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TMI Blog2019 (5) TMI 1361X X X X Extracts X X X X X X X X Extracts X X X X ..... eck that remains has no consequence. The discharge of duty liability on the goods that were removed from the wreck and whose quantity or value is not in dispute, would be the appropriate discharge of appropriate duties. The impugned order is therefore set aside and remanded back to the original authority with a direction to restrict the decision to the contents of such bills of entry that were presented or such bills of entry that should have been presented under section 21 of Customs Act, 1962 - Appeal allowed by way of remand. - Custom Appeal No. 146 of 2012 - A/85900/2019 - Dated:- 10-5-2019 - Mr CJ Mathew, Member (Technical) And Mr Ajay Sharma, Member (Judicial) Shri HK Maingi, Advocate with Shri CS Biradar, Advocate for the appellant Ms PV Sekhar, Joint Commissioner (AR) for the respondent ORDER PER: C J MATHEW The root of the dispute in this appeal of M/s Chowgule and Company Pvt Ltd is the statutory provision under Customs Act, 1962 that is liable to be invoked for levy of duty on goods recovered from a ship that was wrecked off the shores of India; the appellant contends that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al salvers who were, contractually and upto an agreed ceiling, bound to discharge liability. Even as the provisionally assessed bill of entry for the import of the vessel was yet pending finalisation, the importer, with judicial sanction, commenced filing bills of entry for the recoveries effected during salvage. The jurisdictional authorities, by now having relinquished claim on the bank guarantee, were far from satisfied by this piece-meal discharge of duty liability and, by invoking the contingency in the proviso of notification no. 262/58 dated 11th October 1958, initiated proceedings under section 28 of Customs Act, 1962 in show cause notice dated 11th November 1985 which culminated in the upholding of the demand leading to this appeal. These, then, are the relevant facts. 4. The antediluvian Ark built by Noah which, according to biblical narrative, in negotiating the deluge that covered the earth and found its final resting place on Mount Ararat, having preceded the divinely frustrated construction of the Tower of Babel, was, probably, the only watercraft that did not present a dilemma. However, since the dawn of national administrations, the dual aspect of mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of privileges accorded to stores in section 87 and section 89 therein. With the enumeration of vessels of every kind in chapter 89 of First Schedule to Customs Tariff Act, 1975, description in any other statute is, for tax policy formulation, superfluous. We are unsure if the relevant taxing entry in the erstwhile First Schedule or Second Schedule to Indian Tariff Act, 1934 may have warranted this description. The existence of a taxing entry for ocean going vessels in the First Schedule to Indian Tariff Act, 1934 deeming such vessels to be goods and, hence, liable to duty has not been suggested. Indeed, the absence of such in the record of proceedings should suffice to indicate the lack of it. It does not, therefore, surprise us that attempts to curtail the benefit of the notification owing to this ambiguity has caused many disputes. We shall, by the by, revert to this. 6. As a persistent thorn in the procurement of vessels, the evolution of the exemption may well be worth unravelling. In the absence of any other authoritative source, we draw upon the facts recorded in different judicial rulings to enlighten us. The Tribunal, in Collector of Customs v. Salim A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n going vessels. This would lead us to surmise that the impugned exemption was an exercise to formalise free movement of vessels with formulation of a tax policy, and other policies that go hand-in-hand with sovereignty, on shipping. The treatment of ships for breaking appears to have been aligned, and articulated, for domestic manufacture and for imports, in 1965. We shall turn to that presently after considering the postulates apparent in the proceedings initiated by customs authorities. 7. Learned Counsel for the appellant contends that the Hon'ble High Court of Karnataka, in Commissioner of Customs, Bangalore v. Symphony Services Corporation India Pvt Ltd [2012 (275) ELT 369 (Kar)], has held that relinquishment of title vests the goods in the government with attendant escapement from duty for the importer. It is also submitted that remission, under section 23 of Customs Act, 1962, is available when the imported goods are of no commercial use to the importer. Learned Authorised Representative placed reliance on the decision of the Hon'ble High Court of Karnataka in Antarctica Ltd v. Union of India [2010 (258) ELT 206 (Cal.)], on the decision of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the vessel, if intended to be broken, must be subject to assessment separately as though imported afresh for that purpose. The concern here is, thus, restricted to the continuing operation, and admissibility, of the notification in 1985 when the vessel was wrecked. 11. It has been suggested by Learned Authorized Representative that the adjudicating authority has correctly considered the wrecking of the vessel as the breaking up envisaged in the notification as, on the date of filing of bill of entry, the vessel was no longer ocean going and the salvage of the vessel for dislodging it from the navigation channel, though under statutory obligation, as breaking up of the vessel. The adjudicating authority, too, inferred, that the filing of a few bills of entry in pursuance thereof, was an admission of such event. In our opinion, reliance on the decision of the Hon ble High Court of Bombay in re Khanbhai Essofbhai is misplaced as there is a substantive difference between the two: in that matter, the issue in question was not the importation or eligibility for free importation in the hands of the owner but the escapement from duty on an entire vessel to be br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the tonnage of the vessel, irrespective of the recovery, because various components, classifiable under different tariff headings, that would emerge from the process of breaking up has all the promise of an assessment nightmare. A wreck that could not be subject to such valuation on the basis of tonnage cannot be considered as vessel for breaking up which itself is a fiction incorporated in law owing to the peculiarity of life cycle of vessels. 15. The existence of a vessel is contingent upon it never entering a landmass. Once it is irretrievably grounded, it is no longer a vessel. Though legends, such as that of Flying Dutchman and Mary Celeste, abound in the mariners world, shipbreaking, as a thriving industry, is indispensable. Vessels may also be declared to be unseaworthy in mandatory inspections. Vessels may become commercially or operationally unviable. In stark contrast with manufacture, Daltonian principles require transformation of such former vessels by disaggregation. A vessel can be broken up only on land and once a ship has been led on its funeral voyage, it ceases to exist as a conveyance and, indeed, a vessel itself. It cannot, thereafter, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding that 27 The Noticee has indirectly accepted that duty is payable on the wreckage when they requested for remission of duty under Section 23 vide letter dated 04.06.1998, The vessel became a wreck in 1985 and the request for remission was after salvaging a part of the wreckage from 1986 to 1998. Moreover, as required under Section 23 of the Customs Act, 1962, the Noticee has not shown to the satisfaction of the Assistant/ Dy. Commissioner with supporting evidence, that the imported goods have been lost. Therefore, no reference was made to the Noticee for granting permission for remission of duty on the wreckage which was intentionally not salvaged. If they had relinquished the title to the goods in 1998 due to inability to salvage the wreck, the same should have been intimated to the Hon'ble High Court before its Order dated 17.12.2003, enclosing a copy of the approval of the Department Further, the Noticee's submissions are contradictory, to the extent that they state that they had relinquished the title in 1998 as the wreck could not be salvaged and then they, submit that they were forced to engage another contractor to salvage the balance portion o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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