CBEC order likely to slowdown ship acquisitions

CBEC order likely to slowdown ship acquisitions

Its circular has intimated owners and shipping companies to file bill of entry when they import ships

MUMBAI 1 NOVEMBER 

    The expected growth of the country's shipping tonnage, which, for the first time, managed to cross the 10 million gross tonnage mark, is likely to slowdown if you go by a recent circular issued by Central of the Board of Excise & Customs (CBEC), according to many a shipowner. 
    The September 13 circular has intimated owners and shipping companies to file bill of entry when they import ships. 
    The circular 'out of the blue', as one ship owner liked to term it, has given instances where 'certain shipowners of Indian flag vessels have imported vessels which are exempt from payment of duty, without filling bill of entry and import general manifest (IGM).' "In this connection, it stated that at the time of their import into India the status of these vessels, which are meant for plying on Indian ports as coastal vessels or as Indian flag foreign going vessels, etc, is the same as that of any other class of imported goods. 
    According to the circular, Section 2 (25) has defined "imported goods" as any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption. Further, it said, 'goods' has been defined under section 2 (22) as to include, inter alia, vessels, aircrafts and vehicles. Hence, it said, "these are subject to the same procedure i.e., filing of IGM, Bill of Entry, payment of duty, if any etc. as is applicable in case of other imported goods." 
    Accordingly, the circular also reminded the ship owners about the filing of these documents should be complied with even in cases, where goods are exempt from payment of any duty. 
    More importantly, CBEC has instructed jurisdictional commissioners not only to review the situation but also to take appropriate action for past cases, including appointment of a common adjudication authority, if so desired. 
    If, after the nerve wrecking economic downturn that unsettled even many of big players, Indian shipping companies are still trying to swim to the shore, the circular has left them gasping. What is troubling them is the stipulation to file bill of entry and its affect effects could further harm the industry at a time when the industry is frantically looking for funds to acquire vessels. 
    "With ships available at attractive valuations, thanks to the downturn-led slackness in demand, we are unable to make use of the opportunity. Even our repeated requests to the government for support have not yielded anything yet," said a shipowner. 
    Indian shipping, like the industry elsewhere, is down with fluctuating freight rates which are not likely to go up in the near future. In such a context, constricting rules like this could play havoc with the industry, they aver. 
    Insa, on its behalf, has written to CBEC for a meeting to discuss the issue. Expressing surprise at the circular, it has drawn attention to earlier enquiries into the subject where it was mandated that no bill of entry is required to be filled for vessels at the time of their import, though, it was required to be filled at the time of breaking the ship. "Even after the investigation, the member companies have continued the practice of not filling the bill of entry in case of ocean going vessels and similarly the Customs have accepted this practice," it said. 
    "It has always been the case of the shipowners that in the case of ocean going vessels there is no import for home consumption therefore no bill of entry is required to be filed. Various courts across India have also taken cognizance of the fact of this practice in their judgements and have mentioned that it is a consistent practice of the Customs authorities not to insist on a bill of entry in the case of ocean going vessels. 
    "Equating import of ships with cargo and subjecting deals to duties like Customs could dissuade owners and shipping companies from buying assets, even though they are available at a discount. Coming as it is, the circular will have a dampening effect on ship acquisition plans of shipowners, while the government is seen supporting, it at least morally," said another ship owner. 
    The shipowners' body has also requested the board not to initiate any action on the matter till the matter is decided. While INSA is waiting for an appointment, CBEC has remained silent on the issue. 
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