Supply vessel classification prevails over inconsistent evidence; exemption applies and confiscation, duty, interest and penalties cannot survive.

Where competent statutory certificates consistently identified the vessel as a Supply Vessel or Offshore Supply Vessel, those formal records prevailed over an inconsistent memorandum, unauthenticated website extract and an ambiguous Chartered Engineer's report; the vessel was therefore classifiable under CTH 8901 and eligible for exemption under Notification No. 21/2002-Cus. Once that classification and exemption were accepted, the basis for confiscation on alleged misdeclaration fell away, and non-filing of the bill of entry was treated as a procedural lapse in the absence of mala fide intent or suppression. Duty demand, interest and penalties, including personal penalties, were accordingly not sustainable.

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Issues: (i) Whether the vessel was classifiable as a Tug under CTH 8904 or as a Supply Vessel under CTH 8901 and entitled to exemption; (ii) Whether confiscation, duty demand, interest and penalties could survive once the classification dispute was resolved in favour of the importer.

Issue (i): Whether the vessel was classifiable as a Tug under CTH 8904 or as a Supply Vessel under CTH 8901 and entitled to exemption.

Analysis: The classification turned on the weight to be attached to the material evidencing the nature and use of the vessel. The statutory certificates issued by competent authorities consistently described the vessel as a Supply Vessel or Offshore Supply Vessel, and several of them followed survey of the vessel. The memorandum of agreement and the website extract describing the vessel as a Tug were treated as insufficient to displace the formal certifications, especially when the agreement contained inconsistent descriptions and the website data was unauthenticated. The Chartered Engineer's report was found to be ambiguous, because the initial report did not conclusively identify the vessel as a Tug and the later clarification still recorded that the vessel had functioned only as a supply vessel and had never been used for towing or anchor handling. The mere presence of a winch was held not to be decisive.

Conclusion: The vessel was held to be correctly classifiable as a Supply Vessel under CTH 8901 and to qualify for exemption under Notification No. 21/2002-Cus., in favour of the assessee.

Issue (ii): Whether confiscation, duty demand, interest and penalties could survive once the classification dispute was resolved in favour of the importer.

Analysis: Once the vessel was accepted as correctly classifiable under CTH 8901 and eligible for exemption, the foundation for confiscation on alleged misdeclaration ceased to exist. Non-filing of the bill of entry was treated as a procedural lapse in the circumstances, as the vessel was exempt and the record showed no mala fide intention or suppression. Consequently, the demand of duty, interest and penalties, including personal penalties, could not be sustained.

Conclusion: The confiscation, duty demand, interest and penalties were held not sustainable, in favour of the assessee.

Final Conclusion: The impugned order was set aside, the assessee's appeals were allowed with consequential relief, and the Revenue's appeal was dismissed.

Ratio Decidendi: Where competent statutory certificates consistently identify a vessel as a Supply Vessel, unauthenticated contrary material and an ambiguous engineering report cannot override that classification, and a non-filing of bill of entry in such exemption-backed circumstances is only a procedural lapse absent mala fide intent.

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