2011 (6) TMI 616 - AT - Customs

Tribunal classifies vessel under Heading 8901, grants customs duty exemption.

CGU LOGISTIC LTD. Versus COMMISSIONER OF CUSTOMS (I), MUMBAI

The tribunal allowed the appeal, classifying the vessel under Heading 8901 and granting exemption from customs duties under Notification No. 21/2002-Cus. ... Classification – assessee had classified the vessel under Heading 8901 (SH 8901 90 00) and had, accordingly, claimed exemption from payment of duties of customs under Notification No. 21/2002-Cus., dated 1-3-2002 (serial No. 352) - assessing authority suggested that the vessel be classified under Heading 8905 – Held that:- various documents produced by the appellant described the vessel as “cargo ship”, “general cargo ship”, “transhipper” etc. The certificates issued by the Mercantile Marine Department are also significant in this regard. ‘Cargo ship’ is specifically classified under Heading 8901 irrespective of the extent or degree of its navigability. The HSN Note under Heading 89.01 says that this Heading covers all vessels for the transport of persons or goods. vessel in question is, admittedly, not always in stationary position while carrying out transhipment of cargo. Some modes of transhipment definitely involve navigation. At times, the vessel may be stationary, but this would not ipso facto detract from classification of the vessel as a cargo ship under Heading 8901. vessel is held classifiable under Heading 8901. appeal is allowed Issues Involved:1. Classification of the imported vessel ('M.V. Bulk Prosperity').2. Eligibility for exemption from customs duties under Notification No. 21/2002-Cus.3. Consideration of the appellant's application under Section 149 of the Customs Act for amendment of the Bill of Entry.Issue-wise Detailed Analysis:1. Classification of the Imported Vessel:The primary issue revolves around the classification of the vessel 'M.V. Bulk Prosperity' imported by the appellant. The appellant classified the vessel under Heading 8901 (SH 8901 90 00) and claimed exemption from customs duties under Notification No. 21/2002-Cus., dated 1-3-2002 (serial No. 352). However, upon examination, the assessing authority found that the vessel was self-propelled with a dedicated conveyor system, designed for short trade with a service speed of 7 knots, had no hatches to store cargo, and was not competent to cruise with loaded cargo in the high seas. Consequently, the assessing authority suggested classifying the vessel under Heading 8905, which was upheld by the appellate Commissioner.The appellant argued that the vessel was a sea-going ship fitted with mechanical means of propulsion, primarily functioning to carry and transport cargo from other ships waiting at the bay to the port and vice versa. They provided various documents, including certificates from the Indian Register of Shipping and the Mercantile Marine Department, which described the vessel as a 'Bulk Cargo Transhipper' and 'Cargo Ship.' The appellant also cited the Supreme Court judgment in UOI v. V.M. Salgaoncar & Bros. (P) Ltd., which held that transhippers were ocean-going vessels.The tribunal found that the vessel navigated between the port area and the anchorage of the bulk carrier for transshipment, thus navigability could not be discounted. The tribunal referred to HSN Notes under Heading 89.01, which cover all vessels for the transport of persons or goods, and Heading 89.05, which includes vessels performing their main function in a stationary position. The tribunal concluded that the vessel, being used for transshipment involving navigation, should be classified under Heading 8901.2. Eligibility for Exemption from Customs Duties:The appellant claimed exemption from customs duties under Notification No. 21/2002-Cus., based on the classification of the vessel under Heading 8901. The tribunal, after determining that the vessel should be classified under Heading 8901, held that the vessel was eligible for the exemption claimed by the appellant.3. Consideration of the Appellant's Application under Section 149 of the Customs Act:The appellant filed a miscellaneous application for a direction to the assessing authority to dispose of their application under Section 149 of the Customs Act for amendment of the Bill of Entry. This application sought to amend the declared value of the goods and was pending with the original authority. Since the appeal was allowed, the tribunal dismissed the miscellaneous application as infructuous.Conclusion:The tribunal allowed the appeal, holding that the vessel should be classified under Heading 8901 (SH 8901 90 00) and assessed accordingly. The appellant was granted the consequential relief of exemption from customs duties under Notification No. 21/2002-Cus. The miscellaneous application was dismissed as infructuous.