TMI Blog2015 (2) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... essels of CTH 8905. Further from the contracts entered into with ONGC and NACOR, it is seen that the vessel should possess significant navigational capability to undertake and perform the tasks assigned and there are specific standards laid down in this regard. If the vessel has to undertake the survey at constant speed and depth, its navigability can not be said to be subsidiary to its main function and both are equally important. Further as per HSN Explanatory Note, vessels falling under CTH 8906 include scientific research vessels; laboratory ships, etc. within its ambit. It is a settled position in law as held by the hon'ble apex court in the case of Wood Craft Products Ltd. [1995 (3) TMI 93 - SUPREME COURT OF INDIA] that for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. Revenue has placed reliance on the principle of NOSITUR A SOCIIS. As per this principle, entries in the schedule of sales tax and excise statute list some articles separately and some articles are grouped together; when they are grouped together, each word in the entry draws colour from the other words, therein. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 M.C. Kshirsagar, Managing Director of HIPL - 50 Lakhs 80 lakhs 3 Hasan Abdulkadir Mapari, Manager (Operations) HIPL - 10 lakhs - 4 J.M. Baxi Co CHA - 50 lakhs - 5 Arya Offshore Services P. Ltd. appointed by the CHA - 25 lakhs - 6 Rajendra Devadiga, Manager Operations of Arya Offshore Services P Ltd - 10 lakhs - 7 Hemant Kumar Joshi, Surveyor of the Indian Register of Shipping - 2 lakhs - Aggrieved of the same, the appellants are before us. 2. The submissions made by the Ld. Counsel for the appellant can be summarised as below:- (a) Dispute pertains to classification of the vessel Geo Hind Sagar imported by the appellant, which according to them is classifiable under CTH 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled a lot of equipment on board to perform the various functions and these are, - Navigational Equipment, Seismic Survey/Research Equipment comprising of air guns, streamers, Seismic Data recording and processing equipment, facility for the personnel such as geo-physicists, etc., required for processing of seismic data and analysis. The details of various equipment are given in the technical specifications for the vessel which consists of Safety equipment, Seismic recording instrument, Deck machinery, Navigation Aids, Streamers, Energy source communication and Onboard processing. (e) In particular the valuation report given by Sugao Shipping Japan while classifying the vessel as a 'seismic survey vessel' against Sr. No. 10 gives the details of the navigation equipment which consist of GMDDS, GPS, Radars, Gyro, Wind sensor, Navigatgion Echo Sounder, Electronic Chart, Sonar, Tow system and so on. (f) The Charted Engineer's Certificate dated 7/10/2012 in respect of vessel also gives the vessel particulars and concludes that Geo Hind Sagar has to perform her task of conducting the research of sea bed by navigating a vast survey area running into hundreds of kilome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loats, dredgers, floating cranes, and other vessels, the navigability of which is subsidiary to their main function . As per HSN Explanatory Notes, vessels falling under Heading 8905 normally perform their main function in a stationary position and they include light vessels, drill ships, fire floats, dredgers of all kinds, salvage ships for the recovery of sunken vessels, permanently moored air/sea rescue floats, bathyscaphes, pontoons fitted with lifting or handling machinery and so on. The vessel in question does not perform its main function of survey/research in a stationary position and the navigational ability of the vessel can not be considered to be subsidiary to its main function. On the other hand CTH 8906 is the residuary entry covering all other vessel not covered by heading 8901 to 8905. In particular, it covers scientific research vessels as is evident from the HSN Explanatory Notes. Therefore, the vessel merits classification under CTH 8906 attracting 'nil' rate of duty. Accordingly he pleads for allowing the appeals. 2.1 The Ld. Counsel for the CHA, J.M. Baxi Co., their agent, M/s. Arya Offshore Service P. Ltd. and Shri Rajendra Devadiga, Manager (Oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other Vessels covered by CTH 8906. It is also argued that off-shore seismic survey involves a ship towing a seismic source and is therefore akin to a tug. The seismic survey work undertaken is designed to identify oil exploration targets and therefore, such a vessel can not be considered as a research vessel. Further notification no. 21/2002-Cus dated 1/3/2002 grants exemption to seismic survey vessels subject to obtaining certificate from the Directorate General of Hydrocarbon, if used for oil exploration work. This would also imply that the goods are otherwise dutiable. It is also submitted that in the memorandum of agreement for sale the vessel and the bill of sale dated 10/12/2009, the vessel has been described as a seismic survey vessel. In the application made by the appellant to the Government of India, Ministry of Shipping for the purpose of registration, the appellant has declared the vessel as a seismic survey vessel and even in the technical information pertaining to the vessel, it has been described as a seismic survey vessel. It is accordingly contended that being seismic survey vessel, it can not be equated with a research vessel and therefore, the vessel would merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and both are equally important. Further as per HSN Explanatory Note, vessels falling under CTH 8906 include scientific research vessels; laboratory ships, etc. within its ambit. It is a settled position in law as held by the hon'ble apex court in the case of Collector of Central Excise, Shillong vs. Wood Craft Products Ltd 1995 (77) E.L.T. 23 (SC) that for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. 4.3 From the various certificates given by the authorities (both in India and abroad) including Indian Registry of Shipping and the professional surveyors who have undertaken the examination and classification of the vessel, the vessel in question is a seismic research vessel . Seismic research is scientific research and therefore, the vessel is a scientific research vessel. There is no evidence produced by the Revenue to the contrary by way of any expert opinion and therefore, the contention of the Revenue that the vessel merits classification under CTH 8905 does not have any sound basis and accordingly, we reject this contention. An argument has been advanced by the Revenue to the ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is-placed, in fact goes against the Revenue's contention. In our considered view, CTH 8906 which covers scientific research vessels is the most appropriate classification in respect of a seismic research vessel. Since there is no duty liability on the vessels falling under CTH 8906, the entire custom duty demand confirmed in the impugned order completely fails. Consequently the confiscation of the vessel and the penalties imposed on the main appellant and its officials, the CHA, its agent/officials and the surveyor of the Indian Register of Shipping are clearly unsustainable in law and have to be set aside and we do so. We also note that the penalty imposed on the Surveyor of the Indian Register of Shipping is completely bereft of any logic or reason and amounts to abuse of statutory powers. There is no statutory obligation on the Surveyor of the IRS to perform any functions under the Customs Act. IF such an authority performs his function under some other statute, even if wrongly, the same cannot amount to any violation of the provisions of the Customs Act. Suffice to say that the finding of the adjudicating authority in this regard is quite perverse and is strongly condemnabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
