TaxTMI 
TaxTMI 
2026 (6) TMI 532
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....hoe Casino inclusive of equipment fixture and standard equipment", claimed classification of the vessel under Customs Tariff Heading(CTH) 8901 1010 with the benefit at Sl. No. 352 of Notification No. 21/2002-Cus dated 01.03.2002, wherein the basic customs duty (BCD) is wholly exempted and benefit of exemption of Notification No. 1/2011-CE dated 01.03.2011 for Countervailing Duty (CVD). The appellant along with the bill of entry submitted a copy of bill of lading dated 30.04.2011, where the description of the vessel was mentioned as 'old and used M.V. Horseshoe Casino vessel' along the commercial invoice from M/s. Horseshoe Hammond LLC, USA dated 16.11.2010 for the purchase of the vessel mentioned in the invoice as M.V."HORSESHOE CASINO" for an amount of US$ 3,000,000. The goods were examined on first check by the customs. M/s. Intertek, who is the independent chartered engineer appointed by the department inspected the vessel on 23.06.2011 and 24.06.2011 and vide certificate dated 24.06.2011 certified that the Cost Insurance Freight (CIF) value of the passenger vessel is fixed at US$ 6,349,869. Thereafter the bill of entry was finally assessed and the duty was assessed as p....
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....nd reassessed at the applicable rate of duty. v) Differential duty of Rs. 6,92,37,774/- (Rupees six crores ninety two lakhs thirty seven thousand seven hundred and seventy four only) should not be demanded under the provisions of Section 28 of the Customs Act, 1962 along with interest thereon as applicable. vi) Interest applicable on above mentioned duty amounts should not be recovered under section 28AA of the Customs Act, 1962 vii) The vessel M.V. Horseshoe Casino now valued at Rs. 35,80,74,724/- (Rupees Thirty five crores eighty lakhs seventy-four thousand seven hundred and twenty four only) CIF should not be confiscated under Section 111(m) of the Customs Act, 1962. vii) Penalty should not be imposed under Sec 114A of the Customs Act, 1962 on M/s. Victor Hotels & Motels Ltd for knowingly mis declaring the vessel as a passenger vessel of Customs Tariff Heading 89011010 and for knowingly suppressing the value of the costs and services incurred in the import of the vessel with the intention to evade payment of Customs duty applicable thereto. ix) Penalty should not be imposed on; Shri Anil Malani, Director of M/s. Victor Hotels & Motels....
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.... Boa Sorte' and Vessel 'M.V. San Domino'. The Commissioner of Customs vide letter dated 07.11.2012 informed the Appellant that while classification of Vessel MV San Domino is under dispute, Vessel M.V. Boa Sorte was classified under CTH 89011010. The appellant contended that, Vessel MV. Boa Sorte is a similar vessel which has a casino on board and the same as stated above has been classified under Customs Tariff Heading 89011010 by the department. The Appellants after receiving the documents sought by them filed a final reply to the show cause notice dated 16.11.2012, making various submissions in relation to classification and valuation of the vessel. The Appellants were heard on 20.11.2012 by the Commissioner of Customs, Mangalore. 6. The Commissioner of Customs. Mangalore by his Order-in-Original No 04/2012-Commr dated 19.12.2012 rejected the contentions of the Appellants on classification and valuation of the vessel and passed the following order; i. I order reclassification of the vessel M.V. Horseshoe Casino Imported vide Bill of Entry no. 3868285 dated 22/6/2011 under Customs Tariff Heading No. 8903 9990 and order reassessment at the applicable ....
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....ger vessel under Customs Tariff Heading 89011010 and for knowingly suppressing the value of the costs and services incurred in the Import of the vessel with the intention to evade payment of Customs duty applicable thereto, under section 114A of Customs Act, 1962. x. I impose penalty of Rs 50.00.000/- on Shri. Anil Malani Director of M/s. Victor Hotels & Motels Ltd. Rs. 50,00,000/-on Shri Ashish Kapadia, Managing Director M/s. Delta Corp Ltd. and Rs.25,00,000/- on M/s. Hassan Hajee & Co. CHA Mangalore under Section 112(a) of the Customs Act, 1962 for aiding and abetting in the act of misdeclaration of the vessel as passenger vessel and suppressing the value of the costs and services incurred in its import and hence rendering the goods liable for confiscation, xi. I refrain from imposing any penalty on M/s. GVP forwarder Pvt. Ltd, Mumbai for the reasons discussed above; xii. I order for appropriation of the amounts deposited by the importer at the time of investigation of the case and at the time of provisional release of the vessel and I also order for enforcement of the bank guarantee furnished by them. towards the adjudication levies made in this order ....
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.... Ferry boats of all kinds, including train ferries, car ferries and small river ferries; (3) ....................... .......................... 8.2 However, the Department has erroneously classified the impugned vessel under Customs Tariff Heading (CTH) 8903 which reads as under: 8903 Yachts and other vessels for pleasure or sports; rowing boats And canoes 89031000 -- Inflatable - Others 89039100 -- Sailboats, with or without auxiliary motor 89039200 -- Motorboats, other than outboard motorboats 890399 -- Other 89039910 --- Canoes 89039990 --- other Relevant portion of HSN for CTH 8903 reads as under: " 89.03-Yachts and other Vessels for pleasure of sports; rowing boats and canoes": 8903.10 - Inflatable - Other: 8903.91 -- Sailboats, with or without auxiliary motor 8903 92 -- Motorboats, other than outboard motorboats 8903.99 -- Other This heading covers all vessels for pleasure or sports and all rowing boats and canoes. This heading includes yachts, mari....
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....as a passenger vessel. In any case, the above classification effected under various international provisions/ Indian Merchant Shipping Act is not relevant for the purposes of Indian Customs where the law applicable for the classification of import goods is Customs Tariff Act, 1975 and the First Schedule thereto. 14. It is pertinent to mention here that report dated 05-09-2010 at (i) above given by Captain Kelly Pulsifier & Associates, Inc though describes the vessel in the first para of the said report as a twin diesel, twin screw, twin rudder welded steel passenger vessel, it hastens to add the purpose of the vessel as purpose designed and built for the casino day trade in Jacksonville, FL. USA. It is therefore clear from this report that the purpose and design of the vessel was to carry out casino day trade and not the transport of passengers. ....................... ........................ 21. Though the importer contends that several vessels have been classified under CTH 8901, they have furnished information in respect of only one such vessel viz M. V. Boa Sarte, which was imported way back in the year 2007. The importer have not furnished ....
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....at the said demurrage charges are rightly includible in the assessable value as proposed in the SCN. 27. The importer further contended that the SCN erroneously proposes to include in the assessable value an amount of appox. Rs 2.25 crores spent for repairing the damaged pipeline at Quebec due to ingress of water into the engine room and that their insurance claim is yet to be settled. As regards this contention, ongoing through the records, I find that SCN does not propose to include any amount as 'insurance claim'. Instead I notice that in Annexure-1 at Sl. No.38 a huge expenditure amount of Rs 2,21,02,229 towards 'supply of labour and material for the removal of water from the vessel' is mentioned. This amount being the expenditure incurred prior to the import of vessel is rightly includible in the assessable value. It may be seen that the said expenditure is not linked to any insurance claim in the SCN. 28. The importer further submits that so far as CVD is concerned they are eligible for exemption under Notification No. 1/2011 CE dated 01-03-2011 under which the concessional rate of duty is 1% ad valorem for the goods falling under CTH 8901. T....
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....g authority to hold that POG is not a passenger ship designed to carry passengers when no contrary opinion of another competent authority is brought on record 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." (Emphasis supplied) 11.1 In Commissioner of Central Excise, Goa Vs. Vijai Marine Services [Excise Appeal No: 86759 of 2016] the vessel therein was identical to the impugned vessel. The Hon'ble CESTAT, Mumbai while classifying the vessel 'MV Royale Floatel' under CTH 8901, which was desi....
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.... endowed with the wherewithal to operate as a casino. This aspect is also not seriously disputed by Revenue. The original authority has further gone on to identify, supported by appropriate judicial decisions, the group of vessels intended to be classified under heading no. 8903 of the First Schedule to the Central Excise Tariff Act, 1985. Mere moral indignation against this logical finding will not carry weight and it is only logical counters that we are required to look to in resolving this dispute. In our opinion, too, the opulence of the vessel or facilities available on board should not metaphonically capsize the classification on the figurative iceberg of taxation. It is also surprising that the show cause notice has invoked judicial pronouncement to allege flaws in classification when case law as precedent gives support only to findings and cannot be the basis for determining tax liability which should be founded on nothing but deviation from the statute. ......................... 14. In the light of the decision in re Ashok Khetrapal and the absence of other binding precedent on the classification of 'casino vessels' as 'pleasure boats', we....
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.... would have to litigate in different jurisdictions for the same issue even when the said issue stands settled in its favour." 13. The learned counsel submits that in view of the aforesaid legal and factual background, since the facts and allegations of the present case are identical to the facts and allegations in the case of Vijai Marine (supra) and Ashok Khetrapal (supra), the impugned order is liable to be set aside on this count itself. 14. The learned counsel submits that; without prejudice to the aforesaid and in any event, a similar vessel viz., 'M.V. Boa Sorte' etc., which ply in Goa, has been classified under Customs Tariff Heading (CTH) 8901 and are chargeable with 'nil' duty; the Appellant was informed by the Commissioner of Customs vide his reply letter dated 07.11.2012 to an RTI, 2005 application made by the Appellant dated 08.10.2012 regarding classification of similar vessel 'M.V. Boa Sorte' that the same is classified under Customs Tariff Heading (CTH) 89011010; the Vessel 'M.V. Boa Sorte' was similar to the impugned vessel in the present case and was equipped with a casino on board; it is settled law that once the Department ha....
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....ed vessel under CTH 8903 when at least one similar vessel namely M.V Boa Sorte plying in Goa was allowed classification under CTH 8901 without demur, making the impugned order discriminatory and contrary to the tenets of settled law. 15. The learned counsel submits that the departmental representative erred in relying upon decision of Mumbai Tribunal in the case of Waterways Shipyard Pvt. Ltd., in as much as the same is not applicable to the facts of the present came unlike in the case of waterway shipyard, in the present case, the applicant has provided ample evidence to show that the vessel has been registered as Passenger vessel by experts, including Ministry of Shipping; the Show Cause Notice itself records and does not dispute the statement of Mr. Kelly stating that the vessel was earlier used to ferry passengers in the Great lake; it goes on to show that vessel was designed as a passenger vessel and the usage as casino vessel cannot be the reason to change CTH 8901 to CTH 8903; the decision of the Mumbai Tribunal in the case of Waterways Shipyard has classified the vessel under CTH 8903 on the basis of its usage which is contrary to plain and unambiguous language of chapte....
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....eral Regulations (Title 46, Part 2) and Certificate of Classification List D issued by the International Register of Shipping both dated 22.11.2010 which classifies the impugned vessel as a "Passenger Vessel". iii) A provisional certificate issued by ST Kitts and Levis, International Ship Registry dated 22.11.2010 have classified the impugned vessel as a Passenger Vessel. iv) A letter dated 02.11.2010 issued by the Secretary Maritime permitting transfer to the Indian Registry, also went on to classify the said vessel as a passenger vessel. v) A report by Manley Brother LLC dated 25.02.2009 ascertaining the valuation of the said vessel, specifically mentioned the passenger capacity as 2340, which highlights its intended purpose and capability. vi) The Chartered Engineer Certificate dated 24.06.2011 on the basis of which duty was paid at the time of import, also described he said vessel as a passenger vessel. vii) A provisional certificate issued by the Ministry of Shipping, Government of India dated 04.01.2012 under Section 40(1) of the Merchant Shipping Act, 1958 also classified as a passenger vessel. 17. The learned....
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....Breweries Ltd. Vs. CCE [2017 (7) G.S.T.L. 102 (Tri. Mumbai)] f. Linkwell Telesystem Pvt. Ltd. Vs. CCE & ST [2017 (358) E.L.T. 1172 (Tri. - Hyd.)). g. Panama Chemical Works Vs. UOI [1992 (62) E.L.T. 241 (Μ.Ρ.)] 18. The learned counsel submits that; in the present case, since the aforesaid agencies, more particularly the Ministry of Shipping, are well acclaimed and an independent authority, their opinion is very relevant and in view of the judicial precedents above, the expert opinion provided by the aforesaid agencies ought to be relied upon. It is pertinent to note that the Ministry of Shipping which is the sole and Apex Indian Ministry responsible for formulation and administration of the rules, regulations and laws relating to ports, shipping and waterways, has also opined that the impugned vessel is classified as a "Passenger Vessel". Thus, since the experts in the present case have unanimously opined that the impugned vessel is nothing but a "Passenger Vessel", the same ought to be rightly classified under CTH 8901. Moreover, since the Department has not provided any expert opinion of its own, the expert opinion provided by the aforesaid agencies is ....
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....he department whilst attempting to classify the impugned vessel under CTH 8903 as a pleasure vessel or a vessel meant for pleasure or sport is not in dispute, but it is its failure to appreciate the true meaning of the term 'Pleasure Vessel' that has to be appraised; 'Pleasure vessel' has not been defined under the Excise Act, Tariff Act, HSN or the Merchant Shipping Act and would require an appraisal and interpretation not too rigid in terms of its commercial or trade understanding or according to its popular meaning or common parlance in its relevant subject matter as held by the Hon'ble Supreme Court in the cases of Commissioner Of Customs & C. Ex., Amritsar Vs. D.L. Steels CCE [2022 (381) E.L.T. 289 (S.C.)) and New Delhi Vs. Connaught Plaza Restaurant (P) Ltd. [2012 (286) ELT 321 SC)]; thus, it is important to understand the meaning of the term "pleasure vessel" and import the meaning for using it in the current context used globally in various statutes and reports as follows: i) In the Market Research Report (2009) issued by the Italian Trade Commission, for the Boating industry in India, pleasure boats have been inter-alia described as boats....
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....e instant case was intended to be used as a vessel for commercial gain and not for the personal or sole use of the owner. Therefore, the proposal to classify the impugned vessel under CTH 8903 on the ground that the same is a pleasure vessel is incorrect and bad in law; Reliance is once again placed on the decision of Ashok Khetrapal (supra) wherein the Hon'ble Tribunal has held that a casino Vessel (named as Pride of Goa) is correctly classifiable under Heading 8901. The above judgment also differentiated "Pleasure Vessels" as mentioned under Heading 8903 to be vessels that were meant for the personal use of the owner for pleasure or sports. The said judgment adopted the definition of pleasure vessels as discussed above and inter alia held that: the words 'Passenger', 'Passenger Ship' and 'Pleasure Vessel have neither been defined under the Customs Tariff Act nor in the HSN explanatory notes. The words 'Passenger' and 'Passenger Ship' 'Special Trade Passenger' and 'Special Trade Passenger Ship' have been defined under Section 3(24) and 3(25, 3(47B) and 3(47C) of the Merchant Shipping Act, 1958; as per the above definitions, i....
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....words susceptible of analogous meaning are grouped together and the meaning of the words is judged by the company it keeps and is applicable to the words 'Yachts and other Vessels for pleasure or sports, rowing boats and canoes' appearing in CTH 8903. The Hon'ble Supreme Court in the case of Rohit Pulp & Paper Mills Ltd. v. Collector of Central Excise [1990 (47) ELT 491 (SC)) has held as under: "The principle of statutory interpretation by which a generic word receives a limited interpretation by reason of its context is well established. In the context with which we are concerned, we can legitimately draw upon the "noscitur a sociis" principle. This expression simply means that "the meaning of a word is to be judged by the company it keeps." Gajendragadkar, J. explained the scope of the rule in State v. Hospital Mazdoor Sabha (1960-2 S.C.R. 866) in the following words: "This principle has been applied in a number of contexts in judicial decisions where the Court is clear in its mind that the larger meaning of the word in question could not have been intended in the context in which it has been used. The cases are too numerous to need discussion here. ....
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....asinos which are often bigger in size than the casino in the said vessel, however these vessels not classified as a pleasure vessel; in view of the aforesaid submissions the impugned vessel being a passenger vessel is correctly classified under CTH 8901 as against CTH 8903 and the impugned order is bad in law and deserves to be set aside. 23. The learned counsel submits that; classification of imported goods needs to be determined in accordance with the form in which they were presented for assessment to the Customs Authority; the Respondent has erroneously sought classification of the subject vessel under CTH 8903 based on a flawed assumption that the imported vessel is intended to be used for the same purpose as it was being used for prior to her import i.e., a casino vessel; even if the case of the Department is to be accepted, it is an undisputed fact that the Department is seeking to classify the vessel under CTH 8903 alleging that the same has a casino on board. It is submitted that the said basis of the Department is incorrect as it is an undisputed fact that when the subject vessel was imported and presented for assessment to the Customs Authority, it was a passenger ves....
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....tion of the incomplete or unfinished or unassembled or dis-assambled articles to the customs for assessment and classification purpose. It is also a settled position in law that the goods would have to be assessed in the form in which they are imported and presented to the customs and not on 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 take....
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....n into consideration for determining the classification of a product. For the purposes of classification, the relevant factors inter alia are statutory fiscal entry, the basic character, function and use of the goods. When a commodity falls within a tariff entry by virtue of the purpose for which it is put to, the end use to which the product is put to, cannot determine the classification of that product." 28. Similarly, the Hon'ble Supreme Court in the case of V.M. Salgaoncar (supra) observed that the usage of a commodity could vary based on differences in season, ports and managers and hence must look into the commodity to classify it and not just the test of dominant use. Relevant extract is reproduced hereunder: "20. We do not think that, in the present case, the question whether a transshipping Vessel is an ocean-going Vessel, can solely rest on the test of its dominant use to which their owners put them at times. Use may vary from season to season, port to port and also managers to managers. So in this area of understanding use of the article stands down-staged, and the Court must look at to know what actually the commodity is." 29. The learned counsel subm....
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....settled law that burden of showing correct classification lies on the revenue. The revenue has done precious little in this case to discharge this burden". 32. In the present case, the Respondent has failed to produce any evidence that corroborated or supported their proposed classification of the impugned vessel under the category of a 'Pleasure Vessel' and erred in holding that the Appellants failed to prove that the said vessel was classified as a 'passenger vessel'. On the contrary, the Appellants have produced a plethora of evidence in the form statutory documents as mentioned hereinabove and even attempted to define the term pleasure vessel by placing reliance on various international statutes, etc., to establish its rightful classification as a passenger vessel; the Respondent failed to appreciate that the said vessel was already classified as a passenger vessel prior to import and once it was not in dispute, the Appellants were not bound to show the usage of the same and could not erroneously rely on the usage of the vessel for the purpose of classification; since the Respondent failed to discharge its burden cast upon them to substantiate their proposal ....
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....10 (261) E.L.T. 607 (Tri. - Bang.)]. it is held that- " ........ The said note has been illustrated in para 17 in the decision of the Hon'ble Supreme Court in the case of Tata Iron & Steel Co. Ltd. v. CCE&C, Bhubaneshwar- 2000 (116) E.L.T. 422 (S.C.). As per the said decision and in terms of note to Rule 4, in the instant case, the Project Consultancy charges, which are clearly distinguishable and paid separately, are not includible or cannot be added to the Transaction Value declared by the appellant.... ...In view of the above circumstances, we are of the view that the Project Consultancy charge, which has nothing to do with the imported goods and is covered by a separate contract, cannot be included in the assessable value even by applying Rule 9(1)(e) of the Valuation Rules. Consequently, we set aside the impugned order and allow the appeal with consequential relief... 34. The learned counsel submits that; the Respondent erred in including the Insurance amounting to approx. Rs. 2.25 Crores in the Assessable Value (AV) of the impugned vessel; the said amount was incurred by the Appellant for salvaging the impugned vessel after its purchase and the ....
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....e accepted by all Custom Houses: a. Circular No. 4/2008-Cus., dated 12-2-2008: "8. Guidelines in respect of some other issues related to valuation of second hand machinery are as follows: For valuation of second hand machinery/capital goods, the assessing officers must insist on importers submitting a certificate issued by an independent Chartered Engineer or any equivalent in the country of supply. The certificate should indicate inter alia: (i)...." b. Circular No. 25/2015-Cus., dated 15.10.2015: "10. For this purpose, the Board has decided that Inspection/ Appraisement Reports issued by Chartered Engineers, or their equivalent, based in the country of sale of the second hand machinery shall be accepted by all Custom Houses." c. Circular No. 7/2020-Cus., dated 05.02.2020: "4.8 For this purpose, the Board has decided that Inspection/Appraisement Reports issued by Chartered Engineers, or their equivalent, based in the country of sale of the second hand machinery shall be accepted by all Custom Houses." 36. It is settled position in law that the Department is bound by the Circulars issued by the CBEC. In othe....
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.... the Circulars. Therefore, it is clear that so far as the Department is concerned, whatever action it has to take, the same will have to be consistent with the Circular which is in force at the relevant point of time." 37. The learned counsel submits that; in the entire show cause notice (SCN) or the Impugned Order, the Respondent /Department has neither disputed the Chartered Engineer (CE) Certificate nor provided any reason as to why the valuation as certified in the CE Certificate ought to be rejected or not relied upon; it is trite law that the Department cannot discard the value of second-hand machinery certified in the foreign supplier's CE certificate produced by the importer when the same was fair and reasonable without any corroborative evidence challenging the genuineness of such certificate. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in Commissioner Vs. Anish Kumar Spinning Mills [2005 (182) E.L.T. A92 (S.C.)] which upheld the decision of the Hon'ble CESTAT, Chennai in Anish Kumar Spinning Mills v. Commissioner [2004 (172) E.L.T. 394] wherein it was held as under: "4. In the case of Commissioner of Customs, Chen....
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....ounsel submits that Goods not liable for confiscation, penalty and redemption fine was erroneously imposed; the Respondent erred in holding that the impugned vessel is liable for confiscation under Section 111 (m) of the Act and further erred in imposing redemption fine of Rs. 3,60,00,000/- under Section 125 of the Act; the Appellants had aptly described the vessel in the Bill of Entry in accordance with the import documents and bonafide believed in its classification as a 'passenger vessel' under CTH 8901 as per which the values were declared well in accordance with the provisions of the Act. Hence, there has been no violation of Section 111(m) as there was no difference in describing the goods to corresponding value or particulars in the entry, which is necessary for the confiscation. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court Northern Plastic Ltd. Vs. Commissioner of Customs and Central Excise [1998 (101) E.L.T. 549 (S.C.)]) and this Hon'ble CESTAT in Petroplus International marketing FZCO Vs. Commissioner [2006 (205) E.L.T. 1041 (Tribunal)] as approved by the Hon'ble Karnataka High Court in Commissioner Vs. Petroplus Inter....
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....ct that for attracting penalty under Section 114A of the Act, mens rea is an essential requirement as has been held in the case of Commissioner of Central Excise, Raigad Vs, Indo Dacin Leather 2011 (272) E. L.T. 430 (Tri. Mumbai)). Further in the case of H. Kumar Gadecha Vs. Commissioner of Customs, Ahmadabad [2009 (243) E.L.T. 248 (Tri. Ahmd.)], no penalty was imposed in the absence of malafide intention; as stated above Appellant genuinely believed that the expenses mentioned in Annexure Al and Annexure A2 are not includible in the assessable value (AV) of the impugned vessel and the impugned vessel is appropriately classifiable under Customs Tariff Heading 8901. 44. The learned counsel submits that at the outset, the demand confirmed vide the Impugned Order has no basis in law and deserves to be set aside. Further, in view of the aforesaid legal and factual submission the Appellant is not liable to pay the differential customs duty on the alleged undervaluation and misclassification of the impugned vessel as imported by the Appellant; it is trite law that when the demand itself is not sustainable, there is no question of levy of interest. Reliance in this regard is placed on ....
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....ce rendering the goods liable for confiscation, submits that; the Respondent erred in holding that the impugned vessel is liable for confiscation under Section 111 (m) of the Act and further erred in imposing redemption fine of Rs. 3,60,00,000/- under Section 125 of the Act; the Appellants had aptly described the vessel in the Bill of Entry in accordance with the import documents and bonafide believed in its classification as a 'passenger vessel' under CTH 8901 as per which the values were declared well in accordance with the provisions of the Act. Hence, there has been no violation of Section 111(m) as there was no difference in describing the goods to corresponding value or particulars in the entry, which is necessary for the confiscation. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court Northern Plastic Ltd. Vs. Commissioner of Customs and Central Excise [1998 (101) E.L.T. 549 (S.C.)] and this Hon'ble CESTAT in Petroplus International marketing FZCO Vs. Commissioner [2006 (205) E.L.T. 1041 (Tribunal] as approved by the Hon'ble Karnataka High Court in Commissioner Vs. Petroplus International Marketing FZCO (2012 (275) E.LT. A18 (K....
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....aigad Vs, Indo Dacin Leather 2011 (272) E. L.T. 430 (Tri. Mumbai)). Further in the case of H. Kumar Gadecha Vs. Commissioner of Customs, Ahmadabad [2009 (243) E.L.T. 248 (Tri. Ahmd.)], no penalty was imposed in the absence of malafide intention; appellant genuinely believed that the expenses mentioned in Annexure Al and Annexure A2 are not includible in the Assessable Value (AV) of the impugned vessel and the impugned vessel is appropriately classifiable under Customs Tariff Heading (CTH) 8901. 47. The learned Authorized Representative (AR) for the Revenue reiterated the findings of the Commissioner in the impugned order and further submitted that; the issues to be decided are: (i) Whether the imported vessel 'M.V. Horseshoe Casino' is classifiable under Customs Tariff Heading (CTH) 8901 as a 'passenger vessel' or under Customs Tariff Heading (CTH) 8903 as a 'pleasure vessel'. (ii) Whether remittances made by the appellant towards payment of various services availed prior to import and expenses incurred towards costs prior to purchase of the impugned vessel were suppressed from the knowledge of the department so as to avoid i....
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....avoid inclusion of the same in the assessable value of the vessel. d. whether the vessel M.V. Horseshoe Casino valued at Rs. 35,80,74,724/- (Rupees thirty five crores eighty lakhs seventy four thousand seven hundred and twenty four only) CIF is liable for confiscation under Section 111(m) of the Customs Act, 1962. e. whether penalty is imposable under section 114A of the Customs Act, 1962 on M/s. Victor Hotels & Motels Ltd., for knowingly mis-declaring the vessel as a passenger vessel under Customs Tariff Heading (CTH) 89011010 and for knowingly suppressing the value of the costs and services incurred in the import of the vessel with the intention to evade payment of Customs duty applicable thereto. f. whether, penalty is imposable on; Shri Anil Malani, Director of M/s. Victor Hotels & Motels Ltd., Shri Ashish Kapadia, Managing Director, M/s. Delta Corp. Ltd., M/s. Hassan Hajee & Co. CHA, Mangalore under section 112(a) of the Customs Act, 1962 for aiding and abetting in the act of misdeclaration of the vessel as passenger vessel and suppressing the value of the costs and services incurred in its import. 52. In this regard it is pertinent to analy....
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....-- Motorboats, other than outboard motorboats 890399 -- Other 89039910 --- Canoes 89039990 --- other 53.2 Relevant portion of HSN for Chapter Heading 8903 reads as under: " 89.03-Yachts and other Vessels for pleasure of sports; rowing boats and canoes: 8903.10 - Inflatable - Other: 8903.91 -- Sailboats, with or without auxiliary motor 8903 92 -- Motorboats, other than outboard motorboats 8903.99 -- Other This heading covers all vessels for pleasure or sports and all rowing boats and canoes. This heading includes yachts, marine jets and other sailboats and motorboats, dinghies, kayaks, sculls, skiffs, pedalos (a type of pedal operated float), sports fishing Vessels, inflatable craft and boats which can be folded or disassembled. 54. An analysis of the two contending Customs Tariff Headings (CTH) 8901 and 8903 shows that to be eligible for classification under Customs Tariff Heading (CTH) 8901 it is necessary that the vessel is 'principally designed for transportation of persons or goods'. We find that the impugned vessel 'old and used M.....
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....iff Heading (CTH) 8901. The impugned vessel is principally designed for the purpose of entertainment associated with a casino operation. The impugned vessel has been registered and was used before it was imported as a casino vessel and therefore the dismantling of the casino equipment or facilities from the vessel would not make it a vessel which is principally designed for transportation of the persons. The main purpose of a casino vessel for which it is built is to provide all the facilities a casino would have however since it is a floating vessel, therefore the added feature of this vessel is that it can also take the persons who have come for the casino entertainment for a ride on the sea and that does not make the vessel a passenger carrying vessel. The reliance placed by the appellant on the decision of the Hon'ble CESTAT, Ahmedabad in Ashok Khetrapal Vs. Commissioner of Customs, Jamnagar, (supra) wherein it was held that 'since a casino vessel imported by the importer is principally designed to cагту passengers, the same has been correctly assessed under Customs Tariff Heading (CTH)' would not come to their rescue since the impugned vesse....
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....ot tenable for the reason that impugned vessel has not been designed for transportation of passengers and it has been designed for the purpose of gaming /pleasure and therefore it is a vessel to be classified under the category of 'pleasure vessel' under Customs Tariff Heading (CTH) 8903. Therefore, the classification of the impugned vessel under Customs Tariff Heading (CTH) 8901 is not proper and it is rightly classifiable under Customs Tariff Heading (CTH) 89039990 and not under Customs Tariff Heading (CTH) 89011010 as declared by the appellant. 55. The other issue involved in this case is with regard to the costs incurred by the appellant before the goods were imported into India and it is alleged that the same were not included in the declared value of the vessel when the bill of entry was filed. The sale invoice dated 16.11.2010 shows the hailing port as Hammond, USA, however the Bill of lading dated 30.04.2011 shows the port of lading as Quebec, Canada. The invoice is on FOB basis, therefore the costs from Hammond USA to Quebec Canada would have to be borne by the seller M/s. Horseshoe Hammond LLC. The expenditure incurred by the buyer, M/s. Victor Hotels & M....
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....03.2011 under which the concessional rate of duty is 1% ad valorem is for the goods falling under Customs Tariff Heading (CTH) 8901. Since we find that the impugned vessel is correctly classifiable under Customs Tariff Heading (CTH) 8903 for which benefit of exemption under Notification No. 1/2011-CE dated 01.03.2011 is not available and for the goods under Customs Tariff Heading (CTH) 8903 concessional rate of CVD is higher i.e. @ 10% ad valorem under notification No. 2/2008-CE dated 01.03.2008 in force at the relevant time of importation. We find this rate of duty has been correctly applied in the SCN i.e. @10%. ad valorem while computing CVD and is sustainable. 60. We also find that the impugned vessel being 'old and used' is required to be assessed by the certified chartered engineer which has been done in this case and the certified chartered engineer has determined the value of the goods at USD$ 6,349,869 and also the goods have been cleared based on that valuation and thereafter on intelligence the matter was taken up by DRI and the investigation taken up has shown that there is a mis-declaration of classification of the vessel as under Chapter Heading 8901 ....
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.... for knowingly suppressing the value of the costs and services incurred in the Import of the vessel with the intention to evade payment of Customs duty applicable thereto, under section 114A of Customs Act, 1962. Further, the impugned order has imposed penalty of Rs. 50,00,000/- on Shri. Anil Malani Director of M/s. Victor Hotels & Motels Ltd. Rs. 50,00,000/-on Shri Ashish Kapadia, Managing Director M/s. Delta Corp Ltd., and Rs.25,00,000/- on M/s. Hassan Hajee & Co. CHA Mangalore under Section 112(a) of the Customs Act, 1962 for aiding and abetting in the act of misdeclaration of the vessel as passenger vessel and suppressing the value of the costs and services incurred in its import and hence rendering the goods liable for confiscation. We find the imposition of penalties on the appellant and co-appellants is not tenable for the reason that the goods have not been mis-declared in the bill of entry and the supporting documents also mentioned about it being a 'casino vessel' therefore it is for the department who have examined the impugned vessel in detail to determine where the goods are rightly classifiable under the Customs Tariff and having not done so at the time of ass....