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2018 (11) TMI 243 - AT - CustomsClassification of imported vessel - M V royal Sesa - classifiable under CTH 89019000 or under CTH 89059090? - benefit of N/N. 12/2012-Cus dated 17.03.2012 (Sr No 461) and N/N. 21/2012-Cus dtd 17.03.2012. Whether the vessel imported declared as “Self Propelled & Navigable Transhipment Cargo Barge” classifiable under the CTH 89019000, and exempt from payment of duty under Notification No 12/2012-Cus dated 17.03.2012 (S No 461) and Notification No 21/2012-Cus dated 17,03,2012, or under 89059090 and subjected to duty at appropriate rate? Held that:- The vessel is not a normal passenger or cargo vessel but has been designed and fitted with number of equipments for performing specific functions for which the vessel has been designed - From the structure of Chapter 89, it is quite evident that navigability is not a criteria for determination of the Classification under the said chapter. Navigability would be one of the features for all the goods classifiable under chapter 89 - Classification of any vessel is based on its essential character ascertained on the basis of the functional features, structural design and the equipment fitted on board the vessel. It is the basic design keeping in view the function that is intended to be performed which determine the classification of the particular vessel. The appellant are claiming classification of the vessels under CTH 8901 on the ground that the vessel is principally designed for transport of goods and navigability is one of the main functions of the vessel - On perusal of the certificates and experts classification it is observed that these certificates have been issued by the various authorities to certify the availability of certain features such as navigability etc, but none of these certificates identify the essential character and function of the said vessel. Further these certificates cannot be the sole basis of classification under the CTH and the classification needs to be determined only after ascertaining the main/ essential function intended/ performed by the vessel and terms of the relevant tariff heading. It is not in dispute that under the HSN Explanatory Notes crane barge / floating cranes are classifiable under Chapter 8905 of HSN. In the present case, the vessel imported was fitted with cranes, and cranes provided the pre dominant usage and functional basis to the vessel - navigability was not even the basic design essential for this vessel. One factor which makes this case unique and distinguishable from all other cases is the declaration made by the exporter to the Customs Authority in China. Exporter has declared the said vessel as “floating cranes” as is evident from the documents resumed during the investigation. When the exporter himself is declaring the vessel as floating crane then how can the appellants claim the vessel to be different from the said declaration? Change in the nomenclature from Floating Transfer Station to Crane Barge - Held that:- Various emails, discussions etc recovered during the course of investigation, regarding the classification, application for license under EPCG, decision not applying for the same and the consequential directions for the CHA’s to change the description to “Cargo Barge” show that appellants had knowingly adopted the description to suit their convenience and classify the goods under heading 8901 so that they can avail the benefit of exemption. It was part of a well thought out strategy to evade duty of Customs. The vessel M V Royal Sesa imported vide B/E No 006/JGD/12-13 dated 15.04.2013 is correctly classifiable under heading 89059090 and benefit of exemptions claimed is not admissible to them. Demand of Interest - Held that:- Demand of interest is a natural consequence on account of delay in payment of the tax. Since appellants have short paid the Customs duty interest is demandable from them under Section 28AA of the Customs Act, 1962. Penalty u/s 114A - Held that:- The word “or” should be read as “and” and penalty should be equivalent to the total of duty and interest short paid. Appeal disposed off.
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