TaxTMI 
TaxTMI 
2022 (8) TMI 1612
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....ss of laying submarine cables under the seabed, which are used for telecommunication/ internet connectivity. SubCom, LLC is engaged by telecom companies in India for laying submarine cables under the seabed in India. SubCom, LLC has subcontracted the task of laying telecommunication cables under the seabed in India to the applicant. Pursuant to the said contract, the applicant intends to import cable laying vessels on lease from Transoceanic Cableship Company LLC on a time charter basis. The applicant would use the cable laying vessels for laying cable under the seabed in India. Vessels may exit Indian Customs waters after the initial import and return to Indian Customs waters to continue cable laying activities. The cable laying vessels are expected to leave Indian Customs waters after the completion of the cable laying activity. While the cable laying vessel is proposed to be imported by the applicant on a lease, the cables and other goods required for cable laying will be imported by the customers of the applicant in India (hereinafter referred to as the purchasers) who had or would in future, award a contract to SubCom, LLC for laying the submarine telecommunication cable under....
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....an amount equal to the integrated tax payable on the said goods but for the exemption under this notification in the event of violation of any of the above conditions."; 2.2 As per Sr. No. 557C of the Notification, the import of cable laying vessel for purpose of laying cable in Indian Customs waters is exempt from IGST subject to fulfilment of five conditions. A substantial portion of the goods (owned by the system purchaser) would be carried into India on the applicant's cable laying vessel. While the applicant intends to undertake to fulfil conditions numbers 2 to 5 specified above, the applicant believes that it has to satisfy condition number 1 as well. Condition number 1 requires that the importer of the cable laying vessel (i.e., the applicant in the instant case) shall bind himself to pay BCD and IGST on the goods used in cable laying or repairing services. The fact that the goods used in cable laying are not imported by the applicant may create ambiguity regarding whether the applicant is eligible for exemption. As per the applicant, the condition of payment of appropriate customs duty on the goods used in the process of cable laying gets fulfilled regardless of who....
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....om the jurisdictional commissioners. Therefore, I proceed to pronounce my rulings on the basis of information available on record. The issue before me is the applicability of Sr. Nos. 555 and 557C of the Customs Tariff Notification No. 50/2017, dated 30.06.2017 for import of cable laying vessel. At first, I will examine the classification of the cable laying vessel. GRI 1 provides that the classification of goods shall be "determined according to the terms of the headings and any relative section or chapter notes." In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, GRIs 2 through 6 may be applied in order. Chapter 89 covers ships, boats and other vessels of all kinds (whether or not self-propelled), and also floating structures such as coffer-dams, landing stages and buoys. As per the HSN explanatory note to heading 8906, it covers all vessels not included in the more specific headings 89.01 to 89.05. It covers: (1) ... (6) Vessels for the transportation and mooring of buoys; cable ships for laying underwater cables, e.g., for telecommunications. Heading 8906 i....
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....a) Undertake to pay customs duty on goods used in cable laying or repairing services, b) Undertake to pay IGST on cable laying or repair service provided in India, c) Provide an undertaking to the customs authorities in India to the effect that the imported goods shall not be cleared for home consumption and shall be used only for the intended purpose; d) Re-export the ship/ vessel immediately after completion of the said cable laying or repairing service, e) Undertake to pay IGST on the cable laying vessel but for the exemption in the event of a violation of any of the above conditions The applicant undertakes to fulfil conditions nos. 2 to 5 above. However, the issue remains whether the applicant can provide an undertaking on condition number 1 above, i.e., to pay customs duty on goods used in cable laying services. As per the applicant, condition number 1 suggests that the applicant should be the loR for the said goods and they should pay BCD. The applicant further states that this interpretation that the IGST exemption shall be available only when the applicant pays the customs duty on the goods imported in the process of cable laying by b....