TMI Blog2013 (1) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... s imported as an ocean going vessel but subsequently broken up - from the actual date of import to the date of breaking up by creating a legal fiction. The vessel is an Indian origin and therefore cannot be levied to duty at the time of breaking up cannot be accepted. Section 2(25) of the Act when the vessel was purchased by the appellant, importation had not taken place. Importation took place subsequently when the appellant decided to beach the vessel and took permission for the same. Beaching the vessel was for the purpose of breaking it up. Therefore the appellant was advised to file a bill of entry which he filed and this series of events would show clearly that appellant was the owner as well as the importer at the time of filing bill of entry. Therefore appellant has to be held as the importer. In favour of revenue - C/1783/1994 and C/1/2008 - A/1139-1140/2012-WZB/AHD - Dated:- 6-8-2012 - S/Shri M.V. Ravindran, B.S.V. Murthy, JJ. REPRESENTED BY : Shri P.M. Dave, Advocate, for the Appellant. Shri K.M. Mondal, AR, for the Respondent. [Order per : B.S.V. Murthy, Member (T)]. The subject matter of this case relates to duty liability of the vessel M.V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained permission for beaching from Superintendent of Central Excise. 7-5-1993 The Appellant addressed a letter to the Superintendent of Central Excise, seeking information as to whether any duty was payable for beaching the said vessel, pointing out that the said vessel had been built at the Hindustan Shipyard Ltd. 12-5-1993 The Superintendent of Customs Central Excise directed the Appellant to file a Bill of Entry for the said vessel. It was done by the Appellant under protest. On 12-5-1993, the Superintendent of Customs Central Excise, informed the Appellant that the Bill of Entry had been assessed provisionally and directed the Appellant to make the necessary payment of duty and also to furnish a bond in relation to the provisional assessment under Section 18 of the Customs Act, 1962. 14-5-1993 Aggrieved by the provisional assessment, on 14-5-1993, the Appellant filed a Special Civil Application No. 4924 of 1993 in the High Court of Gujarat at Ahmedabad. 25-5-1993 The Hon ble High Court of Gujarat at Ahmedabad granted an interim relief exempting the Appellant from paying the provisionally assessed duty of Rs. 75,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een imported; that the Noti. No. 262/58 was inapplicable; that the revenue had erred in equating such vessels to Indian built vessels; that the Noti. No. 118/59-Cus. was attracted to the instant case and conferred an unconditional exemption on all ocean going vessels cleared for home consumption from M/s. Hindustan Shipyard Ltd.; that the said notification did not stipulate that if at any later point of time, such vessel was taken up for breaking, it would attract customs duty; that the said vessel was built and registered in India and carried an Indian flag. 24-5-1994 The Customs, Excise Gold (Control) Appellate Tribunal, West Regional Bench, Bombay vide an interim order dated 24-5-1994 waived the pre-deposit of the balance of duty vide Order No. 266/94/WRB, till final disposal of appeal and granted a stay subject to the continuance of the deposit of Rs. 8 lakhs and a personal bond for the remaining amount. 10-7-1998 The CEGAT, New Delhi vide order dated 10-7-1998 [2000 (125) E.L.T. 1001 (Tribunal)] rejected the Appeal No. C/1783/94-B2 filed by the Appellant and recorded following findings : (a) A legal fiction had been created unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 491 to rectify the mistakes apparent from the record. 13-4-1999 The CEGAT, New Delhi, vide Misc. Order No. 13/99/B2 dated 13-4-1999 dismissed the ROM application based on the fact that the manufacture of the vessel in the customs licensed shipyard was the same if the vessel had been manufactured in a foreign country. 3-8-1999 The Appellant filed Misc. Application in ROM No. C/ROM/138/98-B2 and in Appeal No. C-491/98-B2 stating that the CEGAT, New Delhi had not taken into consideration the decision of this Hon ble Court in Union of India v. Baijnath Melaram [1998 (97) E.L.T. 27 (S.C.)] in which it was held that a vessel which had been originally held by the Indian Navy can not be said to have been re-imported . But the said Misc. Application was dismissed by the learned Tribunal vide order dated 8-10-1999. Year 2000 Aggrieved, the appellant filed Civil Appeal No. 1998 of 2000 before Hon ble Supreme Court against the Order No. 491/98-B2 passed by the CEGAT, New Delhi in Appeal No. C/1783/94-B2 as well as against the Misc. Order No. 35/99-B dated 8-10-1999 in Misc. Application in ROM No. C/ROM/138/98-B2. The Hon ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in terms of the conditions in the said notification. (e) The question of the applicability of the High Court judgment in the case of Baijnath Melaram does not arise. (f) The rate of duty referred in Section 66 of the Customs Act, 1962 would necessarily mean rate of Customs duty. Wording of the section would indicate both components and the goods manufactured therefrom would be subject to Customs duty. Therefore, on this ground also, the argument that any goods made in Customs Bonded warehouse are deemed to be made in India must be rejected. (g) There is no basis in law to support the submission that if the duty of Customs has to be paid, it has to be limited to that calculated on the value of the imported parts used therein. There are notifications exempting indigenously made inputs from excise duty when used in the manufacture of goods in bond. Therefore, the plea of double taxation has no merit. The wrong practice adopted by the department cannot be a ground for moulding of any relief by the Tribunal. 21-4-2003 The party filed a ROM application No. C/MA/540/03 in CESTAT Order No. CI/403/WZB/2003 which was dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and directed to pay Rs. 8 Lacs further instead of Rs. 25 lacs ordered by CESTAT. The amount of Rs. 8 Lacs was deposited by the party. 28-2-2011 Meanwhile, in C.A. No. 3788/2003 which pertained to provisional assessment, the SC has once again remanded back the case to the CESTAT for fresh adjudication and determination of question of leviabilty of duty on an Indian built ship brought into India for breaking purpose. It was also directed to keep in mind the observations of the SC in CA No. 1998/2000. 19-9-2011 The CESTAT vide Order No. M/1776/WZB/AHD/11 dated 19-9-2011, has tagged the Appeal No. C/1783/94 related to provisional assessment and Appeal No. C/01/2008 related to final assessment as issue in both the appeals are same and for same vessel. 3. Heard both the sides. 4. First question to be decided is whether the vessel should be assessed and levied to duty as the vessel imported for breaking up or not. 4.1 It is submitted by the ld. counsel for the appellant that the vessel when it was built and cleared by M/s. Hindustan Shipyard Ltd. and sold to M/s. Dempo Steamships Ltd., central excise duty @ 1% ad volarem had been paid. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind and value are liable to subject, on the importation thereof. 4.5 The provisions of Section 20 are very clear and unambiguous. Even if the vessel is of India origin, the duty liability is attracted as if it is of foreign origin when it is imported into India unless it is exempted by a specific notification. Therefore the fact that vessel was built by M/s. Hindustan Shipyard Ltd.; that M/s. Hindustan Shipyard Ltd. had paid central excise duty; that M/s. Hindustan Shipyard Ltd. had availed exemption under Notification No. 163/65-Cus.; whether the ship was cleared under ex-bond bill of entry or under an invoice by M/s. Hindustan Shipyard Ltd. are all irrelevant. What is to be examined is when the vessel was purchased by the appellant herein and brought for breaking up it was to be treated as vessel imported for breaking up or not. 4.6 During the relevant period when the vessel was sold in auction and bill of entry was filed there was a Notification No. 133/87-Cus. which was in force and the same is reproduced below : Notification No. 133/87-Cus., dated 19-3-1987 Exemption to specified goods falling under Chapter 89 In exercise of the powers conferred by sub-section (1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship was sold to M/s. Dempo Steamships Ltd. and it was an ocean going vessel till 1993 and thereafter an order was passed by the Hon ble High Court of Bombay on a suit filed by the creditors and Hon ble High Court passed the order for auction of the said vessel on as is where is basis. It is to be noted that the vessel was sold free from all encumbrances and existing liens. The appellant purchased it being the highest bidder and took delivery. What is important to be noted is that when it was sold to the appellant there was no condition or agreement that it was sold for breaking up. The decision as to whether the vessel should be broken up or should be used for carrying goods as a ocean going vessel was made by the purchaser. The appellant sought and obtained permission for beaching the vessel from the superintendent of Central Excise which is nothing but permission for breaking up the vessel. There is no indication as to whether anyone obtained permission from DG shipping for breaking up in the records. The fact remains that the appellant applied and obtained permission for beaching the vessel on 6-9-1993 and thereafter the proceedings started because customs insisted on filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to be applied to any other case as the one laying down the law. Therefore we do not consider that this decision would be applicable to the facts of this case. As regards the decision in the case of Hindustan Motors Ltd., Lal Woollen and Silk Mills Pvt. Ltd. and Golden Paper Udyog (P) Ltd. cited above, while it has to be accepted that liability of an article to duty is not determined by an exemption notification, it cannot be denied that the duty liability has to be determined in terms of the Act. We have already reproduced Section 20 of the Act to show that the origin of the goods is not relevant for levy of customs duty. Once the duty liability is established, it is necessary to examine whether the duty liability can be set aside on the basis of an exemption notification. Once as per the statute duty is leviable, it is for the importer to show that such duty is not leviable and for that purpose he is required to show that goods can not be considered as imported in accordance with legal provisions or he is eligible for exemption if any. Unfortunately, in this case Section 20 of the Act is against the importer. 4.11 We also agree with the submission that action of a third part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consumption, it is for the department to show that the goods had been exported and are being re-imported. In the absence of such a proof, the natural decision would be that levy of duty again when the ship is to be broken up would amount to clearance for home consumption of the same goods twice which is not correct. In the case of M.G. Industrial Services Pvt. Ltd., the issue was additional customs duty leviability and the High Court was considering the provisions of Notification No. 167/86. Notification No. 167/86 is nowhere under consideration before us. Therefore we are unable to consider this decision. In the case of Dev Krupa Ship Breaking cited by the ld. counsel, the Tribunal in the Order No. A/778/WZB/2004/C-II dated 3-9-04 [2007 (210) E.L.T. 591 (Tribunal)] had considered the issue. In that case, the ship was sold by Shipping Corporation of India for breaking up only after scraping the same. In sub-paragraph (2) of paragraph 1, the Tribunal has clearly observed that the ship was sold as scrap for breaking. In this case ship was not sold after scrapping but was sold on as is where is basis. In fact the seller discharged the liability for keeping it in the port after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue above and have taken a view that in this case it is not the case of the appellant that the seller, the auctioneer appointed by Bombay High Court, had obtained permission for breaking up. In fact from the records and submissions it is not clear as to who obtained the permission for breaking up the vessel. While on behalf of Revenue it was submitted by the ld. counsel that appellant had obtained permission but this was denied by the ld. counsel for the appellant in his written submission. In any case, it was the responsibility of the appellant to show that the permission of DG shipping was obtained by someone else if he wanted to escape the liability as the importer. This has not been done. 6. According to Section 2(25) of the Act, importer in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out by the importer. In this case when the vessel was purchased by the appellant, importation had not taken place. Importation took place subsequently when the appellant decided to beach the vessel and took permission for the same. Beaching the vessel was for the purpose of br ..... X X X X Extracts X X X X X X X X Extracts X X X X
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