TMI Blog2011 (12) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... -WZB/C-II(EB) - Dated:- 2-12-2011 - Mr. S.S. Kang, Mr. Sahab Singh, JJ. Appearance: Shri R.K.Mahajan, Commissioner (A.R.) for appellant Shri Naresh Thacker. Advocate. Per : Sahab Singh This is an appeal filed by the Revenue against the Order-in-Original No.3/Commr.Goa/CX./2003 dt. 27/2/2003. 2. The brief facts of the case are that M/s. Waterways Shipyard Pvt. Ltd., Goa (hereinafter referred to as 'WSPL') manufactured a vessel called 'M.V.CARAVELA' at their shipyard in Vasco-da-Gama, Goa, which was cleared by them in February 2001 without payment of appropriate Central Excise duty leviable on the vessel. The said vessel has been retrofitted and presented as an entertainment destination and India's first ever offshore Casino having pleasure games. 3. M/s. Advani Pleasure Cruise Pvt. Ltd. hereinafter referred to as 'APCPL', which is joint venture between Advani Hotels Resorts India Ltd. (M/s. AHRIL) and Casino Austria International, had undertaken the activity of interior design of the vessel for Casino and entertainment activity at the yard of M/s. WSPL and had taken the said vessel from M/s. WSPL on lease basis for the period of 5 years. Because of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the bay of the Mandovi River, for commuting the persons, food articles. This showed that said vessel is not taking any voyage and that intentions of M/s. WSPL to manufacture M/s. AHRIL to acquire the said vessel was for the sole purpose of operating Casinos, rather than using it as Cruise ship. Heading 8903.00 in the HSN states that this heading includes yachts, marine jets and other sail boats and motor boats, dinghies, kayaks, sculls, skiffs, pedals (a type of pedal operated float), sports fishing vessels inflatable craft and boats which can be folded or disassembled and the word includes given in the said clarification is in the nature of illustration and the list is not exhaustive. It further showed that the classification would have been read with the preceding paragraph of the said classification which specifically states that heading covers the vessel for pleasure or sports and all rowing boats and canoes. From the investigation department took a view that the said vessel is a casino gambling establishment specially designed for live casino gaming activities and therefore rightly classifiable under Chapter heading 8903.00 of the Central Excise Tariff Act, 1985 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present condition and not when certain fitments or facilities are removed. He submitted that it is a fact on record that the vessel was conceived, manufactured cleared and operated as a floating casino. He further submitted that Commissioner did not take cognizance of the fact that the said vessel is being clearly advertised as casino and commercially it is identified as place for pleasure or entertainment and not for voyage or cruise. It was wrong on the part of the Commissioner to rely upon the principle of Nosciture A Sociis, to hold that only small sports vessels qualify for classification under chapter heading 8903. It was further submitted by the learned Commissioner (A.R.) that adjudicating authority failed to apply the Rules of Interpretation, inasmuch as he directly resorted to Rule 4 for determining the classification of the vessel, without considering and eliminating the appreciation of Rule 1,2, 3 of the said Rules of Interpretation. The learned Commissioner also referred to para 30 of the show-cause notice referring to the Supreme Court decision in the case of C.C.E Shillong Vs. Woodcraft Products Ltd. reported in 1995 (770 ELT 23 9 (SC) wherein it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gers. He also submitted that the said vessel is classified as class VII passenger ship by the Director General of Shipping, it is capable of plying on the coastline within 5 nautical miles. The said vessel has cabins for passengers, a swimming pool, a sun deck, a casino, a restaurant, bars etc. He further submitted that according to the Survey Certificate issued by Mercantile Marine Department under the Merchant Shipping Act, 1958. The said vessel can operate with crew not staying on board the vessel when off duty. 9. (III). The learned Advocate submitted that Revenue's argument that the vessel in question is a pleasure vessel cannot be accepted. He contended that though the pleasure vessel had not been defined in the Indian Shipping Act but it has been clearly defined in UK, Australia and Canada. He referred to the definition of pleasure vessel given in the UK Statutory Instruments and Principal Merchant Shipping Act, wherein a pleasure vessel means any vessel which at the time it is being used is wholly owned by an individual or individuals and used only for the sport or pleasure of the owner or the immediate family or friends of the owner. If it is owned by a body corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges and similar vessels for the transport of persons or goods. Nil 89.03 8903.00 Yachts and other vessels for pleasure or sports; rowing boats and canoes. 16% 12. In the show cause notice Revenue relying on the Supreme Court judgment in the case of C.C.E. Shillong Vs. 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 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:- 89.01 - 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 8901.20 - Tankers 8901.30 - Refrigerated vessels, other than those of sub-heading 8901.20 8901.90 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this explanation. Entry 8903 of the HSN reads as under:- 89.03 - Yachts and other vessels for pleasure of sports; rowing boats and canoes (+). 8903.10 - Inflatable - Other : 8903.91 -- Sailboats, with or without auxiliary motor 8903.92 -- Motorboats, other than outboard motorboats. 8903.99 -- Other This heading covers all vessels for pleasure or sports and all rowing boats and canoes. This heading includes yachts, marine jets and other sailboats and motorboats, dinghies, 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 simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 employee 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/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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