2025-VIL-1943-CESTAT-AHM-CU
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CUSTOMS CESTAT Cases

Customs – Sections 74 and 114A of Customs Act, 1962 – Import of tugs – Denial of benefit of concessional rate of duty – Demand of differential duty – Appellant imported two old and used Tugs on re-export basis and claimed concessional rate of customs duty under Notification No.72/2017-Cus – Principal Commissioner disallowed benefit of Notification No.72/2017 and confirmed demand of differential duty – Whether tugs imported by Appellant are entitled to benefit of Notification No.72/2017-Cus – HELD – Notification No.72/2017-Cus exempts payment of Customs duty on temporary import of leased machinery, equipment and tools. Tugs fall under Chapter Heading 8904 of Tariff Act, as they are designed to assist ships in distress and not for transport of persons and goods. Tug boats imported by Appellant are not machinery, equipment or tools, as these are specifically covered under Chapter Heading 8904. Two tugs imported by Appellant are not entitled to benefit of Notification No.72/2017-Cus – Appeal partly allowed - Entitlement of drawback benefit – Whether Appellant is entitled to drawback benefit under Section 74 of the Act – HELD – Appellant have alternatively argued that drawback of duty would be available under Section 74 of the Act, inasmuch as, tug boats have gone back after salvage operations within a period of 3 months from date of their importation. There is no doubt that both tugs were exported after completing all formalities. On export of tug boats imported temporarily, Appellant is entitled to drawback benefit under Section 74 of the Act - Imposition of penalty – Whether penalty under Section 114A of the Act imposed on Appellant is sustainable – HELD – It would be reasonable if penalty imposed on Appellant under Section 114A of the Act is equal to differential duty amount. Adjudicating Authority is directed to first compute the differential duty payable by Appellant after allowing drawback benefit to them and then decide quantum of penalty under Section 114A of the Act.
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