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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 ..... h an assessable value of Rs. 124,80,25,488/- 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. In appeal Nos. C/465 to 467/11 the importer is M/s Great Off shore Ltd. imported a Multi-purpose Support Vessel (MSV) 'HAL- Anant' vide B/E No. 791345 dated 7-9-2007 declaring the goods as 'second hand supply vessel Malaviya Thirty Six (Ex- Skandi Bergen)' with an assessable value of Rs. 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 Dula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms Multi-purpose Support Vessel to mean a vessel which is capable of multi-purpose functions like fire-fighting, diving support, helicopter operation, rescue operations and pollution control operations etc. and because of these functionalities, MSV is different from ordinary Supply Vessel. 7) The importers had suppressed the information regarding the contracts entered into by then with the ONGC at the time of import of the vessels, thereby suppressing the functionality of the vessel to evade customs duty by mis-classifying them as supply vessels instead of multi-purpose vessels where the 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). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rightly classifiable under CTH 89.01. 4) Even prior to the acquisition of the vessel, the vessels were performing as tug-cum-supply vessel-cum-anchor handling vessel. For performing these functions, navigation was primary and not secondary or subsidiary. The design and construction of the hull and the vessel was made keeping the navigation of the vessel as a primary function. After acquisition, the design and construction did not undergo any substantial change and the navigation aspect continued to be a primary function. 5) Supply of cargo and crew is also one of the functions to be performed by the vessels as per the scope of work prescribed in the contracts with the OMGC. The contract specifically requires the appellants 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns made by both the sides. Our findings and conclusions are discussed in the ensuring paragraphs. 7.1 As the issue relates to classification, it will be useful to understand the scope of the relevant tariff entries. 89.01 - Cruise ships, excursion boats, ferry boats, cargo ships, barges and similar vessels for transport of persons or goods 8901.10 - Cruise ships, excursion boats and similar vessels principally designed for the transport of persons; ferry boats of all kinds 8901.20 - Tankers 8901.30 - Refrigerated vessels, other than those of sub-heading No.8901.20 8901.90 - Other vessels for the transport of goods and other vessels for the transport of both persons and goods The appellants have claimed classification under heading 8901.90 for the impugned goods. The HSM 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 boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the vessel has been registered as Offshore Supply Vessel in the certificate of Indian Registry and as 'SUPPLY VESSEL' and in the certificate of Class issued by the Indian Register of Shipping. The Registered tonnages are 4703 Gross and 1411 Net. In the provisional classification certificate issued by the Bureau Veritas, the vessel has been described as 'SUPPLY VESSEL'. The special service is Fire fighting ship 2- Water spraying and the navigation is unrestricted. Thus from the registration documents available on record, the vessels under importation are essentially 'SUPPLY VESSELS' with unrestricted navigation. In addition to being a supply vessel, the vessels are 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vider. 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 Kms of sub-sea pipe lines, 4 SPMs/SBMs, 20 PLEMs, etc. To ensure that these underwater offshore facilities are fit for use, Multi-purpose Support Vessels (MSVs) are deployed. These MSVs are also required to provide the fire-fighting, safety, search and rescue and pollution control support to offshore oil and gas fields. The MSVs remain in high alert mode for any emergency requirement, while they carry out their designated duties including air and saturation diving. On the basis of the scope of work specified by ONGC, the Revenue concludes that the vessel is not an ordinary supply vessel but a special vessel designed to carry inspection, maintenance and repair operations. This conclusion drawn by the Revenue is absurd. ONGC is not the agency author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atures 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 Revenue's case for classifying these vessels under CTH 8905. The said heading covers Light vessels, fire floats, dredgers, floating cranes, and other vessels the navigability of which is subsidiary to their main function; floating docks; floating or submersible drilling or production platforms. The types of vessels specified in this heading are essentially stationary vessels and they do not have any navigational capability. Even when they have such capability, the same is subsidiary to their main function. From the class certificates issued by the Indian Registry and Bureaus Veritas, it is seen that the vessels are 'SUPPLY VESSELS' with unrestricted navigation. In other words, navigation is not subsidiary to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 of the bill of entry are only invoices /purchase orders for the goods, product literature/catalogue applicable to the goods. In the case of vessels, the registration and class certificates are also required to ascertain the nature of the vessels. All these documents were submitted by the appellants at the time importation. How the vessels would be put to use or is there any contract for the future use of the imported goods are not relevant considerations for assessment of customs duty. Therefore, we hold that the entire demand is time barred and on that ground also the customs duty demands fail. Once the classification claimed by the appellants is upheld, the question of differential duty demand, confiscability of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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