Case Law Details
Commissioner of Customs Jamnagar Vs Dhan Steel Pvt Ltd (Supreme Court of India)
Introduction: In a recent ruling, the Supreme Court of India upheld a decision made by the Customs Excise and Service Tax Appellate Tribunal (CESTAT) concerning the treatment of oil in bunker tanks on ships. This article provides an in-depth analysis of the case and the Supreme Court’s endorsement of the CESTAT ruling.
Background of the Case: The case, titled Commissioner of Customs Jamnagar vs. Dhan Steel Pvt Ltd, involved a dispute regarding the assessment of oil in the bunker tanks of ships, both inside and outside the engine room, when the vessels were sent for scrapping.
Delay Condoned: The Supreme Court began by condoning any delays in the appeal and proceeded to address the matter at hand.
The Impugned Order: The impugned order, dated 1st December 2022, was issued by the Customs Excise and Service Tax Appellate Tribunal, West Zonal Branch, Ahmedabad, Regional Bench. It was based on the understanding that a similar issue had already been ruled against the Revenue in a prior case, and the present appeal had been filed against the same order.
Coordinated Bench’s Observations: The Supreme Court noted that a coordinated Bench of the Court had recently disposed of appeals filed by the Revenue concerning similar issues. These appeals pertained to orders passed by CESTAT on 16th February 2022 and 1st December 2022, addressing the assessment of oil in bunker tanks in ships destined for scrapping.
The Core Issue: The core issue in the case revolved around whether the oil in the bunker tanks, both inside and outside the engine room, should be assessed separately or considered an integral part of the vessels to be scrapped.
CESTAT’s Ruling: CESTAT had ruled that the oil in the bunker tanks should be assessed as part of the ship, meaning it would not be separately assessed. This decision was contrary to a previous ruling in a different case.
Supreme Court’s Decision: After considering both the conflicting views expressed by CESTAT, the Supreme Court upheld the later view expressed in the orders dated 16th February 2022 and 1st December 2022. In these orders, CESTAT had concluded that the oil should be assessed as part of the ship. The Supreme Court, therefore, dismissed the Revenue’s appeals and affirmed the CESTAT’s decision.
Conclusion: The Supreme Court’s decision to uphold the CESTAT ruling regarding the assessment of oil in bunker tanks on ships provides clarity on this issue. The ruling, based on the understanding that the oil is integral to the ship, has implications for the assessment and taxation of such assets when vessels are sent for scrapping.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Delay condoned.
2. The Revenue is in appeal against the order No.A/11849/2022 dated 01122022 passed by the Customs Excise and Service Tax Appellate Tribunal, West Zonal Branch, Ahmedabad, Regional Bench, in Custom Appeal No.12024/2019.
3. The impugned order dated 1122022 came to be passed on the ground that the similar issue has been held against Appellant – Revenue and the present appeal has been filed against the said common order passed in Civil Appeal No.11849/2022. This Court by order dated 05042023 has disposed of the appeals filed by the revenue by observing as follows:
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The Revenue is in appeal(s) against two orders passed by Customs Excise & Service Tax Appellate Tribunal [CESTAT] i.e. orders dated 16.02.2022 and 01.12.2022. The issue agitated by it is that the Oil in the Bunker Tanks of the Engine Room/outside the Engine Room of the vessels sent for being broken up, are to be assessed separately or as part of the vessels to be scrapped. In the appeals preferred by the Revenue, which are directed against the orders of the CESTAT dated 16.02.2022 and 01.12.2022, the CESTAT ruled that the oil is to be assessed as part of the Ship. However, in an earlier appeal [Mahalaxmi Ship Breaking Corp. ETC. Vs. Commissioner of Customs, Bhavnagar, which is the subject matter of Civil Appeal Nos. 53185342/2009 before this Court], the CESTAT ruled otherwise vide order dated 29.05.2009, stating that both the articles are to be separately assessed. Having considered both the orders as well as the submissions of the parties, this Court is of the view that the later view expressed in the orders dated 16.02.2022 and 01.12.2022 [which are the subject matters of Diary No(s). 24220 OF 2022, Diary No(s). 8943 OF 2023, Diary No(s). 10272 OF 2023, Diary No(s). 10034 OF2023, Diary No(s). 11290 OF 2023, Diary No(s). 8954 OF 2023, Diary No(s). 10267 OF 2023, Diary No(s). 10031 OF2023] is correct. The Revenue’s appeals are, accordingly, dismissed.
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4. Having regard to the aforestated order passed by a coordinate Bench of this Court, we are of the considered view that present appeal which arises out of same common order would not survive for consideration.
5. This appeal is disposed of in above terms.
6. Pending applications(s), if any, stand disposed of.
