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TMI Blog2015 (12) TMI 1579X X X X Extracts X X X X X X X X Extracts X X X X ..... ipping Agency Pvt. Ltd. had filed IGM No. 20166/06, dated 6-2-2006. During the course of conversion a Manual Bill of Entry No. 28/2006 was filed with the Export Commissionerate of Mumbai Customs for clearance of fuel/bunkers and provisions on board vessel and paid the customs duty of Rs. 3,06,593/-. The vessel 'Happy Success' IMP No. 7375753 was not declared as goods in the IGM No. 20166/06, dated 6-2-2006 filed at Mumbai and no bill of entry was filed for import of the said vessel. The appellant got registered the vessel under Merchant Shipping Act, 1958 with the Registrar of Indian Ships, Mumbai under registration certificate dated 8-9-2006 as an "Offshore Supply Vessel". On gathering of intelligence in 2011 by SIIB (Import), New Custom House Mumbai, it was found that no bill of entry was filed for import of the vessel. On further investigation, information regarding the subject vessel "Happy Success" was obtained from the Internet website wherein it was noticed that the category of the vessel was stated to be a 'Tug' whereas documents submitted by the importer of the vessel mentioned the category of subject vessel as "Offshore Supply Vessel", hence the Asst. Commissioner of Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... release of the subject seized vessel Happy Success IMO No. 7375753 under Section 110A of the Customs Act, 1962 and undertaken to comply with the condition laid down for provisional release of the subject vessel. During the course of further investigation, statements of Shri Prakash Rajaram Hede, Managing Director of appellant company and statements of Shri Deepak M. Khabrani, Director of M/s. Preetika Shipping Agency Pvt. Ltd. were recorded. On asking the question about non-declaration and filing of bill of entry in respect of the subject vessel Shri Prakash Rajaram Hede stated that they have purchased ocean going utility-cum-offshore supply vessel which as per their bona fide belief does not attract customs duty therefore bill of entry in respect of vessel was not filed. He produced various statutory certificates wherein the vessel was shown registered as a 'supply vessel' and not as a 'Tug'. The vessel, on the request of the appellant was released on provisional basis on filing of manual Bill of Entry No. 04, dated 9-1-2012 declaring the vessel 'Happy Success' as 'supply vessel' and classified the same under CTH 8901, the said bill of entry was assessed provisionally by the appra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book, the vessel was used as supply vessel only. The Chartered Engineer has endorsed the fact that in all the statutory certificates, vessel has been classified as 'Supply Vessel' and no question was raised on this fact. As regard the subsequent statement of one inspector Mr. Sanket of the Chartered Engineer, who stated that the vessel is built as a tug is of no support to the Revenue for the reason that a detailed certificate dated 26-2-2011 does not confirm that the subject vessel is a tug vessel. Moreover the detailed certificate gives the condition of various parts and on the basis of which it clearly constitutes that the vessel is neither a tug vessel nor it is capable being used for toeing or anchoring. From the various statutory certificates/documents it is clear that the subject vessel is supply vessel and not a tug. Some of the certificate were issued by the Government authorities after conducting the survey and thereafter it was certified the vessel as 'Supply Vessel'. Therefore the reliance of the ld. Commissioner only on internet print out and statement of one inspector, Shri Sanket which is contrary to the certificate issued by the Chartered Engineer cannot be the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of vessel is required to be filed. However, before 25-9-2010 there was no clarity therefore bona fide belief of the appellant cannot be doubted. In view of this undisputed position the appellant has not violated any provision of law in non-filing of bill of entry in respect of the vessel at the time of import in the year 2006. (c) He further submits that the show cause notice was issued demanding duty under Section 28 whereas the same was confirmed in the impugned order partly under Section 28 and partly under Section 125 which is absolutely illegal as the adjudication order cannot travel beyond the scope of show cause notice. Since the show cause notice was issued under Section 28 it could have been issued maximum within one year from the date of import i.e. 6-11-2006 whereas the show cause notice was issued on 21-10-2013 i.e. after almost six years eleven months. It is his submission that under any circumstances the show cause notice could not have been issued beyond 5 years therefore show cause notice itself is time bar. He submits that as soon as the vessel was converted from foreign to Indian coastal run vessel on arrival at port the IGM and bill of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of Revenue's appeal, he submits that show cause notice proposed demand under Section 28 but ld. Commissioner has erred in confirming part demand under Section 125(2) which is not correct being beyond show cause notice. He submits that the ld. Commissioner also erred in imposing penalty of lesser amount under Section 114A as against the total demand of customs duty which is not permissible in the light of Hon'ble Supreme Court judgment in the case of UOI v. Dharmendra Textile Processors and Others [2008 (231) E.L.T. 3 (S.C.)]. (b) As regard time bar ld. AR submits that since the bill of entry was not filed by the appellant at the time of import, the period of limitation shall not be applicable in this case. Therefore the submission of the appellant that show cause notice was issued after six years eleven months therefore time bar is not correct. Ld. AR in support of his submission placed reliance on following judgments : (a) Sedco Forex Intl Drilling Inc. v. Commissioner of Customs, Mumbai [2001 (135) E.L.T. 625 (Tri.-Mum.)] (b) Sachidananda Banerjee, ACC v. Sitaram Agarwala [1999 (110) E.L.T. 292 (S.C.)] (c) &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been shown as "Other Cargo Ship (Offshore Supply Vessel)". (v) Certificate No. 3256, dated 8 September, 2004 issued by Certificate of Indian Registry by the Registrar of Indian Ships Mumbai, wherein in the column of 'framework and description of ship' has been stated as "Steel/OSV". (vi) Licence No. GEN-330/06, dated 3-11-2006 issued by Government of India, Ministry of Shipping, Directorate General of Shipping shows the description of the vessel "Offshore Supply Vessel". On analysis of all the above statutory documents, we find that various statutory authorities have categorically certified the description of subject vessel as 'Supply Vessel'. In the certificates shown at Sl. No. (i), (ii) and (iv) above, the survey of the vessel was also conducted and thereafter the classification of subject vessel was made as 'Supply Vessel'. On going through the judgments on the identical issues, we find that in the case of Hal Offshore Ltd. (supra), the classification of the vessel was decided on the basis of various certificates of different statutory authorities similarly, in the present case also the same authorities classified the subject vessel as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not suggest that the vessel is 'Tug'. The said report also verified the various certificates and endorsed the category of vessel as 'Supply Vessel'. However, after more than one year the department once again sought clarification on the report. The Chartered Engineer in their further clarificatory report dated 15-2-2013 stated that the vessel was built as 'Tug'. However at the same time they also confirmed that as per the available log book since 2008 the vessel had performed only supply function and never performed/engaged for towing/anchor handling. Thus the reports gives contrary version. However, from any material it could not be proved that the vessel has ever used as Tug. On the contrary, ample of evidences prove that the vessel is 'Supply Vessel' and used as 'Supply Vessel'. As regard Winch on the vessel, this alone is not sufficient to conclude the classification of the vessel as Tug. In the case of Raj Shipping Agencies Ltd. (supra) a coordinate bench of this Tribunal held that "merely having a winch does not lead to conclusion that the vessel is a tug-supply and passenger ships can also have a winch - Certificates of Indian Registry and the clarification given by the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression of fact on the part of the appellant. As per our above discussions, we are of the view that subject vessel 'Happy Success' is correctly classifiable as 'Supply Vessel' under CTH 8901 and eligible for exemption Notification No. 21/2002-Cus. Hence the impugned order is not sustainable.
6.5 Since we decide the appeal on the merit of the classification issue, we are not addressing other issues such as limitation and dispute that when the show cause notice issued under Section 28, whether the part of the duty can be demanded under Section 28 and partly under Section 125(2) of the Customs Act, 1962.
6.6 Since the demand of duty, penalties, fines, interest etc. are not sustainable against the main appellant, the personal penalties imposed on the Managing Director Shri Prakash Rajaram Hede and on M/s. Preetika Shipping Agency Pvt. Ltd. are also not sustainable.
7. The impugned order is set aside and parties' appeals are allowed with consequential relief, if any, in accordance with law. Revenue's Appeal No. C/89972/14-MUM is dismissed. Cross objection also stands disposed of accordingly.
(Order pronounced in Court on 4-12-2015) X X X X Extracts X X X X X X X X Extracts X X X X
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