Custom, Excise & Service Tax Tribunal
Advani Pleasure Cruise Co. Pvt. Ltd. vs Cc (Import) Nhavasheva on 1 November, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Customs Appeal No. 681 of 2012
(Arising out of Order-in-Appeal No. 253/MCH/AC/Gr.VB/2012 dated
20.04.2012 passed by Commissioner of Customs (Appeals), Mumbai-I)
M/s. Advani Pleasure Cruise Co. P. Ltd. Appellant
109, Bayside Mall, 1st floor,
Opp. Sobo Central Mall,
Tardeo Road, Haji Ali,
Mumbai 400 034.
Vs.
Commr. of Customs (I), Nhava Sheva Respondent
Jawaharlal Nehru Custom House,
Post Uran, Dist. Raigad,
Sheva 400 707.
Appearance:
Shri Chirag Shetty, Advocate, for the Appellant
Shri R.K. Dwivedy, Additional Commissioner, Authorised
Representative for the Respondent
CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
Hon'ble Mr. Sanjiv Srivastava, Member (Technical)
FINAL ORDER NO. A/86982/2019
Date of Hearing: 24.07.2019
Date of Decision: 01.11.2019
PER: SANJIV SRIVASTAVA
This appeal is directed against order in appeal No
253/MCH/AC/Gr-VB/ 2012 dated 20.04.2012 of the
Commissioner Customs (Appeals), Mumbai Zone I. By the
impugned order, the Commissioner (Appeals) has upheld
the order of Assistant Commissioner of Customs (Import),
Gr VB NCH Mumbai holdings as follows:
"I hold that the said vessel, M V majesty, is classifiable
under chapter sub heading 89039990 and not under
Chapter 89011010. I further order that importer is liable to
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pay the applicable duty leviable under CTH 89039990 and
accordingly, I order that amount of Rs 22994015/- paid by
the importer be appropriated towards applicable duty.
This order is issued without prejudice to any other action
that may be taken in respect of the goods in question and/
or against the person concerned under the provisions of
the Customs Act, 196 and/ or any law for the time being in
force in the Republic of India"
2.1 Appellants imported second hand/ used Casino Ship
M V Majesty vide Bill of Entry 886357 dated 17.05.2009.
The declared assessable value of the Ship was TRs 7.99
crores and classification claimed was under 8901. The B?E
was order for examination on first check basis.
2.2 The ship was examined on first check basis. As per
the examination report the value of the vessel excluding
game equipments was proposed in the range of US$
1,125,000 to US$ 1,400,000 by the docks. The value of
game equipment was proposed around US$ 117,500 and
the value of chair and stool around US$ 15,430. It was
also suggested vessel would more appropriately be
classifiable under heading 8903 as against 8901 claimed
by the importer. It was also stated that casino games/
chairs/ stools are old and used and fitted in the vessel may
be classified separately under Chapter 94/95 and may also
attract ITC violation.
2.3 B/E was assessed under CTH 89039990 as the vessel
imported was a complete 'casino vessel' and it was to be
used exclusively for gaming and the same was not a
passenger vessel absolutely for any excursion as the
vessel did not had any regular seating plan, and the chairs
in the vessel were around the gaming table and not for any
excursion trips. The value as suggested by the docks on
the basis of Chartered Engineer Certificate (produced by
the importer) was adopted for assessment. No ITC
violation was found as the casino games/ chairs/ stools
3 C/681/2012
though old and used were fitted with the vessel and could
not have been treated differently. Importer paid the duty
assessed vide TR 6 Challan No 20639109 dated
18.05.2009.
2.4 Against the assessment order they filed writ in High
Court of Bombay and subsequently withdrew it. They filed
the appeal before Commissioner (Appeal) which was
allowed (Order in Appeal No 279/2009/MCH/AC/Gr
VB/2009 dated 27.10.2009) and Assistant Commissioner
directed to pass a speaking order under Section 17(5) of
the Customs Act, 1962.
2.5 As directed by the Commissioner (Appeals),
Assistant Commissioner has vide his order in original No
668/AC/Gr VB/ RCC/2010 dated 10.03.2010 decided the
issue by a speaking order. Appellants filed the appeal
against this order before Commissioner (Appeals).
2.6 Commissioner (Appeals) has vide the impugned
order referred in para 1, supra dismissed the appeal filed
by the appellants.
2.7 Aggrieved by the impugned order, appellants have
filed this appeal.
3.1 We have heard Shri Chirag Shetty, Advocate for the
Appellants and Shri R K Dwivedi, Additional Commissioner,
Authorized Representative for the revenue.
3.2 Arguing for the appellant, learned counsel submitted
that-
Impugned order admits that the vessel was designed
as passenger ship and was subsequently modified to
be casino ship. In terms of decision in case of Urmila
& Co Pvt Ltd [1998 (104) ELT 97 (T)] subsequent
modifications cannot have impacted the
classification.
In case of Vipul Shipyard [1996 (88) ELT 640 (SC)]
Supreme Court negatived the contention that
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classification is to be based on end use. Hence the
end use of vessel is irrelevant factor for determining
classification.
The vessel was manufactured in 1997 with a
passenger including crew carrying capacity of 475.
The vessel was subsequently modified as casino
vessel. Just by placing casino games on board the
vessel will not cease to be cruise ship or an
excursion vessel.
The terms used in the tariff should have been
interpreted as per the definitions incorporated in
other relevant statues and there judicial exposition.
Certificate of survey dated 21.05.2009 granted by
the Ship Survey cum Deputy DH (Tech) of the
Mercantile Marine Department under Section 27 of
the Merchant Shipping Act, 1958 also describes the
vessel as a Passenger Vessel. It is therefore
abundantly clear from the aforesaid provisions as
well as the aforesaid certificates and the Final
certificate of the Indian Registry that the vessel has
to be considered as a passenger vessel.
Reliance placed by the Commissioner on the decision
of tribunal in case of Waterways Shipyard Pvt Ltd is
irrelevant as the said ship was built as casino ship.
The issue is squarely covered by the decision of
tribunal in case of Ashok Khetrapal [2014 (304) ELT
408 (T-Ahd)]
3.3 Arguing for the revenue learned authorized
representative while re-iterating the findings recorded in
the impugned order submitted that-
It is clear that both the sub heading 801 and 8903
covers the vessels but of different types-
o Heading 8901 is for Cruise ships, excursion
boats and similar vessels principally designed
for the transport of persons; ferry boats of all
kinds;
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o Heading 8903 is for yachts and other vessels
for pleasure or sports, rowing Boats and
canoes;
The difference between the two headings is that
while the heading 8901 is applicable to vessels that
are principally designed for the transport of persons,
heading 8903 is for the vessels meant for pleasure.
The dock examination report specifically gives the
salient features of the vessel and states that the
subject vessel is having several casino pleasure
games like slot machines/ table games etc. The
entire layout of all the three decks is occupied by
these casino games. The chairs are laid to these
games. These games are exclusively meant for
pleasure.
The old certificate of inspection dated 22.05.2000
describing the vessel as passenger vessel cannot be
accepted for the present controversy as the vessel
has been suitably modified subsequently to
incorporate various pleasure games on all the three
decks and throughout the decks.
The decision of Commissioner (Order in original No
3/ Commr Goa/CX/2003 dated 27.02.2003) relied
upon by the appellants has already been set aside,
by the Tribunal as reported at Waterways Shipyard
Pvt Ltd [2013 (297) ELT 77 (T-Mum)],
Since the vessel in the form which it has been
imported is exclusively meant for use as casino/
pleasure vessel it is appropriately classifiable under
heading 8903 and not under 8901 as claimed by the
appellants.
4.1 We have considered the impugned order along with
the submissions made in appeal and during the course of
arguments of appeal.
4.2 It is settled law that imported goods are to be
assessed in the form and manner in which they are
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imported and presented for assessment/clearance to the
Customs authority at the port of importation for the
clearance. Reference in this regards is made to the
following para of decision of the Hon'ble Apex Court in case
of Sony India wherein it has been held that-
11. Again the meaning of terms "as presented" in Rule
2(a) would clearly imply that the same refers to
presentation of the incomplete or unfinished or
unassembled or dis-assembled articles to the customs for
assessment and classification purpose. It is also a
settled position in law that the goods would have to
be assessed in the form in which they are imported
and presented to the customs and not on the basis of
the finished goods manufactured after subjecting
them to some process after the import is made. In
the reported decision in Vareli Weaves Pvt. Ltd. v. Union of
India [1996 (83) E.L.T. 255 (S.C.)] the question was as to
whether the countervailing duty was liable to be left on the
imports made by the assessee at a stage they would reach
subsequent to their import after undergoing a process. It
was contended that such goods could be subjected to duty
only in the State in which they were imported. It was held
that the countervailing duty must be levied on goods in the
State in which they are when they are imported. This was
on the basis of Section 3 of the Customs Tariff Act. Though
there is no reference to Rule 2(a), in our opinion, the same
Rule should apply subject of course to the applicability of
the Rule. We have already held that the Rule is not
applicable. Similar view was taken in Dunlop India and
Madras Rubber Factory Ltd. v. UOI [1983 (13) E.L.T. 1566
(S.C.)].
Hence the classification of the imported goods needs to be
determined in accordance with the form in which they were
presented for assessment to the customs authority, and
not in the form they were designed and in the form they
earlier existed.
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4.3 Undisputedly the gods were examined by the
Customs on first check basis. The text of examination
report as recorded by the Assistant Commissioner in his
order is reproduced below:
"1. Inspected the vessel. Examined 100% under DC
(Docks) Supervision. Checked description and quantity wrt
import document, C E Certificates issued by International
Bluewater Marine Se4rvice Inc dated 29.10.2008 and by
Dhiraj Offshore Surveyors & Adjusters Pvt dated
30.03.2009. Verified old and used YOM as per CE
Certificate.
2. vessel is having several casino pleasure games like
slot machines/ table games as per attached list. Annexure.
Layout of main deck, second deck and third deck is
occupied by these casino games. Chairs are laid to play
these casino (table games, slot machines) games. These
games are exclusively for the purpose of pleasure and
games of chance which may attract other statutory
regulation. On the basis of condition of the vessel and
examination thereof at the time and place of importation,
the vessel is appropriately classifiable under CTH
89039990 as "other vessel for pleasure." The declared
CTH8901 is not correct as vessel is not be classified
passenger/ cruise types based on the fixtures (i.e. casino
games) occupying the whole area of decks at the time and
place of importation. Subsequent intended modifications
cannot be considered for the purpose of classification and
duty liability. Old Certificate of Inspection dated
22.05.2000 describing vessel as passenger for the purpose
of sea voyage cannot be accepted at present for the
classification purpose, when the imported vessel is tailor
made for pleasure activity, classifiable under 89039990.
3. As per CE dated 29.10.2008, value of vessel
excluding gaming equipment lies in the range of US$
1,125,000 and US$ 1,400,000.
8 C/681/2012
4 As per CE dtd 30.03.2009, value of total gaming
equipments is US$ 33,950 and chairs & stools at US$
2,980. Value of total gaming equipment is low and fair
value on the basis of condition seems to be US$ 117,500.
Similar Fair Value of Chairs & Stools seems to be US$
10,430
5. Since casino games/chairs/stools are old and used
and fitted in the vessel, these are separately classifiable
under respective Chapter 95/94. These attract ITC
violation. The matter may be decided by the appropriate
adjudicating authority."
4.4 From the examination report reproduced above it is
quite evident that casino games have been fitted on all the
three decks of the vessel, and the layout of the decks
including those of chairs and stools on the deck was to
facilitate the playing of those casino games. Once the
vessel is fitted with such casino games across the entire
three decks with no regular seating plan etc., the same
cannot be called a passenger ship. It is also not case of
appellant that there is a fare charged by the appellant for
the voyages that can be undertaken on the vessel
imported. In the above background we need to examine
the decisions referred to by both the sides during the
course of argument of appeal.
4.5 After taking the note of above entries in the HSN and
also the definition of "Pleasure Vessel" in Merchant
Shipping Act, Mumbai Bench of Tribunal has in case of
Waterways Shipyards Pvt Ltd [2013 (297) ELT 77 (T-
Mum)] held as follows:
12. In the show cause notice Revenue relying on the
Supreme Court judgment in the case of C.C.E., Shillong v.
Wood Craft Products Ltd. contends that the HSN can be
relied upon for the purpose of classification under the
Central Excise Tariff. Therefore, the Revenue submits that
the Entry 8901 of the HSN covers the vessels, which are
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principally designed for the transport of persons or to the
transport of the goods. Since, the vessel M/s. M.V.
Caravela is not principally designed and manufactured for
the purpose of transport of persons or goods it cannot be
classified under Heading 8901. We find that Entry 8901 of
the HSN is as under :-
Cruise Ships Excursion Boats, Ferry Boats,
8901
Cargo Ships and Similar Vessels for transport of
Person or Goods.
Cruise ships, excursion boats and similar
890110
vessels principally designed for the transport of
persons; ferry-boats of all kinds
Tanker
890120
Refrigerated vessels, other than those of
890130
subheading No 890120
Other vessels for the transport of goods and
890190
other vessels for the transport of both persons
and goods.
The heading covers all vessels for the transport of persons
or goods, other than vessels of heading 8903 and life
boats (other than rowing boats), troop ships and hospital
ships (heading 8906); they may be for sea navigation or
inland navigation 9eg on lakes, rivers, estuaries)
The heading includes
1. Cruise Ships and excursion boats
2. Ferry boats of all kinds, including train ferries, car
ferries and small river ferries.
3. ..
4. ....
5. ....
6. .....
7. ......
From the entry in HSN it is noticed that Heading 8901.10
covers Cruise ships, excursion boats and similar vessels
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principally designed for the transport of persons and the
Entry 8901.90 covers other vessels for the transport of
goods or both persons and goods. Since present vessel is
not used and manufactured for the purpose of transport of
goods it will not be qualifying for its classification under
Heading 8901.90. Only sub-Heading where the vessel can
be classified under Heading 8901 is 8901.10 where the
Cruise ships, excursion boats and similar vessels
principally designed for the transport of persons are
classifiable. Therefore, it is an important to know whether
the vessel was principally designed for transport of persons
or the vessel falls under the category of cruise ships or
excursion boats. After going through the advertising
material published, we find that vessel is shown as
advertised cruise ship which forms the India first gaming
casino . Cruise is defined in New Shorter Oxford Dictionary
as :
"Cruise - A voyage in which a ship sails to and fro over a
particular region, esp. for the protection of shipping or for
pleasure; a sail for pleasure making for no particular place
or calling at a series of place."
The vessel as a cruise ship is classifiable under Heading
8901 of Central Excise Tariff.
13.It is also noticed from the explanation below the sub-
heading 8901 as HSN Explanatory Notes states that "this
Heading covers all vessels for the transport of persons or
goods, other than vessels of Heading 89.03......" From this
explanation it is also inferred that some vessels of
transport of persons or goods are also classifiable under
Heading 8903 because of the use of the words "other than
vessels of Heading 8903" in this explanation. Entry 8903 of
the HSN reads as under :-
8903 Yatch and Other Vessels for Pleasure or
Sports; Rowing Boats and Canoes
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8031 Inflatable
Other
890391 Sailboats, with or without auxiliary motor
890392 Moto boats, other than outboard motorboats
890399 Other
This heading covers all vessels for pleasure or sport and all
rowing boat and canoes
This heading includes yachts, marine jets and other
sailboats and motorboats, Dinglies, kayaks, sculls, skiffs,
pedals (a type of pedal-operated float), sports fishing
vessels, inflatable craft and boats which can be folded or
disassembled.
The Heading also covers lifeboats propelled by cars (other
lifeboats fall in Heading 89.06).
Sailboards are, however, excluded (Heading 95.06).
Heading 8903 is meant for yachts and other vessels for
pleasure or sports and rowing boats and canoes. As per
HSN explanation under the Heading, this Heading covers
all vessels for pleasure or sports and all rowing boats and
canoes, which means that all vessels which are used for
pleasure or sports are to be classified under Heading 8903
and similarly all rowing boats and canoes are to be
classified under Heading 8903. The use of word all before
'vessels' in the 'all vessels for pleasure or sports' means
that all vessels which are used for pleasure or sports are to
be classified under Heading 8903 even if these vessels are
used for transport of persons or goods in view of their
exclusion from 8901 as per HSN explanation under
Heading 8901.
14.Under the Merchant Shipping Act, 1958 'passenger' and
the 'passenger ships' have defined under Section 3(24) &
3(25) which are as under :-
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3(24) "passenger" means any person carried on board a
ship except -
(a) a person employed or engaged in any capacity on
board the ship on this business of the ship;
(b) a person on board the ship either in pursuance of the
obligations laid upon the master to carry shipwrecked,
distressed or other persons or by reason of any
circumstances which neither the master nor the character,
if any, could have prevented or forestalled;
(c) a child under one year of age;
3(25) "passenger ship" means a ship carrying more than
twelve passengers;
Similarly, 'special trade', 'special trade passenger' and
'special trade passenger ship' have been defined under
Section 3(47A) (47B) & (47C). The ship in question has
been categorized by the Mercantile Marine Department as
'a special trade passenger ship'. Special trade means the
conveyance of large number of passengers by sea within
prescribed sea areas. Special trade passenger ship has
been specifically defined as to mean a mechanically
propelled ship carrying more than thirty special trade
passengers. This is a fact that of the vessel M/s. M. V.
Caravela carries more than thirty passengers and this
vessel can go to a limited area in the sea. Therefore, this
special trade passenger ship is defined under Section
3(47C) is different from the normal passenger ship as
defined under Section 3(25).
15.Now we have to see whether this special trade
passenger ship can be classified under Heading 8901 in the
category of the vessel used for transport of passengers.
The passenger and special trade passenger have been
separately defined under the Merchant Shipping Act. The
special trade passenger ship can be taken a vessel meant
for transport of the passenger as the special trade ship are
meant for special trade as defined under Section 3(47A) of
13 C/681/2012
the Act and by virtue of words 'other than the vessels
under Heading 8903' in HSN Explanatory Notes of Heading
8901 [this Heading covers all vessels for transport of
persons or goods other than vessels of Heading 8903] it is
classifiable under Heading 8903.
16.The contention of the respondent is that their vessel
cannot be categorized as a vessel meant for pleasure or
sports as internationally known vessels of pleasure or
sports as defined in U.K., Australia and Canada are only
those vessels which are owned privately by the owners or
body corporate for their personal use or use for their
family and the employees of the body corporate. Since the
vessel does not fall under this category this cannot be
classified as vessel for pleasure or sports. We find that
definition of the vessel for pleasure or sports has not been
incorporated in the Indian Merchant Shipping Act, which
governs the registration and movement of the vessels in
India. On the other hand, the Merchant Shipping Act
specially defines Special Trade Passenger Ship and present
vessel in question has been categorized as special trade
passenger ship. The present vessel is used for casino
games for people who are transported by the ferry to the
vessel by the owner/lessee of the vessel. These activities
fall under the category of special trade as defined under
the Indian Merchant Shipping Act and would therefore be
taken as a activities for the purpose of casino games,
which are meant for pleasure of the people. Therefore, this
would bring the vessel more appropriately under the
Heading 8903 of the Central Excise Tariff.
17.Another argument taken by the respondent is that on
the basis of nosciture a sociis the Commissioner has rightly
held classification under Heading 8901 as articles in the
Heading 8903 have to be identified by the company they
keep and only a small sports vessels appear to qualify for
classification under Heading 8903. We find that the first
explanation in the Heading 8903 clearly states that this
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Heading covers all vessels for pleasure or sports. The word
all' is sufficient enough to cover the vessels for pleasure
whether small or big. Therefore, the principle of nosciture
a sociis will apply only to the second explanation and not
to the first explanation.
18.In the case of Urmila & Co. Pvt. Ltd. v. Collector of
Customs, Bombay reported in 1998 (104) E.L.T. 97
(Tribunal) it was held by the Tribunal that it is the basic
design of the vessel that determines its classification. The
para 18 of the said decision is reproduced as under :
"We have already referred to above that the vessel in
question was designed and registered as a vessel for
pleasure. Its fittings, fixtures and equipment indicated that
it was usable not for carrying cargoes or passengers for
commercial purposes but was for vacation, enjoyment etc.
The items for survey which were not part of the basic
design of the vessel could not change the character and
classification of the vessel."
In the instant case the vessel M/s. M.V. Caravela is
designed for the purpose of casino games therefore by
applying the ratio of the said decision it should more
appropriately be classifiable under Heading 8903 as vessel
for pleasure or sports.
19.It is seen from the above that the vessel in question on
one hand Is classifiable as a cruise ship under Heading
8901 and on the other hand it is classifiable as a vessel for
pleasure under Heading 8903. In such a situation the Rules
for interpretation of the classification come into play Rule
1, 2 & 3 of the Rule for Interpretation of the Schedule are
reproduced as under :
1. The titles of Sections and Chapters are provided for
case of reference only; for legal purposes, classification
shall be determined according to the terms of the Headings
and any relative Section or Chapter Notes and provided
15 C/681/2012
such Headings or Notes do not otherwise require,
according to the provisions hereinafter contained.
2. (a) Any reference in a Heading to goods shall be taken
to include a reference to those goods incomplete or
unfinished, provided that the incomplete or unfinished
goods have the essential character of the complete or
finished goods. It shall also be taken to include a reference
to those goods complete or finished (or falling to be
classified as completed or finished by virtue of this rule),
removed unassembled or disassembled.
(b) Any reference in a Heading to a material or
substance shall be taken to include a reference to mixtures
or combinations of that material or substance with other
materials or substances. Any reference to goods of a given
material or substance shall be taken to include a reference
to goods consisting wholly or partially of such material or
substance. The classification of goods consisting of more
than one material or substance shall be according to the
principles contained in Rule 3.
3. When by application of sub-rule (b) or Rule 2 or for
any other reason, goods are, prima facie, classifiable under
two or more Headings, classification shall be effected as
follows :
(a) The Heading which provides the most specific
description shall be preferred to Headings providing a more
general description. However, when two or more Headings
each refer to part only of the materials or substances
contained in mixed or composite goods or to part only of
the items in a set, those Headings are to be regarded as
equally specific in relation to those goods, even if one of
them gives a more complete or precise description of the
goods.
(b) Mixtures, composite goods consisting of different
materials or made up of different components, and goods
put up in sets, which cannot be classified by reference to
16 C/681/2012
(a), shall be classified as if any consisted of the material or
component which gives them their essential character, in
so far as this criterion is applicable.
(c) When goods cannot be classified by reference to (a)
or (b), they shall be classified under the Heading which
occurs last in the numerical order among those which
equally merit consideration."
Since the Rule 1, 2, & 3-(a) or (b) are not applicable in the
present situation, we find that under Rule 3(c) when the
goods cannot be classified by reference to Rule 3(a) & (b)
they shall be classified under Heading which occurs last in
the numerical order among those which equally merit
consideration. Therefore, following this Rule of
Interpretation the vessel in question is more appropriately
classifiable under Heading 8903 of the Central Excise
Tariff. We hold accordingly."
4.6 Appellants have relied upon the decision of Tribunal
Ahmedabad bench in the case of Ashok Khetrapal [2014
(304) ELT 408 (T-Ahd)] wherein it has been held as
follows:
"5.1 On the issue of classification of the vessel POG, the
adjudicating authority has mainly relied upon the fact that
the vessel is a Casino vessel and is intended to be made
stationary for use as a casino even if it is capable of
making voyages in the open sea. On the other hand,
importer has come out with the argument that the end use
of the vessel should not be made as the basis for
classifying a vessel under the Customs Tariff Act. This
issue, whether end use of imported goods should be made
the basis of classification was decided by Hon'ble Apex
Court in the case of UOI v. V.M. Salegaoncar a Brs (P) Ltd.
(supra). In that case, appellants imported transhippers
which were vessels used for carrying cargo loaded from
the harbour and carry the same for unloading cargo into
the large vessels. The issue before the Apex Court was
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whether such transhippers should be considered as ocean
going vessels when they were not actually meant to be
going to high seas/oceans. While holding the transhippers
to be ocean going vessels and eligible to exemption under
Customs Notification dated 11-10-1958, the following
observations were made by the Apex Court in Para 20 :-
"20. We do not think that, in the present case, the
question whether a transshipping vessel is an ocean going
vessel, can solely rest on the test of its dominant use to
which their owners put them at times. Use may vary from
season to season, port to port and also managers to
managers. So, in this area of understanding use of article
stands down staged, and the Court must look at to know
what actually the commodity is."
5.2 In the light of above law laid down by Apex Court and
the conflicting judgment of CESTAT Mumbai in the case of
CCE v. Waterways Shipyard Pvt. Ltd. (supra), CGU
Logistics Ltd. v. CC (I), Mumbai (supra) and Hal Offshore
Ltd v. CC, Mumbai (supra), it has to be seen as to what is
the nature of vessel POG. Whether it is a 'Passenger Ship'
or a 'Pleasure vessel'. The words 'Passenger', 'Passenger
Ship' and 'Pleasure Vessel' have neither been defined
under the Customs Tariff Act nor in the HSN explanatory
notes. The words 'Passenger' and 'Passenger Ship' 'Special
Trade Passenger' and 'Special Trade Passenger Ship' have
been defined under Section 3(24) and 3(25), 3(47B) and
3(47C) of the Merchant Shipping Act, 1958 as follows :-
"3. Definitions. - In this Act, unless the context
otherwise requires, -
(24) "Passenger" means any person carried on board a
ship except -
(a) a person employed or engaged in any capacity on
board the ship on the business of the ship;
(b) a person on board the ship either in pursuance of the
obligations laid upon the master to carry shipwrecked,
18 C/681/2012
distressed or other persons or by reason of any
circumstances which neither the master nor the character,
if any, could have prevented or forestalled;
(c) a child under one year of age;
(25) "Passenger ship" means a ship carrying more than
twelve passengers;"
(47B) "Special trade passenger" means a passenger
carried in special trade passenger ship in spaces on the
weather deck or upper deck or between decks which
accommodate more than eight passengers and includes a
pilgrim or a person accompanying a pilgrim;
(47C) "Special trade passenger ship" means a
mechanically propelled ship carrying more than thirty
special trade passengers."
From the above definitions, it is not necessary, as
contended by the Revenue that a passenger has to be
carried from one place to another in a ship in order to hold
that a vessel is a "passenger ship". A person taken on
board a vessel will also be considered as a passenger as
per the above definitions. Various certificates issued by the
competent authorities in favour of POG, as per Section
3(38) of the Merchant Shipping Act, 1958, also convey
that POG is a passenger ship. It is observed from Para 3 of
the order passed by CESTAT Mumbai in the case of CGU
Logistics Ltd v. CC (I), Mumbai [2011 (274) E.L.T. 75 (Tri-
Mum)] that similar certificates were considered for
classifying a vessel as cargo ship of CTH 8901 when
special equipments were fitting on it for doing special tasks
and Revenue was claiming the classification under CTH
8905.
5.3 It is further observed from the HSN explanatory
notes under Heading 89.03 that the notes talk of all
vessels for pleasure or sport. However, while specifying
the inclusions mainly the notes talk of small boats like
rowing boats, canoes, sail boats, motor boats, dinghies,
19 C/681/2012
sports fishing vessels, inflatable craft and boats, lifeboats
propelled by oars, Yachts, etc. At the same time, neither
the Customs Tariff Act nor the HSN Explanatory Notes say
that all Casino vessels are vessels for pleasure or sport.
5.4 A definition of 'Pleasure vessel' appears in The
Merchant Shipping (Vessels in Commercial Use for Sports
or Pleasure) Regulations, 1988, issued as per the
Agreement on the European Economic Area signed at
Oporto on 2nd May 1992 as adjusted by the Protocol
signed at Brussels on 17-5-1993. As per these
Regulations,
"Pleasure Vessel" means -
(a) any vessel which at the time it is being used is :
(i) (aa) in the case of a vessel wholly owned by
an individual or individuals; used only for the
sport or pleasure of the owner or the immediate
family or friends of the owner; or
(bb) in the case of a vessel owned by a body
corporate, used only for sport or pleasure and
on which the persons on board are employees or
officers of the body corporate, or their
immediate family or friends; and
(ii) on a voyage or excursion which is one for which
the 'owner does not receive money for or in
connection with operating the vessel or carrying
any person, other than as a contribution to the
direct expenses of the operation of the vessel
incurred during the voyage or excursion; or
(b) any vessel wholly owned by or on behalf of a
members' club formed for the purpose of sport or pleasure
which, at the time it is being used, it used only for the
sport or pleasure of members of that club or their
immediate family, and for the use of which any charges
20 C/681/2012
levied are paid into club funds and applied for the general
use of the club; and
(c) in the case of any vessel referred to in paragraphs
(a) or (b) above no other payments are made by or on
behalf of users of the vessel, other than by the owner."
5.5 Above definition of a pleasure vessel gives support to
the argument made by the Advocate of the importer that a
vessel for pleasure or sport should be meant for personal
consumption/use of the person/owner of a vessel. It is
evident from the facts on record that the vessel POG
imported by the importer is not used for personal use of
the owner for pleasure or sport but is used for commercial
purposes as a 'Casino vessel'. There is thus force in the
argument of the importer that when the appropriate
authorities under Section 3(38) of the Merchant Shipping
Act, 1958, by issuing required certificates, have opined
POG to be a passenger ship or Special Trade Passenger
Ship then there is no ground for the adjudicating authority
to hold that POG is not a passenger ship designed to carry
passengers when no contrary opinion of another
competent authority is brought on record saying that POG
is a vessel for pleasure or sport.
5.6 Temporary use of POG in a stationary position will not
change the classification of POG when the same is capable
of moving across the seas/oceans but has to be mostly
made stationary due to the restrictions imposed by the
local laws. It will be a strange situation to classify a vessel
under CTH 8901 if used for making trips to open sea, with
a night halt arrangement in the sea, but classify the same
vessel under CTH 8903 if used in a predominantly
stationary position. In view of the above observations, we
are of the opinion that Casino vessel POG imported by the
importer is principally designed to carry passengers and
has been correctly assessed under CTH 8901.
21 C/681/2012
4.7 The Mumbai bench has again in case of Drishti
Adventures Pvt Ltd [2017 (357 ELT 877 (T-Mum)] stated
the law as follows:
7.We have considered the competing entries and find that
the said chapter headings are as under :-
.........
It can be seen from the above reproduced headings, it is the appellant's claim that boats fall in the category of Heading 8901 as excursion boats, ferry boats by virtue of the various applications made by them to the Government of Goa for granting them permission for ferrying the passengers and tourists between two places in the river. We find that the claim of the appellant is unacceptable as the declaration of conformity filed by the manufacturer of the boats before the authorities in United States indicates that the boats which are imported by the appellant, are recreational craft. This particular declaration is annexed at Page 24 of the appeal memoranda. The said declaration of conformity also states that the craft is powerboat. In addition to that, we find that the certificate of registration as issued by the Port officer, Government of Goa, specifically registered these boats as "motor boats - mars, mercury" etc. and relies upon the declaration filed by the manufacturer i.e. Regal Marine Industries, Florida, though the description of the boat has been stated as excursion boats. We find that the adjudicating authority in order-in- original has reproduced the photographs of the boats which are imported. On casual perusal of the said reproduction of the photographs, we find that the boats which are imported by the appellant would merit classification only under Heading 8903 as motor boats, other than outboard motor boats which is a specific entry indicated in the Customs Tariff Act.
8.Again, we find that the HSN Explanatory Notes to Chapter 8901 specifically excludes the vessels of Heading 22 C/681/2012 8903. It would mean that Heading 8901 would exclude vessels which are specifically listed in the said Heading of 8903. In 8903, motor boat is mentioned as specific vessel under specific heading. In view of this, we have to hold that the impugned order is correct.
4.8 In case of Kingsway Travel Agencies Pvt Ltd [2018 (366) ELT 360 (T-Bang)], Bangalore bench stated as follows:
7. We find that the impugned boat imported by the respondents is equipped with modern amenities like swiveling helm seat, Stove, Stainless steel sink, microwave, fridge, coffeemaker and solid surface counter tops; it also contains arrangement for shower, sleep and relaxation; it is no important as to the manner in which the impugned boat is used, it is rather important as to how the boat is built which should be a guideline for determining the classification of boat; in fact, we find that the catalogue describes the impugned boat as "Bayliner 325 Cruiser" and the Bayliner have claimed themselves to be manufacturers and marketers of recreation boats and Cruisers; there is a prima facie evidence that the boat is intended for the luxury uses; we find that the case of Urmila & Company Pvt. Ltd. cited supra is similar to the impugned case; we find that Heading 8901 covers the vessels for transport of persons or goods that vessels design primarily for the conveyance of persons or goods are covered by this Heading; it is not the case of the respondents that it was for the conveyance of persons or goods and looking into the fittings available in the boat and the amenities it offers, there is no doubt to believe that the boat is intended to a "pleasure boat". Therefore, whatever be the actual use of the said boat, it is required to classify as per the making of the vessel; it is seen that the impugned boat is not principally designed and manufactured for the purpose of transport of persons and goods, it cannot be classify under Heading 8901; we find 23 C/681/2012 considerable force in the argument of the Learned AR and find relevance in the ratio of the cases cited by them.
7.1 Regarding the refund application, the Learned advocate for the respondents has claimed that the refund claim filed by their CHA is valid as per the ratio of Jayant B. Shah v. Collector of Customs, Bombay - 1996 (81) E.L.T. 669; the Learned AR submitted that as per the ratio of Hon'ble Supreme Court in the case of Collector of Customs, Cochin v. Trivandrum Rubber Works Limited, 1999 (106) E.L.T. 9 (S.C.) clearing agent's dues under Customs Act ordinarily come to an end with the clearance of imported goods and delivery to the importer/owner and therefore, we find claim filed by M/s. National Trading Agency, Cochin; the CHA for M/s. Kingsway Travel Agency is not a proper refund claim.
7.2 We find that we have decided the classification of the impugned boat under Heading 8903 of CTH, the refund claim does not sustain on merits. Therefore, there is no need to go into the other aspects of the refund claim.
This decision of Tribunal has been affirmed by the Hon'ble Apex Court as reported at [2019 (367) ELT A14 (SC)]. In this decision, the Tribunal has held that the fitments made to vessel are determinant of classification.
4.9 It is settled law that classification of goods under the Customs tariff is to be determined by the Custom Authorities and for determining the classification the Custom Authorities are bound by the Terms of Entries in the Tariff, Rules of Interpretation and decisions rendered by the competent courts in relation to the interpretation of tariff. The view taken by other authorities acting under other Acts and Legislation may have persuasive value for determining the classification under the Customs Tariff but cannot be termed as in any case binding on the Customs Authority for determining the classification. In case of Atul 24 C/681/2012 Glass Industries [1986 (25) ELT 0473 (SC)], Hon'ble Supreme Court held as follows:
"10. Our attention has been drawn on behalf of the Revenue to the circumstance that glass mirrors have been classified as 'glass and glassware' in Chapter 70 of the Brussels Tariff Nomenclature. It seems to us that this circumstance can hardly advance the case of the Revenue, because the First Schedule to the Central Excises and Salt Act does not appear to have been modelled on the Brussels Tariff Nomenclature. There is nothing to show that the Tariff Items were classified in the Schedule on the basis of the Brussels Tariff Nomenclature. It was when the Customs Tariff Act, 1975 was enacted that the First Schedule to that Act was framed in accordance with the Brussels Tariff Nomenclature, evidently because the progress made in industrial growth and economic development, and the substantial changes in the composition and pattern of India's external trade called for the need to modernise and rationalise the nomenclature of India's Tariff in line with contemporary conditions (introductory comments on the Customs Tariff Act, 1975). The glass mirrors were still not specifically mentioned under the Customs Tariff Act, 1975. They are now being brought in as such by the Customs Tariff Bill, 1985."
Thus the decision of Ahmedabad Bench which solely applied the meaning as assigned to "Pleasure Vessel" in The Merchant Shipping (Vessels in Commercial Use for Sports or Pleasure) Regulations, 1988, for determining the classification under the Customs Tariff, is contrary to the principles of law as laid down by the Apex Court in this case.
4.11 Hon'ble Supreme Court has clearly stated in case of Wood Polymers Ltd [1998 (97) ELT 193 (SC)]as follows:
"11. We are unable to accept the said contention of the learned Counsel. In view of the rules regarding 25 C/681/2012 Interpretation which are contained in the New Tariff the matter of classification has to be considered in the light of the said rules. As indicated earlier, Rule 3 of the said rules contains the principles to be applied for classification of goods which are prima facie classifiable under two or more headings. Since decorative laminates are composite goods made from different components, namely, paper and chemical solutions with which it is impregnated, the classification of decorative laminates has to be determined in the light of Rule 3(b). ........"
Applying the above ratio, Mumbai bench has in case of Waterways determined the classification by applying the Rule 3 of Rules of Interpretation.
4.11 Hon'ble Supreme Court applied the usage test to be good guide for determining the classification of the goods under the Customs Tariff. In case of Deena Jee Sansthan [2019 (365) ELT 353 (SC)] "4. In the present case, the finding of fact recorded by the Commissioner in its order dated 27-11-1997, after evaluating the material on record was that the product in question was not used as ayurvedic medicine but was a "shampoo". This finding can be discerned from paragraph 8 of the judgment of the Commissioner, which reads as under:
"8. In their defence reply, M/s. DJS had contended that all the ingredients of the product manufactured by them appear in the authorities books on ayurveda listed in the first schedule of Drugs and Cosmetic Act. However, I am not inclined to accept the party's plea that since ingredients are listed in the medicine should be considered as a whole and not only on the basis of its ingredients, however important they may be moreover, I find that some of the ingredients like amla, ritha, shikakai, etc. are not understood as 'medicines' in common parlance though they might have been mentioned in the ayurvedic 26 C/681/2012 reference books. Even if such products are being sold/advertised as ayurvedic medicines, it is not sufficient to establish that the product is noticee party have failed to produce any evidence, document or otherwise that the product shampoo being sold by them is known as ayurvedic medicine in common parlance and not as a toilet preparation. In interpreting tariff hearing of a commodity, resort should not be made to the scientific and technical meaning of the terms and expression used but to their popular meaning in medical practitioner for a specific disease. Further, I find in his statement dated 16-9-96 recorded under sec. 14 of the Central Excise Act, 1944, Shri Ajay Kumar Gupta, Manager referred to their product as "shampoo" thereby indicating its actual identity as known in common trade parlance. Consequently, I find no reason to agree with views of the defence that their product is ayurvedic medicine and not shampoo as understood in common trade parlance.""
4.12 Further elaborating the above principle Hon'ble Apex Court has in case G S Auto International Ltd [2003 (152) ELT 3 (SC)] held as follows:
"15.The question that needs to be adverted to is:
whether the goods in question can appropriately be classified under Tariff Item 52 or not having been specified elsewhere, they fall under Tariff Item 68. In construing these items, what is the proper test to be applied? Is it the functional test or is it commercial identity test which would determine the issue. It seems to us that this question is no longer res integra. It fell for consideration of this Court earlier and it was laid down that the true test for classification was the test of commercial identity and not the functional test. It needs to be ascertained as to how the goods in question are referred to in the market by those who deal with them, be it for the purposes of selling, purchasing or otherwise."
27 C/681/2012 4.13 We are of opinion the relevant question in terms of the said decision for determining the classification of the imported vessel will be as to what would be the usage of such vessel. If this question is put to the person who goes to the vessel and his response is that he visits the vessel for playing casino games and not for cruise/ voyage then the vessel is definitely a pleasure vessel for the purpose of classification under Custom Tariff. In the present case examination report clearly suggests that on all the three decks of vessel are fitted casino games and the entire layout was to facilitate the playing of such games without any regular arrangement/ seating plan for carriage of passengers.
4.14 The relevant and competent tariff entries are reproduced below:
Tariff Item Description of goods 8901 Cruise Ships, Excursion Boats, Ferry-Boats,
Cargo Ships, Barges And Similar Vessels For The Transport Of Persons Or Goods 8901 10 - Cruise ships, excursion boats and similar vessels principally designed for the transport of persons; ferry-boats of all kinds :
8901 10 10 --- Ships
8901 10 20 --- Launches
8901 10 30 --- Boats
8901 10 40 --- Barges
8901 10 90 --- Other
8901 20 00 - Tankers
8901 30 00 - Refrigerated vessels, other than those of
Sub-heading 8901 20
8901 90 00 - Other vessels for transport of the goods
and other vessels for the transport of both persons and goods 8903 Yachts And Other Vessels For Pleasure Or Sports; Rowing Boats And Canoes 8903 10 00 - Inflatable
- Other :
8903 91 00 -- Sail boats, with or without auxiliary motor 8903 92 00 -- Motorboats, other than outboard motorboats 8903 99 -- Other :
8903 99 10 --- Canoes
8903 99 90 --- Other
28 C/681/2012
From the scheme of Chapter 89 of the Customs Tariff it is clearly evident that the Chapter has been totally aligned with HSN upto six digit level. The HSN explanatory notes along with the relevant tariff have been analyzed by the bench of tribunal in case of Waterways Shipyard Pvt Ltd, and the classification determined by application of Rules of Interpretation under heading 8903. Tribunal has in the said decision determined classification in line with the principles of classifications as enunciated by the Apex Court in the above referred decisions. Following the decision of tribunal in case of Waterways Shipyard Pvt Ltd we hold the classification of imported vessel under heading 8903 as determined by the impugned order.
5.1 In view of discussions as above, the appeal is dismissed.
(Order pronounced in the open court on 01.11.2019) (S.K. Mohanty) Member (Judicial) (Sanjiv Srivastava) Member (Technical) tvu