In re SubCom Projects India Private Limited (CAAR Mumbai)
Background: SubCom Projects India Pvt. Ltd., a 99.99% subsidiary of SubCom, LLC (USA), approached the Central Authority for Advance Rulings (CAAR), Mumbai seeking clarity on the eligibility for exemption from Basic Customs Duty (BCD) under Sl. No. 555 and Integrated Goods and Services Tax (IGST) under Sl. No. 557C of Notification No. 50/2017-Customs, dated 30 June 2017. The query concerned the import of a cable laying vessel, a specialized ship designed to lay and repair submarine cables for telecommunication and internet services in Indian waters.
While SubCom India imported the vessel under a time-charter lease from Transoceanic Cable Ship Company LLC, the submarine cables and related materials used in cable-laying operations were imported directly by its clients, who were also responsible for paying the applicable customs duties. The applicant sought an advance ruling to clarify whether they could claim duty exemptions on the vessel despite not importing the cable materials themselves.
Legal Framework Considered:
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Section 28H(2) of the Customs Act, 1962 – Governs matters related to the applicability of customs notifications.
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Notification No. 50/2017-Customs, dated 30 June 2017 – Provides exemptions from BCD and IGST on certain goods, including specialized vessels.
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Customs Tariff Act, 1975 – Classifies goods for duty purposes. In particular, Chapter 89 relates to “Ships, boats, and floating structures.”
Classification of Cable Laying Vessel:
CAAR examined the vessel’s characteristics, noting it is distinct from ordinary cargo or passenger ships, equipped with cable tanks, laying machinery, and positioning systems. Using the Customs Tariff and HSN Explanatory Notes, the vessel falls under:
