HAL Anant was built in the year 1982 and was named as Fu Lal and was classified as Supply vessel. Thereafter it was taken over by M/s Dulam International and named as Dulam Providence. M/s HAL Offshore purchased the vessel in 2007 and renamed the vessel as HAL Anant. 2) Malaviya Thirty Six was built in the year 1987 and was classified as Tug/Supply vessel. M/s Great Offshore purchased the vessel in October 2006 from M/s Geo Redereo AS, Norway and renamed the vessel as Malaviya Thirty Six (Ex-Skandi Bergen). The classification remained as Tug/Supply vessel.. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... navigability is subsidiary to the main function of the vessel. 8) In the case of M/s HAL Off shore, there is an additional allegation that the importer had mis-declared the value of the vessel under importation by not including the cost of modification and saturation diving system totally worth US $ 8.4 million. 4. On the basis of the investigation conducted and evidences unearthed, show cause notices were issued to the appellant vide notices dated 21/5/2010 (HAL Offshore) and notice dated 25/6/2010 (Great Offshore). These notices proposed to re-classify the vessels under CTH 8905 and demand differential duty of ₹ 15,50,78,867/- in the case of M/s HAL Offshore (on account of both reclassification and also redetermination of assessable value) and differential duty of ₹ 20,18,53,270/- in the case of M/s Great Offshore on account of reclassification, by invoking the extended period under section 28(1) of the Customs Act, 1962. The notices also proposed to recover interest on the differential duty liability under section 28AB. There were also proposals for confiscation of the goods under section 111(m) ibid and imposition of penalties under sections 112(a)/114 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants to carry out transportation of material and equipment as and when required. The fact that in terms of the contract, the vessel has to be operated in a particular manner cannot discriminate the classification of the imported vessel. 6) In addition to the transportation of cargo and personnel, the vessels would also be required for carrying on repairs and maintenance, inspection, rescue support, etc. at the OMGC platforms. The ONGC platforms at Bombay High are spread over a large area and therefore, without navigation, the vessels will be unable to perform most the required operations. 7) In any case, navigability of the vessel is not subsidiary to the primary function and hence the impugned vessels are not classifiable under CTH 89.05. 8) Applying the principle of ejusdem generic, the term other vessels appearing in CTH 89.05 should be read with the specific types of vessels mentioned in the entry i.e., light vessels, fire-floats, dredgers, floating cranes. These vessels are floating structures which rarely require any navigation. The vessels imported by the appellants are not floating structures. They are capable of transporting cargo as also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SM explanatory notes says that the heading covers all vessels for the transport of persons or goods, other than vessels of heading 89.03 (which covers yachts and other vessels for pleasure or sports; rowing boats and canoes ) and life boats, troop-ships and hospital ships (89.06). The note further says that the heading includes cruise ships and excursion boats, ferry-boats of all kinds, including train-ferries, car ferries and small river-ferries, tankers, refrigerated vessels for the transport of meat, fruit, etc., cargo vessels of all kinds, whether or not specialized for the transport of specified goods such as ore vessels and other bulk carriers, container ships, Ro-Ro ships, LASH type vessels, barges of various kinds and vessels of the hydro-glider type, hydrofoils and hovercraft. Thus the coverage of heading 8901 is very wide and all types of vessels for the transport of persons or goods would merit classification under the said heading. 7.2 The Revenue wants to classify the products under heading 89.05 which reads as follows:- 89.05 - Light vessels, fire floats, dredgers, floating cranes, and other vessels the navigability of which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re capable of performing certain special services. That does not mean that, the vessels cease to be supply vessels merely because they perform certain additional functions.Further as per the Rules for classification of ships Class notations published by Det Norske Veritas supply vessel means vessels designed specially for supply services to offshore installations. 7.4 As per the CARGO SHIP SAFETY CONSTRUCTION CERTIFICATE issued by the Mercantile Marine Dept., Mumbai District, available in respect of MV Malaviya Thirty Six, the type of the vessel is described as Cargo ship other than any of the preceding . The preceding types are oil tanker/chemical tanker/gas carrier/bulk carrier. 7.5 Some of the technical data relating to the impugned vessels which would be relevant for classification available in the records are extracted below: S. No. Parameters Vessel s name Malaviya Thirty Six HAL Anant -I Main Particulars 1. DWT 1364 4602 2. Gross tonnage 2915 4703 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gathered that the vessel is designed to carry cargo and persons, is self-propelled and has navigational capability. From the details of the speed parameters, it can be seen that the vessel is not a stationary vessel even when delivering service. These parameters are very crucial for classification of the impugned vessels. 7.6 The Revenue s reasons for classification under CTH 8905 is mainly based on two documents, namely, the permission given by the Indian Navy and the contract entered into by the appellants with the ONGC. The Naval Security Clearance is given by the Indian Navy from the security point of view and it has nothing to do with the classification of the vessel. As regards the contract with the ONGC, the said contract stipulates the various services to be rendered to them by the service provider. In the contract, the technical specifications of Multi-purpose Support Vessel are enumerated. The background of work is given as under: Inspection, Maintenance Repair group of Offshore logistics, ONGC, Mumbai Region presently caters to inspection, maintenance and repair of approx. 190 offshore steel structures (process and well platforms), 800 risers, 4000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgo capacities through better compartment design and also better space efficiency of electric propulsion system. Some of the new generation supply vessels are equipped with ROV underwater operations, lifting appliances with high safe working loads for cargo handling, platform access system to facilitate transfer or personnel from the vessel to offshore platform, etc. 7.8 A reading of the above technical paper makes it abundantly clear that Offshore support vessels are nothing but supply vessels for the supply of cargo and personnel to offshore platforms with additional features of underwater diving and inspection, fire-fighting operations, etc. The vessels under importation have some of these additional features so that they can perform the various operations that are required and expected of offshore support vessels. The contract given by ONGC requires certain operations to be performed in addition to supply and transport of cargo and personnel. Nevertheless, these vessels remain supply vessels designed for transport of cargo and persons and therefore, they are rightly classifiable under CTH 8901 and we hold accordingly. 7.9 Now let us see whether there is any merit in the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the vessel was classifiable under CTH 8901, on the ground that the vessel was not always in stationary position while carrying out transshipment of cargo and some modes of transshipment involved navigation. In the case before us, the vessels are self-propelled, have capacity for carrying cargo and persons and have unrestricted navigational capability. The certificates issued by the Indian Registry of Shipping and Mercantile Marine Dept. also classify the vessel as supply vessel. Therefore, the ratio of the above decision applies squarely and the impugned vessels merit classification under CTH 8901. 8. The appellants have also raised a contention that the demand is time-barred. The goods were examined by the Customs before assessment and all the type approval certificates given by the statutory authorities and the technical data relating to the vessels were made available to the customs authorities. The allegation of the customs is that the copies of the contract entered into with the ONGC were not made available. There is no statutory requirement for submission of contracts with ONGC to the customs authorities. The documents required to be submitted at the time of filing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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