1. The issue involved in this appeal, filed by M/s. Priya Holding Pvt.
Ltd., is whether the customs duty is separately leviable on stores and bunkers or these goods are to be included in LDT of the ship brought for breaking.
2. Shri A.D. Maru, learned Advocate, submitted that the appellants imported one old ship M.V. BORROVICHI; that they paid the customs duty of Rs. 50,52,210/-; that subsequently the Assistant Commissioner, under Adjudication Order No. 4/99, dated 30-3-99, dropped the demand on movable gears but confirmed the demand on bunker and food-stuff in terms of Board's Circular No. 37/96 Cus., dated 3-7-1996; that on appeal, the Commissioner (Appeals), under the impugned order dated 14-12-2001, rejected their appeal holding that the fuel kept in the engine room could not be treated as a part of engine and machinery and ship stores were classifiable separately in their own appropriate Heading of the Customs Tariff and not to be classified along with the ship. The learned Advocate, further, submitted that as per definition of LDT of ship, oil stored in double bottom tanks, deep tanks, storage or reserve supply tanks, barrels, drums, or tins is not included in LDT and the duty is leviable; that, however, oil in Engine room tanks connected and associated with machinery and engines of the ship is included in the LDT and duty is not leviable. He referred to the Book titled "Ship Design and Construction", Published by the Society of Naval Architects and Marine Engineers, New York. He also mentioned that while sending the ships for breaking, the seller provides sufficient fuel oil and water so that ship can be beached properly at their own power; that such oil is always in engine Department tanks only which are associated and connected with the machinery and engine of ship; that such oil is called "fuel and oil contained in vessel's machinery and engines" regarded as forming integral part of the vessel and no separate duty is leviable. He emphasised that in the present case, the oil was in Engine room tanks and hence no separate duty is leviable.
He, further mentioned that the food-stuff is consumed by the crew members on particular vessel during their compulsory and necessitated stay period till beaching and no customs duty is payable on the food-stuff in view of the provisions of Sections 86 and 87 of the Customs Act. Finally the learned Advocate submitted that the Appellants have filed a Miscellaneous Application for raising an additional ground to the effect that the assessment of Bill of Entry was made on the M.T.of the ship whereas under Notification No. 87/90-Cus., dated 20-3-1990, the duty was to be assessed on LDT; that as such the assessment was wrong; that further the benefit of Notification No. 118/89-Cus., dated 1-3-1989 and Notification No. 169/89-Cus., dated 12-5-1989 was not given which may be allowed.
3. Countering the arguments, Shri Atul Dixit, learned SDR, submitted that the Appellants have never challenged the assessment of Bill of Entry and as such at this stage of their appeal before the Appellate Tribunal, they cannot challenge the assessment by claiming benefit of Notifications; that the present matter pertains to the assessment of oil and food-stuff only; that as per para 2(b) of the Board's Circular No. 37/96, dated 3-7-1996 only fuel and oil contained in the vessels machinery and engines is to be regarded as forming integral part of the vessel and it is to be classified under Heading 89.08; that as per para 2(d) remaining fuel and oil and other ship stores, including drinks and food-stuff are classifiable separately in their own appropriate Headings; that the Commissioner (Appeals) has given the specific findings in the impugned order that the Appellants are treating oil and fuel contained in vessel's machinery and engines as the same as the fuel and oil contained in the engine room; that the fuel kept in the engine room cannot be treated as part of the engine and machinery; that accordingly fuel tank in the engine room cannot be considered as part of the engine and machinery. He, finally, submitted that ship stores are classifiable separately and the provisions of Sections 86 and 87 of the Customs Act are not attracted inasmuch as Section 86 provides for consumption of stores without payment of duty when the vessel is in India; that it means that exemption is only in respect of vessel in transit; that Section 87 of the Act provides for consumption of stores on board the vessel during the period the vessel is a foreign going vessel; that the ship in the present matter has been imported for the purpose of breaking and it is not any more a foreign going vessel as defined in the Customs Act. He relied upon the decision of the Tribunal in the case of Bhikkamal Chhotelal v. Commissioner of Customs & Central Excise, Final Order Nos.
4. We have considered the submissions of both the sides. As far as food-stuff is concerned, the provisions of Section 86 and 87 of the Customs Act are not attracted as the food-stuff in the present matter, cannot be treated as ship stores. The stores are not chargeable to duty under Section 87 only when these are consumed as stores, during the period vessel is a 'foreign going vessel'. As per Section 2(21) of the Customs Act 'foreign going vessel' means any vessel for the time being engaged in the carriage of the goods or passenger between any port in India and any port outside India. The vessel or ships in the present matters are not falling within definition of the foreign going vessel and as such the provisions of Section 87 are not applicable. The Board's Circular No. 37/96, dated 3-7-1996 has been issued after consulting World Customs Organization, Brussels and according to which ship stores including drinks and food-stuffs are classifiable separately in their own appropriate headings. The Circular also mentions that fuel and oil contained in the vessel machinery and engine can only be regarded as forming integral part of the vessel and to be classifiable along with the vessel under heading No. 89.08; that the Circular, further provides that remaining fuel and oil has to be classified separately in their own appropriate heading. We find force in the submissions of the ld. Advocate that the engine room tank is to be considered as containing fuel and oil in the vessel's machinery and engine. The fuel and oil contained in other tank will fall within the category of "remaining fuel and oil" which is covered by para 2(d) of the Circular. Accordingly, the fuel and oil in engine room tanks will be classified with the ships under Heading 89.08 and the fuel and oil in other tanks will be classifiable in their own headings and duty will be charged accordingly. The fuel and oil in other tanks and food-stuff will be charged to duty separately.
5. In the present proceedings, the issue involved is the assessment of oil and food-stuff. The Appellants have not challenged the assessment of the Bill of Entry and as such they can not now claim that the assessment of the Bill of Entry was wrongly made. The ratio of the decision in the case of C.C.E. v. Flock (India) (P) Ltd., 2000 (120) E.L.T. 285 (SC) is squarely applicable. Accordingly, the Miscellaneous Application is rejected.