Appellant imports old and used ships for breaking

The Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad Bench has recently ruled that oil present in the bunker tanks of a vessel’s engine room is to be considered part of the ship for the purpose of customs duty determination. The appellant is engaged in the business of importation of Old and used vessels for breaking up at the Ship Breaking Yard Alang /Sosiya at their designated plot which was allotted by the Gujarat Maritime Board Bhavnagar/ Gujarat. Learn the Essentials of Sections 269 and 271, Click here Appellant imports various types of old and used ships for breaking on payment of the due Customs duty leviable thereupon under the provisions of the Customs Act, 1962 read with the Customs Tariff Act, 1975. At the time of importation of a vessel at SBY Alang anchorage, the boarding and rummaging of the said vessel has been carried out by the Customs authority of SBY Alang. The authorised Surveyor was also appointed by the owners of the vessel, who boarded the vessel and carried out all types of survey as required and issued a Survey report mentioning all the required information. The authorised Shipping Agent filled the Import General Manifest after completion of boarding formalities declaring the import cargo as vessel Viz M.V. CRASSIER as provided under the Section 30 of the Customs Act, 1962. After importation of the said vessel, Appellant submitted a Bill of Entry before the Superintendent of Customs SBY Alang which was allotted Sr. No, 6672982 dated 29.01.2020. The rummaging of the said vessel was carried out by the Customs authority of SBY Alang. The authorised Surveyor was also appointed by the owners of the vessel, who also boarded the vessel and carried out all types of survey as required and issued a Survey report mentioning all required information. The authorised Shipping Agent also filled the Import General Manifest after completion of boarding formalities declaring the import cargo as vessel Viz. M.V. CRASSIER wherein also the remaining stock of Bunkers Viz Marine Gas Oil (MGO /HSD). Diesel Oil, Lubricating Oil etc along with other movable items, Store list Bunkers etc, were declared as per the Instructions contained in Circular No. 37/1996-Cus dated 03.07.1996. These goods were not imported exclusively but such importation was as an integral part of the vessel classified under heading No. 8908 of the Customs Tariff Act, 1975 as provided under the Section 30 of the Customs Act, 1962. Learn the Essentials of Sections 269 and 271, Click here The appellants argued that the oil in the bunkers, such as Marine Gas Oil (MGO), Diesel Oil, and Lubricating Oil, was an incidental part of the vessel and should be classified under the same customs heading as the ship (CTH 8908).  All goods including all types of Oils were declared in the impugned bill of entry only as per the Instructions contained in Circular No. 37/1996-Cus dated, 03.07.1996. Their contention was however rejected by lower authorities. This classification would exempt the oil from separate duty assessment, the tribunal observed in agreement with the submission of the appellants, in light of the previous rulings and a recent decision by the Supreme Court in MAHALAXMI SHIP BREAKING CORP. VS. COMMISSIONER OF CUS., BHAVNAGAR that had supported the view that such oil is to be assessed as part of the vessel when imported for breaking up. This decision reaffirmed that the oil in bunker tanks is not to be assessed separately but as an integral part of the ship being imported for demolition. The CESTAT ruling set aside the earlier lower authority orders and allowed the appeals, providing relief to the ship breaking industry by confirming the inclusive classification of such oil under the customs tariff heading applicable to the vessel.