2007 (2) TMI 487 - AT - Customs

Summary

Issues:
- Interpretation of clause 3(2)(b) of the Foreign Trade (Exemption from application of Rules for certain cases) Order, 1993 regarding importability of goods as ship stores for vessels.
- Application of the decision of the Hon'ble Supreme Court in Union of India v. V.M. Salgaoncar & Bros. (P) Ltd., 1998 (99) E.L.T. 3 (S.C.) in determining the scope of "outgoing vessels."
- Assessment of whether the benefit of clause 3(2)(b) of Order, 1993 is applicable to vessels on a coastal run.

Analysis:

The appeal before the Appellate Tribunal CESTAT, New Delhi involved a dispute regarding the importation of goods declared as "Freon 22 (Ship stores)" under an ex-bond bill of entry. The Customs Act, 1962 was invoked to propose confiscation and penalties due to the goods being restricted for import. The adjudicating authority confiscated the goods, imposed fines, and penalties, a decision upheld by the Commissioner (Appeals).

The crux of the matter revolved around the interpretation of clause 3(2)(b) of the Foreign Trade (Exemption from application of Rules for certain cases) Order, 1993. The appellant contended that the goods were meant for supply to coastal vessels, falling within the exemption provided under the said clause. Reference was made to the decision of the Hon'ble Supreme Court in Union of India v. V.M. Salgaoncar & Bros. (P) Ltd., emphasizing the similarity between "sea" and "ocean" concerning vessels' geographical operations.

The Tribunal analyzed the issue in light of the Supreme Court's decision and concluded that the benefit of clause 3(2)(b) of Order, 1993 could be extended to vessels on a coastal run. As per the Tribunal's findings, the distinction between "sea-going" and "ocean-going" vessels was not substantial, aligning with the broader interpretation provided by the Supreme Court. Consequently, the impugned order was set aside, and the matter was remanded back to the Commissioner (Appeals) for a fresh decision, ensuring the appellant's right to a personal hearing.

Ultimately, the appeal was allowed by way of remand, providing an opportunity for a reevaluation of the case based on the clarified interpretation of the relevant legal provisions and precedents, particularly focusing on the applicability of the exemption to vessels operating on coastal routes.