Customs, Excise and Gold Tribunal - Delhi
Chowgule And Co. Ltd. vs Collector Of Customs on 21 September, 1995
Equivalent citations: 1995(80)ELT680(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from order-in-Appeal No. 5/93, dated 31-3-1994 passed by the Collector (Appeals), Hyderabad. The Revenue is aggrieved with the order-in-original passed by the Assistant Collector, who by his order dropped the proceedings initiated by the issue of L.C. Demand Notice dated 28-1-1987. The Asstt. Collector has held that Bill of Entry 280/31-10-1986 was correctly assessed to nil rate of duty by the Customs Department in terms of Notification No. 262/58, dated 11-10-1958 in respect of imported one bulk-carrier vessel M.V. MARATHA DEEP in Oct., 19"86 by the importer appellants herein. The facts of the case are that the said bulk carrier was imported by the appellants having been purchased from M/s. Bravo Enterprises 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 and that the said notification cannot be extended in their case. Before the Assistant Collector, the importer had impressed upon him, with the documentary evidence and certificates that the vessel "MARATHA DEEP" was an ocean going vessel. They drew the distinction between the vessels "MARATHA TRANSHIPPER" and imported vessel namely "MARATHA DEEP" and pleaded that the vessel Maratha Deep was classified correctly as ocean going vessel and would be eligible for duty exemption in terms of the said notification. The ld. Assistant Collector after scrutinizing the anormous evidence placed before him accepted the importer's contention and dropped the proceedings. The importer had explained before the Assistant Collector that the term "ocean going vessel" is defined as "any vessel designed and equipped to go on the open sea" as appearing in Random House Dictionary. It was pleaded that the term 'ocean going vessel' describes the conception and design of the vessel and its ability to ply on the sea. It had been further contended that the vessel 'Maratha Deep' is an ocean going vessel and that this fact is verifiable and ascertainable on the basis of various documents and certificates issued by marine authorities. The following verifiable documents and certificates were submitted by the importers :
(i) Vide their applications dated 6-8-1985 and 18-12-1985 to the Ministry of Commerce, the importers sought permission for purchase of a second hand ocean going vessel fitted with barge discharging and ship loading equipment for use in up-topping, coastal trade and foreign trade.
(ii) Vide letter No. 1(31)/85-FT (M & D), dated 4-7-1986, Ministry of Commerce granted permission for import of a second hand ocean going bulk cargo carrying vessel of about 25,000/30,000 DWT capacity (later amended to 33,400 DWT capacity, built in 1974) from Japan.
(iii) After import, the vessel was registered under Section 34 of the Merchant Shipping Act, 1958 (part V) & a certificate of Indian Registry No. 2194, dated 28-10-1986 was issued. This certificate is required only in respect of sea-going ships fitted with mechanical means of propulsion. This certificate also contains the endorsements made by the Registrar of Indian Ships from time to time under Section 37 of the Merchant Shipping Act (at the time of taking over by New Captain).
(iv) Bureau Veritas Certificate of classification No. 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 XW, 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 convention for the safety of life at sea, 1974 under Section 299(A) of Merchant Shipping Act, 1958. This is required only when the ship performs international voyages.
(d) International Oil Pollution prevention certificates dated 30-9-1986 and 29-1-1987 under Section 352 (N).(O).(P) of Merchant Shipping Act, 1958. This is required when the vessel is a bulk carrier on international voyage.
(e) Cargo ship safety equipment certificate dated 29-9-1986 issued under Section 300(1)(a) of the Merchant Shipping Act, 1958. This is required only when the ship performs voyages between parts or places in India and Ports or places outside India.
(f) Cargo ship safety Radio Telegraphy Certificate dated 29-9-1986 issued under Section 301 (a) of the Merchant Shipping Act, 1958. This certificate again is required only when the ship performs voyages between Ports in India and Ports outside India.
(g) International Tonnage Certificate issued under Section 30 of M.S.A., 1958.
(h) Bureau veritas Machinery Certificate dated 30-9-1986. (i) Bureau Veritas Boiler Certificate dated 30-9-1986. (j) Suo Canal Tonnage Certificate dated 14-10-1986 (k) Panama Canal Tonnage Certificate dated 15-10-1986 Thus the importers claimed to have obtained all the certificates specified in the Merchant Shipping Act, 1958, which an ocean going vessel should possess. This again they say, is verifiable and it cannot be questioned :-'
(vii) The importers also contended that CEGAT had consistantly held that the criteria for determining whether a vessel is ocean going is evident in its design and construction and the capacity of proceeding on the ocean, copies of CEGAT Orders No. 845/83-B, dated 16-9-1983, 882/86-B2, dated 24-9-1986, 954/86-B2, dated 24-9-1986 and 541 to 544/84-B, dated 16-7-1984 [reproduced in 1985 (19) E.L.T. 122 (Tribunal)] are placed in the folder.
(viii) The importers had also drawn attention to Import licence No. P/J/3075150, dated 29-7-1988 issued for one No. second hand (1974 make) ocean going bulk carrier vessel of 33,400 DWT capacity -valid for already arrived/shipped. The Customs Department accepted the import licence and cancelled the ITC Bond executed by the importers at the time of importation in Oct., 1986 - thereby, the Department accepted the fact that the vessel 'MARATHA DEEP' is an ocean going vessel.
(ix) On its vary maiden voyage, the vessel 'MARATHA DEEP' 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 continues to be registered as a sea going vessel under the Merchant Shipping Act, 1958.
2. The Assistant Collector accepted, this documentary evidence and held that 'Maratha Deep' was an 'Ocean going' vessel at the time of its first importation during Oct., 1986 and it continued to be an ocean going vessel even at present.
3. The appellant had argued that 'Maratha Deep' had been rightly classified under the Tariff Heading 8901.90 of the first schedule to Customs Tariff Act, 1975. The tariff heading reads :
"8901.90 - Other vessels for the transport of goods and other vessels for the transport of both persons and goods 40%.
The importers had contended that the department had not disputed the classification of the vessel under the above tariff heading of CTA, 75, as such the vessel is indisputably a vessel for the transport of goods. Further, the vessel 'Maratha Deep' was also carrying a consignment of coal from Australia on its maiden voyage. Hence at the time of its arrival at Vizag Port, it could also be considered as "foreign going vessel" as defined under Section 2(21) of the Customs Act, 1962; which reads :
"Foreign-going vessel or aircraft" means any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any port or airport in India and any port or airport outside India, whether touching any intermediate port or airport in India or not, and includes :
(i) any naval vessel of a foreign Government taking part in any naval exercise;
(ii) any vessel engaged in fishing or any other operations outside the territorial waters of India;
(iii) any vessel or aircraft proceeding to a place outside India for any purposes whatsoever".
In view of the above definition, the importers had contended that the vessel Maratha Deep was an ocean going vessel plying on an international voyage on its own power and carrying bulk cargo from Australia. The ld. Assistant Collector accepted this plea also. They had also pleaded that once a vessel was an ocean going vessel, it was exempt under the said notification, the only exception being that when a vessel was imported for the purpose of breaking up. Hence, they contended that the said notification does not import, the concept of end-use. The phrase 'ocean going' in that notification refers to the design and capability of the vessel to ply on the ocean and not to the end use. Hence, 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 any such vessel subsequently broken up shall be chargeable with the duty which would be payable on her if she were imported to be broken-up".
Thus, it was pleaded that in terms of the above notification, any ocean going vessel which touched any Indian Port would be eligible for duty exemption under the said notification, except when it was imported solely for breaking up purpose or alternatively, if and when the vessel was subsequently broken up. Therefore, they had pleaded that in the present case the vessel 'Maratha Deep' was not imported for breaking up purposes and since it is objectively established that it is an ocean going vessel - on the basis of facts, certificates and other documentary evidence furnished by the importer - the same is covered under the said-Notification. The ld. Assistant Collector after examining their plea upheld this contention as well. The importers had distinguished their earlier case as reported in AIR 1987 SC 1176 on the ground that in the previous case, the vessel 'Maratha Transhipper' had been brought into India to be used primarily as transhippers at Mormugoa, though used incidentally or occasionally to go into the open-sea. The Hon'ble Supreme Court on perusal of the technical details of Maratha Deep within the definition of 'goods for home consumption' and not ocean going vessels for the purpose of the Customs Act. It had been held that after their conversion as 'transhippers' they were no longer ocean going' vessels, in the full sense of the term i.e. in the sense that their predominant purpose was for use as ships traversing the open seas. Therefore, the Hon'ble Supreme Court had held that there was necessity for the importers to present Bills of Entry in respect of the said 'Maratha Shipper'. The importers before the Assistant Collector drew distinction from the facts in the case before the Supreme Court, in the earlier case pertaining to 'Maratha Transhipper' and Triyamvade', the Assistant Collector examined this issue and went into detail facts of both the cases and in the light of the documents which had been produced in the present case and upheld the appellant's contention. He had also upheld the importer's contention that even assuming that the test of predominant under which the Supreme Court applied in the earlier case was relevant, it could not be said in the present case that the 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 AIR 1987 S.C. 1176 was clearly distinguishable in as much as that the Supreme Court had upheld that 'Maratha Transhipper' and Triyamvada' were 'Goods' for purposes of filing the bill of entry for home consumption in terms of Section 46 of the Customs Act, 1962.
4. The department was aggrieved with this order and appealed before the Collector (Appeals) and had submitted that the Supreme Court judgment rendered in the appellant's own case earlier in respect of 'Maratha Transhipper', secondly apply to the fact in respect of the present imported vessel namely Maratha Deep. The ld. Asstt. Collector in his very brief order has upheld the said contention. However, he has not gone into the entire evidence nor distinguished the same, which the importer had produced in support of 'Maratha Deep'. Therefore, the importers in the present case are aggrieved and have brought out several grounds supported by catena of case law.
5. We have heard ld. Sr. Advocate Shri Atul Setlvad and Shri K.K. Jha, ld. SDR in this matter.
6. The submissions made by the ld. Advocate have also been stated in the written submissions filed before us. We are noting herein the gist of the written submissions. It has been contended as regards the nature of the vessel that there can be no doubt that the vessel was and is an ocean-going vessel, on the following facts:
(i) They applied to purchase an ocean-going vessel, proof has been placed.
(ii) Permission was granted to purchase an ocean-going vessel, proof has been placed.
(iii) The import licence is for an ocean-going vessel, proof has been placed.
(iv) The vessel has been registered under the Merchant Shipping Act and they have issued a certificate under the said Act - under provisions which only apply to sea-going vessels. In this context Sections 20 and 405, Merchant Shipping Act, 1958 has been referred. The Surveyor-in-Charge or Govt. of India vide his letter dated 27-6-1994 has referred the vessel as "sea going vessel".
(v) The appellants were exempted from permission under Section 22A, Monopolies & Restrictive Trade Practices Act, 1969, when they acquired the said vessel under an exemption application to the shipping Industry.
(vi) The vessel has been permitted to ply in the international trade by the Director General of Shipping - proof has been placed.
(vii) The Bureau Vertias an internationally recognised classification agency, has classified the vessel as a bulk carrier, deep sea. The status of Bureau Vertias and the classification "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. The appellants pay dues such as pilotage charges, port dues, under the Indian Ports Act, 1908, and charges which are only payable by vessels such as berth hire and anchorage charges under the Major Port Trusts Act, 1963, the total amount has paid being over Rs. one lakh per annum. Such charges are payable by vessels, i.e. anything made for the conveyance of persons or property. Port authorities treat the said vessel as a vessel conveying property-proof according to this has been placed.
(ii) They have given the details of voyage international under charter to the Govt. of India which is extracted from 3.2 :
Year Cargo Voyage particulars Charter Party
1987 Potash qaba-Bombay Vol. II, P. 250
1988 Phosphate Aqaba - Vishakhapatnam - Vol. II, P. 258
Madras
1989 Capotex Vancouver - Madras Vol. II P. 274
(She had earlier sailed from Mormugao to
Kawasaki carrying iron ore and then went to Van-
couver : Vol. II, P. 230).
1990 Uren Aqaba-Kandla Vol. II, P. 284
1991 Uren Aqaba - Kandla Vol. II, P. 293
1991 Rock- Aqun-Kandla Vol. II, P. 302
Phosphate
1992 Uren Ruwais - Navlakhi Vol. II, P. 308
1992 Muriate of Aqaba - Mormugao Vol. II, P. 232
Potash
1993 Uren Ruwais - Goa Vol. II, P. 233
(iii) Since the vessel arrived in India and up to 1992, of the 2192 days involved, she was occupied (i.e not lying idle) on 1374 days. Of these 1374 days she was engaged on a foreign voyage on 735 days and on up-topping work for only 639 days. On the basis of this, the appellants have submitted that the predominant user, if considered, is relevant test the vessel was predominantly used in foreign voyage i.e. as an ocean-going vessel. The appellants have stated that the nature of the vessel at the time of importation is relevant and this point is required to be accepted in the light of the Hon'ble Supreme Court judgment rendered in the case of Dunlop India Ltd. v. Union of India, AIR 1977 SC 597, 605. The following part has been cited from the judgment:
"The relevant taxing event is the importing into of exporting from India. Condition of the article at the time 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 - 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 judgments have been relied.
(a) Dredging Corpn. v. Collector of Customs - Order No. 845/83, dated 16-9-1983.
(b) Collector of Customs v. Dredging Corporation - Order No. 882/86- B2
(c) M/s. Dredging Corporation of India Ltd. v. Collector of Customs, Bombay - Order No. 954/86-B2, dated 24-9-1986.
(d) M/s. Vipul Shipyard, Bombay v. Collector -1985 (19) E.L.T. 122. (e) Union of India v. Chowgule & Co. -1985 (20) E.L.T. 57.
It was submitted that the classification of the vessel has been accepted by the department as vessel for the transport of goods, and when this position is clear, the department cannot now plead that the vessel is not an ocean-going vessel. It has also been submitted mat the Govt. of India has understood that the vessel as an ocean-going vessel capable of plying on the sea. Ld. Sr. Advocate also distinguished the Supreme Court Judgment rendered in the importer's own case as reported in AIR 1987 SC 1176 and submitted that the same was a different issue and a different vessel. He further submitted that the Ld. Collector had wrongly applied the ratio without going into evidence as has been done by the Asstt. Collector.
7. Ld. DR Shri K.K. Jha submitted that an ocean-going vessel has been accepted as "sea-going vessel and foreign going vessel in Merchant Shipping Act and Customs Act respectively. He referred to page 668 Vol. 18 "water transportation, which in this chapter, the distinction between coastal shipping and an ocean going shipping has been drawn. He also referred to HSN Explanatory Notes which does not refer to an ocean going ships. He submitted that the activity of the imported vessel "Maratha Deep" is also for up-topping/transhipping operations at the Harbour and this vessel was used during man-soon season for foreign voyage. Therefore, the main purpose for which it was imported was for up-topping and transhipping and the said activity is not being denied by the importer. This particular activity has been upheld by Supreme Court, in their own case as an up-topping activity and not as "an ocean-going vessel". Therefore, ld. DR submitted that merely because the imported vessel has been registered under Merchant Shipping Act and that they had taken licence for ocean-going vessel for the purpose of notification, by itself is not sufficient to treat it so. He referred to the letter dated 27-6-1994 issued by Ministry of Surface Transport, 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", which is not disputed by the department. The notification grants exemption to an ocean-going vessels other than vessels imported to be broken-up, from the whole of Customs Duty leviable thereon and from the whole of additional duty leviable thereon under Section 3 of the Customs Act. Only exception in the notification is that any such vessel subsequently broken up shall be chargeable with the duty which would be payable if she was imported to be broken up. The department had accepted at the time of filing of bill of entry with regard to the vessel being an ocean-going vessel. It was only at a later stage that the department has issued a less demand notice, demanding payment of Customs Duty of Rs. 11,38,72,297.56, on the ground that the vessel cannot be treated as an ocean going vessel as it is designed for uptopping, transhipping operations and the same is not exempted under the said notification. The importer had placed several documents before the Asstt. Collector. The Asstt. Collector after a careful consideration accepted the evidence and has also distinguished the importers' earlier case before the Supreme Court, as the Supreme Court had held that these two vessels namely 'Maratha Transhipper and Priyamvade', had been converted for the purpose of transhipper and therefore, they have to be treated as goods for home consumption under Section 46 of the Customs Act and hence, the Supreme Court has held that the appellants required to file a bill of entry. The Revenue being aggrieved had filed the appeal before the Collector of Appeals. The Collector (Appeals) has not adverted to any of the arguments placed by the importers and had not considered the enormous citations which was referred to by the importer. The Collector (Appeals) has merely applied the Supreme Court judgment without examining the subtle points. In this case, the facts are totally different, as can be seen from the enormous evidence placed before us. The appellants perhaps being conscious of their earlier experience before the / Hon'ble Supreme Court, in respect of 'Maratha Transhipper', had taken precautions from the initial stage itself, inasmuch as, they had applied for licence to import an 'ocean going vessel'. The licence granted to them is for an ocean going vessel and in terms of the said licence, the vessel has also been classified under Heading 8901.90 as vessel for the transport of goods. 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. 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 examined the Salgaocar judgment, alongwith another judgment and also considered the matter on its own merits. The argument of the ld. SDR that the judgment in the V.M. Salgaocar's case (supra) was later set at large does not take away the precedential value of the judgment which took into consideration not only two judgments but also the relevant facts. We reproduce para 5 of the judgment for the sake of clarity :
Para-5 of Order No. 845/83-B "Coming to the merits of the case, no statutory definition of the term "ocean-going vessel" had been brought to our notice. But we have before us two High Court judgments which considered transhippers carrying ores from coast midstream as ocean-going vessels. No contrary judgment has been cited by the Department. Even the Department does not dispute that the subject tug was fully capable of undertaking ocean voyages. The appellants have shown the apart from its capability as an ocean-going vessels, the subject tug had in fact undertaken five rescue operations on the high seas and 19 long coastal trips during the last two years in 16 out of which the rug went beyond the territorial waters of India. The appellants have thus shown that the subject tug was an ocean-going vessel in actual performance as well. In the circumstances, we find merits in the appellants' plea that the subject tug was an oceangoing vessel. The fact that the appellants initially applied for an ad hoc exemption under Section 25(2) of the Act cannot be held against them as any importer in the position of the appellants would like to use all possible avenues for getting the desired relief. We hold that the subject tug was entitled to the duty exemption as an ocean-going vessel under Notification No. 262-Cus./58, dated 11-10-1958 and, accordingly, we allow this appeal with consequential relief to the appellants."
21. As far as the present matter is concerned, it is clear that the Dredger is designed and constructed for ocean going in the sense that it can go from one port to another even if there is ocean in between. The ratio of the Tribunal's judgment cited above, therefore, applies to the facts of the present case.
22. We have considered the arguments of the ld. Counsel for the respondent who also submitted that the words "ocean going vessels" were not unknown to the legislature. He submitted that two Central Excise Notifications referred to 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 salvage ships for purpose of Notification No. 234/82-C.E., dated 1-11-1982".
23. It was submitted by the ld. Advocate that Public Notices of this nature are issued under the direction of the Central Board of Excise & Customs which is part of the Ministry of Finance. This was not denied by the Revenue. Therefore, it appears that the Government intended to include Dredgers in the scope of the term "ocean going vessels".
24. A mere important document was cited by the ld. Counsel to support his argument that the legislature were not unaware of the term 'ocean going vessels' and intended to include dredgers in the scope of the term. He cited Notification No. 211 /83-Cus., dated 23-7-1983 which carries an explanation which defines the expression 'ocean going vessels' in an inclusive way. In sub-clause (c) of this Notification, Dredgers are included. The ld. SDR argued in this context that the Public Notice extended the benefit of the Notification in that particular case and that these two instances cannot be taken to mean that the Central Government intended to cover dredgers in the term 'ocean going vessels' for all purposes.
25. We note also the submission made by the ld. SDR to the effect that Notification No. 53/84, dated 1-3-1984 exempts auxilliary duty in excess of 25% and Notification No. 177/83, dated 15-6-1983 exempts levy of additional duty of customs on dredgers, whereas by Notification No. 56/84, dated 1-3-1984, auxilliary duty is completely exempted for ocean going vessels and by Notification No. 49/79, dated 1-3-1979, additional duty is exempt on ocean going vessels. Sri Gopinath argued that this Notification indicated that it is not the intent of the Government to include a dredger in the general term 'ocean going vessels'. We have carefully considered this argument. The Collector of Customs (Appeals) discussed the same argument in his order now under appeal. In view of what we have said about Notification No. 211-Cus. /83 and the Public Notice dated 7-3-1984 issued by the Collector, Bombay, we agree with the reasoning of the Collector (Appeals).
26. Shri Gopinath also argued that in the earlier Tariff (ICT) when the same exemption notification was in force, the notification appeared as a root note to Item 76.1 ICT in the Tariff and the practice existing then was to put the relevant notification under the respective items in the Tariff. As per the 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 us and the capability of the same as explained and not disproved all taken together show that it is just and fair to held that the Dredger is entitled to exemption under Notification No. 262-Cus./58.
We, therefore, reject the appeal".
This judgment also refers to earlier Order No. 845/83-B, dated 16-9-1983, the technical details of the 'dredger' has been gone into by the Tribunal. Thereafter, it has been held the vessel is entitled for exemption of the notification in question. This is required to be examined likewise, for grant of the benefit of the Notification to the vessel in question, by applying the similar guidelines as has been noted by the Tribunal in the above judgment. As can be seen from the documents, the appellant has relied on the affidavit of one Shri Kishore Sharma, who is presently practising as a Consultant in the marine field concerned with ships and presently holding a very high qualification and being a fellow of Institution of Marine Engineers, India, as well as London. He has examined the vessel 'Maratha Deep' and after a detailed examination of the ship, by his affidavit, has opined his opinion that the vessel is a sea-going vessel and have been classed as such with one or the other internationally recognised ship classification society such as Bureau Veritas, N.K.K., D.N.V. This affidavit has been filed before us in 1994 and the Revenue has not contested the technical details of the vessel incorporated therein. The importer has also filed a technical brocher of the vessel in question and on examination of this technical brocher, the contents supports the appellants' contention that the vessel is an ocean going vessel and not a mere uptopping/transhipper operation vessel. The vessel has also been compared that several other internationally known ocean going vessel. We have examined the details and find in the printed brocher, comparison done with the details of the appellant's vessel with that of the other ocean-going vessels and we find that the details to be matching. The Govt. of India by their letter dated 27-6-1994 has also clarified about the vessel being registered in part V of Merchant Shipping Act, 1958 and being in possession, of all the statutory Certificates and the vessel 'Maratha Deep' being a Sea-going ship. The department does not dispute about the various voyages made by the ship abroad and it has paid charges relating 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 30-9-1986 issued under the provisions of the International Convention on Load Line, 1966 under the authority of Govt. of India. They have obtained certificate dated 30-9-1986 and 16-2-1987 for Cargo Ship Safety Construction Certificate issued under International Convention for the Safety of Life at Sea, 1974. They have also obtained likewise certificate under Regulation 10(2) of ILLC, 1986 International Convention for the prevention of Pollution from Ships, 1973, International Convention for the Safety of life at Ships, 1974 and certificate issued under International Convention of Tonnage Measurement of Ships, 1969. The ld. Asstt. Collector has examined all these documents and satisfying himself about the vessel being an ocean-going vessel, has upheld their contention. The importer has also observed that the imported licence issued is also for an ocean going vessel and the classification has also not been disputed. In view of these enormous evidence placed, it cannot be said that the vessel in question is not an ocean going vessel. On a plain reading of the Notification, the appellants cannot be denied with the benefit of the Notification in question. Therefore, the Asstt. Collector had rightly dropped the proceedings. The Collector (Appeals) has not gone into these evidence and therefore, for the reason on non-application of mind, the impugned order is unsustainable. As can be seen from the importer's own case before the Hon'ble Supreme Court, it pertains to 'Maratha Transhipper' and the Hon'ble Supreme Court after examining the appellant's contention and also noting the facts of 'Maratha Transhipper', held that it had been converted for the purpose of 'uptopping' Transhipping operation, which is to be carried on only at Harbour. Therefore, the Hon'ble Supreme Court had held that they are goods for home consumption and the appellants were required to file a bill of entry under Section 46 of the Customs Act. In present case, the appellants have produced the documents of the imported ship 'Maratha Deep' Which is for the purpose of uptopping/transhipping as well as for ocean going activity. They had applied for various registrations and thereafter, they have been carrying on their ocean going activity by transporting the Indian goods abroad. The vessel has sailed on high seas on more than 12 occasions. They have also been paying various charges which is required to be discharged by an ocean going vessel. The department does not deny about the vessel 'Maratha Deep' having all the features of an ocean going ship. The Tribunal's judgments rendered in Dredging Corpn. is also noted by us which grants exemption to a similar vessel, which is a sea-going vessel. In view of our above finding, we hold that the appellants are entitled to benefit of the notification in question. Therefore, impugned order is set-aside and the appeal is allowed.