Custom, Excise & Service Tax Tribunal
International Seaport Dredging Ltd vs Tiruchirapalli on 10 January, 2019
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IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
[COURT : Division Bench B1]
Appeal No.: C/00379/2012
[Arising out of Order-in-Original C. No. VIII/10/04/2012
Order No. 04/2012 dated 16.11.2012 passed by the
Commissioner of Customs, Tiruchirapalli]
M/s. International Seaport Dredging Ltd., : Appellant
5th Floor, Challam Tower, No. 113,
Dr. Radhakrishnan Salai,
Chennai - 600 004
Versus
The Commissioner of Customs, : Respondent
No. 1, Williams Road, Tiruchirapalli - 620 001 Appearance:-
Shri. N. Viswanathan, Advocate for the Appellant Shri. B. Balamurugan, AC (AR) for the Respondent CORAM:
Hon'ble Shri Madhu Mohan Damodhar, Member (Technical) Hon'ble Shri P. Dinesha, Member (Judicial) Date of Hearing: 11.12.2018 Date of Pronouncement: 10.01.2019 Final Order No. 40046 / 2019 Per P. Dinesha :
By this appeal, the assessee-appellant challenges the denial of exemption benefit of Notification No. 27/2008-Cus. dated 01.03.2008 and Notification No. 01/2011-CE dated 01.03.2011. 2
2.1 The relevant facts inter alia are that the appellant imported one unit 'used work boat "ASL Gallant" with complete spare parts, accessories and consumables from Singapore as a temporary import on re-export basis vide Bill of Entry No. 224/2011 dated 28.10.2011. Initially, the said Bill of Entry was assessed on 31.10.2011 by the Assistant Commissioner of Customs, Nagapatinam with BCD of 5% and CVD of 1% as per Notification No. 01/2011 (supra) and all other applicable duties on the date of import.
2.2 A Show Cause Notice dated 06.06.2012 was issued by the Commissioner of Customs, Trichy on the following terms :
a. The Exemption benefits under Notification No. 27/2008-Cus.
dated 01.03.2008 and 01/2011-CE dated 01.03.2011 should not be denied to them in respect of the said goods imported vide Bill of Entry No. 224/2011 dated 28.10.2011;
b. The differential duty amount of Rs. 80,57,380/- should not be demanded from them under Section 28 of the Customs Act, 1962;
c. The appropriate interest leviable on the differential duty should not be demanded under Section 28AA of the Customs Act, 1962;3
d. The Bank Guarantee No. 2117148 dated 29.10.2011 furnished by M/s. BNP Paribas, Chennai for Rs. 55,37,213/- should not be enforced and appropriated towards the above duty.
2.3 The appellant filed its detailed reply contending that the work boat imported was used for development of port infrastructure facilities/upgradation or modernization of the port infrastructure;
dredging and excavation underwater on sea bed is carried out with specialized equipments fitted with machinery to create depths for safe navigable shipping channel which are not available in India; the work boat is a specialized equipment propelled by machinery for movements to assist in dredging operations for dumb (non-
propelled) Cutter Section Dredger (CSD) for modernization/upgradation of the port infrastructure; that therefore, the work boat is rightly classified under RITC 8400, qualifies for exemption under Notification No. 27/2008 (supra), etc. 2.4 Not convinced by the reply of the appellant, the Commissioner vide impugned Order-in-Original No. 04/2012 dated 16.11.2012 rejected the claim of the appellant and thereby the benefit of Notification No. 27/2008 (supra). Aggrieved, the assessee has come in appeal before this forum.
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3. We have heard Shri. N. Viswanathan, Ld. Advocate appearing for the assessee-appellant and Shri. B. Balamurugan, Ld. AC (AR) appearing for the Revenue.
4. The contentions of the Ld. Advocate are that the work boat had been utilized to transport dredging spare parts, dredging equipments and consumables to the dredgers; assisted in dredging operations for a dumb (non-propelled) CSD; that the dredging operations could not be carried out without the use of the work boat which is an essential equipment for the operation; that it has been held that the floating pipelines, pontoons and work boat imported are part of dredgers classifiable under CTH 8905; that DGFT Policy Circular No. 29/2009-14 dated 17.03.2010 (sic 26/2009) has clarified that ship/vessel is a moveable capital good and therefore, the benefit of duty under Notification No. 27/2008 (supra) is available; etc.
5. Per contra, Ld. AR supported the findings of the Commissioner/adjudicating authority.
6. On a perusal of the documents placed on record, we find that the Bill of Entry discloses the description of the goods as "One unit used work Boat "ASL Gallant" with complete Spare Parts, Accessories and Consumable" which the assessee-appellant wants to equate with machinery, equipment or tools falling under Chapters 84, 85, 90 or any other Chapter of the First Schedule to the 5 Customs Tariff Act, 1975. Notification No. 27/2008 (supra) gives the description of the goods eligible for duty benefit under Section 74(2) of the Customs Act subject to the limitations and conditions prescribed thereunder. In nutshell, machinery, equipment, tools, etc., are the goods when imported temporarily and re-exported, entitles the importer to the benefit of the above Notification. Further, Chapter 89 undoubtedly is specific, covering ships, boats and floating structures including tugs, dredgers, etc.
7. The facts which are unambiguous are that the Bill of Entry carried the description of the goods as a work boat per se from which it is clear that what is imported in the first place is the work boat which perhaps came with machinery/equipment like spare parts, accessories and consumables and not vice versa. Therefore, to our minds, the decisive factor for classification depends on the characteristic of the boat and not the items that came along with the boat.
8. Section 2(22) of the Indian Customs Act, 1962 defines 'goods' to include :-
(a) vessels, aircrafts and vehicles;
(b) stores;
(c) baggage;
(d)currency and negotiable instruments; and 6
(e) any other kind of movable property;
By the above definition, the Ld. Advocate wanted to impress upon us that the boat comprising of certain machinery/equipments is also required to be equated with 'goods' since the above definition even covers vessels.
9. Drawing our attention to Section 74 of the Customs Act, Ld. Advocate further submitted that the imported goods having been re-exported within a period of three months from the date of importation, the duty drawback is always available in terms of Section 74 ibid. Ld. Counsel also relied on the following decisions/Orders in support of his case :
Boskalis Dredging India Pvt. Ltd. Vs. Commr. of Cus., Bhubaneshwar - 2001 (135) E.L.T. 1396 (Tri. - Kol.);
Dredging Corporation of India Ltd. Vs. Commr. of Cus, Calcutta - 2002 (140) E.L.T. 195 (Tri. - Kol.);
Union of India Vs. V.M. Salgaoncar & Bros. (P) Ltd. - 1998 (99) E.L.T. 3 (S.C.);
CGU Logistic Ltd. Vs. Commissioner of Customs (I), Mumbai - 2011 (274) E.L.T. 75 (Tri. - Mum.);
Shipping Corporation of India Ltd. Vs. Commr. of Cus. (Import), Mumbai - 2014 (312) E.L.T. 305 (Tri. - Mum.);
L&T Sapura Shipping P. Ltd. Vs. Commissioner of Cus. (Import), Mumbai - 2016 (343) E.L.T. 1144 (Tri. - Mum.);
In RE : Leighton Contractors (India) Pvt. Ltd. - 2011 (267) E.L.T. 422 (G.O.I.); Commissioner of Customs (Import) Vs. J.M. Baxi & Co. - 2017 (351) E.L.T. 247 (Bom.);
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10. Drawing our attention to the additional grounds, Ld. Counsel further submitted that the impugned Order is a non-speaking Order wherein the adjudicating authority/Commissioner has not considered any of the claims/explanations made in person as well as in writing.
11. We have gone through the various decisions relied on by the Ld. Advocate.
12. The import of work boat which is termed as a tug boat is not disputed and therefore, Chapter 89 which is wide enough, covers ships, boats and also floating structures and without the fear of contradiction we can safely assume that the impugned goods are also covered under this Chapter. The grounds of appeal and even the written submissions and the arguments advanced during the course of hearing do not anywhere dispute the above facts. 13.1 The above facts are pari materia with that of the Order of the Mumbai Bench of the Tribunal in the case of Shipping Corporation of India Ltd. (supra) relied on by the Ld. Advocate. In its Order, the Mumbai Bench after considering the rival contentions and also after going through several decisions relied on, has concluded as under :
" 6.12 In the light of the above discussions, import duty demand on vessels Smit Lumba, imported by the Shipping Corporation of India and Posh Giant-1 and Salvaree imported by M/s. J.M. Baxi & Co. are sustainable in law and the appellants are liable to pay customs duty in accordance with law. The appellants have not disputed either the valuation or the duty calculations adopted for confirmation of demand. However, the appellants have claimed that 8 they would be eligible for the benefit of Notification No. 27/2002-Cus. as amended. The said Notification provides for duty concessions on "Machinery, equipment or tools, falling under Chapters 84, 85, 90 or any other Chapter of the First Schedule to the Customs Tariff Act, 1975" subject to the conditions that the goods have been taken on lease by the importer for use after importation; the importer makes a declaration at the time of import that the goods are being imported temporarily for execution of a contract; the said goods are re-exported within six months of the date of importation or within such extended period not exceeding one year from the date of importation, as the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, may allow. The concessional rate of duty prescribed is fifteen per cent. of the aggregate of the duties of customs, which would be leviable, in the case of goods which are re-exported within six months of the date of importation. In the case of goods which are re-exported after six months, but within one year of the date of importation, the rate of duty chargeable would be thirty per cent. of the aggregate of the duties of customs. To be eligible for the concession, the goods should be either machinery, equipment or tools. Tugs and barges can, by no stretch of imagination, be considered as falling in this category. They fall under Chapter 89 as "Ships, boats and floating structures".
Therefore, in our view, the appellant would not be eligible for any duty concession under the said Notification and the claim in this regard is not sustainable."
13.2 In view of the above, we do not see any reason to interfere with the findings of the lower authority on the classification and the denial of benefit of Notification No. 27/2008 (supra).
14. In the same case, the Mumbai Bench of the CESTAT has also dealt with another issue taken by way of alternate plea and the relevant discussions/findings read as under :
" 6.13 The appellants have alternatively argued that drawback of the duty would be available under Section 74 of the Customs Act inasmuch as the vessels have gone back after the salvage operations, within a period 3 months from the date of their importation. There is merit in this argument. The ld. consultant for the Revenue has not contested this point and has left the issue for appropriate decision by this Tribunal. We find that under Section 74(2) read with Notification No. 19/65-Cus., dated 16-2-1965 as amended, if the imported goods are re-exported as such within a period of 3 months from the date of importation, 95% of the import duty paid is eligible as drawback to the exporter. In the present case, there is no dispute that the vessels have been re-exported within a period of 3 months from their date of importation. In the case of Sedco Forex International Drilling Inc. v. CC, Mumbai [2001 (135) E.L.T. 625], in a similar situation, this Tribunal directed the Revenue to re-compute the duty liability after taking into the drawback. Following the said decision, in the present appeals also, we direct the Revenue to work out the duty liability after taking into account the drawback that the appellants would be entitled to, after completing the necessary formalities, if any required."9
15. The benefit available under Section 64 is a statutory one and once the importer satisfies the condition namely, that the vessels have gone back within a period of three months from the date of their importation, then such importer would be eligible for 95% of the import duty as drawback. Apparently, there is no finding or discussion in the impugned Order. Hence, we are of the considered opinion that this is required to be re-adjudicated by the Original Authority, who shall call for relevant details to ascertain whether the assessee satisfies the above condition under Section 74(2) read with Notification No. 19/1965 (supra) and then extend the benefit if the re-export condition is satisfied. This issue alone is set aside and remanded back to the file of the adjudicating authority.
16. The appeal is therefore partly allowed by way of remand.
(Pronounced in open court on 10.01.2019)
(P Dinesha) (Madhu Mohan Damodhar)
Member (Judicial) Member (Technical)
Sdd