9911796707
TMI Blog2019 (12) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... uipment' imported by M/s Highstreet Cruises and Entertainment Pvt Ltd, Goa in June 2009, a subsidiary of M/s Delta Corp Ltd, which was also the holding company of M/s Delta Pleasure Cruise Company Pvt Ltd. M/s Vijai Marine Services was contracted for the conversion into a self-propelled luxury floating hotel which, held in the impugned order to be amounting to manufacture, was taken up for classification in chapter 89 of First Schedule to the Central Excise Tariff Act, 1985. The clearance, at a declared value of Rs. 11.89 crores, had been effected at 'nil' rate of duty applicable to heading no. 8905 of the First Schedule to the Central Excise Tariff Act, 1985 with entitlement to exemption under notification no. 12/2013-CE dated 1st March 2013. 2. The show cause notice proposed recovery of undischarged duty liability on the ground that the vessel was intended for deployment as an 'offshore casino' to be operated on the Mandovi river in Goa and that, under the pretext of clearing the same as a 'conveyance', the true intent of use and actual design of the impugned goods had been concealed to avail the consequences of the claimed classification. It was alleged that the 'dumb barge', c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e surprisingly, unseemly, has been discarded on facts in the impugned order. 4. The classification proposed in the show cause notice, and now sought for in this appeal, is the residuary entry under the description of 'yachts and other vessels for pleasure or sports; rowing boats and canoes'. The broad heading has been sub-divided as 'inflatable' and 'others', and the latter of which includes 'sail boats', with or without auxiliary motors, 'motorboats', other than outboard motorboats and 'others'. Within the proposed sub-heading, the options are restricted to 'canoes' and 'others'. In other words, the vessel is sought to be described as for pleasure or sports which are not inflatable and are sail boat, motor boat/ rowing boats/canoes. Following the decision of the Tribunal in Ashok Khetrapal v. Commissioner of Customs, Jamnagar [2014 (304) ELT 408 (Tri.Ahmd.)] and on the count that the Explanatory Notes to the Harmonized System of Nomenclature did, in heading no. 8903, enumerate various inclusions which enlighten on the meaning assignable to 'vessels for pleasure or sports', it was concluded by the adjudicating authority, that floating casinos are not 'vessels for pleasure or sport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d POG to be a passenger ship or Special Trade Passenger Ship then there is no ground for the adjudicating authority to hold that POG is not a passenger ship designed to carry passengers when no contrary opinion of another competent authority is brought on record saying that POG is a vessel for pleasure or sport. 5.6 Temporary use of POG in a stationary position will not change the classification of POG when the same is capable of moving across the seas/oceans but has to be mostly made stationary due to the restrictions imposed by the local laws. It will be a strange situation to classify a vessel under CTH 8901 if used for making trips to open sea, with a night halt arrangement in the sea, but 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.' 5. The issue, therefore, appears to be that, in the view of officers of central excise, gambling gives pleasure and the inclusion of such expression in heading no. 8903 of First Schedule to Central Excise Tari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation when case law as precedent gives support only to findings and cannot be the basis for determining tax liability which should be founded on nothing but deviation from the statute. 7. According to Learned Authorised Representative, negation of the decision of the Tribunal in re Waterways Shipyard Pvt Ltd is incorrect as that settled classification should prevail and it was pleaded that the reliance placed by the adjudicating authority on the agreement, instead of ascertaining the status of the goods upon clearance from the yard of the respondent herein, is questionable. We do not find much substance in these submissions as the investigations commenced only after the clearance and it is the documentary record, relied upon by the adjudicating authority as evidence of the lack of any intent to transform a floating hotel or into something even more exclusive as a floating casino, that can throw light on the nature of the vessel at the time of clearance. The submission, on behalf of Revenue, that the nature of the goods had not been gone into is not acceptable; more particularly as there is no evidence of such fitment on the vessel at the time of clearance, on the submission of Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssel is used for casino games for people who are transported by the ferry to the vessel by the owner/lessee of the vessel. These activities fall under the category of special trade as defined under the Indian Merchant Shipping Act and would therefore be taken as a activities for the purpose of casino games, which are meant for pleasure of the people. Therefore, this would bring the vessel more appropriately under the Heading 8903 of the Central Excise Tariff.' 10. Furthermore, this decision placed reliance on an earlier decision of the Tribunal in Urmila & Co Pvt Ltd v. Collector of Customs, Bombay [1998 (104) ELT 97 (Tribunal)] to the effect that '17. On the consideration of the examination report, the characteristics and features of the vessel as on record, the Collector of Customs, Bombay, had referred to a number of facilities which led to the conclusion that the imported vessel was a vessel for pleasure. Para 14 from the impugned order-in-original is extracted below: "14. From the above, I hold that there is overwhelming evidence to hold that the imported goods are classifiable under Heading 89.03 Schedule I CTA, 1975. I hold that to decide what is the nature of the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the proposal in the show cause notice to classify it under heading no. 8903, the adjudicating authority found it appropriate that heading no. 8901 should be adopted. Therefore, the decision in re Waterways Shipyard Pvt Ltd does not apply to the present dispute. Likewise, in re Urmila & Co Pvt Ltd, on which reliance has been placed in the decision of the Tribunal in re Waterways Shipyard Pvt Ltd, it was held that '8. In the various communications relied upon by the appellants and referred to in support of their claim that the vessel imported was not a vessel for pleasure, the vessel had been referred to as Cabin Cruiser cum Speed Boat and Cabin Cruiser cum Survey Boat. In the communication dated 29-10-1986 from the Ministry of Shipping and Transport, Mercantile Marine Department, addressed to the Chief Controller of Imports and Exports, the vessel had been referred to as the Cabin Cruiser cum Speed Boat. In the certificate dated 23-12-1986 given by the Managing Director of the Appellants' Company, the vessel had been referred to as Cabin Cruiser cum Speed Boat. Cabin Cruiser is a motor boat having a cabin and equipped with berths, cooking and other facilities for living on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing or preserving fishery products, tugs and pusher craft etc. There is nothing like survey boats as such.' which discarded the claim of the importer that it was intended to be used as a 'survey vessel' and requiring classification under an appropriate heading. This reinforces the general principle that, under customs law, it is the form in which the goods are presented that is relevant for classification and, as on the date of import, there was no indication of any change to convert to that of survey vessel. 12. In re Ashok Khetrapal, an identical issue of import of vessel for the purpose of utilization as 'casino vessel' was before the Tribunal. A fresh look was had at the inclusion of such vessels in heading 8903 of First Schedule to Customs Tariff Act, 1985 as the principle laid down by the Hon'ble Supreme Court in Union of India v. VM Salgaoncar & Bros. (P) Ltd [1998 (99) 3 (SC)] had not been brought to the notice of the Tribunal and in view of contrary decisions. Therein, it was held that the descriptions in heading no. 8903 of the First Schedule to the Customs Tariff Act, 1975 was intended to convey a different meaning to 'pleasure boats' therein and decided that '5.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... halt arrangement in the sea, but 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. 13. In the context of this latter decision of the Tribunal, which has been relied upon in the impugned order no flaw can be ascribed to the impugned findings. The adjudicating authority is required to follow the decision of the Tribunal that is aptly conforms to the dispute as the decision in re Waterways Shipyard Pvt Ltd placed reliance on a dispute of 1987 in re Urmila & Co Pvt Ltd, we do not find that to be a precedent binding upon us for reasons aforesaid. In the absence of a specific description of 'casino vessels' and for the want of definition of 'pleasure boats', recourse to Rules for Interpretation of the Schedule cannot be had, as held by the Tribunal in Raj Shipping Agencies Pvt Ltd v. Commissioner of Customs (Import), Mumbai [2015 (329) ELT 913 (Tri.-Mumbai)] that '6.7 The Commissioner has placed reliance on the Rules for Interpretation of the Schedule (t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
