Full Judgment
1. The facts of the case are that the appellant is engaged in the breaking of old and unserviceable imported ships at Alang ship breaking yard. He purchased the ship "M.V. LINHAI" as per memorandum of agreement dated 10-8-1990 and the addendum No. 1 dated 1-10-1990 from M/s. Echkardt Marine German. The Light Displacement Tonnage (LDT) of the vessel being 4675 Long Ton, duly certified by independent Marine Surveyor or classification society. The revised letter of credit was taken on 25-10-1990 for US $ 1.051,875/- @ 225 US $ for long ton of the LDT excluding permanent ballast for net LDT of 4675/- long tons. On the arrival of the ship M/s. Erickson & Rechards (Gujarat) Surveyor, being convinced of the removal/non-existence of 5 cranes bearing 110 long tons issued after verification, the survey report dated 30-1-1990 confirming the Net LDT of the vessel as 4675 long tons. IGM was filed and Port authorities charged the wharfage and beaching charges on that LDT of 4675 i.e. 4750 MTs. On 5-11-1990, before clearance for home consumption, the appellant requested the Range Superintendent to examine and verify the removal of 110 long ton being the total weight of five cranes, so as to enable him to assess the duty precisely upon the actual tonnage of the Import. Accordingly, the Superintendent of Central Excise and Customs, Alang being satisfied on physical inspection of the vessel and verification of documentary evidence, such as drawing of the vessel and five photographs along with a certificate of the Crane Mfrs. A/S. Skers Mekaniske Verksted in terms of Section 17 of the Customs Act, found the removal/non-existence of 110 long tons (five cranes) to be genuine and endorsed the same on 7-11-1990 upon the certificate issued by M/s. Buro Behrmann - Marine surveyor, Humburg dated 10-10-1990. The vessel M.V. LINHAI bearing originally 4785 LDT in long tons was imported with only 4675 LDT. The Bill of entry No. 62/91 was filed in the customs for clearance of the vessel of 4675 long tons i.e. 4750.03 metric tons for home consumption on payment of duty of Rs. 59,13.787/-. The Superintendent of Customs & Central Excise, Alang revised the Bill of Entry and assessed the duty on 4785 long tons for Rs. 60,52,529/-. The said duty was remitted under protest to State Bank of Saurashtra on 8-11-1990 under the Challan No. IMP-63/90-91. The refund claim was made for Rs. 1,39,142/- recovered in excess along with all documentary evidence to Asst. Collr. of Customs and Central Excise Bhavnagar. Show cause notice was issued on 11-4-1991 calling upon them to explain why their claim should not be rejected. They have submitted the reply on 6-5-1991 and explained their position in the personal hearing. On 13-6-1991, the refund claim was rejected under the Order-in-Original by him, holding that the import of M.V. LINHAI has taken place as Old ship for breaking and individual item in ship for breaking as per the Import Policy 1990-93, Appendix 19. The import is considered as a whole and not as 'Goods for breaking' and Section 23 of the Customs Act for granting remission of duty for goods lost or destroyed for home consumption, is not applicable. Refund claim for refund of duty has no bearing against Note No. 2 of Chapter 89 of the Customs Tariff, under which duty was charged for taking highest of the LDT indicated in the other documents. The appeal preferred by the appellant against the said order has been rejected on 6-1-1993 under the impugned order by the Collr. (Appeals), Ahmedabad, by holding that the appellant has failed to show the amendment in the stability book by the builder which is the basis on which the duty is assessed. The stability book is an important document on which the duty has to be assessed as per the above provisions. The appellants have claimed benefit of Modvat credit of the countervailing duty paid by them on the imported ships computed on LDT basis, while clearing their finished products obtained after breaking of the ships falling under Heading 72.30/73.27. Thus they have taken Modvat credit even in respect of missing items. While paying the duty as per the LDT shown in the stability book. The appellant cannot simultaneously claim both the Modvat credit and refund claim. Hence this appeal.
2. The appellant has requested for a decision on merits. Heard the ld.DR Shri B.K. Suman, who has supported the impugned order. Perused the document produced in this case and the orders of the lower authorities and the Show cause notice and the reply thereon, and the written submission. There is no dispute about the missing of the 5 cranes before import as certified by the Superintendent. But, the remission is not given under Section 23 of the Customs Act in view of the Import Policy of Appendix 19 of 1993 regarding the applicability of note under the Chapter 89 of Customs Tariff Act. The duty is assessed under Section 27 of the Customs Act. Section 23 of the Customs Act gives remission of duty on the parts lost or destroyed. Here in this case, the parts of the ship namely the 5 cranes were removed before sale.
This is not the case of loss or destruction. The purpose for which the vessel was purchased was for ship breaking. So the assessment of duty is, as a whole, on the ship as held by the lower authorities. Section 12 of the Customs Act is a charging section for the levy of customs duty on the goods imported into India. According to it, it shall be levied at such rates as prescribed under the Customs Tariff Act, 1975.
The Tariff, as shown under 8908 under Chapter 89, vessels and other floating structures for breaking up @ 1000 per LDT. So the appellant cannot have any grievance regarding the charging of duty under the tariff, under Section 12 of the Customs Act. LDT means LDT Metric tons as per builders register LDT referred to in stability book of the builder, certificate at the time of initial commissioning of the vessel of the floating structure. From the orders of the lower authorities it is clear that stability book is the basis on which the duty is charged.
As observed by the respondent in the impugned order, the said stability book if not amended regarding the removal of 5 cranes and the reduction of LDT. Duty is charged on the LDT in the stability book, it is proper and correct. Note 2 of Chapter 89 is a clarification and is not contrary to Section 12 of Customs Act. The contention of the appellant that remission must be as given under Section 23 of Customs Act does not hold good, so long as stability book of the vessel is not amended.
As observed by the respondent in the impugned order the appellant has taken Modvat credit while paying duty after ship breaking on 4785 long tons only. This clearly shows that the appellant has conceeded the impugned order even though he has paid duty under protest. In view of this conduct of the appellant, his refund claim cannot be upheld. The reasoning of the lower authorities in the orders under the challenge is proper and correct, in view of the discussion made above. There is no basis for the appellant to file IGM and Bill of Entry for 4675 LDT, when the stability book was not showing. The duty has to be assessed only in terms of LDTs and not otherwise. So under these circumstances, the appeal cannot be allowed. The case of the appellant is rejected.
Hence I pass the following order.
For the reasons discussed above, the appeal cannot be allowed and it is rejected.