Circular No.58/1997 date 6/11/97

I am directed to refer Board's circular F.No. 433/1/81-CUS.IV dated 22.1.85 on the above subject. In view of representations made by Indian National Shipowner's Association from time to time and the references made by Commissioners of Customs, the procedure relating to recovery of duty on ship stores Consumed by foreign going vessels during their temporary reversion into coastal run has been reviewed.

2. It has been observed that the work relating to assessment and collection of duty on ship stores consumed during temporary reversion to coastal run is not being given due attention. It has resulted in accumulation of backlog at all the ports. The Comptroller and Auditor General has also pointed out lapses in recovery of duty on ship stores in its reports. It has also been observed that the instructions contained in Board's circular dated 22.1.85 are not being followed uniformly. The duty has not been collected at the time of reversion of vessel from foreign run to coastal run, and even after the reconversion of vessel from coastal to foreign run the assessment are kept pending for want of the inventory list of ship stores from the port at which the vessel reverted to foreign run. This has resulted in assessments remaining unfinalised, and even when finalised, the steamer Agents have showed no urgency to honour their duty liability despite the Bonds furnished by them.

3. Therefore in modification of existing procedure, it has been decided that if the Steamer Agents do not desire to pay duty on the entire quantity of Bonded stores carried by the ship, it is open to them to take the estimated quantity out of the Bonded stores and pay duty on the same. The remaining quantity may remain on board such vessels in terms of Section 86 of the Customs Act 1962. The duty on stores like alcoholic liquor, cigarettes, etc. (other than liquid cargo like diesel, furnace oil etc.) may be recovered on quantity likely to be consumed during coastal run, and remaining quantity may be keptin bond under customs seal as per procedure laid down under Imported Stores (Retention on Board) Regulations, 1963. The Steamer Agents are required to file the Bill of Entry as soon as the conversion takes place, and the assessment would be completed and duty collected within 7 days of the date of conversion to coastal run.

The duty on bunkers like diesel, furnace oil etc may be recovered at 110% (one hundred and ten) of the duty leviable on the quantity estimated to be consumed during the coastal run at the time of conversion from foreign run to coastal run on provisional assessment basis. The steamer agent may file refund claim if any to get refund of duty at the time of reconversion from coastal to foreign run. The assessment may be finalised within 15 days of reconversion from coastal to foreign run.

4. The procedure as contained at Annexure I to this circular may be adopted for assessment and recovery of duty.

5. Custom Houses may issue suitable Public Notice and standing order incorporating the above positions. The difficulty if any in following the above procedure may be brought to the notice of the Board.

Sd/-
(Vijay Kumar)
Under Secretary to the Govt. of India

F.No. 450/77/95-CUS.IV

ANNEXURE-A

Procedure for collection of duty on ship stores consumed on Board vessel during the coastal run.

1. Whenever vessels in the foreign run revert to coastal trade at any port, the Steamer Agents should present an application, in duplicate, to the Assistant Commissioner concerned, with a copy to the Assistant Commissioner of Customs, Preventive Department, intimating such reversion to coastal trade and requesting for the services of a preventive Officer forinventorying the Bonded stores. The application should also indicate whether the Steamer Agents would like to pay duty on the entire bonded stores carried by the vessel; or, the quantum of bonded stores that they would like to take out for the crew etc. on payment of duty and keep the remaining under Customs seal in term's of Imported Stores (Retention on Board) Regulations, 1963.

2. As per the request of the Steamer Agents, the Preventive Department will take an inventory of the stores. If the request is for taking out only a portion of such stores, the Preventive Officer concerned should supervise the quantity that is taken out and make an inventory of the same. Inventory of the private property of the crew would similarly be taken separately. In regard to the inventory of fuel oil, lubricant, etc., the quantity remaining on board the vessel at the time of reversion would be noted separately for HSD, furnace oil, lubricants, etc.

3. The inventory so taken as well as the PP (Personal Properties) declaration shall be signed by the Master/representative of the Steamer Agents and the Preventive Officer making the inventory as to its correctness. On copy of the inventory and declaration would be kept in the Preventive Department, another copy would be sent to the Import/Export Department and the third copy will be handed over to the Steamer Agents.

4. On receipt of this inventory, the Steamer Agents will prepare the Bill of Entry and file the same in the Department concerned within a period of 5 days.

5. On receipt of the Bill of Entry in the Customs House, the Department concerned will correlate the same with the inventory already sent through the Preventive Department and assessment will be completed within a course of another 5 days and the Bill of Entry will be returned to the Steamer Agents for payment of duty.

6. In the case of fuel oils, samples taken for test by the chemicals laboratory should be forwarded to the laboratory as soon. as the inventory is taken, and the result should be obtained by the assessing Department within a period of one week. On the basis of the test results the assessment should be completed as indicated in para 5 above.

7. The Steamer Agents should make arrangements for payment of duty within the next 5 days.

8 The Port clearance for the vessel reverting to coastal trade need not be held back pending assessment of the ship stores and payment of duty.

9. In so far as the private property declarations are concerned, one copy will be retained in the Preventive Department, another copy will be given to the Steamer Agents and another to the Master of the vessel. The preventive Department should take a simple guarantee from the Steamer Agents to safeguard the revenue and the baggage are cleared in accordance with the rules when the crew are finally paid off. At the time of reversion to coastal trade, since the crew are not finally paid off, the baggage items will be retained onboard after taking an undertaking from the Steamer Agents in the form appended at Annexure-B. This guarantee will be cancelled when the certificate, from the Custom House of the last Indian Port of call, to the effect that all the crew members have retained the baggage items/signed off in the intermediate ports and duly cleared through Customs, is produced by the Steamer Agents.

10. If in another Indian Port the vessel on the coastal run needs any further bonded stores, then they should make a similar application in the port concerned and pay duty on such stores taken off, on the same lines as indicated above.

11. At the time of reversion to foreign run, the Master of the Vessel or the Steamer Agents should make an application to the Assistant Commissioner of Customs, Import/Export Department alongwith a copy of the application to the Preventive Department requesting for the services of a Preventive Officer forinventorying the stores on which duty has been paid and for which they would now be claiming refund of duty paid in excess of duty leviable on goods consumed during coastal run.

12. On completion of such inventory a copy will be retained in the Preventive Department, another copy will be sent to Export Department and another copy will be given to the Steamer Agents, or the Master of the Vessel. On the basis of the copy Steamer Agent would file a refund claim in the Export Department of the Custom House alongwith the triplicate copy of the Bill of Entry under which duty was originally paid on the stores.

13. The refund application so received will be dealt with in the Department in the usual course after considering the same with the inventory forwarded by the Preventive Department.

14. In so far as the private property declaration is concerned, the Custom House, at which the reversion to foreign run takes place, should verify and ensure that the private property had been properly accounted for, either by retention on board by the crew member or by its clearance through Customs in that port or in any other intermediate ports in India. A certificate to that effect will be issued by the Preventive Department to the Steamer Agents so that the same will be produced by the Agents at the original Customs port at which the reversion to coastal trade took place, so that the guarantee executed by the Steamer Agents could be cancelled.

ANNEXURE - B
(On Steamer Agent's Letter Head)

We, M/s.......................... "The local agents to the vessel......................... now lying at the port of.................................hereby undertake that the private properties of the officers/crew onboard the said vesselnow reverted to coastal trade at ................ shall not cause to be landed without proper clearance from theCustom House through which the said officer/crew will get signed off during the period of coastal voyage or thebaggage of the crew members re-exported when the vessel reverts to foreign voyage, which ever is earlier.

A list of officers and crew on board the vessel now under reversion is enclosed.

( )
As Agents

Place:
Date:

(Please refer INSTRUCTION DATE 24/11/2005)

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