TaxTMI 
TaxTMI 
2024 (11) TMI 949
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....king payment of duty on vessel as well as ship stores. The same was provisionally assessed and duty (IGST) was paid on the vessel (Rs. 9,43,74,958/-) as well as ship stores (Rs. 1,00,59,604/-). 1.2. On return from Mumbai, inventory was again drawn and Bill of Entry was finalized after deducting the duty involved in ship stores consumed during the voyage from Pipavav to Mumbai and back. A final assessment order by Ld. Deputy Commissioner of Customs, Pipavav (Page 31) determining final duty liability post-reversion as Rs. 9,49,64,274/- (Rs. 9,43,74,958/- on vessel & 5,89,316/- on ship stores consumed during coastal voyage). Consequent upon final assessment order, Rs. 94,70,288/- became refundable to appellant. This was excess duty paid on ship stores at the time of arrival at Pipavav. 1.3. The department filed appeal against final assessment order with Ld. Commissioner (Appeals) on the ground separate bill of entry was required to be filed for conversion and Ld. Deputy Commissioner erred in combining the two separate acts of import of vessel and conversion. Further, freight, either actual or @ 20% of fob value was required to be added to the value of vessel for discharging duty at ....
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.... which, though devoid of distinct definition therein, may, for our purposes, be placed along with (21) "foreign-going vessel or aircraft" means any vessel or aircraft for the time being engaged in the carriage of goods of passengers between any port or airport in India and any port or airport outside India, where the touching any intermediate port or airport in India or not, and includes - xx xx xx' 12. Any vessel expends her entire life in waters - domestic or international - and, similar to aircraft, are remunerative to the extent that they are on the move. Though every arrival at the harbour or airport involves, technically, import from outside the country, the personality of the vessel/aircraft as 'conveyance' entitles separate treatment; the alternative would generate inconvenience bordering on chaos in international travel and traffic. Nonetheless, for certain statutory requirements attended upon ownership, and appendant privileges, vessel/aircraft may have to be imported as 'goods' requiring compliance with attendant customs procedures. That, however, does not derogate from its functionality as 'conveyance' which is the purpose of, and defines, its very existence as ve....
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....t been fully burned out of operational memory, and practice, of assessing authorities; notwithstanding reiterations, in different contexts, under the policy formulation authority of Central Board of Excise & Customs (CBE & C). The valuation dispute, initiated in the show cause notice leading to the impugned order, has every appearance of the chasm that separates conformity with international convention from its disposition at the administering level. 15. The extant scheme of valuation for assessment is predicated upon acceptance of the declaration in the bill of entry except in circumstances of deviation from the specific parameters that comprise the totality of Section 14 of Customs Act, 1962 and, thereby, empowering customs authorities to invoke Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. 16. Bearing in mind that the scheme of valuation is intended for general application to 'goods', and not to 'conveyances' that, for a time and for the purpose, are statutorily transformed into 'goods', the parameters of Section 14 of Customs Act, 1962 remain, indiscriminatingly, applicable. It is only in application of Customs Valuation (Determination....
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....invoked. The third component, or Rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, interferes with the declared value solely for fairness and non-discriminatory treatment without in any way questioning the credibility of the contractual value determined between the buyer and the seller in normal commercial engagement. That inclusion may comprise value of specified services which, otherwise, is not permissible in valuation of goods, payments to the benefit of the seller that are conditions of sale or freight and insurance which adds value to the goods at the time of import. In the present dispute, we are concerned with recourse to Rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 for adoption of the value estimated by the Chartered Engineer appointed by customs authorities and the last of the specifics in Rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 for evaluation of the enhancement upheld in the impugned order. 19. The appellant had furnished bill of sale for US $ 21,000,000 purporting to be the 'transaction value' for assessment of the vessel. The Chartered Engineer appoint....
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....of Rule 9 and Rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 does not appear to have taken into account that in '3. Determination of the method of valuation. - (1) Subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with the provisions of rule 10; xx xx xx' additions are permissible only to 'transaction value' and, to the extent that the 'residual method' is not 'transaction value' at all, there is no scope for further addition to the determined value of the impugned goods. Even otherwise, it is only the specifics intended by Rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and in the circumstances elaborated therein, that validate such additions. The payment of 'buying commissions' is not to be included. There is no scope for addition of 'pre-shipment inspection' charges save in circumstances of incorporation as a condition of sale between buyer and seller. There is no evidence of such and, indeed, no examination of such in the impugned order. 21. As we have premised supra, import of a vessel arriving under its own steam does not lend itself to the pro....
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....s on 'fire-fighting vessel class I' in the several certificates to demonstrate that the impugned vessel has been designed for such specialised purpose. On behalf of the appellant, it is contended that capability of fire-fighting is intrinsic to every vessel at sea and that the particular attention devoted to this aspect in certificates does not derogate from its design, and use, as 'supply' vessel. The settled law on classification imposing the burden of establishing the aptness of the alternative tariff item on the customs authorities relegates the comparison between the rival discussions to secondary importance and solely for determining, under the authority of the General Rules for the Interpretation of Import Tariff, the more appropriate of two equally applicable tariff items. Therefore, it is necessary to take note of 'other vessels the navigability of which is a subsidiary to their main function' corresponding to Tariff Item 8905 90 90 in the First Schedule to Customs Tariff Act, 1975 within which the adjudicating authority has placed the impugned vessel. We are not inclined to accept inordinate reliance on the certification of different authorities for, if that were the inte....
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....ion "Offshore Supply Vessel" is merely a general description of the vessel Sagar Fortune and that the exact description and class of the said vessel would be as per the description and class mentioned in the class certificate of the said vessel. Now it can be seen that the Interim certificate of class No. BOM17F016, dated 4-7-2017 issued by Indian Register of Ships (IRS) and the final certificate of class No. 17472, dated 28-9-2017 issued by class IRS for the vessel Sagar Fortune give the description and class of the said vessel as "SUL, Offshore Support Vessel, IY, Agni 1(2400 Cum/hr), DP (2)". Further the survey status report dated 7-7-2017 of IRS also gives the description and class of the subject vessel as "SUL, Offshore Support Vessel, IY, Agni 1(2400 Cum/hr), DP (2)". It also be seen that the class certificate dated 2-10-2013 issued by the American Bureau of Survey (ABS) and its survey status report (print date 23-1-2017) have also given the description and class of the vessel "Pacific Amethyst" (Now known as "Sagar Fortune") as "*AI, Fire Fighting Vessel Class 1, Offshore Support Vessel, Circle E, AMS, *DPS-2". The DNV-GL vide their inspection report certificate No. 20817008....
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....o these functions because if navigability and supply is to be considered its primary functions then these special and features/functions like firefighting, DPS and large number of cabins, which are otherwise not available on other supply/support vessels, become redundant and ineffective. In this context deposition of Capt. Shri Bijoy Kumar Sharma, expert Surveyor of IRS, who has personally surveyed the said vessel, is also very important. Capt. Shri Bijoy Kumar Sharma, who is an expert in this field, in his said deposition has said that as Agni I and DP-2 require the vessel to remain stationary and that it can be said that the navigability of this vessel becomes subsidiary to these two functions. He has further stated that navigability of this vessel has become subsidiary to two main functions of this vessel namely Agni 1 and DP-2, i.e. Fire Fighting and Dynamic Positioning System. He is an expert in surveying vessels and classifying them as per shipping parlance and as such is technically qualified to determine the class notation which he has agreed remains the same as that given by ABS i.e. American Bureau of Shipping. In that sense the opinion of Capt. Shri Bijoy Kumar Sharma re....
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....m 8901 90 00 of First Schedule to Customs Tariff Act, 1975. On the other hand, the disposal of the alternative proposition thus '13. I find that the importer in their written submission dated 6-3-2018/7- 3-2018 have now claimed that the subject vessel is classifiable under the chapter heading 89.06, which in other words and by their own admission means that it was never classifiable under the chapter heading 89.01. It would therefore be in order for me to examine their claim that the said vessel is properly classifiable under 89.06. I find that the chapter heading 89.06 reads as follows : 89.06 OTHER VESSELS, INCLUDING WARSHIPS AND LIFEBOATS BOATS OTHER THAN ROWING 890610 00 - Warships 8906 90 00 - Other It is therefore evident from the chapter heading 89.06 and the explanatory notes thereto that the subject vessel cannot, by any stretch of imagination, be classified under that heading. On the other hand I find, from the evidence on record and the discussions above, that the subject vessel is a firefighting vessel of class I having very advance dynamic positioning system in the form of DPS-2. The subject vessel is capable of playing multiple roles by remaining alongsid....