MARINELINES SHIP BREAKERS (P) Vs. COMMISSIONER OF CUS.

JUDGEMENT

(1.) The issue involved in this Appeal filed by M/s. Marinelines Ship Breakers (P) Ltd. is whether the weight of 'CONSTANT' is to be included in LDT of the vessel imported by them.

(2.) Shri A. D. Maru, learned Advocate submitted that M/s. Demo International Ltd. entered into a Memorandum of Agreement dated 7 -10 -2002 with the Appellants for sale of the vessel M V Bute having LDT 6528.54 LT for breaking purposes; that the price entered in the Memorandum of Agreement was US 946,638.30 at the rate of US 145/ - per LT CIF; that the Revenue has added the value of US 49,952.50 of 'CONSTANT' of 344,50 LDT and confirmed the demand of duty against the appellants. Learned Advocate, further, submitted that the Appellants are liable to pay the duty on the transaction value in terms of Rule 3(1), 4(1) and Rule 9 of the Customs Valuation Rules; that thus enhancement of the transactional value is against the law; that in any way, the CONSTANT is nothing but sea water, kept in double bottom tank and deep tanks as 'Ballast' to maintain stability in sea voyage for, smooth beaching of the ship at her own power; that the ship is sent for the purpose of breaking, it is empty and there is no cargo and therefore to maintain the stability in the sea, special 'ballast' is kept; that in the present it was shown in the final departure report given to the master of the ship who handed over the same to the Customs officer with Trim and Stability Booklet of the Ship; that as per Dictionary of the Shipping Terms by Peter Brodie, CONSTANT means "Combined weight of a ships stores and spares. This weight, normally expressed in tons or tonnes, is taken into consideration when calculating the maximum quantity of cargo bunker and fresh water which the ship can lift." Learned Advocate contended that the weight of the CONSTANT is not to be included for working out the LDT of the vessel imported by them. He has also relied upon the Ministry's Circular No. 37/96 -Cus. dated 3 -7 -96 wherein the Ministry has accepted the opinion of the World Customs Organisation, according to which rule, oil and consumables are to be classified in their own appropriate Headings in the Bills of Entry showing their weight also. He also mentioned that the Surveyor in his survey report in 1992 has confirmed LDT as 6528.24; that thus to levy and collect the duty on the CONSTANT is not sustainable in law.

(3.) Countering the arguments, Shri S. M. Tata, learned Senior Departmental Representative, submitted that on perusal of the Trim and Stability Booklet, it was observed that LDT of the vessel was 6.633 MT and CONSTANT is 350 MT; that the Constant of a vessel generally consists of spare anchor, spare tail shaft, spare propeller and machine tools etc.; that Para 2(a) of the Circular No. 37/96 -Cus. dated 3 -7 -96 clearly states that "Movable gears such as lifting and handling machinery, anchors, navigational equipment, machine tools, fire fighting equipments form part of the vessel's normal equipment and hence classified under Heading 89.08 of the First Schedule to the Customs Tariff Act; that accordingly, the CONSTANT has to be classified under Heading 89.08 along with vessel and they become part of the vessel and therefore its weight should be included in the LDT of the impugned vessel.