TaxTMI 
TaxTMI 
2019 (1) TMI 1290
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....gned orders on the ground that the Commissioner has imposed a meagre amounts of redemption fine under section 112 (a) which is less than 1% of the value of the vessels and this needs to be enhanced. 2. Heard both sides and perused the records. The facts of the case in brief are that assessee imported vessels "Lewek Altair" and "Lewek Atlas" and filed Bills of Entry, classifying them under chapter heading 8901 9000of Customs Tariff and claimed the benefit of Exemption Notification No. 12/2012-Cus, dated 17.03.2012 as amended. These vessels are meant to support oil rigs of ONGC in their offshore drilling platforms. The vessels in question are used to transport personnel and equipment from shore to the platform and back. It is the case of the Revenue that such vessels are to be correctly classifiable under Customs Tariff Heading 8905 9000 and are not eligible for exemption under notification No. 12/2012-Cus, dated 17.03.2012. It is the case of the appellant assessee that the vessels are classifiable under CTH 89019000 and are eligible for exemption under notification No. 12/2012-Cus, dated 17.03.2012 (S.NO. 461). Consequently there is a demand of customs duty along with interest as....
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.... Barges u 10% - 8901 10 90 Other u 10% - 8901 20 00 Tankers u 10% - 8901 30 00 Refrigerated vessels, other than those of Subheading 8901 20 u 10% - 8901 90 00 Other vessels for transport of the goods and other vessels for the transport of both persons and goods u 10% - 8905 LIGHT-VESSELS, FIRE-FLOATS, DREDGERS, FLOATING CRANES, AND OTHER VESSELS THE NAVIGABILITY OF WHICH IS SUBSIDIARY TO THEIR MAIN FUNCTION; FLOATING DOCKS; FLOATING OR SUBMERSIBLE DRILLING OR PRODUCTION PLTFORMS 8905 10 00 Dredgers u 10% - 8905 20 00 Floating or submersible drilling or production platforms u 10% - 8905 90 Other : 8905 90 10 Floating docks u 10% - 8905 90 90 Other u 10% - 4. He would argue that the primary function of the vessels being to carry persons and equipments, they cannot be classified under 8905 but have to be classified under Chapter Heading 8901 9000. Chapter Heading 8905 basically covers such vessels whose function is not navigation bu....
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....els in question are incapable of carrying personnel and equipment to different Ports or over long distances as has been admitted by the Master of the Vessels in his statement before the Customs Officer. Therefore, the navigation of the vessels is secondary to the primary function of the vessels namely supporting the oil rig platforms. 7. We have considered the arguments on both sides and perused the records including the statement by the Master of the vessel. The vessels in question are meant to support the ONGC's oil drilling platform and were imported as such. The next question is how the vessels support the platform. As is evident from all available documents that the vessels carry out this function by carrying personnel and equipment from shore to the platform and back. Such a function is essential for the off shore oil drilling platforms which are located far away from the shore. In such a factual matrix, we are unable to hold that the navigation of the vessels is not the primary function. We find that navigation indeed, is the primary function of the vessels and dynamic positioning system helps to perform this function efficiently. Similarly, loading or unloading goods or ....
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..... As far as the penalties under section 114AA are concerned, these are imposable if a person knowingly or intentionally makes, signs or uses or causes to be made, signed or used, in a declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purpose of the Customs Act. Ld. Commissioner held "considering the facts of the case, it has to be held that on the ground of wilful misstatement regarding classification and availing of notification, I am constrained to hold that the importer is liable for penalty under section 114AA of the Customs Act, 1962." Thus holding, he imposed a penalty of Rs. 1.00 Crore on the appellant in each of the impugned orders. In our considered view, claiming an incorrect classification or the benefit of an ineligible exemption notification does not amount to making a false or incorrect statement because it is not an incorrect description of the goods or their value but only a claim made by the assessee. Thus, even if the appellant makes a wrong classification or claims ineligible exemption, he will not be liable to penalty under section 114AA of the Customs Act, 1962. Further, in thes....
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.... with certain specialized provisions viz., Dynamic Positioning System (DPS) which keeps the vessel in stationary position for off-loading or loading the goods. The same facilities are not available to cargo/passenger vessels. Further the vessel consist of various ship's propulsion electrical, navigational, communication system, safety, survival fire fighting systems, interior hull fittings, furnishing storage systems, Automatic identification system (AIS), Bow thrusters, Life saving equipments, Rescue Boa, Life-rafts etc. Document 2 These having in-built fire fighting equipments, Cranes, storage tanks, winches, sophisticated propulsion and other dynamic engineering and navigational systems etc. The main function of the vessel viz., Lewek Altair is supporting the activities at the place of Oil Rigs to support the oil exploration and drilling operations and normally works under stationary position where the navigability is subsidiary to the main function of the vessel. The main feature of the vessel is keeping it in stationary position for specified activities and the navigability is subsidiary to its main function. The regular cargo or passenger ve....
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....e expanded form of SUL is SARVOUTAM LANGER which denotes vessels which are classed with Indian Register of Shipping where the hull and its appendages and equipment meet the rule requirement; the expanded form of STS is SAMATARANA STHIRATVA which denotes that the ship complies with the survival capability (floating in damaged condition) in accordance with Chapter 3 of IMO Resolution MSC 235(82). The notation "Supply Vessel" will be assigned to all ships built in accordance with applicable requirement of Part 5, Chapter 8 of the Rules. Part 5 of the Rules pertains to Special Ship Types. The notation "Passenger Ship" will be used only when the vessels intended for carrying more than 12 passengers and the notation "Container Ship" will be used for vessels built for exclusive carriage of containers in holds and on decks. As seen from the class notations given for the vessel viz., Lewek Altair, "Passenger Ship" or "Container Ship" was not given. Further, the class notation "Supply Vessel" indicates that it is a special type of ship and it is not a cargo or passenger ship. The expanded form of DP(2) is Dynamic Positioning (2) which denotes that the s....