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Issues: (i) Whether the applicant is eligible for exemption from basic customs duty under Sr. No. 555 of Notification No. 50/2017-Customs for import of a cable laying vessel; (ii) Whether the applicant is eligible for exemption from IGST under Sr. No. 557C of Notification No. 50/2017-Customs in circumstances where the applicant is importer on record for the vessel while purchasers are importers on record for cables and other goods carried on the vessel.
Issue (i): Eligibility for basic customs duty exemption under Sr. No. 555 of Notification No. 50/2017-Customs for the cable laying vessel.
Analysis: Classification of the vessel under Heading 8906 is supported by chapter and explanatory notes which expressly include cable ships for laying underwater cables. Condition 84 of Notification No. 50/2017-Customs applies only where vessels are intended to be broken up after importation and is not attracted where the vessel is imported for laying cables in Indian customs waters. The facts indicate the vessel is imported for use in cable laying and not for breaking up.
Conclusion: The cable laying vessel classified under heading 8906 is eligible for exemption from basic customs duty under Sr. No. 555 of Notification No. 50/2017-Customs.
Issue (ii): Eligibility for IGST exemption under Sr. No. 557C of Notification No. 50/2017-Customs where purchasers, not the applicant, are importers on record for the cables and other goods carried on the vessel.
Analysis: Sr. No. 557C conditions require payment of customs duty on goods used in cable laying, payment of IGST on cable laying service, undertaking that goods will not be cleared for home consumption, re-export of vessel after completion, and payment of IGST on vessel in event of breach. The statutory objective of granting IGST exemption to facilitate cable laying permits a purposive construction of the conditions. The factual arrangement shows purchasers own and import the cables and will pay applicable customs duties; the applicant proposes to furnish undertakings ensuring duty payment by or on behalf of purchasers and to ensure duties are remitted before import of the vessel. Such fulfillment of the condition of payment of customs duty satisfies the requirement irrespective of which party is importer on record, provided the prescribed undertakings and conditions are complied with.
Conclusion: The applicant is eligible to claim IGST exemption under Sr. No. 557C of Notification No. 50/2017-Customs subject to fulfillment of the notification conditions, including an undertaking/bond ensuring payment of customs duty on goods used in cable laying, re-export obligation, and other specified conditions.
Final Conclusion: The applicant is entitled to the benefits under Sr. Nos. 555 and 557C of Notification No. 50/2017-Customs for import of the cable laying vessel, provided the conditions attached to Sr. No. 557C are duly complied with.
Ratio Decidendi: A cable laying vessel classifiable under heading 8906 is exempt from basic customs duty under Sr. No. 555 and may be granted IGST exemption under Sr. No. 557C of Notification No. 50/2017-Customs where the statutory condition of payment of customs duty on goods used in cable laying is met in substance (by payment by or ensured on behalf of the actual importers) through prescribed undertakings and compliance with the other stated conditions.
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