Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2019 (11) TMI 128

..... nd manner in which they are imported and presented for assessment/clearance to the Customs authority at the port of importation for the clearance - Hence the classification of the imported goods needs to be determined in accordance with the form in which they were presented for assessment to the customs authority, and not in the form they were designed and in the form they earlier existed. From the examination report reproduced above it is quite evident that casino games have been fitted on all the three decks of the vessel, and the layout of the decks including those of chairs and stools on the deck was to facilitate the playing of those casino games. Once the vessel is fitted with such casino games across the entire three decks with no regular seating plan etc., the same cannot be called a passenger ship. It is also not case of appellant that there is a fare charged by the appellant for the voyages that can be undertaken on the vessel imported. It is settled law that classification of goods under the Customs tariff is to be determined by the Custom Authorities and for determining the classification the Custom Authorities are bound by the Terms of Entries in the Tariff, Rules of I .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... f India 2.1 Appellants imported second hand/ used Casino Ship M V Majesty vide Bill of Entry 886357 dated 17.05.2009. The declared assessable value of the Ship was T₹ 7.99 crores and classification claimed was under 8901. The B?E was order for examination on first check basis. 2.2 The ship was examined on first check basis. As per the examination report the value of the vessel excluding game equipments was proposed in the range of US$ 1,125,000 to US$ 1,400,000 by the docks. The value of game equipment was proposed around US$ 117,500 and the value of chair and stool around US$ 15,430. It was also suggested vessel would more appropriately be classifiable under heading 8903 as against 8901 claimed by the importer. It was also stated that casino games/ chairs/ stools are old and used and fitted in the vessel may be classified separately under Chapter 94/95 and may also attract ITC violation. 2.3 B/E was assessed under CTH 89039990 as the vessel imported was a complete casino vessel and it was to be used exclusively for gaming and the same was not a passenger vessel absolutely for any excursion as the vessel did not had any regular seating plan, and the chairs in the vessel were .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... Survey cum Deputy DH (Tech) of the Mercantile Marine Department under Section 27 of the Merchant Shipping Act, 1958 also describes the vessel as a Passenger Vessel. It is therefore abundantly clear from the aforesaid provisions as well as the aforesaid certificates and the Final certificate of the Indian Registry that the vessel has to be considered as a passenger vessel. Reliance placed by the Commissioner on the decision of tribunal in case of Waterways Shipyard Pvt Ltd is irrelevant as the said ship was built as casino ship. The issue is squarely covered by the decision of tribunal in case of Ashok Khetrapal [2014 (304) ELT 408 (T-Ahd)] 3.3 Arguing for the revenue learned authorized representative while re-iterating the findings recorded in the impugned order submitted that- It is clear that both the sub heading 801 and 8903 covers the vessels but of different typeso Heading 8901 is for Cruise ships, excursion boats and similar vessels principally designed for the transport of persons; ferry boats of all kinds; Heading 8903 is for yachts and other vessels for pleasure or sports, rowing Boats and canoes; The difference between the two headings is that while the heading 8901 is a .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... t on the imports made by the assessee at a stage they would reach subsequent to their import after undergoing a process. It was contended that such goods could be subjected to duty only in the State in which they were imported. It was held that the countervailing duty must be levied on goods in the State in which they are when they are imported. This was on the basis of Section 3 of the Customs Tariff Act. Though there is no reference to Rule 2(a), in our opinion, the same Rule should apply subject of course to the applicability of the Rule. We have already held that the Rule is not applicable. Similar view was taken in Dunlop India and Madras Rubber Factory Ltd. v. UOI [1983 (13) E.L.T. 1566 (S.C.)]. Hence the classification of the imported goods needs to be determined in accordance with the form in which they were presented for assessment to the customs authority, and not in the form they were designed and in the form they earlier existed. 4.3 Undisputedly the gods were examined by the Customs on first check basis. The text of examination report as recorded by the Assistant Commissioner in his order is reproduced below: 1. Inspected the vessel. Examined 100% under DC (Docks) Supe .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... games across the entire three decks with no regular seating plan etc., the same cannot be called a passenger ship. It is also not case of appellant that there is a fare charged by the appellant for the voyages that can be undertaken on the vessel imported. In the above background we need to examine the decisions referred to by both the sides during the course of argument of appeal. 4.5 After taking the note of above entries in the HSN and also the definition of Pleasure Vessel in Merchant Shipping Act, Mumbai Bench of Tribunal has in case of Waterways Shipyards Pvt Ltd [2013 (297) ELT 77 (TMum)] held as follows: 12. In the show cause notice Revenue relying on the Supreme Court judgment in the case of C.C.E., Shillong v. Wood Craft Products Ltd. contends that the HSN can be relied upon for the purpose of classification under the Central Excise Tariff. Therefore, the Revenue submits that the Entry 8901 of the HSN covers the vessels, which are principally designed for the transport of persons or to the transport of the goods. Since, the vessel M/s. M.V. Caravela is not principally designed and manufactured for the purpose of transport of persons or goods it cannot be classified under .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... es that this Heading covers all vessels for the transport of persons or goods, other than vessels of Heading 89.03…… From this explanation it is also inferred that some vessels of transport of persons or goods are also classifiable under Heading 8903 because of the use of the words other than vessels of Heading 8903 in this explanation. Entry 8903 of the HSN reads as under :- 8903 Yatch and Other Vessels for Pleasure or Sports; Rowing Boats and Canoes 8031 Inflatable Other 890391 Sailboats, with or without auxiliary motor 890392 Moto boats, other than outboard motorboats 890399 Other This heading covers all vessels for pleasure or sport and all rowing boat and canoes This heading includes yachts, marine jets and other sailboats and motorboats, Dinglies, kayaks, sculls, skiffs, pedals (a type of pedal-operated float), sports fishing vessels, inflatable craft and boats which can be folded or disassembled. The Heading also covers lifeboats propelled by cars (other lifeboats fall in Heading 89.06). Sailboards are, however, excluded (Heading 95.06). Heading 8903 is meant for yachts and other vessels for pleasure or sports and rowing boats and canoes. As per HSN explanation .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ship can be taken a vessel meant for transport of the passenger as the special trade ship are meant for special trade as defined under Section 3(47A) of the Act and by virtue of words other than the vessels under Heading 8903 in HSN Explanatory Notes of Heading 8901 [this Heading covers all vessels for transport of persons or goods other than vessels of Heading 8903] it is classifiable under Heading 8903. 16. The contention of the respondent is that their vessel cannot be categorized as a vessel meant for pleasure or sports as internationally known vessels of pleasure or sports as defined in U.K., Australia and Canada are only those vessels which are owned privately by the owners or body corporate for their personal use or use for their family and the employees of the body corporate. Since the vessel does not fall under this category this cannot be classified as vessel for pleasure or sports. We find that definition of the vessel for pleasure or sports has not been incorporated in the Indian Merchant Shipping Act, which governs the registration and movement of the vessels in India. On the other hand, the Merchant Shipping Act specially defines Special Trade Passenger Ship and pres .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ion the Rules for interpretation of the classification come into play Rule 1, 2 & 3 of the Rule for Interpretation of the Schedule are reproduced as under : 1. The titles of Sections and Chapters are provided for case of reference only; for legal purposes, classification shall be determined according to the terms of the Headings and any relative Section or Chapter Notes and provided such Headings or Notes do not otherwise require, according to the provisions hereinafter contained. 2. (a) Any reference in a Heading to goods shall be taken to include a reference to those goods incomplete or unfinished, provided that the incomplete or unfinished goods have the essential character of the complete or finished goods. It shall also be taken to include a reference to those goods complete or finished (or falling to be classified as completed or finished by virtue of this rule), removed unassembled or disassembled. (b) Any reference in a Heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a ref .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... d not be made as the basis for classifying a vessel under the Customs Tariff Act. This issue, whether end use of imported goods should be made the basis of classification was decided by Hon ble Apex Court in the case of UOI v. V.M. Salegaoncar a Brs (P) Ltd. (supra). In that case, appellants imported transhippers which were vessels used for carrying cargo loaded from the harbour and carry the same for unloading cargo into the large vessels. The issue before the Apex Court was whether such transhippers should be considered as ocean going vessels when they were not actually meant to be going to high seas/oceans. While holding the transhippers to be ocean going vessels and eligible to exemption under Customs Notification dated 11-10-1958, the following observations were made by the Apex Court in Para 20 :- 20. We do not think that, in the present case, the question whether a transshipping vessel is an ocean going vessel, can solely rest on the test of its dominant use to which their owners put them at times. Use may vary from season to season, port to port and also managers to managers. So, in this area of understanding use of article stands down staged, and the Court must look at to .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ed for classifying a vessel as cargo ship of CTH 8901 when special equipments were fitting on it for doing special tasks and Revenue was claiming the classification under CTH 8905. 5.3 It is further observed from the HSN explanatory notes under Heading 89.03 that the notes talk of all vessels for pleasure or sport. However, while specifying the inclusions mainly the notes talk of small boats like rowing boats, canoes, sail boats, motor boats, dinghies, sports fishing vessels, inflatable craft and boats, lifeboats propelled by oars, Yachts, etc. At the same time, neither the Customs Tariff Act nor the HSN Explanatory Notes say that all Casino vessels are vessels for pleasure or sport. 5.4 A definition of Pleasure vessel appears in The Merchant Shipping (Vessels in Commercial Use for Sports or Pleasure) Regulations, 1988, issued as per the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17-5-1993. As per these Regulations, Pleasure Vessel means - (a) any vessel which at the time it is being used is : (i) (aa) in the case of a vessel wholly owned by an individual or individuals; used only for the sport or pleas .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ut classify the same vessel under CTH 8903 if used in a predominantly stationary position. In view of the above observations, we are of the opinion that Casino vessel POG imported by the importer is principally designed to carry passengers and has been correctly assessed under CTH 8901. 4.7 The Mumbai bench has again in case of Drishti Adventures Pvt Ltd [2017 (357 ELT 877 (T-Mum)] stated the law as follows: 7. We have considered the competing entries and find that the said chapter headings are as under :- ……… It can be seen from the above reproduced headings, it is the appellant s claim that boats fall in the category of Heading 8901 as excursion boats, ferry boats by virtue of the various applications made by them to the Government of Goa for granting them permission for ferrying the passengers and tourists between two places in the river. We find that the claim of the appellant is unacceptable as the declaration of conformity filed by the manufacturer of the boats before the authorities in United States indicates that the boats which are imported by the appellant, are recreational craft. This particular declaration is annexed at Page 24 of the appeal memoran .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... it was for the conveyance of persons or goods and looking into the fittings available in the boat and the amenities it offers, there is no doubt to believe that the boat is intended to a pleasure boat . Therefore, whatever be the actual use of the said boat, it is required to classify as per the making of the vessel; it is seen that the impugned boat is not principally designed and manufactured for the purpose of transport of persons and goods, it cannot be classify under Heading 8901; we find considerable force in the argument of the Learned AR and find relevance in the ratio of the cases cited by them. 7.1 Regarding the refund application, the Learned advocate for the respondents has claimed that the refund claim filed by their CHA is valid as per the ratio of Jayant B. Shah v. Collector of Customs, Bombay - 1996 (81) E.L.T. 669; the Learned AR submitted that as per the ratio of Hon ble Supreme Court in the case of Collector of Customs, Cochin v. Trivandrum Rubber Works Limited, 1999 (106) E.L.T. 9 (S.C.) clearing agent s dues under Customs Act ordinarily come to an end with the clearance of imported goods and delivery to the importer/owner and therefore, we find claim filed by .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ey are now being brought in as such by the Customs Tariff Bill, 1985. Thus the decision of Ahmedabad Bench which solely applied the meaning as assigned to Pleasure Vessel in The Merchant Shipping (Vessels in Commercial Use for Sports or Pleasure) Regulations, 1988, for determining the classification under the Customs Tariff, is contrary to the principles of law as laid down by the Apex Court in this case. 4.11 Hon ble Supreme Court has clearly stated in case of Wood Polymers Ltd [1998 (97) ELT 193 (SC)]as follows: 11. We are unable to accept the said contention of the learned Counsel. In view of the rules regarding Interpretation which are contained in the New Tariff the matter of classification has to be considered in the light of the said rules. As indicated earlier, Rule 3 of the said rules contains the principles to be applied for classification of goods which are prima facie classifiable under two or more headings. Since decorative laminates are composite goods made from different components, namely, paper and chemical solutions with which it is impregnated, the classification of decorative laminates has to be determined in the light of Rule 3(b). …….. Applying t .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... The question that needs to be adverted to is: whether the goods in question can appropriately be classified under Tariff Item 52 or not having been specified elsewhere, they fall under Tariff Item 68. In construing these items, what is the proper test to be applied? Is it the functional test or is it commercial identity test which would determine the issue. It seems to us that this question is no longer res integra. It fell for consideration of this Court earlier and it was laid down that the true test for classification was the test of commercial identity and not the functional test. It needs to be ascertained as to how the goods in question are referred to in the market by those who deal with them, be it for the purposes of selling, purchasing or otherwise. 4.13 We are of opinion the relevant question in terms of the said decision for determining the classification of the imported vessel will be as to what would be the usage of such vessel. If this question is put to the person who goes to the vessel and his response is that he visits the vessel for playing casino games and not for cruise/ voyage then the vessel is definitely a pleasure vessel for the purpose of classification un .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||