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2015 (12) TMI 1579 - CESTAT MUMBAI

2015 (12) TMI 1579 - CESTAT MUMBAI - 2016 (334) E.L.T. 540 (Tri. - Mumbai) - Confiscation of vessel – Classified as ‘Happy Success’ under CTH 8904 or as Supply Vessel under CTH 8901 – N/N. 21/2002-Cus – Held 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), the survey of the vessel was also conducted and thereafter the classification of subject vessel was made as ‘Supply .....

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el is a Supply Vessel is absolutely in the line of the above judgment. - Discrepancy in the Memorandum of Agreement is due to inadvertence – at some page it was mentioned as “Ocean Going Utility-cum-Offshore Supply Vessel” while in other it was described as “Steel Tug MV NAVIS SUCCESS”. In the same agreement “Supply Vessel” was mentioned and the same gets confirmed on the basis of other various certificates, which establish that the Steel Tug was mentioned due to inadvertence. Therefore when .....

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tered Engineer’s report - 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. Even though the vessel has winch, this will not suffice to hold the classification of vessel as Tug. - As regard non-filing of Bill of Entry - once goods is exempted by cus .....

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Pruthi, Member (T) and Ramesh Nair, Member (J) Shri A.K. Prabhakar, Advocate, for the Appellant. Shri M.K. Sarangi, Joint Commissioner (AR), for the Respondent. ORDER [Order per : Ramesh Nair, Member (J)]. - These appeals are directed against the Order-in-Original No. 88/2014/CAC/CC(I)/AB/Gr.VB, dated 25-7-2014 passed by the Commissioner, Customs (Import), New Custom House, Ballard Estate, Mumbai. 2. The brief facts of the case are as under : The Appellant purchased a Japan origin vessel M .....

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rt Commissionerate of Mumbai Customs for clearance of fuel/bunkers and provisions on board vessel and paid the customs duty of ₹ 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 .....

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, hence the Asst. Commissioner of Customs Special Investigation and Intelligence Branch (Import) ordered to conduct physical survey of the vessel to ascertain the proper category/type of the subject vessel. In this regard the Commissioner of Customs (Import) appointed a Chartered Engineer M/s. Sai Siddhi Associates under a letter dated 23-12-2011. The Chartered Engineer surveyed the vessel and submitted their inspection/survey report vide letter bearing reference No. SSA/CEC/VALUE/HAPPY SUCCESS/ .....

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ngine of winch was found in rusty condition, no oil spillage near engine or drum space. Hydraulic and pneumatic which was necessary for operation and power control was not found on the deck as well as in the engine room. Tugger winch, which does dragging of toeing wire/mooring wire were not found on main deck; Supporting toeing gears, toeing pins etc. were not found on deck, shark jaws which hold to toeing wire or anchor wire were not found on deck, fuel oil tank of which was found empty conditi .....

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vestigation the vessel Happy Success was seized under panchanama dated 28-12-2011 under Section 110 of the Customs Act, 1962 on reasonable belief that the same was imported in contravention of Customs Act, since the importer did not file bill of entry for import of said vessel as required under Section 46 of the Customs Act, 1962. The appellant vide their letter 28-12-2011 made a request for provisional release of the subject seized vessel Happy Success IMO No. 7375753 under Section 110A of the .....

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y 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 an .....

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r, M/s. Sai Siddhi Associates Mumbai was recorded under Section 108 on 2-3-2013 wherein Shri Sanket Nare stated that the vessel Happy Success is built as a Tug . In view of above investigation a show cause notice No. SG/INV-60/WB/2011/SIIB(Import)/SG/Misc-92/WB/2011SIIB (Import), dated 21-10-2013 was issued wherein the vessel Happy Success was proposed to be classified under CTH 8904 as tug and also proposed the confiscation, demand of customs duty, interest and penalties on the allegation of mi .....

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e order-in-original parties as well as Revenue filed these appeals. 3. Shri A.K. Prabhakar, ld. Counsel for the appellant made various submissions as under : (a) The appellant has imported vessel Happy Success which is classifiable under CTH 8901 and attracts NIL rate of duty therefore bill of entry was not filed at the time of import. The ld. Commissioner though considered website print out, Chartered Engineer s report and Memorandum of Agreement for arriving at the classification of the v .....

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ssel 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 g .....

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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 basis for deciding the classification. The ld. Commissioner also taken support from the memorandum of agreement between seller of the vessel and the appellant wherein vessel was shown as a Tug. He submits that it was mentioned inadvertently therefore the same cannot be taken as conclusive evidence. In view of the above position it is clear tha .....

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., Hasim Abdul Razka v. Commissioner of Customs (Import), Mumbai [2014-TIOL-2438-CESTAT-MUM = 2015 (327) E.L.T. 283 (Tribunal)] (d) M/s. Raj Shipping Agencies Ltd. v. Commissioner of Customs (Import), Mumbai [2015-TIOL-1405-CESTAT-MUMBAI = 2015 (329) E.L.T. 913 (Tribunal)]. (b) As regard non-filing of Bill of Entry at the time of import in the year 2006, he submits that since the appellant had bona fide belief that the subject vessel is classifiable under CTH 8901 which attracts NIL rate of duty .....

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is letter the department could have asked the appellant for filing of Bill of Entry. He submits that there was confusion in the customs department itself that in case of coastal run vessel whether Bill of Entry is to be filed or otherwise, accordingly the matter was referred to the Board and only by the Board Letter F. No. 450/79/2010-CUS-IV, dated 25-9-2010 it was made clear that Bill of Entry in respect of vessel is required to be filed. However, before 25-9-2010 there was no clarity therefore .....

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avel 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 .....

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import of said vessel, Happy Success to the customs department. Therefore there is no suppression of facts on the part of the appellant, for this reason also the show cause notice issued much after five years is time bar. In this support he placed reliance on the judgment of Montana Valves & Compression Pvt. Ltd. v. Commissioner of Customs, Mumbai [2000 (116) E.L.T. 220 (Tribunal)]. 4. On the other hand, Shri M.K. Sarangi, ld. Joint Commissioner (AR) appearing on behalf of the Revenue r .....

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, Mr. Sanket on dated 15-2-2013 it has been stated that the said vessel Happy Success was built as a Tug. The appellant did not file bill of entry in respect of import of vessel. Board Circular 58/97, dated 6-11-1997 is not applicable to Indian flag vessel for coastal run whereas it is applicable to foreign flag vessel. He further submits that memorandum of agreement dated 14-3-2006 between appellant and foreign supplier described the vessel as Steel Tug MV Navis Success therefore vessel is Tug .....

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ppeal, 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) .....

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(135) E.L.T. 625 (Tri.-Mum.)] (b) Sachidananda Banerjee, ACC v. Sitaram Agarwala [1999 (110) E.L.T. 292 (S.C.)] (c) Commissioner of Customs v. Jagdish Cancer & Research Centre [2001 (132) E.L.T. 257 (S.C.)] (d) Commissioner of Customs (Pre.), Mumbai v. M. Ambalal & Co. [2010 (260) E.L.T. 487 (S.C.)] (e) Shipping Corporation of India v. Commissioner of Customs (Import), Mumbai [2014 (312) E.L.T. 305 (Tri.-Mum.)]. 5. We have carefully considered the submissions made by both sides. 6. .....

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though nature of winch double drum and other parts were described as non workable but in a statement which was recorded after more than one year of one inspector of Chartered Engineer namely Shri Sanket stated that the vessel was built as Tug . We find that on the contrary, the appellant s claim of the classification as Supply Vessel under CTH 8901 is based on the following documents/certificates which are not in dispute : (i) Registration No. 26833-00-A, dated 15 Nov., 2004 of Government of Rep .....

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an Ships, Mumbai wherein in the column of framework and description of ship it has been stated as Steel/Offshore Supply Vessel/Single Hull . (iv) Certificate No. DGS/DOC/10/087, dated 6 July, 2010 issued by Dy. Chief Surveyor with Govt. of India, Director General of Shipping wherein the description of vessel has 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 Mumb .....

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, (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 Supply Vessel . Hence the certifica .....

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essel. In view of this settled position, it is clear that when the statutory authorities as listed above have certified the subject vessel as Supply Vessel then there is no reason to classify the vessel, differently in other CTH 8904 as held by the ld. Commissioner. 6.1 As regard the evidences relied upon by the Revenue, in the Memorandum of Agreement of purchase of the vessel the vessel was mentioned as Tug. The Managing Director of the appellant-company in his statement dated 29-12-2011 e .....

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en statutory bodies classified the vessel as Supply Vessel , no weightage can be given to an inadvertent mistake appearing in MOA. 6.2 The Commissioner relied upon print out of website wherein the vessel categorized as Offshore Tug/Supply Vessel. The appellants given explanation that though the Offshore Tug was mentioned but it also mentioned as Supply Vessel and the Tug was left to be deleted. In this regard, we observed that the website is neither of the supplier nor of the appellants, it .....

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ssel . 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 p .....

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dian Registry and the clarification given by the Ministry of Shipping can by no means be discarded . Following the ratio of this judgment, in the present case also even though the vessel has winch, this will not suffice to hold the classification of vessel as Tug. 6.4 In view of above discussions and settled legal position, we are of the considered view that the subject vessel Happy Success is correctly classifiable as Supply Vessel falling under CTH 8901 and consequently exempted under Not .....

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of import is merely a procedural lapse as there is no mala fide intention of the appellant as no benefit accrues to the appellant by non-filing of Bill of Entry. We agree with the submission of the appellant that at the material period i.e. in 2006 when the vessel was imported there was confusion among the assessees and department regarding filing of Bill of Entry in respect of vessel and the same was clarified by the Board vide clarification letter F. No. 450/79/2010-CUS-IV, dated 25-9-2010. Th .....

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