TMI Blog2017 (2) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the vessel should be treated as a good for home consumption. As the vessel in the said case was brought in India and was primarily used as a transshipper and occasionally in the open seas, it was held to be a good imported for home consumption. Release of foreign exchange, approval and licence, etc. are prior to the import. Import may not take place in spite of this aforesaid clearances/licence and release of foreign exchange. There may have been violation of another enactment/provision as the rig was not imported, albeit for deciding the question whether the rig was imported into India, the requirement of home consumption has to be satisfied. Then alone, the ‘good’, i.e., the vessel/rig would be taxable and customs duty payable under the Act. Pertinently, the adjudication order does not hold that the import had taken place in 1987 when the rig first put into operation in the high seas. This was not treated as the date of import or home consumption. The import as per the authorities had taken place when the rig was brought for repairs. The evaluation of the rig has been done on the basis of the last visit of the rig for repair in 1998. While we are disposed to accept tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding the one, that is, the shipping document should indicate the place of final destination and should not be different from the port of discharge. As the factual matrix has been uncurtained, the assessee purchased in July 1987 a rig, Griffin Alexander III, from Griffin Alexander Drilling Co. for a price of US $ 5.39 million. The rig was towed directly to the drilling site at Bombay High in October 1987. In February 1996, the importer wrote to the Commissioner of Customs, Mumbai, seeking permission to import the rig into Mumbai for carrying out repairs and re-export in terms of the provisions of Notification No. 153/94-Cus. 3. It is not in dispute that the rig was towed into the waters comprising Mumbai Port on 12.11.1996 and after it was repaired, taken out of the territorial waters of India. It was once again imported to India on 9th December, 1998, being towed into Indian territorial waters by two tugs of the ONGC, Malaviya IV and SCI-05. After repairs, the rig was again towed out of the Indian territorial waters. Investigations by the Customs authorities into these two cases of importation led them to conclude that there had been contravention of certain provisions by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be redeemed on payment of fine of ₹ 1.0 lakh each and imposed penalties on ONGC, and Benny Ltd., the importer s agent. 4. Aggrieved by the said order, assessee preferred appeal before the tribunal. On the foundation of the judgments, namely, mership Management Pvt. Ltd. v. UOI 1996 (86) ELT 15rendered by the High Court of Bombay, Scindia Steamship Co. Ltd. v. CC 1988 (36) ELT 581 delivered by the High Court of Calcutta and an earlier judgment of the tribunal in Sedco Forex International Drilling Inc. v. CC 2001 (135) ELT 625 (Tri-Mumbai), it was contended by the assessee before the tribunal that neither any duty was payable nor any penalty was imposable. It was also urged that foreign going vessels do not cease to be so when they enter into Indian territorial waters only for repairs. Alternatively, it was contended that method adopted by the Commissioner by starting with the originally built cost in 1982 and determining depreciation was totally incorrect. According to the assessee, there was no contravention of any aspect contained in Section 111 and hence, no penalty could be imposed. 5. On behalf of the department, it was propounded that the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Act and the authorities in the field, the tribunal held that a ship that is engaged in carriage of cargo or passengers between Mumbai and Abu Dhabi is a foreign going vessel covered by the first part of the definition and would be as such a foreign going vessel throughout the length of its voyage, if, during its voyage between these two ports, it touches other Indian Ports. It further opined that a rig had been held in Amership Management Pvt Ltd. (supra) as a foreign going vessel because it was engaged in the operations outside Indian territorial waters in view of clause (2) of the extended definition, but it would not be appropriate to apply the first part of the definition while considering the second. The tribunal on that basis held that each of the three clauses of the extended definition applied to different fact situations, and each of these situations requires to be considered on its own merits. Being of this view, it ruled:- It would therefore not be possible to say that a craft which is anchored without undertaking any operation whatsoever for long periods outside the territorial waters is a foreign going vessel. So also, when a rig enters Indian te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In our view, for the purpose of the levy of customs duty, in order to determine whether any imported goods are goods for home consumption , we have to find out the primary intended use of the goods when the goods are brought into Indian Territorial Waters. If the goods are intended to be primarily used in India, they are goods for home consumption notwithstanding that they may also be used for the same or other purposes outside India. We guard ourselves against saying that the converse may be true. The question whether goods not intended to be primarily used in India but used occasionally for short periods in India also fall within the meaning of the expression goods for home consumption has not been examined by us. We have only considered the question whether goods brought into India for use primarily in India are goods for home consumption notwithstanding that they are occasionally or incidentally used outside India. We are of the view that they are. 9. After referring to the dictum laid down in the said authority, the tribunal further referred to the authority in UOI v. V.M. Salgaonkar Bros. Pvt. Ltd. (1998) 4 SCC 263wherein it has been opined by this Court that ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will apply to the facts before it and hence, it is deducible that import had not been completed. On the aforesaid basis, it concluded that in the circumstances payment of duty on the rig did not arise and even if the rig was liable to duty. 11. After so holding the tribunal addressed to the contravention of the provisions of clauses (f), (g) and (j) of Section 111 of the Act. Analysing various aspects, it opined that the provisions of Section 111 would be attracted and, therefore, contravention of clause (f) had been established. It was also held that clause (g) would also be attracted as the goods were unloaded without the permission of the competent authority as required under Section 32 of the Act. It was also held that clauses (h) and (j) would be applicable. Being of this view, the tribunal opined that the rig was liable for confiscation. However, it opined that as there was no deliberate intention on the part of the importer to contravene the said regulations although there had been clear negligence and rules had not been followed. Having regard to the facts, it reduced the fine for redemption of the rig. That has compelled the revenue to prefer Civil Appeal Nos. 1784-1787 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be unloaded at the port for India and those which are not to be unloaded and in transit. The said aspect shall be elucidated at a subsequent stage. 15. At this stage, we would like to first adumbrate on the definition of the term foreign going vessel or aircraft as defined in sub-section (21) of Section 2 which reads as under:- (21) foreign-going vessel or aircraft means any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any port or airport in India and any port or airport outside India, whether touching any intermediate port or airport in India or not, and includes - (i) any naval vessel of a foreign Government taking part in any naval exercises; (ii) any vessel engaged in fishing or any other operations outside the territorial waters of India; (iii) any vessel or aircraft proceeding to a place outside India for any purpose whatsoever; 16. The aforesaid expansive definition by way of deeming fiction includes any vessel engaged in fishing or any other operations outside the territorial waters of India. By legal fiction, a vessel engaged in fishing outside the territorial waters of India or any other operations o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept as otherwise provided in this Act or any other law for the time being in force . Thus, it gives primacy to any other law being in force, and records that the said provision would apply when otherwise not provided in the said Act. Therefore, when any other provision of the Act or other law for the time being provides differently, that would not attract customs duty under Section 12. Duty of custom, subject to the above, is levied at the rates specified under the Customs Tariff Act, 1975 or any other law for the time being in force on the goods imported into or exported from India. 19. In Chowgule and Co. Pvt. Ltd. (supra) on the question of chargeability of customs duty on a vessel which was being used to ship iron ore from MormugaoHarbour to ocean going carriers, it was held as under:- 6. We may now refer to the relevant provisions of the Customs Act. Section 2(22) of the Customs Act defines that unless the context otherwise requires, goods includes - (a) vessels, aircrafts and vehicles; (b) stores; (c) baggage; (d) currency and negotiable instruments; and (e) any other kind of moveable property . Import is defined as meaning bringing into India from a place o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to such vessel. An entry inwards order is not to be given until an import manifest has been delivered or unless the proper officer is satisfied that there was sufficient cause for not delivering it. Section 39 prohibits the master of a vessel from permitting the loading of any export goods other than the baggage and mail bags, until an order has been given by the proper officer granting entry outwards to such vessel. Section 41 prescribes that an export manifest in the case of a vessel or an aircraft and an export report in the case of a vehicle should be filed by the person in charge of a conveyance before the departure of the conveyance from a customs station. Section 42 prohibits the departure of a conveyance which has brought any imported goods or has loaded any export goods to depart from that customs station without a written order of the proper officer. Section 43 provides that the provisions of Sections 30, 41 and 42 shall not apply to a vehicle which carries no goods other than the luggage of its occupants. Chapter VII, as we said, deals with clearance of imported goods and export goods. 20. Thereafter, the Court adverting to Section 46, as it was of primary conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that if a vessel, aircraft and vehicle are required to be excluded from the meaning of the expression goods in Section 46(1) of the Act, he was unable to suggest what other purpose was to be served by the inclusive definition of the expression which expressly brought within its shadow vessel, aircraft and vehicle . He frankly stated that he was unable to point out any provision in the Act into which the inclusive definition could be read. We cannot attribute redundance to the legislature particularly in the case of a definition in a taxing statute. We must proceed on the basis that such a definition is designed to achieve a result. Under Section 12 of the Customs Act what are dutiable are goods imported into or exported from India and if goods are defined to include vessels, aircrafts and vehicles, we must take it that the object of the inclusive definition was to bring within the net of taxation vessels, aircrafts and vehicles which are imported into India. It is undisputed and indeed it is indisputable that Section 46(1) is a prelude to the levy of duty or a first step in that direction. It must, therefore, follow as a necessary sequitur that vessels, aircrafts and vehicles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structurally and technically competent to go on the high seas and they have been certified to be so competent by appropriate maritime authorities. Instead of remaining idle and getting rusty, during off-season, that is when because of inclement monsoon weather topping-up operations cannot be done in MormugaoHarbour, the vessels do go out into the open sea sometimes from one Indian port to another and at other times to foreign ports. Of course, even in the course of topping-up operations during the fair season, it is necessary for the trans-shippers to go into the open sea to reach the bulk carriers. But, in our view these operations do not make these vessels oceangoing vessels when their primary purpose and the purpose for which they were permitted to be purchased and brought to Indian waters, the primary purpose for which they were licensed and the primary purpose for which they are used is to conduct topping-up operations in Indian territorial waters and not to serve as oceangoing vessels. Thereafter, the Court ruled what we have already reproduced hereinbefore. 23. As is noticeable, in the said case, the vessel was in operation and primarily used within the territorial wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng into the bulk carriers (those being unable to touch the port) they cannot be excluded from the category of ocean-going vessels. At any rate it has been demonstrated by the Government that it was not very much interested in segregating transhippers from the category of ocean-going vessels as the Government brought out a new notification enveloping all vessels including transhippers within the ambit of ocean-going vessels, almost immediately after pronouncement of the decision in Chowgule Co. (P) Ltd. That subsequent development on account of its close proximity to time cannot be overlooked as of no impact. 26. In the result we accept the contention of the owners of the trans-shippers that such vessels are entitled to the benefit of the notification dated 11-10-1958. The appeals are disposed of in the above terms. 25. The aforesaid passage refers to the Government s decision that had brought out a new notification to envelop all vessels including a transshippers within the ambit of ocean going vessels immediately after the pronouncement in Chowgule and Co. Pvt Ltd (supra) . 26. The decision in V.M. Salgaoncar (supra) refers to the limits of territorial waters fixe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the rig was brought within the territorial waters for repairs. The adjudication order does not record that the rig was in operation within the territorial waters of India. On the other hand, the adjudication order does not spell out that the rig did not operate outside the territorial waters of India. The contention raised by the owner in this regard was neither specifically rejected not a different finding was recorded. The finding was that the rig when it is repaired in India, it is imported into India for home consumption. The adjudication order holds that the repairs undertaken would complete the act of import, for the requirement of home consumption was satisfied. The said finding, in our opinion, is unacceptable and faulty. Mere repair of a vessel is not putting the vessel to use in India and would not result in home consumption as the vessel was not utilized within the territory of India. Repairs are carried on the vessel and not to utilize the vessel. It would not amount to utilization or operation of the vessel/rig in India. Thus, it cannot be said that the vessel, i.e., the rig, was imported into India when it had anchored twice in 1996 and once in 1998 for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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