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Cus - Maharashtra Police could not have invested huge public money for purchase of boat for pleasure without being used for patrolling purpose-Revenue's classification of Patrolling boats under CTH 8903 fails: CESTAT

By TIOL News Service

MUMBAI, NOV 27, 2017: AGAINST an order passed by the Commissioner of Customs (Import), the appellant is before the CESTAT.

They submit that the raw materials and parts were imported to manufacture two Patrolling Boats and to supply the same to Maharashtra Police.

The goods so imported were allowed to be warehoused for manufacture of war boat meant for use as patrolling boats by Maharashtra Police. To carry out such activity, central excise registration was not required in terms of Notification No. 36/2001-CE dated 26.6.2001.

Appellant submitted that warship falls under CTH 89.06 which reads -

89.06 Other vessels, including warships and lifeboats other than rowing boats.

8906.10 - Warships

8906.90 - Other

It is the Revenue contention that the boat cleared from the warehouse was high-speed motorboats essentially designed for pleasure or sports and classifiable under CTH 8903. Furthermore, the appellant did not file ex-bond bill of entry against the raw materials allowed to be warehoused for end-use in manufacture; that appellant had delivered the boats without following due process of law and committed breach thereof.

After considering the submissions, the Bench inter alia observed -

"8. Dispute on classification was raised by Revenue contending that the boat manufactured by appellant was of the nature dealt by CTH 8903. We do not understand why Maharashtra Police shall be investing huge public money for purchase of boat for pleasure without being used for the purpose of patrolling. When page 100 of the appeal folder is read, it is revealed that copy of a document appearing thereat was issued by Maharashtra Police explaining that the boat was fitted with arrangement to carry Arms and Ammunitions by Police patrolling parties in district Raigad & Sindhudurg for the purpose of coastal security. Revenue's plea fails accordingly to hold that such boats fall under CTH 8903.

9. There was breach of law for not informing the excise authorities as to the manufacture carried out in warehouse and also there was breach of law made by appellant without filing ex-bond of bill of entry. Maharashtra Police having clarified that the boats were meant for the purpose of security and patrolling, no penalty is imposable on the appellant in the fitness of the circumstances of the case since warship was exempt from duty."

The appeals were allowed.

(See 2017-TIOL-4152-CESTAT-MUM)


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