Customs, Excise and Gold Tribunal - Calcutta
Dredging Corporation Of India Limited vs Commissioner Of Customs, Calcutta on 13 September, 2001
Equivalent citations: 2002(140)ELT195(TRI-KOLKATA)
JUDGMENT
Archana Wadhwa
1. Briefly stated the facts of the case are as under:-
1.1. The appellant firm herein, which is a Government of India Undertaking, entered into a Contract with M/s. Calcutta Port Trust for dredging work of the Balari Bar Reach at River, Hooghly, and further of transporting the material dredged and disposing the same in the designated disposal area. For the said purpose, the appellants purchased one Cutter Suction Dredger with all necessary accessories and spares from a Dutch Firm, Zanen Verstoep. For the said purpose, they filed three bills of entry on 28.1.91, 29.1.91 and 1.2.91. The said three bills of entry were assessed provisionally on payment of duty and against execution of a bond inasmuch as the Customs Authorities entertained a doubt as to whether the spares along with the dredger and the two subsequent consignments per other two vessels were eligible for assessment at the rate applicable to the dredger under Accessories (Condition) Rules, 1963 read with Notification No. 133/87-CUS.
1.2. Subsequently, during the adjudication proceedings, the appellants contended before the Assistant Commissioner that the spares which had come along with the dredger covering under bill of entry dated 28.1091 and in which no separate invoice had been raised by the supplier, should be assessed at the rate applicable to the dredger and the extra duty paid by them during provisional assessment, should be refunded to them, since the two conditions in terms of Accessories (Condition) Rules, 1963 read with Notification No. 133/97-CUS have been fulfilled by them.
1.3. As regards accessories imported by them under other two different bills of entry, the appellants' contention was that the said spares/accessories were part of the dredger and as per the provisions of Accessories (Condition) Rules, 1963, the same have to be assessed at the rate applicable to the dredger. The said contention of the appellants was not accepted by the adjudicating authority who confirmed the demand of duty in respect of the spares/ accessories by denying them the benefit of Notification No. 133/87-CUS. Appeal against the above Order of the Assistant Commissioner of Customs did not succeed before the Commissioner (Appeals). Hence the present appeal.
2. Arguing on the appeal, Shri D.V. Subba Rao, Advocate appearing for the appellants submitted that the basic function of a Cutter Suction Dredger is -
(a) to develop and maintain greater depths than, naturally, exist for canals, rivers and harbours;
(b) to produce fill to raise the level of low lands and thus reclaim land areas and improve drainage and sanitation;
(c) to construct dams, dykes and other control works for streams and sea shore; and
(d) to recover subcutaneous deposits or marine life having commercial value. Dredgers are classified as Mechanical and Hydraulic Dredgers - Many special types of Dredgers in both classes and combination of both the Mechanical as well as the Hydraulic dredgers have been devised. Though dredgers have been constructed to remove many kinds of deposits, the bulk of material removed consists of sand and mud. There are several kinds of dredgers, like (i) a Dipper Dredge, (ii) Grab or Clamshell Dredge, (iii) Ladder Dredge, (iv) Scrapper Dredge, also called a dragline and (v) Hydraulic Dredge. The dredging plant is an expensive item of waterway maintenance, Bucket dredgers for major operations are supplemented by: Suction or Grab Dredgers for localized work; Hopper barges are required for transporting dredged materials to disposal sites the numbers of which should be enough to minimise the transporting period, so that the dredger remains fully operational with a minimum of hooper barges and towage units.
2.1. He further submitted that the Cutter Suction Dredger, "Aquarius", imported by the appellant firm is a self-propelled dredger, which is deployed for dredging and pumping the dredged material through floating/shore pipelines for which following accessories are constantly required for the execution of the Cutter Suction Dredger in question imported by the appellants:-
i) Floating Pipeline consisting of Ball and sockets, Floaters and pipes. The dredged spil will be transported through the pipeline and will be deposited in reclamation bund, behind the training wall.
ii) Ship connecting Pontoon "CEES" :- The ship connecting pontoon "Cees" (first pontoon aft of the dredger) has been specially designed to keep the floating pipeline away from the CSD Aquarius.
iii) Anchor pontoon "AP-1":- The anchor pontoon AP-1 has been specially designed to position the floating pipeline behind the cutter suction Dredger Aquarius. Two anchors with buoys are delivered with the pontoon.
iv) Anchor Pontoon "AP-6" :- The anchor pontoon "AP 6" has been specially designed to position the floating pipeline behind the CSD Aquarius. Two anchors with buoys are delivered with the pontoon.
v) Elbow pontoon "EP-1" : The elbow pontoon "EP-1" has been specially designed to make a 90-degree bend in the floating pipeline and to position the floating pipeline behind the CSD AQUARIUS. Two anchors and two buoys are delivered with the pontoon.
vi) Shore connecting pontoon "CP-7" :- The shore connecting pontoon "CP-7" is a special pontoon to make the connection in between the floating and the shore pipelines. The pontoon is equipped with an A-frame to lift/lower the swivel pipe.
vii) Anchor handling pontoon "AP-7" :- This anchor handling pontoon "AP-7" within the centre a wall of 7.2 x 2.5 m. has been specially designed to lift heavy anchors from the sea bottom.
viii) Multi-Cat "DV 1740" :- Multi-Cat for lifting swivel pipes and connection/disconnection of B & S joints.
ix) Turntable pontoon "TP-3" :- The turntable pontoon (crane barge) "TP-3" has been specially designed to lift and/or shift various equipment on a large dredging job. With this pontoon, repairs on a floating and/or submerged pipeline can be carried out. In general, all heavy parts such as dredge pumps, cutters etc. are lifted and transported to and form the dredger.
x) Side wire connecting pontoons "CP-6" and "CP-3" :- These pontoons will be used to lay the anchors for pipeline to arrest drifting of FPL due to heavy tidal currents.
2.2. Assailing the Orders of the authorities below, he submitted that they have erroneously denied the benefit of the Accessories (Condition) Rules, 1963 to the appellants on the accessories etc., of Cutter Suction Dredger imported for and along with the aforesaid Cutter Suction Dredger on the ground that the accessories and parts brought in and for the purposes of Cutter Suction Dredger through other vessels/different vessels cannot fall in the category of accessories, compulsorily supplied along with the Dredger in terms of the Accessories (Condition) Rules, 1963 and thus although the said accessories are the accessories supplied for the purpose of Cutter Suction Dredger imported by the appellants, yet the said accessories cannot be said to be imported along with the CSD. He also submitted that the Commissioner of Customs (Appeals) has wrongly construed the words, "alongwith" as together with and wrongly held that it is only those spares and accessories which are brought alongwith i.e. together with the main article are entitled to the exemption under the Accessories (Condition) Rules, 1963. It is submitted that in terms of the Accessories (Condition) Rules, 1963, accessories and spare parts and maintenance and repairing implements for any article when imported alongwith that article shall be chargeable at the same rate of duty as that article if the appropriate officer is satisfied that in the ordinary course of trade, such accessories, parts and implements are compulsorily supplied along with that article and no separate charge is made for such supply; and that their prices are included in the price of the article. The provisions of the Accessories (Condition) Rules, 1963, thus clearly provide that the accessories, parts and implements compulsorily supplied alongwith the article and under no separate charge, is chargeable to the same rate of duty as the main article. The word, "alongwith", does not mean "togetherwith" in the sense as is sought to be construed by the Commissioner of Customs (Appeals). If the connotation of the word, "alongwith" as given by the Commissioner of Customs (Appeals) is accepted, the very purpose of giving exemption to the accessories under the Accessories (Condition) Rules, 1963 would become redundant. As is evident from the description of various accessories etc. given by the appellants above, the accessories imported by the compulsory spares/accessories and the above accessories being integral and a very important part of the Cutter Suction Dredger, the Dredger cannot function in the absence of the aforesaid accessories.
2.3. He, further, submitted that in so far as filing of three separate bills of entry filed by the appellants is concerned, the appellants had to file three separate bills of entry since Dredger after working at Abu Dhabi came to Calcutta on its own steam since it was self-propelled work boat and other accessory equipments had to come from some other place by Vessel M.V. "Sibig Venture" for which bill of entry No. 1856 dated 29.1.1991 was filed. The other pipeline floats and pipeline pontoons of the dredger came from Singapore by Vessel M.V. "Malayasian Eagle" for which separate bill of entry No. 1 dated 1.2.1991 was filed since these pipeline floats and pontoons had to be sent to Singapore from Abu Dhabi for repairs etc. Thus for the above reasons, the appellants had to file three separate bills of entry. However, all the articles above were the spares and accessories belonging to the main article i.e. Cutter Suction Dredger. The fact that all the above-mentioned accessories came through different vessels does not legally change the position of the articles imported inasmuch as all the articles above were the compulsory accessories, spares and stores belonging to main article i.e. the Cutter Suction Dredger. Accordingly, the benefit of the provisions of Accessories, parts and implements which are compulsory - supply alongwith the main article, namely, Cutter Suction Dredger and whose prices also were included in the price of such articles which is evident from the invoices. Since the basic conditions for the accessories to be entitled to the benefit under Accessories (Condition) Rules, 1963, were fulfilled by the appellants, they cannot be made to pay duty on such accessories and the appellant firm is thus entitled to refund of the said Customs duty erroneously levied and charged from the appellants.
2.4. It is the contention of Sri Subba Rao, learned Advocate that the appellant company, a Government of India Undertaking, has imported the Dredger accessories etc. for the purpose of carrying on the dredging operations in India and has sought permission of the Government of India to import the Cutter Suction Dredger alongwith accessories. They cannot even contemplate having any other intention but to use the spare parts imported for the Dredger for the purposes of the work undertaken by them or assigned to them. The price of the accessories is included in the price of the main article and the accessories and parts and implements being compulsorily supplied for the purpose of the Dredger, they have to be assessed as parts of the Dredger classifiable under heading 8705.10 entitled to exemption under Notification No. 133/87-CUS. Learned Advocate also placed reliance upon the Tribunal's Order No. A-1436/CAL/97 dated 6.11.97 wherein all the accessories including the pipelines used for carrying out the dredged material to dumping place was held to be part of the Dredger, qualifying for their classification under Chapter 8905.00 as Dredger and they are entitled to the exemption Notification No. 133/87-CUS. dated 19.3.87. Appeal against the above Order of the Tribunal filed by the Commissioner of Customs, Bhubaneswar, was dismissed by the Honourable Supreme Court vide their Order dated 19.2.99. As such, learned Advocate submits that the issue has been already decided by the Tribunal and confirmed by the Honourable Supreme Court and their appeal is entitled to be allowed.
3. Appearing for the Revenue, Shri R.N. Das, learned Senior Advocate assisted by Shri Urmila Dutta, submitted that the earlier Order of the Tribunal was per incuriam inasmuch as the Accessories (Condition) Rules, 1963 were not considered. He drew out attention to the fact that the appellants were assigned to two different works - one for dredging and the other for transportation of the dredged material. The huge pipeline was meant for transportation of the dredged material to the designated disposal area and by no stretch of imagination, can be considered to be a part of the Dredger. Reliance has also been placed on some earlier decisions of the Tribunal.
4. After careful consideration to the submissions made from both sides, we agree with the learned Advocate for the appellants that the point under dispute has already been considered by the Tribunal in the above-referred decision in the case of Boskalis Dredging (India) Pvt. Ltd. v. Commissioner of Customs, Bhubaneswar vide Tribunal's Order No. A-1436/CAL/97 dated 6.11.97. After considering the functions of the various types of Dredgers, it was held that in the case of Cutter Suction Dredger, discharge pipes are essential parts of the Dredger. For better appreciation, we reproduce paras 10 and 11 of the said Order below:-
"10. From the definitions of various Dredgers as extracted above, we find that Dredging, no doubt, means excavation. But there is definitely a need for continuous lifting of the dredged material and dumping the same at some other place. This can be done by a separate disposal system or discharge system can be a part of the Dredger by itself. Referring to the British Standard Specification (BS 6349, Part-5:199), we find that there are various types of Dredgers like Stationary Suction Hopper Dredger, Trailing Suction Hopper Dredger, Cutter Suction Dredger etc. The Dredger in the instant case is a Cutter Suction Dredger in contrast to the Hooper Dredger which keeps the dredged material in its hold (hopper). When the hold is filled up, the said Hopped Dredger moves to the designated area of discharging dredged materials without the assistance of any pipelines. In such type of Hopper Dredgers, neither the Suction Pipe nor the Discharge Pipe may be essential. In the case of Cutter Suction Dredger, the procedure for carrying out the dredging work is different. The Cutter-Head is fitted with the Dredger with a Suction Pipe beneath it. The said Cutter cuts the earth, rock etc. under the water when the dredged material accumulates. As these dredged material has to be taken from the Dredger for the continuous uninterrupted dredging work, Suction Pipe sucks the dredged material. The Suction Pipes are connected with the discharge pipe with the aid of flanges/belts, nuts and bolts etc. The discharge pipes then throw these dredged material at the designated area which may be at a distant place. It is this function of the Cutter Suction Dredger which involves the dredging as well as the discharging, which makes the Pipelines an essential part of the Dredger inasmuch as without these Pipelines the Dredger of the type in question will not be able to work properly........."
11. From the above description of the Cutter Suction Dredger also, we find that Pipelines attached with the Suction Dredger forms an indispensable part of the main mother craft. The cutter-head which may be electrically or hydraulically driven, encloses the suction intake of a centrifugal dredge pump. The cutterhead is mounted at the extremity of a fabricated steel structure, termed the 'ladder', which also supports the suction pipe. The technical and practical requirement of disposal of the dredged material makes the Pipelines a part of the main Dredger. We find that the evidence relied upon by the appellant firm in the shape of the British Standard Specification, strongly favours their case. Accordingly, we hold that the various types of Pipelines are a part of the Dredger itself, qualifying for their classification under Chapter 8905.00 as Dredgers and therefore, they are entitled to the exemption Notification No. 133/87-CUS. dated 19.3.87. As we have held Pipelines as a part of the Dredger enjoying exemption under Notification No. 133/87, the appellants' further Notification No. 133/87, the appellants' further claim of exemption under Notification No. 106/92 dated 1.3.92, in the alternative, does not require any consideration. The appeal is thus allowed."
The above Order of the Tribunal has further been confirmed by the Honourable Supreme Court when the appeal filed by the Revenue against the same was dismissed. As such, by following the ratio of the above decision of the Tribunal, we set aside the impugned Order and allow the appeal with consequential reliefs to the appellants.
(Pronounced)