TaxTMI 
TaxTMI 
2019 (11) TMI 128
X X X X Extracts X X X X
X X X X Extracts X X X X
....to any other action that may be taken in respect of the goods in question and/ or against the person concerned under the provisions of the Customs Act, 196 and/ or any law for the time being in force in the Republic of India" 2.1 Appellants imported second hand/ used Casino Ship M V Majesty vide Bill of Entry 886357 dated 17.05.2009. The declared assessable value of the Ship was TRs. 7.99 crores and classification claimed was under 8901. The B?E was order for examination on first check basis. 2.2 The ship was examined on first check basis. As per the examination report the value of the vessel excluding game equipments was proposed in the range of US$ 1,125,000 to US$ 1,400,000 by the docks. The value of game equipment was proposed around US$ 117,500 and the value of chair and stool around US$ 15,430. It was also suggested vessel would more appropriately be classifiable under heading 8903 as against 8901 claimed by the importer. It was also stated that casino games/ chairs/ stools are old and used and fitted in the vessel may be classified separately under Chapter 94/95 and may also attract ITC violation. 2.3 B/E was assessed under CTH 89039990 as the vessel imported was a comple....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or an excursion vessel. * The terms used in the tariff should have been interpreted as per the definitions incorporated in other relevant statues and there judicial exposition. Certificate of survey dated 21.05.2009 granted by the Ship Survey cum Deputy DH (Tech) of the Mercantile Marine Department under Section 27 of the Merchant Shipping Act, 1958 also describes the vessel as a Passenger Vessel. It is therefore abundantly clear from the aforesaid provisions as well as the aforesaid certificates and the Final certificate of the Indian Registry that the vessel has to be considered as a passenger vessel. * Reliance placed by the Commissioner on the decision of tribunal in case of Waterways Shipyard Pvt Ltd is irrelevant as the said ship was built as casino ship. * The issue is squarely covered by the decision of tribunal in case of Ashok Khetrapal [2014 (304) ELT 408 (T-Ahd)] 3.3 Arguing for the revenue learned authorized representative while re-iterating the findings recorded in the impugned order submitted that- * It is clear that both the sub heading 801 and 8903 covers the vessels but of different typeso * Heading 8901 is for Cruise ships, excursion boats and simila....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the basis of the finished goods manufactured after subjecting them to some process after the import is made. In the reported decision in Vareli Weaves Pvt. Ltd. v. Union of India [1996 (83) E.L.T. 255 (S.C.)] the question was as to whether the countervailing duty was liable to be left on the imports made by the assessee at a stage they would reach subsequent to their import after undergoing a process. It was contended that such goods could be subjected to duty only in the State in which they were imported. It was held that the countervailing duty must be levied on goods in the State in which they are when they are imported. This was on the basis of Section 3 of the Customs Tariff Act. Though there is no reference to Rule 2(a), in our opinion, the same Rule should apply subject of course to the applicability of the Rule. We have already held that the Rule is not applicable. Similar view was taken in Dunlop India and Madras Rubber Factory Ltd. v. UOI [1983 (13) E.L.T. 1566 (S.C.)]. Hence the classification of the imported goods needs to be determined in accordance with the form in which they were presented for assessment to the customs authority, and not in the form they were desig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt reproduced above it is quite evident that casino games have been fitted on all the three decks of the vessel, and the layout of the decks including those of chairs and stools on the deck was to facilitate the playing of those casino games. Once the vessel is fitted with such casino games across the entire three decks with no regular seating plan etc., the same cannot be called a passenger ship. It is also not case of appellant that there is a fare charged by the appellant for the voyages that can be undertaken on the vessel imported. In the above background we need to examine the decisions referred to by both the sides during the course of argument of appeal. 4.5 After taking the note of above entries in the HSN and also the definition of "Pleasure Vessel" in Merchant Shipping Act, Mumbai Bench of Tribunal has in case of Waterways Shipyards Pvt Ltd [2013 (297) ELT 77 (TMum)] held as follows: 12. In the show cause notice Revenue relying on the Supreme Court judgment in the case of C.C.E., Shillong v. Wood Craft Products Ltd. contends that the HSN can be relied upon for the purpose of classification under the Central Excise Tariff. Therefore, the Revenue submits that the Entry 8....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the protection of shipping or for pleasure; a sail for pleasure making for no particular place or calling at a series of place." The vessel as a cruise ship is classifiable under Heading 8901 of Central Excise Tariff. 13. It is also noticed from the explanation below the subheading 8901 as HSN Explanatory Notes states that "this Heading covers all vessels for the transport of persons or goods, other than vessels of Heading 89.03......" From this explanation it is also inferred that some vessels of transport of persons or goods are also classifiable under Heading 8903 because of the use of the words "other than vessels of Heading 8903" in this explanation. Entry 8903 of the HSN reads as under :- 8903 Yatch and Other Vessels for Pleasure or Sports; Rowing Boats and Canoes 8031 Inflatable Other 890391 Sailboats, with or without auxiliary motor 890392 Moto boats, other than outboard motorboats 890399 Other This heading covers all vessels for pleasure or sport and all rowing boat and canoes This heading includes yachts, marine jets and other sailboats and motorboats, Dinglies, kayaks, sculls, skiffs, pedals (a type of pedal-operated float), sports fishing vess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom the normal passenger ship as defined under Section 3(25). 15. Now we have to see whether this special trade passenger ship can be classified under Heading 8901 in the category of the vessel used for transport of passengers. The passenger and special trade passenger have been separately defined under the Merchant Shipping Act. The special trade passenger ship can be taken a vessel meant for transport of the passenger as the special trade ship are meant for special trade as defined under Section 3(47A) of the Act and by virtue of words 'other than the vessels under Heading 8903' in HSN Explanatory Notes of Heading 8901 [this Heading covers all vessels for transport of persons or goods other than vessels of Heading 8903] it is classifiable under Heading 8903. 16. The contention of the respondent is that their vessel cannot be categorized as a vessel meant for pleasure or sports as internationally known vessels of pleasure or sports as defined in U.K., Australia and Canada are only those vessels which are owned privately by the owners or body corporate for their personal use or use for their family and the employees of the body corporate. Since the vessel does not fall under this....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e by applying the ratio of the said decision it should more appropriately be classifiable under Heading 8903 as vessel for pleasure or sports. 19. It is seen from the above that the vessel in question on one hand Is classifiable as a cruise ship under Heading 8901 and on the other hand it is classifiable as a vessel for pleasure under Heading 8903. In such a situation the Rules for interpretation of the classification come into play Rule 1, 2 & 3 of the Rule for Interpretation of the Schedule are reproduced as under : 1. The titles of Sections and Chapters are provided for case of reference only; for legal purposes, classification shall be determined according to the terms of the Headings and any relative Section or Chapter Notes and provided such Headings or Notes do not otherwise require, according to the provisions hereinafter contained. 2. (a) Any reference in a Heading to goods shall be taken to include a reference to those goods incomplete or unfinished, provided that the incomplete or unfinished goods have the essential character of the complete or finished goods. It shall also be taken to include a reference to those goods complete or finished (or falling to be classifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eld as follows: "5.1 On the issue of classification of the vessel POG, the adjudicating authority has mainly relied upon the fact that the vessel is a Casino vessel and is intended to be made stationary for use as a casino even if it is capable of making voyages in the open sea. On the other hand, importer has come out with the argument that the end use of the vessel should not be made as the basis for classifying a vessel under the Customs Tariff Act. This issue, whether end use of imported goods should be made the basis of classification was decided by Hon'ble Apex Court in the case of UOI v. V.M. Salegaoncar a Brs (P) Ltd. (supra). In that case, appellants imported transhippers which were vessels used for carrying cargo loaded from the harbour and carry the same for unloading cargo into the large vessels. The issue before the Apex Court was whether such transhippers should be considered as ocean going vessels when they were not actually meant to be going to high seas/oceans. While holding the transhippers to be ocean going vessels and eligible to exemption under Customs Notification dated 11-10-1958, the following observations were made by the Apex Court in Para 20 :- "20. We....
X X X X Extracts X X X X
X X X X Extracts X X X X
....considered as a passenger as per the above definitions. Various certificates issued by the competent authorities in favour of POG, as per Section 3(38) of the Merchant Shipping Act, 1958, also convey that POG is a passenger ship. It is observed from Para 3 of the order passed by CESTAT Mumbai in the case of CGU Logistics Ltd v. CC (I), Mumbai [2011 (274) E.L.T. 75 (Tri- Mum)] that similar certificates were considered for classifying a vessel as cargo ship of CTH 8901 when special equipments were fitting on it for doing special tasks and Revenue was claiming the classification under CTH 8905. 5.3 It is further observed from the HSN explanatory notes under Heading 89.03 that the notes talk of all vessels for pleasure or sport. However, while specifying the inclusions mainly the notes talk of small boats like rowing boats, canoes, sail boats, motor boats, dinghies, sports fishing vessels, inflatable craft and boats, lifeboats propelled by oars, Yachts, etc. At the same time, neither the Customs Tariff Act nor the HSN Explanatory Notes say that all Casino vessels are vessels for pleasure or sport. 5.4 A definition of 'Pleasure vessel' appears in The Merchant Shipping (Vessels in Com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rd saying that POG is a vessel for pleasure or sport. 5.6 Temporary use of POG in a stationary position will not change the classification of POG when the same is capable of moving across the seas/oceans but has to be mostly made stationary due to the restrictions imposed by the local laws. It will be a strange situation to classify a vessel under CTH 8901 if used for making trips to open sea, with a night halt arrangement in the sea, but classify the same vessel under CTH 8903 if used in a predominantly stationary position. In view of the above observations, we are of the opinion that Casino vessel POG imported by the importer is principally designed to carry passengers and has been correctly assessed under CTH 8901. 4.7 The Mumbai bench has again in case of Drishti Adventures Pvt Ltd [2017 (357 ELT 877 (T-Mum)] stated the law as follows: 7. We have considered the competing entries and find that the said chapter headings are as under :- ......... It can be seen from the above reproduced headings, it is the appellant's claim that boats fall in the category of Heading 8901 as excursion boats, ferry boats by virtue of the various applications made by them to the Government....
X X X X Extracts X X X X
X X X X Extracts X X X X
....marketers of recreation boats and Cruisers; there is a prima facie evidence that the boat is intended for the luxury uses; we find that the case of Urmila & Company Pvt. Ltd. cited supra is similar to the impugned case; we find that Heading 8901 covers the vessels for transport of persons or goods that vessels design primarily for the conveyance of persons or goods are covered by this Heading; it is not the case of the respondents that it was for the conveyance of persons or goods and looking into the fittings available in the boat and the amenities it offers, there is no doubt to believe that the boat is intended to a "pleasure boat". Therefore, whatever be the actual use of the said boat, it is required to classify as per the making of the vessel; it is seen that the impugned boat is not principally designed and manufactured for the purpose of transport of persons and goods, it cannot be classify under Heading 8901; we find considerable force in the argument of the Learned AR and find relevance in the ratio of the cases cited by them. 7.1 Regarding the refund application, the Learned advocate for the respondents has claimed that the refund claim filed by their CHA is valid as pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....clature, evidently because the progress made in industrial growth and economic development, and the substantial changes in the composition and pattern of India's external trade called for the need to modernise and rationalise the nomenclature of India's Tariff in line with contemporary conditions (introductory comments on the Customs Tariff Act, 1975). The glass mirrors were still not specifically mentioned under the Customs Tariff Act, 1975. They are now being brought in as such by the Customs Tariff Bill, 1985." Thus the decision of Ahmedabad Bench which solely applied the meaning as assigned to "Pleasure Vessel" in The Merchant Shipping (Vessels in Commercial Use for Sports or Pleasure) Regulations, 1988, for determining the classification under the Customs Tariff, is contrary to the principles of law as laid down by the Apex Court in this case. 4.11 Hon'ble Supreme Court has clearly stated in case of Wood Polymers Ltd [1998 (97) ELT 193 (SC)]as follows: "11. We are unable to accept the said contention of the learned Counsel. In view of the rules regarding Interpretation which are contained in the New Tariff the matter of classification has to be considered in the light of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4, Shri Ajay Kumar Gupta, Manager referred to their product as "shampoo" thereby indicating its actual identity as known in common trade parlance. Consequently, I find no reason to agree with views of the defence that their product is ayurvedic medicine and not shampoo as understood in common trade parlance."" 4.12 Further elaborating the above principle Hon'ble Apex Court has in case G S Auto International Ltd [2003 (152) ELT 3 (SC)] held as follows: "15. The question that needs to be adverted to is: whether the goods in question can appropriately be classified under Tariff Item 52 or not having been specified elsewhere, they fall under Tariff Item 68. In construing these items, what is the proper test to be applied? Is it the functional test or is it commercial identity test which would determine the issue. It seems to us that this question is no longer res integra. It fell for consideration of this Court earlier and it was laid down that the true test for classification was the test of commercial identity and not the functional test. It needs to be ascertained as to how the goods in question are referred to in the market by those who deal with them, be it for the purposes of s....