2023 (2) TMI 683 - SC - Customs

Supreme Court: Importer Status Determines Custom Duty Liability

The Supreme Court determined that the respondent was not considered an 'importer' of the vessel and thus not liable for custom duty payment. The Court ... Levy of Customs duty - importer of vessel 'M.V. Vishwa Yash' or not - deemed importer - whether the respondent can be said to be an importer of the vessel in question which the respondent purchased for the purpose of breaking and, therefore, not liable to pay the custom duty? - HELD THAT:- The decision of this Court in the case of M/s. Jalyan Udyog [1993 (9) TMI 108 - SUPREME COURT] is required be referred to. In the said decision, it is observed and held by this Court that the day on which the permission is granted by the Department for the purpose of breaking, can be said to be the relevant date for the purpose of the levy of duty. Meaning thereby, as observed and held by this Court, the said date can be said to be the “deemed import” and the person in whose favour the permission is granted can be said to be “deemed importer” - In the present case, the permission in favour of the SCI was granted on 4-4-1997. In that view of the matter, the respondent cannot be said to be an “importer” and at the best, SCI can be said to be the “importer”. The submission on behalf of the Revenue that under MOA dated 22-3-1997, the liability to pay the custom duty was fasten upon the respondent and, therefore, the respondent is liable to pay the custom duty is concerned, has no substance. The MOA is between the two individual parties. What is mentioned in the MOA is between the two individual parties and on the basis of that the respondent cannot be held to be importer and liable to pay the custom duty under the Customs Act. The liability to pay the custom duty would be upon the importer under the provisions of the Customs Act only - If ultimately the SCI is held to be the importer and liable to pay the custom duty as per the terms and conditions of the MOA, the SCI can recover the same from the respondent. However, so far as the liability of the respondent to pay the custom duty under the Customs Act is concerned, the same shall be governed by the provisions of the Customs Act only. It cannot be said that the CESTAT and/or the High Court have committed any error in holding that the respondent cannot be said to be the importer and, therefore, not liable to pay the custom duty - Appeal dismissed. Issues:Determining whether the respondent can be considered an 'importer' of a vessel for custom duty liability.Analysis:The case involves an appeal challenging a judgment by the High Court, confirming a decision by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The dispute arises from the purchase of a vessel named 'M.V. Vishwa Yash' by the respondent for scrapping. The Memorandum of Agreement (MOA) between the respondent and the Shipping Corporation of India (SCI) specified that the vessel would be delivered on an 'as is where is' basis, with the custom duty liability solely on the respondent. The respondent filed a Bill of Entry upon insistence by the Department, leading to a duty liability assessment of Rs. 78,73,005. The Tribunal, relying on precedent, held that the respondent was not an importer and therefore not liable for custom duty.The main issue before the Supreme Court was to determine whether the respondent could be considered an 'importer' of the vessel and thus liable for custom duty payment. Referring to the precedent set in a previous case, the Court established that the date of permission granted for breaking the vessel could be deemed as the date of import, with the recipient of the permission being the deemed importer. In this case, the permission was granted to SCI on 4-4-1997, making SCI the importer, not the respondent.The Court dismissed the Revenue's argument that the MOA placed custom duty liability on the respondent, emphasizing that the liability under the Customs Act falls on the importer. While SCI could recover the duty from the respondent per the MOA terms, the respondent's liability under the Customs Act is distinct. The Court affirmed that the permission granted to SCI on 4-4-1997 established the deemed date of import, absolving the respondent of importer status.Ultimately, the Court upheld the decisions of CESTAT and the High Court, concluding that the respondent was not the importer and therefore not liable for custom duty payment. The Revenue's notice to SCI for duty recovery was noted, but the Court affirmed that the duty could not be recovered from the respondent as an importer. The appeal was dismissed, with no costs awarded.