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TMI Blog2013 (1) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... use and delivered to M/s. Dempo Steamships Ltd. for a total consideration of Rs. 7,61,12,400/- on 30-11-1975. It was claimed that at the time of clearance of the said vessel, Central Excise duty @ 1% was paid by Hindustan Shipyard Ltd., Vishakhapatnam. However, the same has not been substantiated by any duty paying document. The said vessel was cleared for home consumption after filing ex-Bond Bill of Entry by M/s. Hindustan Shipyard Ltd., Vishakhapatnam. June 1986 The said vessel ceased to ply and was grounded at Bedi Bunder, Jamnagar in 1986 after it had made several trips to ports outside India and returning to India on every occasion. No application had ever been made to the Central Government under Section 42(2A) of the Merchant Shipping Act seeking permission to export the said vessel, as the vessel was a register Indian vessel tonnage and plying in Indian Flag. 16-10-1992 An order was passed by the High Court of Judicature at Bombay in Admiralty Suit No. 7 of 1990 at the instance of Union of India and the Shipping Credit & Investment Co. of India Limited for the auction of the said vessel on 'as is where is' basis free from all encumbrances and existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection to maintain status quo till the stay application was decided by the Collector (Appeals), Ahmedabad and directed the Collector (Appeals), Ahmedabad to decide the Appeal within a period of three months to avoid causing hardship to the Appellant. 5-8-1993 The Appellant filed an appeal with the Collector (Appeals), Ahmedabad. 17-8-1993 The Collector (Appeals), Ahmedabad, stayed the order of assessment. The stay was, however, conditional on the maintenance of a deposit of Rs. 8 lakhs in accordance with the High Court Order pending a final decision. The Appellant duly maintained the deposit amount. 29-4-1994 The Collector (Appeals), Ahmedabad passed the final order confirming the provisional assessment order of the Superintendent of Customs & Central Excise dated 12-5-1993. The question for consideration before the Collector (Appeals), Ahmedabad was whether the said vessel, which had been turned into a foreign going vessel and had subsequently been brought back to India, fell under the purview of Noti. No. 133/87-Cus., which superseded the previous Noti. No. 262/58-Cus. The Collector (Appeals), Ahmedabad ruled that the aforesaid notifications were attracted and that the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1962 raising inter alia, the following questions of law : (a) Whether a vessel manufactured by a public sector company in India by using substantially indigenous material and cleared from the bonded warehouse in terms of Noti. No. 118/59-Cus. could be equated with a ship manufactured in a foreign country and imported into India in view of the definition of "import" and "imported goods" provided for in Sections 2(23) and 2(25) respectively of the Customs Act? (b) Whether the CEGAT had erred in applying Noti. No. 133/87-Cus and Noti. No. 262/58-Cus. to the vessel despite the fact that the vessel had not been 'imported' in the first place and the exemption had been obtained not under Noti. No. 133/87-Cus. but under Noti. No. 118/59-Cus.? (c) Whether the CEGAT had erred by limiting the scope of Noti. No. 118/59-Cus. as being applicable only as the 'first import' in view of the fact that this Notification provided an unconditional exemption to ocean going ships indigenously manufactured by M/s. Hindustan Shipyard Ltd. and had not been subject to any subsequent amendments? (d) Whether subsequent jour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CEGAT, Mumbai vide final Order No. CJ/403/WZB/2003, dated 18-2-2003 in Appeal no. C/1783/94/B2 [2003 (154) E.L.T. 472 (Tri. - Mum.)] rejected the appeal of the appellant and recorded the following findings : (a) There is no substance in the submission that a new case is being made out by the Notification No. 118/59-Cus. was not in existence at the date, on which the vessel was cleared by HSL having been superseded by Notification No. 163/65-Cus. came to light only on the submission made by Shri Pundir. It would appear that at all time, it was wrongly presumed that the earlier notification was in existence. (b) It has been held by the Hon'ble Supreme Court that as far as facts are concerned, the Tribunal is the final authority and the Court would go into only the questions of law at the Appeal stage. Therefore, the Tribunal would first record the correct facts and then in the factual perspective would locate and apply the relevant law. (c) When the fact is accepted that Notification No. 118/59-Cus. did not exist at the time of clearance of the vessel from the shipyard, the persistent plea that the ship was manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagar vide OIA No. 99/JMN/2007, while dismissing the appeal, held that the issue has already attained its finality inasmuch as the Commissioner (Appeals) as well as the Hon'ble CEGAT, Mumbai have upheld the provisional assessment and also the appellant has not obtained any stay against the operation of decision of Hon'ble CEGAT, Mumbai's Order No. CJ/403/WZB/2003 dated 18-2-2003, but as a regular practice and to avoid recovery of Government's outstanding dues, the appellant has filed one more ROM in the matter before the CESTAT, Mumbai on 24-5-2004 (whereas one ROM in the same matter has already been dismissed) and also filed a Civil Appeal No. 3788/2003 before the Supreme Court of India, which is nothing but a habitual practice of filing appeal and a way of keeping the Government dues in abeyance. 2-1-2008 Being aggrieved with the above, the Appellant preferred appeal before Hon'ble CESTAT, WZB, Ahmedabad which is registered as Appeal No. C/01/08. 4-3-2008 The CESTAT granted conditional stay to deposit a further amount of Rs. 25 Lacs vide Order No. S/194/WZB/AHD/08. 10-4-2008 Aggrieved with the aforesaid Stay Order dated 4-3-2008, the party filed SCA 6058/2008 before H.C. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; Golden Paper Udyog (P) Ltd., Faridabad - 1983 (13) E.L.T. 1123 (C.E.G.A.T.) 4.2 Further any action of a third party like M/s. Hindustan Shipyard Ltd. could not result in any liability of customs duty for the Indian purchaser of the vessel. The appellant had purchased the vessel in an auction held by Hon'ble Bombay High Court on "as is where is" basis. He relied upon the decisions in the cases like Steel Industries Kerala Ltd. - 2002 (146) E.L.T. 688 and Dev Kripa Ship Breaking vide Order No. A/778/WZB/2004/C-II, dated, 3-9-2004 [2007 (210) E.L.T. 591 (Tri. - Mumbai)]. 4.3 Ld. counsel for the Revenue submitted that whether the vessel is of an Indian origin or foreign origin is not relevant and according to Section 20 of Customs Act, 1962, the vessel has to be treated as the one imported. He also submits that the contention of the appellant that he was not the importer of the vessel was not raised earlier before the Hon'ble Tribunal and before the Apex Court. Therefore he submits that appellant has to be held as the importer of the vessel and vessel has to be treated as imported for breaking up and liable to duty. 4.4 According to Section 20 of Customs Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loating structures) as are imported for the purposes of breaking up; and (b) any such goods (that is to say vessels and other floating structures), if subsequently are intended to be broken, the importer shall present a fresh bill of entry to the Collector of Customs, and thereupon such goods shall be chargeable with the duty which would be payable on such goods as if such goods were entered for home consumption under Section 46 of the Customs Act, 1962 (52 of 1962) on the date of the presentation of such fresh bill of entry to the Collector of Customs for the purposes of break up of such goods." It may be seen from the notification that this is an unconditional notification and exempts vessel from payment of customs duty even if it is imported into India from the whole of duty of customs and additional duty unless the vessel is imported for the purpose of breaking up and when such vessels are intended to be broken up, the importer has to file a bill of entry and thereafter customs duty will be payable as if the goods have been imported and entered for home consumption on the date of the presentation of such bill of entry for the purpose of breaking up of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble High Court of Bombay or the auctioneer appointed by the High Court had sold it for breaking up or the agreement provided that it shall be broken up and not do any more voyages as an ocean going vessel. That being the position, it becomes clear that it was the appellant who took the decision to break up and beached the vessel and hence was rightly advised by the customs to file a bill of entry. 4.9 At this stage it would be appropriate to consider some of the decisions which were relied upon by the appellant to submit that no duty is leviable. 4.10 The first decision of Hon'ble Supreme Court in the case of Baijnath Melaram - 1998 (97) E.L.T. 27 (S.C.) was relied upon to submit that there cannot be any customs duty on an Indian vessel. In the case of Baijnath Melaram, the vessel was with Indian Navy. When a vessel is owned by Indian Navy for the national security, it cannot be said that at any point of time the vessel was a foreign going vessel and the Customs Act has to be applied when it ceases to be an ocean going vessel. The vessel owned by Indian Government and sold through MSTC Ltd. as held by Hon'ble Supreme Court cannot be a ship after its export has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the vessel was sold to him on "as is where is" basis only without any restriction for using it as an ocean going vessel or otherwise the seller of the vessel in auction will have no liability to Customs duty. Therefore at the time of sale till it was purchased by the appellant and beached, it cannot be said that there was already an intention to break up the vessel. 4.13 The ld. counsel for the appellant relied upon the decision in the case of Steel Industries Kerala Ltd. to submit that even if the vessel is held to be constructed in a foreign country because M/s. Hindustan Shipyard Ltd. was a customs appointed warehouse, importer can not be held liable to pay duty. In that case, M/s. Hindustan Shipyard Ltd. had availed exemption in terms of Notification No. 118/59 is reproduced below : "In exercise of powers conferred by sub-section (4) of Section 100A of the Sea Customs Act, 1878 (8 of 1878), as in force in India and as applied to the State of Pondicherry, the Central Government hereby exempts the ocean going vessels manufactured by M/s. Hindustan Shipyard Ltd. in their private bonded shipyard at Gandhigram, Vishakhapatnam, from the whole of the Customs duty leviable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e levied to duty at the time of breaking up cannot be accepted. 5. The next submission is that even if it is held that duty is leviable, the burden cannot be on the appellant herein. For this purpose, the ld. counsel relied upon the decision of the Hon'ble High Court of Gujarat in the case of Mustan Taherbhai - 2009 (239) E.L.T. 229 (Guj.). In this case Hon'ble High Court of Gujarat held that Shipping Corporation of India was granted permission on 4-4-1997 by DG shipping for ship breaking. Customs duty became payable consequently as exemption notification applicable to ocean going vessel was not available. Hon'ble High Court took the view that just because the memorandum of agreement between the seller and the buyer provided that purchaser has to discharge the duty liability on behalf of seller, the duty liability can not be fastened on the respondent. In that case Revenue was relying on Notification No. 163/65 to support the contention that respondent who was the buyer of the vessel from Shipping Corporation of India is liable to pay customs duty. The Hon'ble High Court relied upon the decision of the Hon'ble Supreme Court in Jalyan Udyog (supra) wherein the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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