Tribunal upholds classification of imported motor boats as excursion boats, rejects reclassification

The Tribunal rejected the reclassification of imported motor boats as pleasure yachts and upheld their classification under Customs Tariff Heading (CTH) 8901 for excursion boats instead of CTH 8903. The appellant's exemption claim under Notification No.50/2017-Cus. was supported due to the tourism purpose of the boats. Relying on judicial precedent and considering the boats' registration for tourism, the Tribunal set aside the differential duty confirmation, allowing the appeal and emphasizing the correct classification under CTH 8901 for the imported motor boats used in tourism activities.

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Issues: Classification of imported motor boats under Customs Tariff Heading (CTH) 89011030, exemption availed under Notification No.50/2017-Cus., differential duty confirmation, consideration of boats as pleasure yachts, registration, and classification under CTH 8903.

Classification under CTH 89011030 and Exemption Claim:
The case involved the classification of imported motor boats by M/s. E-Factor Adventure Tourism (P) Ltd under CTH 89011030 and the availing of exemption under Notification No.50/2017-Cus. The department sought to reclassify the goods under CTH 89039200, leading to a confirmation of differential duty. The appellant challenged this reclassification, arguing for the original classification and exemption due to the purpose of the boats for tourism.

Consideration of Boats as Pleasure Yachts:
The appellant contended that the department erroneously classified the boats as pleasure yachts, emphasizing that the boats were intended for tourism purposes based on permissions granted by relevant authorities. The definition of pleasure vessel under the Merchant Shipping (Vessels in commercial use for sports and pleasure) 1998 was examined to determine whether the boats met the criteria for pleasure vessels, concluding that the purpose of the boats for tourism precluded their classification as pleasure yachts.

Registration and Classification under CTH 8903:
The department argued for the classification of the boats as yachts based on registration in the country of origin and absence of registration by the Mercantile Marine Department (MMD). However, the Tribunal found that the boats were registered by the Port Authority in Kakinada for tourism purposes, and the MMD confirmed that registration locally was appropriate due to the age and tonnage of the boats. The Tribunal rejected the classification under CTH 8903 and upheld the classification under CTH 8901 for excursion boats.

Judicial Precedent and Final Decision:
The Tribunal referred to a similar case involving M/s. Nanda Agency House Shipping Services Pvt. Ltd., where the classification of boats as yachts was rejected based on the purpose of commercial use. Additionally, the Tribunal highlighted that the boats in question were not registered with MMD due to their age and tonnage, supporting the classification under CTH 8901 for transport vessels. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief as per law, emphasizing the correct classification under CTH 8901 for the imported motor boats used for tourism purposes.

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