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2019 (11) TMI 22 - AT - CustomsClassification of goods - Whether the vessel mercury focus (formerly known as Transocean Mercury), imported by the appellants, which initially underwent repairs in the Cochin Shipyard and later moved to the site of exploration, merits to be called as a ‘foreign going vessel’ or it is to be treated as ‘goods’ for the purposes of Customs Act, 1962? - HELD THAT:- It is seen that the rig has arrived on MV Talisman. In the cargo declaration filed for the MV Talisman, the said rig was not mentioned as Cargo. However, a separate IGM appears to have been filed for the rig itself claiming the same to be calling on Cochin Shipyard Ltd. for repairs. The Department disputes that the appellants have not declared the vessel and the tug as goods having been imported in the country. Though, in terms of the Production Sharing Contract (PSC) dated 02.03.2007 they were very much aware that the said vessel and the tug were to be used in the country for petroleum operations. Whether the appellants required to declare the vessel and the tug as goods in the IGM and to this extent, is there any misdeclaration by the appellants? - Confiscation under Sections 111(d)(f)(g) and(h) of the Customs Act, 1962 - HELD THAT:- Both sides do not dispute the fact that the rig and the tug are vessels. They have been brought to Cochin Shipyard with an understanding on the part of the appellants that the same will be deployed to undertake Petroleum operations in the block allotted to them, albeit after repairs - Once the nature of the vessel was not that of a foreign going vessel, it acquires the nature of a vessel imported for the purpose of use in India. Therefore, it requires to fulfil the conditions of import. As the vessel was not categorically declared as goods intended for import in the IGM filed on behalf of the appellants, contravention of section 30, 32 etc. of Customs Act have taken place. Looking into the facts of the case that the appellants have taken the plea of confusion in the Customs practices itself; that the appellants have been regularly keeping the Department to notice of all the activities and that the officers have boarded the vessels and supervised the supply of ship stores and spares to “Transocean Mercury” and “MV Shunter”, we find that redemption fine imposed on appellants in lieu of confiscation of “Transocean Mercury” and “MV Shunter”, can be reduced. Whether the benefit of Notification No.12/2012 (Sl.No.359) dated 17.03.2012 is applicable to the appellants in respect of the vessel and the Tug? - HELD THAT:- It is not the case of the Department that the said “Transocean Mercury” and “MV Shunter” were put in to use for Petroleum operations without the essentiality certificate. On the contrary, the Department’s contention was that the goods were imported for Petroleum operations and as such their declarations in the IGM in 2011 were incorrect. On completion of the repairs, the appellants filed a Bill of Entry for clearance of “Transocean Mercury” and to facilitate the filing of Bill of Entry amendment to IGM was also requested and accordingly granted. Only after the goods obtained the essentiality certificate, they were put to the intended use. Therefore, we find that the exemption is correctly availed - there is no infirmity in the filing of Bill of Entry in 2012 and allowing the exemption to “Transocean Mercury” and “MV Shunter” available as per Notification No. 12/2012-Cus dated 17.03.2012. Whether the said vessel and the tug MV Shunter which was brought to tow the above vessel is to be considered as a supply vessel meriting classification under 89.01 of Customs Tariff Act, 1975? - HELD THAT:- As the Tug is a supply vessel a few additional features to tow, it is correctly classifiable under CTH 8901. Therefore, we hold that the exemption under Notification 12/2012-Cus dated 17.03.2012 is available to the appellants on “MV Shunter”. Classification of the supply vessel is thus, answered. Whether the appellants are eligible to avail the exemption available for ship stores, consumables, spare parts, etc.? - HELD THAT:- The vessels were not foreign going vessels so as to be eligible for free supply of bunkers and ship stores - The impugned vessel is not a foreign going vessel; we find that such ship stores supplied to a vessel which is not a foreign going vessel are not applicable for exemption thereof. Whether the penalties imposed on different parties are sustainable? - HELD THAT:- The benefit under Notification 12/2012-Cus dated 17.03.2012 is available to the appellants, M/s Focus Energy, on the Rig ‘Transocean Mercury’ and the AHTS ‘M. V. Shunter’ and that they are not liable to pay any duty in this regard. Therefore, the penalty imposed on M/s Focus Energy under Section 114A is set aside. As above, we find that there was a mis-declaration on the part of the appellants and the shipping agents, as far as the nature of the Rig ‘Transocean Mercury’ and the AHTS ‘M. V. Shunter’ is concerned, and the same have become liable for confiscation. There were reasons for the captain to be unsure/unaware of the procedures to be followed in such cases and as such ignorance of CBEC Circular 58/97 dated 06-11-1997 is understandable. Therefore, we find that penalty imposed on him can be reduced. Appeal allowed in part.
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