9911796707
TMI Blog2013 (6) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Hindustan Shipyard Ltd., Vizag in its customs bonded warehouse and was cleared by filing Bill of Entry No.219 dated 21st December, 1982 for Ex-Bond clearance for home consumption without payment of customs duty by claiming benefit of Notification No.163/65- Cus. dated 16th October, 1965. Subsequently, the vessel was sold and delivered to M/s. Shipping Corporation of India Ltd., Mumbai on 16th June, 1983. The vessel was then plying as a foreign going vessel. The said Shipping Corporation of India floated a tender vide Circular dated 15th December, 2000 for sale of the said vessel on "as is where is" basis. The tender of the respondent assessee came to be accepted and the same came to be sold under an invoice No.114 dated 16th January, 2001, at Porbandar. The assessee had purchased the ship for the purpose of breaking up the same. Thereafter, the vessel was brought to Alang Ship Breaking Yard, at Bhavnagar whereupon the assessee sought permission to beach the said vessel on 12th/13th January, 2001 at the plot allotted to it. It was the case of the assessee that since the vessel was manufactured/built in India and was now to be broken up in India, the vessel was neither within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals), on behalf of the assessee, it was contended that:- (i) the Shipping Corporation had sold the ship on "as is where is" basis and that the ship was delivered at the port of Porbandar, and, therefore, was delivered in India. (ii) The ship was manufactured by M/s. Hindustan Shipyard Ltd., Vizag and sold to Shipping Corporation of India Ltd. and delivery was given in India and hence, the clearance could be said to be clearance for home consumption. (iii) Since the Shipping Corporation of India had purchased the ship from Hindustan Shipyard Ltd., the notification which would be applicable would be 118/59-Cus. dated 18th June, 1959 which did not have any condition of payment of duty at the time of breaking. (iv) The invoice issued by the Shipping Corporation of India clarifies that the assessee had paid the amount of sales tax and that the ship was imported by the Shipping Corporation of India and was sold to the assessee. (v) Since the Shipping Corporation of India had collected sales tax from the assessee, in view of the provisions of Article 286 of the Constitution of India, it can very well be said that the ship purchased was not an imported ship and, therefore, no custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly, held that the assessee was not liable for payment of customs duty on the vessel in question. Against the said order of the Commissioner (Appeals), the appellant went in appeal before the Tribunal contending that the definition of importer under section 2(26) of the Customs Act, 1962 would include the transferee owner as they had sought clearance for breaking the same. That under the memorandum of sale agreement, the liability to pay the duty was cast upon the assessee and mere charge of sales tax by the Shipping Corporation would not take the assessee out of the ambit of the definition of importer and that in view of the provisions of section 15 and 46 of the Act, the assessee would clearly fall within the ambit of importer as contemplated under section 2(26) of the Act. 5. The Tribunal, in the impugned order, made reference to the Bill of Entry No.219 whereby the clearance of the vessel was effected from the custom bonded warehouse at Vishakhapatnam and observed that M/s. Hindustan Shipyard Ltd. as importer was granted the benefit of Notification No.163/65 and no duty was assessed. Subsequently, M/s. Shipping Corporation of India was plying the vessel as a foreign going and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, is not covered by the definition of the word 'importer' under section 2(26), the vessel having been cleared for home consumption Ex-Bond Vishakhapatnam in 1982 by Hindustan Shipyard and thereafter the ownership having remained with M/s. Shipping Corporation of India till Porbandar and the voyage from Porbandar to Bhavnagar port being of a vessel after clearance order, the owner of the vessel on the run from Porbandar to Bhavnagar after purchase for breaking up cannot be said to be importer of the subject vessel and that the duty under section 28 of the Customs Act can be demanded only from an importer. The Tribunal also held that the assessment resorted to on the Bill of Entry filed by the assessee in respect of the imported goods at Bhavnagar would not entitle the revenue to demand duty from it since the goods which have entered Bhavnagar port were not as a vessel but as vessel for breaking up on a coastal voyage from Porbandar to Bhavnagar. Referring to Notification 16/2000-Cus. dated 1st March, 2000, the Tribunal observed that under the said notification, a specific condition had been stipulated for filing a fresh Bill of Entry for breaking up and creating a legal friction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia to the respondent and not the date of beaching at Alang and on that date the importer would be Shipping Corporation of India (Para (xii) of Page 10 of CESTAT Order)? (4) Whether, on the facts & in the circumstances of the case, as provided under Section 15 ibid, rate of duty in the case of goods entered for home consumption under Section 46, on the date on which a bill of entry in respect of such goods is presented under that section shall be the rate in force and accordingly in the instant case effective rate would tariff read with Sr. No.298 of Notification No.16/2000-Cus dated 1.03.2000 subject to condition No.65? Accordingly, the appeal stood admitted on the aforesaid questions of law. 7. Ms. Amee Yajnik, learned senior standing counsel for the appellant, vehemently assailed the impugned order submitting that the decision of the Tribunal was not in consonance with the law laid down by the Supreme Court in the case of Union of India v. Jalyan Udyog (supra). The attention of the court was invited to the definition of 'importer' as defined under section 2(26) of the Act to submit that the said definition also provides that any person who owns the goods at any time between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the non-applicability of Notification No.163/65-Cus. is concerned, the Commissioner (Appeals) had categorically held that the same would be applicable to the facts of the present case which was not challenged by the assessee. Under the circumstances, the Tribunal was not justified in holding that the same could not be applied in the present case as there was no provision for filing fresh Bill of Entry therein. 8. Opposing the appeal, Mr. Paresh Sheth, learned counsel for the respondent supported the impugned order passed by the Tribunal as well as the order passed by the Commissioner (Appeals). It was urged that the vessel in question having been built in India, in the first place, the question of importing the same would not arise and as such, levy of customs duty thereof would not be justified. Even if it is assumed that in the light of the fact that the vessel in question was built in a bonded warehouse, the same was liable to customs duty, the date of import was the date when the same was initially cleared for home consumption, that is, on 21st December, 1982. Under the circumstances, once the vessel in question was already imported, there was no question of importing the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty leviable thereon under Section 3 of the said Customs Tariff Act. Provided that the duty of the Customs shall be levied on the vessel if it is broken up as if it were then imported to be broken up." Under the said notification, ocean going vessels manufactured in a warehouse and cleared therefrom by the Central Government were exempted from payment of whole of the customs duty leviable thereon as well as whole of the duty of customs as well as the additional duty of customs leviable thereon. Under the proviso thereto, it was provided that the duty on customs shall be levied on the vessel if it is broken up as if it was then imported to be broken up. At the relevant time since the subject vessel was to be used as an ocean going vessel, M/s. Hindustan Shipyard Ltd. cleared the same by virtue of Bill of Entry No.219 dated 21st December, 1982 for Ex-Bond clearance for home consumption without payment of customs duty availing of the benefit of the above notification. Subsequently, the vessel came to be sold to M/s. Shipping Corporation of India Ltd. on 16th June, 1983. Later on M/s Shipping Corporation of India floated a tender for sale of the subject vessel for scrapping. Pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be. (2) The provisions of this section shall not apply to baggage and goods imported by post. 12. Section 46 of the Act makes provision for entry of goods on importation and as it stood at the relevant time reads thus: 46. Entry of goods on importation. - (1) The importer of any goods, other than goods intended for transit or transhipment, shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form : Provided that if the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub-section, the proper officer may, pending the production of such information, permit him, previous to the entry thereof (a) to examine the goods in the presence of an officer of customs, or (b) to deposit the goods in a public warehouse appointed under section 57 without warehousing the same. (2) Save as otherwise permitted by the proper office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, however, on a closer look it appears that the same pertains to some other vessel. Pursuant to the acceptance of the respondent's tender, M/s Shipping Corporation of India issued an invoice dated 16th January, 2001 to the respondent. The aforesaid sale proceedings took place at Porbandar and the subject vessel was handed over to the respondent at Porbandar. Indubitably, prior thereto, the provisions of Notification No.163/65 had not been complied with inasmuch as customs duty payable on the subject vessel as if it was imported for breaking up had not been paid. 14. Since the Tribunal has held that the subject vessel ceased to be an ocean going vessel at Porbandar and that the goods when entered Bhavnagar Port were not as a vessel but "vessel for breaking up" on a coastal voyage from Porbandar to Bhavnagar the respondent was not an importer, it would be necessary to examine the relevant provisions of the Act. Importer, as envisaged under sub-section (26) of section 2 of the Act, in relation to any goods at any time between the importation and the time when they are cleared for home consumption includes any owner or any person holding himself out to be the importer. As regards wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters and it is the value at that point of time which is to be taken into consideration is no longer res integra. This contention was raised in Union of India v. Apar Industries Limited - 1999 (112) E.L.T. 3 (S.C.) = 1999 (5) J.T. 160. In that case the day when the goods entered the territorial waters, the rate of duty was nil but when they were removed from the warehouse, the duty had become leviable. The contention which was sought to be raised was that what is material is the day when the goods had entered the territorial waters because by virtue of Section 2(23) read with Section 2(27) the import into India had taken place when the goods entered the territorial waters. Following the decision of this Court in Bharat Surfactants (M/s) (Private) Ltd. and Another v. Union of India and Another, 1989 (43) E.L.T. 189 (S.C.) = 1989(4) SCC 21 and Dhiraj Lal H. Vohra and Others v. Union of India and Others 1993 (66) E.L.T. 551 (S.C.) = 1993 (Supp. 3) SCC 453, this Court came to the conclusion in Apar's Private Limited case that the duty has to be paid with reference to the relevant date as mentioned in Section 15 of the Act. 16.It was further submitted that in the case of Apar's Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Tribunal, was, therefore not justified in holding that since the vessel ceased to be an ocean going vessel after arriving at Porbandar and was converted and sold for ship breaking while at Porbandar, the duty liability as per the proviso to Notification No.163/65 would arise at Porbandar Port. The import would be complete only upon filing the Bill of Entry for home consumption, which in the present case was filed at Bhavnagar. Thus, the import of the vessel would stand completed upon the respondent-assessee having filed the Bill of Entry for home consumption. Till then, though the vessel had entered the territorial waters at Porbandar as a vessel intended for ship breaking, the import was not complete. 17. However, another crucial issue that arises for consideration is as to whether in the light of Notification No.163/65, the respondent-assessee would be liable to pay customs duty on the subject vessel which was previously cleared for home consumption as an ocean going vessel in the year 1982. 18. In this regard, it may be germane to refer to the decision of the Supreme Court in the case of Union of India v. Jalyan Udyog (supra) wherein the Supreme Court was dealing with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s if the ship is imported for breaking-up when it is broken up and the customs duty is charged on that basis. The notification thus creates a fiction viz., the vessel must be deemed to have been imported for being broken-up when it is broken up, though as a matter of fact the import was at an earlier point of time. Ordinarily speaking, no doubt, customs duty is levied with reference to the date of actual import but the exemption notification says that if the ship imported is an oceangoing vessel it shall be exempt from customs duty on the date of its import but in case it is subsequently broken up the duty shall be paid as if it were then imported for being broken-up - which necessarily means that duty will be levied on the value and at the rate prevailing on the date of breaking-up. Indeed, in our opinion, the notification was quite clear even before it was amended in 1962; at any rate it has become clearer beyond any doubt after the said amendment. By virtue of the fiction created by the proviso in the notification, the vessel is deemed to have been imported for breaking-up on the date it is broken up. It is well settled that where a fiction is created by a provision of law, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of import to the date of breaking up by creating a legal fiction. Once it is held that it is open to the Central Government to impose such a condition or to create such a fiction, as the case may be, the condition or the fiction has to be given full effect to. It must be deemed that the ship is imported on the date it is broken up and its value and rate should be determined with reference to such date. By doing this, the duty chargeable by virtue of the exemption notification is not going beyond the statutory duty payable on such deemed date. 20. As held by the Supreme court in the above referred decision, by virtue of the provisions of Notification No.163/65, the date of import in the case of a ship which is imported as an ocean going vessel, but is subsequently broken up is shifted from the actual date of import to the date of breaking up by creating a legal fiction. Such legal fiction is to be given its full effect. 21. Examining the facts of the present case in the light of the aforesaid legal position, though the vessel in question was initially imported on 21st December, 1982 when it was cleared for home consumption, by virtue of Notification No.163/65, the date of impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge the customs duty rested on the owner thereof or in other words, the person who presented the bill of entry in respect thereof. In the present case, it is an admitted position that at the time when the respondent-assessee sought beaching permission, the vessel had not been cleared for home consumption. It was in these circumstances, that the customs authority required the respondent to file bill of entry in respect of the subject vessel and pay customs duty thereon. The Commissioner (Appeals) has wrongly placed reliance upon the contents of the invoice under which the subject vessel was purchased by the assessee which reflects payment of sales tax. In the opinion of this court, the Commissioner (Appeals) has misdirected himself in placing reliance upon the contents of the invoice inasmuch as recovery of sales tax by Shipping Corporation of India would not change the character of the vessel which had not been cleared for home consumption for the purpose of breaking up. The conclusion arrived at by the Commissioner (Appeals) that if the sale was made in India Shipping Corporation of India would be the importer, which in turn is based upon the tender notice and the invoice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities are concerned with the levy and collection of customs duty in accordance with the provisions of the Act. Thus, merely because the sale of the subject vessel was made at Porbandar, it could not be said that the sale had been made in India inasmuch as at that time the subject vessel had not yet crossed the customs barrier. 23. At this stage it may also be noted that the Commissioner (Appeals) has placed reliance upon the decision of the Tribunal in the case of Commissioner of Customs v. Steel Industries, Kerala (supra) wherein the Tribunal has placed reliance upon the decision of the Bombay High Court in the case of Jalyan Udyog v. Union of India, 1987 (32) E.L.T. 69 which has been overruled by the Supreme Court in the case of Union of India v. Jalyan Udyog (supra). 24. Thus, in the aforesaid backdrop, it is apparent that by virtue of the provisions of Notification No.163/65-Cus., at the time when the ship was to be broken up, there was a deemed import of the ship for the purpose of breaking up. As held by the Supreme Court in the case of Jalyan Udyog (supra) even a deemed import has to be given full effect. Thus, all the necessary concomitants which go with import, would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in holding that Shipping Corporation of India would be the importer and not the respondent-assessee. 25. It may be recalled that the Tribunal has held that there being no provision for filing fresh Bill of Entry under the Notification No.163/65 as compared to the Notification No.16/2000-Cus., the assessment for home clearance was not under any of the provisions of the Customs Act. The observations made by the Tribunal are contradictory to the law laid down by the Supreme Court in the case of Union of India v. Jalyan Udyog (supra) wherein it has been held that the fiction created by the proviso to notification No.163/65-Cus whereby the vessel is deemed to have been imported for breaking-up on the date it is broken up has to be given full effect to. As discussed earlier, such effect can only be given by following the provisions of the Act in respect of importation of goods. Thus, even if notification No.163/65 did not expressly provide for filing of a fresh bill of entry, such requirement has to be read into it, inasmuch as a condition precedent for importing any goods is filing of a bill of entry. Therefore, the subsequent Notification No.16/2000-Cus only makes explicit w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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