Custom, Excise & Service Tax Tribunal
M/S. Dempo Shipbuilding & Engg. P. Ltd vs Commissioner Of Central Excise, Mumbai on 20 October, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/614/07 & E/3291/98-Mum (Arising out of Order-in-Appeal No. SDK (947) 656/98 dated 31/07/1998 passed by Commissioner of Central Excise, Mumbai, GOA/CEX/SB/130/2006 dated 28-12-2006 passed by Commissioner of Central Excise (Appeals) Goa.) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. C.J. Mathew, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== M/s. Dempo Shipbuilding & Engg. P. Ltd. Appellant Vs. Commissioner of Central Excise, Mumbai Respondent Appearance:
Shri S.B. Gabhawala, C.A. for Appellant Shri R.K. Magi, Additional Commissioner (AR), for Respondent CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing : 20/10/2015 Date of Decision : 20/10/2015 ORDER NO Per: M.V. Ravindran
The appellant herein has filed a miscellaneous application for urging additional grounds of appeal. After considering the submissions made by both sides, we find that the grounds which are urged to be taken were not urged before the lower authorities, in view of which we dispose of the miscellaneous applications as not pressed.
2. This appeal is directed against Order-in-Appeal No. SDK (947) 656/98 dated 31/07/1998 and GOA/CEX/SB/130/2006 dated 28-12-2006.
3. The relevant facts, after filtering out unnecessary details are appellant herein filed a classification declaration no. 125/95-96 in respect of the products manufactured by them pontoon with spuds claiming the classification under chapter heading no. 89.05 and claiming exemption from payment of duty, while the lower authorities have come to a conclusion that the product was correctly classifiable under chapter heading no. 89.07 attracting rate of duty of 20% advalorem. Both the lower authorities have come to the same conclusion.
4. Learned chartered accountant draws our attention to the facts in impugned orders records and submits that they are seeking the classification as the product question is as to self elevating platform used by their clients on the site. He would then draw our attention to the photographs of the products manufactured and cleared by them; explains that the self elevating platform is nothing but pontoon with spuds. He would submit that the HSN entry of 8905 and explanatory notes to if read together, it will be very clear that the products of appellant are nothing but floating structures which are used for various purposes like drilling or production, cementing etc. He would further submit that the issue was first decided in the favour of the appellant assessee by the order of the Tribunal dated 21.05.2004 but on an appeal, Supreme Court remanded the matter back for reconsideration. He would further submit that the chapter heading no. 89.07 as is claimed by the Revenue is starting with description as other floating structures, which would mean that floating structure which are not classifiable under chapter heading no. 89.05 only, get classified herein this heading. He would also further submit that appellant sold this pontoon with spuds to their clients Affcons Infractructure P. Ltd. who were using the same for various applications and had to dispatch these floating structures out of India and while doing so they filed shipping bill for export classifying the same under customs chapter heading no. 89059090, in support of which he produces the copy of the shipping bill. It is his submission that after the completion of the work, Affcons imported the same goods back and filed the bill of entry claiming classification under 89059090, which was accepted by the Commissioner of Customs Ahmadabad and duty was discharged accordingly. It is his submission that aggrieved by such an order, revenue preferred an appeal before the tribunal and tribunal upheld that the product which came into India, with other machinery like crane, jigs etc mounted on it, was classifiable under 89059090, relying upon the judgment of the tribunal in the case of Larsen & Tonbro Ltd. 2013 (293) ELT 35. He would submit that the said judgment is reported at 2014 (306) ELT 664 (Tri-Ahmd.). It is his further submission that the products manufactured by the appellant were survey and registered with Indian registrar of shipping, Mumbai as self elevating platform and that any floating article which is capable of floating in water needs to be registered with Indian registrar of shipping and produces the copy of the certificate of registration. It is his submission that the Indian registrar of shipping is constituted by the government of India for accurate classification and registration of the vessels/floating structures.
6. Learned departmental representative on the other hand would draw our attention to the order-in-original and submit that the assistant commissioner had visited the site to ascertain himself as to examine the products in dispute pontoon with spuds. It is his submission that the pontoon which is in dispute was on visual examination is a floating structure with segments joint together with the help of interlocking pins like males and females plugs. He would also draw our attention to the fact that the floating structures were never assembled at the factory premises of the appellant but was assembled at site. He would submit that the said floating structure pontoon with spuds did not have any other machinery installed nor does it have quarters/accommodation for crew which is prime requirement for to be classified on drilling platform. It is his further submission that in short these flouting structures cannot be considered as a vessel falling under chapter heading no. 89.012 to 89.04, nor would also fall under 8905 as there was no navigability of the said floating structure. He would submit that the registration granted by Indian registrar of shipping is not the final word as to the classification of the product in question. He would submit that the product is correctly classified as other floating structures under heading no. 8907.90. He would draw our attention to the HSN heading no. 89.07 and submit that the HSN specifically holds that pontoon are covered under this heading. He would submit that the reliance placed by the appellants counsel on HSN heading no. 8905 is incorrect.
7. We have considered the submissions made by both sides and perused the records.
8. The issue that falls for consideration, in the case in hand is whether the product manufactured by the appellant is classifiable under chapter hiding no. 89.05.90 and eligible for exemption for payment of Central Excise duty or 89.07.90 liable to full rate of duty.
9. It is undisputed that the appellant manufactures floating structure of big size and clears the same from the factory premises to the site for assembling at site of the clients. The client subsequently puts to use the set floating structures for various operations like drilling, shifting of materials etc. It is also seen from the order-in-original, the factual matrix that the products manufactured by the appellant is a floating structure; is capable of resting on the sea float with the help of spuds and the elevation of the flouting structure either into the sea or above the water level is done by the spuds, as per the requirement at site. It is also undisputed that the products manufactured by the appellant are registered with the Maritime Board by the Indian registrar of shipping, as self elevating platform for operation in Indian coastal areas of maximum water depth, including tide, of 30.0M, maximum wave height 2.0M, maximum total current of 7.0 Knots and wind speed of 50. Knots; the said registration on request of application for change is also issued for the change in name of the said floating structure and is registered as Jack up platform Rani/Raja.
10. At the outset, we reproduce the competing tariff entries which are under dispute. Heading 89.05- 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 89.05.10-DREDGERS 89.05.20-FLOATING OR SUBMERSIBLE DRILLING OR PRODUCTION PLATFORMS 89.05.90-OTHER HEADING 89.07- Other floating structures (E.G. Rafts, Tanks, Coffer Dams, Landing Stages, Buoys and Beacons 89.07.10-INFLATABLE RAFTS 89.07.90-OTHER The claim of appellant is that the product is question would fall under CH. 8905.90, while the Revenue feels products would be rightly classified under CH. 89.05.07. We tried to understand the tariff entry by looking into chapter notes but there are none. We then referred to the HSN explanatory notes of both the chapters, which were produced by both sides. On perusal of HSN explanatory notes for chapter heading no. 89.05, we find that the said chapter note reads as under.
89.05-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. 8905.10- Dregers 8905.20 - floating or submersible drilling or production platforms 8905.90 - Other ~'A) Light-vessels, fire-floats, dredgers, floating cranes, and other' vessels the navigability ~:. of which is subsidiary to their main function, These normally perform their main function ill a stationary position. They include:
light-vessels; drill-ships; fire-floats; dredgers of all kinds (e.g. grab or suction dredgers); salvage ships for the recovery of sunken vessels; permanently moored air-sea rescue floats' bathyscaphes; pontoons fitted with lifting or handling machines (e.g. derricks, cranes; grain elevators) and pontoons clearly designed to serve as a base for these machines, House-boats, laundry boats and floating mills are also covered by this group. B ) Floating docks.
Floating docks are a type of floating workshop used instead of dry docks.
They are generally structures of a U'-section comprising a platform and side-walls, and are equipped with pumping compartments which enable them to be partly submerged to permit the entrance of vessels requiring repair. In some cases they may be towed, A further type of floating dock functions in a similar manner, but is self-propelled and equipped with powerful engines. These are used for the repair or transport of amphibious vehicles or other craft. .
Floating or submersible drilling or production platforms, Such platforms are generally designed for the discovery or exploitation of off-shore deposits of oiler natural gas. Apart from the equipment required for drilling or production, such as derricks, cranes, pumps, cementing units, silos, etc., these platforms have living quarters for the personnel. .
These platforms, which are towed or in some cases self-propelled to the exploration or production site and are sometimes capable of being floated from one site to another, may be divided into the following main groups:(1)
Self-elevating platforms which, apart from the working platform itself, arc fitted with devices (hulls, caissons, etc.) which enable them to float, and with retractable legs which are lowered On the work site so that they are supported on the sea bed and raise the working platform above the water level.
1.
(2) Submersible platform, the substructures of which are submerged over the work sites. with their ballast tanks resting on the sea bed 111 order to provide a high degree of stability to the working platform which is kept above 1110 water level. The ballast tanks may have skirts or piles which penetrate more or Jess deeply into the Sea bed.
(3) Semi-submersible platforms which arc similar to submersible platforms, but differ from them in that the submerged part docs not rest on the sea red. When working, these floating platforms are kept in a fixed position by anchor lines or by dynamic positioning.
Fixed platforms used for the discovery or exploitation of off-shore deposits of oil or natural which are neither floating nor submersible, are excluded from this heading (heading 84.30).
This heading also excludes ferry-boats (heading 89.01), factory ships for processing fishery (heading 89.02), cable-laying ships and weather ships (heading 89.06). While the chapter note of HSN explanatory note to chapter 8907 reads as under.
2. 89.07- Other floating structures (for example, rafts, tanks, coffer-dams, landing-stages, buoys and beacons).
8907.10 - Inflatable rafts 8907.90 - Other This heading covers certain floating structures not havjng the character of vessels. They are generally stationary when ill use and include: ' '{,I) Pontoons of the hollow cylinder type used for the support of temporary brjdges, etc. But pontoons having the character of vessels are excluded ( leading 89.01 or 89.05). Floating tanks used to contain live crustaceans or fish.
Floating tanks used in certain harbours to supply ships with oil, water, etc. Coffer-dams being cases used in bridge building, etc. Floating landing-stages.
Buoys, such as mooring buoys, marking buoys, light or bell buoys.
Beacons used for marking channels, navigational hazards, etc. Re-floating appliances used to refloat boats.
Paravanes, a type of float used in mine-sweeping.
Rafts of all kinds including floating craft of circular shape, which inflate automatically on contact with the sea, for carrying shipwrecked persons.
1) Floating structures designed to function as dock-gates.
heading also excludes:
Diving bells of the type comprising a metal chamber lowered or raised by external means (i.e., a lifting appliance); these are generally classified in heading 84.79. . Life-belts and life-jackets (classified according to their constituent material). Sailboards (heading 95.06).
11. It can be seen from the above reproduced HSN explanatory notes, the floating articles which answer to description as self elevating platform get covered under CH. 8905 and floating structure which has drilling or production platform are covered under 8905.20 and any other floating structure is covered under 8905.90. The factual matrix as reproduced by us herein above indicates that the floating structures as manufactured by the appellant and assembled at site are supported by spuds for resting on the sea bed and can be raised or lowered depending on the water level, is undisputed. In our view the claim of the Revenue that the product would merit classification under chapter heading no. 89.07 is incorrect, as the reliance placed by the learned departmental representative that products are pontoon, is misplaced as the very same explanatory notes exclude pontoons having the character of vessel falling under heading no. 89.01 or 8905. In the case in hand, we find that Indian registrar of shipping has registered the floating structure manufactured by the appellant as self elevating platform and has given at the registration as AF-SEP-RANI & AF-SEP-RAJA we reproduce the said certificates of registration.
I J Of Motor Vessel under Section ,19F of the Inland Vessel Act, 1917 (I of 1917) a,~"''if.A;~'~_~ "\\I(\W. tll \}11~ t',~.mrfu ~~r ror [ ;;"'''iI,::~,;;;":"' j DUPLICA n DUE TO CltAWlE THE VBSSEL NAME Mabarashtra M:lr'ilime Board CA_Q9j~ .. 9(Mah.ar~h~l}1_w1:fleJ.1.\lbnll) Registration Number t~ F<li1f.
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- IV - 00469 . 12.1 L2012 This is to certify that in,a9c.ord~cc;\vith Section 19Fofhirand Vessel Act, 1917 (J of 1917), the registration requested for vessel AF~SEP,-RAJA' . has-been approved by this office.Therefore, Maharashtra Maritime Board here by Grants & Authorizes Ccrti ficate-of' Registryto the.vessel-whose particulars are.given below, 'I!llf1v.~~qij;~'~3l'ig t~t;"(~,\~\3~r7t;) ~~t ~ ~~->1:f!R AP-SEP-RAJA ''11''''<I-Ir4 '11<;Wo(1~'l1 f.t;M\ 'IT Q;1'lb41Q;{i 'lR'~I<f~'~~.~_l!~ .~3f<l~m;{ ~1R13ll\Rpi :!Ru\l1j'!ior<'l 'i'1,{ +fm 3n'6 PARTICULARS OF VESSEL! ~1Mat'!lilt ~ '-"T-"'- " "-.----- ---.-.-----------."-", ", .. - ,,.......................... . . iAF-SEP-RAJA 7-L_ ~-"------"--.- ~---- ,--- '--'" _._ 1 I Mis. AfconsInfrasrructure Ltd. ,- i, li6.:Sh;;hI~d~;i;T~i~7g~t;t~:v~~~;-o;;;TR~~d. AZ!ldNag;I~P.O . Post O{lX No.11978, Andheri (w), Mumbai ~- 4pOOS3 iN~me ofVes~el ;~ .. ~ ........
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7I.r.n.,h of VecselMrr 1Ft :~dt~ . Breadth drWssci. MtrJ Ft, Jre'!lRrJi &;!\ .Dcpth of Vessel Mtr J FI, :,~~~.~,,~-~ Gross Registered Tonnage .!1fuU'<lgrcTJI Net Registered Tonnage ~. u"R,t.&:-,< Deadweight Tonnage ,t~m JACh:UPPGATFORM itAJA 'Previous Registration Number 1141 N.A. D;i; of B~ji, J~~~'rn<'hl
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i~;~ . --':T;;p~ ~rv';s~i -', ~'i'l'1< Number ofDecks _,j,!,," "'f'l Number of Bulk Heads ONE MUMBAI 29.00 Mtrs.
J8.00Mtrs.
2;()0 Mtrs.
1929,00 Mtrs.
!\JILD STEEL 1.50 l\1trs.
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332:00 Tons.
JACK UP PLATFORM 100,00 Tons.
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MAIN::.-'NGINE PARTICULARS / :fo/-I~~ Maln Enainc Make Ti!'<m.,HI7mt .Maln Engine Serial Numbers 'Til't~~""
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Speed or Vessel ~~~ 11M <'Inl all Ty~ of Engine ~.um9"Ji 111i$ vessel is mortgaged to Dated Number-of Rudders lft'1tt'1t{,~ 'NU.r~lb,~; n-( Propellers ~.iiri:";f. tr?'-lJ It" Rs as per letter no.
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I CERTIFICATE,OFREGISTRA TION ~1)i\~ OrM<ltorV~~el uiidcrSCCliol1 lPf(rt~~'lnland Vessel Act, J 917 (lor 1917) ~<l'ki~"pi\:~'~~;;~'~~'(\h(\w,,,, \)"~ i",,,,~ , .
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- JA..QQ..\j,...Q[ ~'~rASh.lr~. L!~ff1akinK) Registration Numberl;if~~", . MOR .. IV .. 00535 11.07.2014 DUPLICATEl)OETO. CffANGE THE VES~EL NAME This is to. certify that in accordance with Sectiori;l9P'oflnland Ypssel . Act, 1917 (1 of 1917), the registration requested for vessel AF-SEP-RANT has~l.,apprO,\'(;<!'b,y::tl)ishflke,Therefore. Maharashtra Maritime Board here hy Grants & Authorizes Certificate of Registry to the vessel whose.particulars are given below, 'Jqlftf<PR1''ffil~qft. ~~atcR' ~ 'q\! (~q\>'lJ O-