TaxTMI 
TaxTMI 
2021 (9) TMI 156
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....stitution of India. The second prayer is for a direction to the Assistant Commissioner, Central Excise, Customs & Service Tax, Balasore Division, Orissa (Opposite Party No.3) and the Commissioner, Central Excise, Customs & Service Tax, Bhubaneswar-1 (Opposite Party No.4) not to deny Petitioner No.1 permission to convert the vessel 'Jag Arnav' to 'coastal status' and not to charge customs duty. The third is to prohibit Opposite Party No.3 from withholding permission to convert the foreign going vessels of Petitioner No.1 to 'coastal run' and from demanding any customs duty on all of the vessels of Petitioner No.1, including 'Jag Arnav', imported into India prior to 17th March, 2012. Background 2. Petitioner No.1 is stated to be a private sector shipping service provider involved in transportation of crude oil, petroleum products, gas and dry bulk commodities. It is stated to be a member of the Indian National Ship Owners Association (INSA). 3. Petitioner No.1, on 3rd July, 2001 acquired from Panama, a motor ship, 'Jag Arnav'. In terms of Section 406 of the Merchant Shipping Act, 1958 (MS Act), a general licence for 'Jag Arnav' to undertake worldwide trade and coastal trade ....
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....a place outside India but does not include goods which have been cleared for home consumption". 7. In relation to ships, vessels, etc. Chapter 89 of the CT Act is relevant since it deals with the classification of 'ships, boats and floating structures.' The Customs Tariff Heading (CTH) 8901 relates to 'vessels for transport of persons and goods.' Two broad types of duties are leviable. One is the Basic Customs Duty (BCD) under Section 2 of the CT Act and the other is the Countervailing Duty (CVD), a duty in lieu of Excise Duty levied under Section 3 of the CT Act. Prior to 1st March, 2011 BCD in respect of the import of ships was 'nil' in terms of Serial No.352 of Notification No.21/2002-Cus. The CVD too was nil in terms of prescribed tariff rate for CTH 8901. 8. This position continued till 16th March, 2012 as far as BCD is concerned. As far as CVD was concerned, the position of 'nil' duty continued under Clause 129 of the Finance Act, 2012 read with Notification No.6/2006-CE and 38/2011-CE. Therefore, till 16th March, 2012 there was no requirement of payment of customs duty on foreign going vessels imported into India. 9. Under Section 46 of the Act, in respect of goods ....
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....hereupon such goods shall be chargeable with the duty which would be payable on such goods as if they were entered for home consumption, under section 46 of the Customs Act, 1962 (52 of 1962), on the date of the presentation of such fresh bill of entry, for the purposes of break-up of such goods. Condition 82-If, the importer files a bill of entry under section 46 of the Customs Act, 1962 (No.52 of 1962) at the time of conversion of vessel for coastal run subsequent to import and pays the applicable duty of customs on: (a) full lease or contract value, if the import is under a lease agreement or contract; (b) 1/120th of the applicable duty, for each month or part thereof, of stay in India as coastal vessel. Explanation-For the purpose of this entry. (1) "Foreign going vessel" shall have the same meaning as assigned to it under clause (21) of Section 2 of the Customs Act, 1962 (No.52 of 1962); (2) "Conversion to coastal Vessel" shall include the vessel granted a license for coastal trade under Section 407 of the Merchant Shipping Act, 1958 (44) of 1958) by the Director General Shipping and the vessel granted permission f....
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....c. Case No.03 of 2013 Heard Mr. S. Mohanty, learned counsel for the petitioners and Mr. P.K. Ray, learned Standing Counsel for the Revenue. Perused the impugned notification under Annexure-1, interim orders passed by the High Court of Gujarat as well as the High Court of Madras under Annexures-5 & 6 to the present writ petition. After hearing the learned counsel for both the parties, this Court is of the considered view that the interest of justice would be best served, if a direction is issued to the opposite parties, to permit the entry of the petitioners' vessel i.e. 'Jag Arnav' (which was imported into India on 30^th April 2013 by the petitioners-company) into 'Dhamra Port', without insisting on their Bills of Entry and further, the opposite parties shall not insist on payment of Countervailing Duty by the petitioners-company in respect of the aforesaid vessel while entering into Dhamra Port and also while considering the application for conversion of the foreign run vessel, into a coastal run vessel. This Court orders accordingly. It is further directed that the opposite parties shall not cause any unnecessary hurdles in processing the application of....
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....er on 22nd April, 2021 by which time the Opposite Parties had not yet filed their counter affidavit. It was ultimately filed on 29th June, 2021 to which the Petitioner filed a rejoinder on 19th July, 2021. 17. This Court has heard the submissions of Mr. Rohan Shah, learned Senior counsel assisted by Mr. S. Mohanty, learned counsel for the Petitioner and Mr. Subash Chandra Mohanty, learned counsel on behalf of Opposite Parties 3 and 4. Submissions of counsel 18. The trigger for the filing of the present petition is the stand of Opposite Parties 3 and 4 that since no BOE was filed with the Customs Authorities when 'Jag Arnav' entered India at Paradeep, Orissa on 30th April 2003, Petitioner No.1 is liable to pay customs duty at the time of conversion of 'Jag Arnav' from a foreign going vessel to a coastal run vessel. The case of the Opposite Parties, as submitted by Mr. Mohanty, learned counsel appearing for them, is that Petitioner No.1 is eligible to avail exemption from payment of BCD subject to fulfillment of the condition that CVD will be paid at the time of conversion of the foreign going vessel into a 'coastal run' vessel. The contention is that every 'entry' of such v....
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.... Deputy Commissioner of Customs) in support of the proposition that the BOE is presented on the actual date of entry and the customs duty leviable on that date is payable. Discussion and Reasons 21. The above submissions have been considered. Since the central plank of the submission of the Opposite Parties to justify the insistence on payment of customs duty on the vessel in question at the time of its conversion from foreign going vessel to coastal run vessel. Notwithstanding that it was imported which was in fact imported way back on 13th April, 2003, no customs duty was payable thereon and in support thereof reliance has been placed on the Notification 16/2012-Cus dated 13th June, 2012, the Court proposed to legally by examining that circular in some due date. The subject matter of the said circular issued by the CBEC "procedure followed for import of Indian vessels and filing of import general manifest, bill of entry-regarding". 22. The circular explains in detailed that the context in which it is being issued since the difficulties was brought to the notice of the CBEC by the INSA stating that the customs field formations are insisting on filing of Import General Man....
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....ct of Indian flag vessels and vessels for breaking up as explained in para 3.3 and 3.5 above, the importer has to file IGM and Bill of Entry, under the provisions of the Customs Act, 1962. As regards the vessel for conversion into coastal run/trade as detailed in para 3.4, since the changes in the duty structure for levy of CVD on vessels which are being converted for coastal trade was initially imposed from 1-3-2011, and subsequently retrospective exemption has been provided for the period 1-3-2011 to 16-3-2011 vide clause 129 of the Finance Act, 2012, the requirement for filing IGM and Bill of Entry may be insisted in all such cases w.e.f. 17-3-2012, that is the date from which levy of CVD has come into force. 5. It is also clarified that all vessels including foreign going vessels for its entry into/exit from the country during its journey as foreign going vessel and the Indian flag vessel/Indian Ship for subsequent use as foreign going vessel would not require filing of IGM and Bill of Entry as conveyance, since the same are not imported goods to be cleared for home consumption. 6. Accordingly, the field formations may adjudicate the cases involving any violat....
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....ted from payment of any customs duty. 30. Mr. Shah has rightly his contention that a distinction has to be made between levy and customs duty on the value of ship stores that is carried on the vessel and are by themselves 'goods'. He points out how Petitioner No.1 has in fact paid customs duty on the value of ship stores without delay. 31. To complete the factual narration, after the interim order of this Court dated 11th January, 2013 a provisional BOE was filed by Petitioner No.1 on 15th January, 2013 and it was provisionally assessed on 10th February, 2013. 'Jag Arnav' re-converted to foreign status at Mundra on 1st February, 2013 and to coastal run status at Paradeep on 10th February, 2013. Provisional BOE was filed on 15th February, 2013 and provisional assessment took place. On 9th March, 2013 it reconverted to foreign status at Mundra. 32. Mr. Shah points out how 'Jag Arnav was in foreign status at the time of import and thereafter for nearly ten years. It converted to coastal run status for the first time at Dhamra on 6th January, 2013. It had called on Indian ports on various occasions in 2003, 2008 and 2009. 33. A similar list of dates have been filed for the ....
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....n terms of Section 3(7) of Customs Tariff Act, 1975 was introduced w.e.f. from 01.07.2017, we hold that the petitioner is entitled to the reliefs claimed in the writ petition." 36. This Court respectfully concurs the above view and holds that in the present case since vessel 'Jag Arnav' called in Indian port for the first time at Paradeep on 30th April, 2003, and at that relevant date it was exempt from payment of customs duty it cannot be made amenable to such duty nine years later by virtue of a condition in another exemption notification of March 2012. 37. One of the contentions of the Opposite Parties is that after the Notification dated 17th March 2012 was issued, customs duty is leviable on every occasion when the vessels in question entered India as a 'conveyance' carrying cargo. In relation to Indian flagged vessels, as the three in question in this case, at the time of their first entry into Indian waters they are considered as imported 'goods'. Thereafter every time they re-renter these vessels conduct their activity as 'conveyance' as defined under Section 2 (9) of the Act. Such conveyances are not re-imported into India every time they enter Indian waters since th....