No Customs Duty On Spare Parts Supplied For Warship: CESTAT

The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that the interceptor boat supplied by the appellant was a warship. The intercepted boats used by the Coast Guard Ministry of Defence Government of India are only for the security of the coastal border of the country and the boats are not used for any other purpose. The interceptor boats are equipped with arms and ammunition. Therefore, it is absolutely without any doubt that the interceptor boat is a warship.

The appellant/assessee has supplied interceptor boats and spare parts to the Government of India for use by the Coast Guards for coastal security by equipping the Coast Guards with fast-speed interceptor boats. While a few interceptor boats had already been delivered in the past and others were in the manufacturing stage, the appellant, under the direction of the Indian Coast Guard (GOI), had supplied B&D spares, after undertaking the desired inspection and testing at their premises. The appellant informed the customs authorities of the supply of B&D spares and submitted the relevant documents with a request to cancel the bond as furnished in terms of Notification No. 12/2012-Cus dated 17.03.2012 (Sr. No. 469A). The department issued a show cause notice and disputed the exemption of duty, as claimed by the appellant, on the import of said B&D spares.

The issue raised was whether the appellant's goods imported and supplied as B&D spares of Interceptor Boats to the Cost Guard, Government of India, were eligible for exemption Notification No. 12/2012-Cust (Sr. No. 460 or 469A).

The appellant submitted the reply that the appellant has fulfilled the conditions of notification by submitting the NDA certificate issued by the Government of India. The appellant alternatively claimed the exemption under Serial No. 460 of the Customs Notification No. 12/2012-Cus dated 17.03.2012 (Sr. No. 460). However, the adjudicating authority confirmed the demand and imposed the penalties and redemption fine.

The appellant submitted that the exemption under Serial No. 469A was of notification No. 12/2012-Cus was denied on the ground that the spares supplied by the appellant were not in connection with the manufacture of interceptor boats. Even though the spares were separately supplied, since it was in or in relation to manufacture and accessories. The supplies are covered under an exemption.

The CESTAT held that the appellant was eligible for exemption notification No. 12/2012-Cus.

Case Title: Larsen Tourbro Limited Versus C.C.-AHMEDABAD

Citation: Customs Appeal No.10978 of 2021

Dated: 10.08.2022

Counsel For Appellant: Advocate Ashish Chauhan

Counsel For Respondent: Superintendent (AR) Vinod Lukose

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