M.P Steel Corporation v. Commissioner Of Customs, Rajkot

[Order per : Gowri Shankar, Member (T)]. - Appellant imported a ship MV “Olinda” at Alang for being broken up into scrap. There was a question raised as to whether, for calculating the light displacement tonnage (LDT for short) of the vessel for purpose of assessment, permanent ballast was to be included or not. It appears that there was some correspondence between the Assistant Collector and the Collector. The Collector, in his letter dated 25th March, 1992 to the Assistant Collector indicated that the LDT should be considered to be inclusive of permanent ballast. On this basis, the Superintendent of Central Excise at Alang wrote to the appellant that the Collector had decided the issue and ordered assessment of the goods to duty by including the weight of permanent ballast and ordered encashment of bank guarantee and that proper action being taken. The order of the Collector is in appeal before us.

2. The preliminary objection of the Departmental Representative is that the order of the assessment is that of the Superintendent and that therefore an appeal lies not to this Tribunal but to Commissioner (Appeals). The Superintendent’s letter specifically informs the appellant that the bank guarantee, which was furnished by the appellant pending assessment was being encashed by including in the LDT the weight of the permanent ballast as ordered by the Collector. Therefore, the Superintendent’s letter is nothing more than a communication to the appellant of the order passed by the Collector (Appeals). The appeal, which in effect, is against the Collector’s order which lays down the basis for finalising the assessment and therefore lies to the Tribunal.

3. According to Note 2 of Chapter 89 of the Tariff the light displacement tonnage means “light displacement tonnage (LDT) in metric tonnes as per builder’s registered LDT referred to in the stability book or the builder’s certificate at the time of initial commissioning of the vessel provided in case of any change in the LDT, the highest of the LDT indicated in any of the documents referred to above shall be taken”. In his order, the Collector has said that Note 2 of Chapter 89 does not refer to LDT and has relied upon the glossary of terms received from the Ministry of Shipping and Transport referred to in the budget instructions for 1986 and the opinion of M/s Alcock Ashdown & Co Ltd. The glossary of terms of the Ministry of Shipping and Transport could not be produced by the Departmental Representative. The Collector has said that according to this glossary of terms LDT of the ship is equal to displacement of ship minus dead weight tonnage, equal to the underwater volume of the ship up to the summer load line. He has said that the LDT therefore could correctly be worked out by deducting the dead weight tonnage from the LDT, both of which are indicated in the stability book/builder’s certificate. Going by this method, this LDT is what has been claimed. The translation produced by Tradutor Publico Juramentado, of the Deadweight Certificate issued on behalf of the ship builders indicates the weight of the ship called “COPACABANA” as follows :

(a) light displacement tonnage 7009 tons

(b) load displacement (with 9.60 m load draft equivalent to freeboard verified) 19,300 tons

(c) deadweight 12,291 tons.

The light displacement tonnage of the ship thus is 7009 tonnes arrived at in accordance with the method approved by the Collector. The trim and stability book of the ship issued by Naval Consult GmbH, Hamburg, who apparently modified the ship, indicates the diplacement to be 19,368 tons and deadweight to be 10,798 tons. According to this the LDT would be 8570 tonnes. Since the light displacement tonnage given in the builder’s certificate is higher that would have to be taken for assessment. In the light of the tariff specification, the question of considering external material such as glossary of terms of the Ministry of Shipping and Transport does not arise.

4. The Departmental Representative contends that it should be held that the permanent ballast of the vessel consisting of copper slug should be assessable to duty on merits. That is not the issue for decision in this appeal. We are concerned in this appeal with the determination of light displacement tonnage for purposes of assessment and are therefore not required to give a finding on this issue.

5. Appeal allowed. Impugned order set aside. Consequential relief.