Custom, Excise & Service Tax Tribunal
Chandra Maritime Pvt.Ltd vs Commissioner Of Customs, New Delhi on 1 May, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.C/179/2006
[Arising out of Order-in-Original No.ACU/KK/9/2000 dated 24.2.2001 passed by the Commissioner of Customs, New Delhi]
For approval and signature:
Honble Mr. P.G.CHACKO, Member (Judicial)
Honble Mr. P.KARTHIKEYAN, Member (Technical)
1. Whether Press Reporters may be allowed to see 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
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Chandra Maritime Pvt.Ltd.
Appellant/s
Versus
Commissioner of Customs, New Delhi
Respondent/s
Appearance :
Smt.R.Devika, Advocate Dr.Nitish Birdi, SDR For the Appellant/s For the Respondent/s CORAM:
Mr. P.G. Chacko, Member (Judicial) Mr. P. Karthikeyan, Member (Technical) Date of hearing : 1.5.2008 Date of decision : 1.5.2008 Final Order No.____________ Per P.G.CHACKO The appellants had filed a Bill of Entry on 24.1.2000 for clearance of computer equipment valued at Rs.14,30,873.16 based on proforma invoice. The equipment had been imported for installation in a dredger for dredging works at Kakinada port. The importer was directed to submit the proper invoice for the purpose of arriving at the correct assessable value. But, before they could produce the invoice, the vessel on which the equipment was to be installed sailed off. In the circumstances, the party requested for transhipment of the goods. After rejecting this request, the Customs authorities proceeded to confiscate the goods under Section 111 of the Customs Act on numerous grounds. The party waived show-cause notice. The Commissioner of Customs passed an adverse order, which was challenged by the party before this Tribunal. A de novo order of adjudication was passed by the Commissioner pursuant to this Tribunals remand order No.908/2000 dt. 30.6.2000 and the same is under challenge in the present appeal.
2. Ld.advocate for the appellants submitted that the benefit of Section 87 of the Customs Act had been denied by the Commissioner without valid reason. The dredger was liable to be treated as a foreign-going vessel in terms of Section 2 (21) of the Act and the imported equipment to be treated as ship stores in terms of Section 2 (38) of the Act. Ld.counsel also relied on the Tribunals decision in Dredging Corporation of India Ltd. Vs Collector of Customs, Bombay, 1995 (79) ELT 262 (Tribunal), wherein a dredger was held to be ocean-going vessel for purposes of Customs Notification No.262/1958. It was also pointed out that the departments civil appeal against the Tribunals decision was dismissed as withdrawn vide Collector Vs Dredging Corporation of India Ltd., 1991 (55) ELT A33 (SC). It was also argued that the substantive benefit under Sections 86 & 87 of the Customs Act was not to be denied on the ground of procedural lapses, in support of which plea, counsel relied on the Tribunals decision in Rama Spinners (P) Ltd. Vs Commissioner, 2007 (220) ELT 330 (Tri.-Bang.). The change of classification of the goods from Heading 84.71 to Heading 93.80 was also challenged by the ld.counsel by submitting that no reason whatsoever had been stated in support of the revised classification. The SDR reiterated the findings of the Commissioner.
3. After considering the submissions, we have found valid reasons to interfere with the Commissioners decision. Ld.Commissioner confiscated the goods under section 111 (d) and (l) of the Customs Act with option to redeem the same on payment of fine of Rs.1.5 lakhs under Section 125 of the Act. He also imposed a penalty of Rs.1 lakh on the importer. He ordered that the goods could be either cleared for home consumption on payment of duty or re-exported. We find that the dredging ship had, admittedly, left the Indian territorial waters after dredging operations in Kakinada port. The computer equipments were meant to be installed in the vessel for the purpose of such dredging operations. On these facts, we are of the view that the equipments should have been treated as ship stores for purposes of Sections 86 & 87 of the Customs Act and, further, for the said purposes, the dredger was liable to be treated as a foreign-going vessel. Section 2 (38) defines stores thus :
stores means goods for use in a vessel or aircraft and includes fuel and spare parts and other articles of equipment, whether or not for immediate fitting;
It is not in dispute that the equipments in question had been imported for use in the dredging ship. It was not necessary that the equipments should be fitted immediately and the same could have been installed in the vessel later on. A foreign-going vessel as defined under Section 2 (21) of the Act means any vessel being engaged in the carriage of goods between any port in India and any port outside India. As already noted, the dredger was expected to carry the computer equipments outside the Indian territorial waters after dredging operations at Kakinada port. In the circumstances, the benefit of Section 86 or 87 of the Customs Act was liable to be granted to the appellants. Under Section 86, any stores imported in a vessel may, without payment of duty, remain on board such vessel while it is in India. Under Section 87, any imported stores on board a vessel may, without payment of duty, be consumed thereon as stores during the period such vessel is a foreign-going vessel. In the case of Dredging Corporation of India (supra), an imported dredger from Holland was held to be ocean going-vessel while still in Indian territorial waters, for the purpose of an Exemption Notification and this position was upheld by the apex court. In the present case. It is not in dispute that the dredger sailed abroad after dredging operations at Kakinada port. In our view, it was liable to be considered as a foreign-going vessel for purposes of Sections 86 & 87 of the Customs Act. The fact that the vessel had, before sailing out of the Indian territorial waters, remained within our territorial waters for dredging operations for some time could not detract from the foreign-going character of the vessel. In this view of the matter, ld.Commissioner should have extended the benefit of Sections 86 & 87 of the Customs Act to the vessel. The benefit ought not to have been denied on the technical ground that the importer was not having IE code. We have also found substance in the counsels submission that the classification of the vessel was changed without stating reasons.
4. In the result, we allow the appeal by setting aside the fine and penalty imposed on the appellants.
(Operative part of the order was
pronounced in open court on 1.5.2008)
(P.KARTHIKEYAN) (P.G.CHACKO)
MEMBER (T) MEMBER (J)
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