Government of India

Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
*****
Room No.229 A, North Block
New Delhi, dated 13th June, 2012
To,
All Chief Commissioners of Customs / Customs (Prev.).
All Chief Commissioners of Customs & Central Excise.
All Director Generals / Chief Departmental Representatives (CESTAT),
All Commissioners of Customs / Customs (Prev.).
All Commissioners of Customs (Appeals).
All Commissioners of Customs & Central Excise.
All Commissioners of Customs & Central Excise (Appeals).

Sir / Madam,

Subject: Procedure followed for import of Indian vessels and filing of Import General Manifest,
Bill of Entry - regarding.

I am directed to invite your attention to the Board's instruction issued vide

F.No.450/79/2010-Cus.IV dated 23.09.2010 which state that the requirement for filing Import
General Manifest (IGM) and Bill of Entry should be complied with even in cases, where goods
are exempt from payment of any duty. The jurisdictional Commissioners were also instructed
to review the situation, and take appropriate action for past cases, including adjudication, if
warranted, in case of non-fulfillment of aforesaid filing of documents.

2. In this regard, certain difficulties have been brought to the notice of the Board by
the trade and Indian Ship Owners' Association stating that the Customs field formations are
insisting on filing of IGM and Bill of Entry even in respect of those vessels that were imported
in the past and which were exempt from payment of import duty.

3.1 In this regard, it is stated that as the provisions of Section 29 of the Customs Act,
1962 read with Section 2 (22) and 2(25), the term 'imported goods', interalia, includes vessels
entering India from any place outside the country (India). These vessels may fall into any of the
following category (i) Foreign flag vessels i.e., vessels that have been registered outside India
and which carry imported/ exported goods or passengers, during its foreign run (voyage from a
port outside India to an Indian port, whether touching any intermediate port in India or not); (ii)
Vessel entering India for the first time on arrival in the country, for registration as Indian Flag
vessel; (iii) Vessels which are intended for conversion from foreign run to coastal run/ trade
(voyage between two or more Indian ports); and (iv) Vessels which are brought into India for
breaking up.

3.2 Foreign flag vessels: These are the vessels that are registered abroad and its entry
into the country is for carrying cargo or passengers, as a conveyance. Hence, there is no
requirement for filing an IGM, Bill of Entry for foreign flag vessel which is being used as
conveyance. However, the requirement for filing an import manifest in the prescribed manner
for the goods or passengers which are being carried in the vessel, on its entry into an Indian
port in terms of the provisions under Section 30 of the Customs Act needs to be complied with.
3.3 Indian Flag Vessel: In terms of the provisions of Part-V of the Merchant Shipping
Act, 1958, vessels entering into India for the first time, are required to be registered with
specified authority of the Mercantile Marine Department as Indian ship, which can then display
the national character of the ship as Indian Flag Vessel for the purpose of Customs and other
purposes specified in the said Act. Such Indian ship or vessel may be used for foreign run or
exclusively for coastal run/ trade. Further, any ship or vessel may be taken outside India or
chartered for coastal trade in India, only after obtaining the requisite licence from the Director
General of Shipping, under the provisions of Section 406 or 407, respectively, of the said
Merchant Shipping Act. Hence, in all such cases the Customs declarations such as IGM, Bill of
Entry is required to be filed with jurisdictional Customs authority.

3.4 Vessels for conversion into coastal run: Any vessel could be used for coastal run/
trade after obtaining requisite clearance from Director General of Shipping and on fulfilment of
certain specified conditions under Section 407 of the Merchant Shipping Act, 1958. In case of
foreign going vessel, exemption from import duties, including CVD, have been extended vide
serial No.462 of notification No.12/2012-Cus. dated 17.03.2012, subject to prescribed
conditions, which binds the importer to file fresh Bill of Entry at the time of its conversion for
coastal run/ trade and payment of applicable duty on such conversion of vessel for costal run/
trade. Similarly, excise duty is also payable on vessels which are being used for coastal trade
vide serial No.306 of notification No.12/2012-Cus. dated 17.03.2012. Hence, if any Indian Flag
vessel which is used for time being as foreign going vessel is converted for use in coastal
trade or any vessel which is to be used for coastal trade, there is a need to file a Bill of Entry
for payment of applicable duty as CVD.

3.5 Vessels for breaking up: Vessel and other floating structures intended for breaking
up are liable to payment of applicable duty. All vessels for the transport of persons or goods,
falling under heading 8901 (excluding those which are imported for breaking up) are fully
exempt from payment of import duty under vide serial No.461 of notification No.12/2012-Cus.
dated 17.03.2012, subject to the condition that the importer should file fresh Bill of Entry at the
time of its breaking up of the vessel after its importation. Hence, in these cases the importer
has to file an IGM and Bill of Entry, claiming the exemption as may be applicable, at the time of
initial import and later file fresh Bill of Entry at the time of breaking up of the vessel as per the
condition attached to the aforesaid exemption.

4. In view of the above, it is clarified that in respect of foreign flag vessels, for Indian
flag vessels, there is no requirement of filing of IGM and Bill of Entry, since its usage is as
conveyance. In respect of Indian flag vessels and vessels for breaking up as explained in para
3.3 and 3.5 above, the importer has to file IGM and Bill of Entry, under the provisions of the
Customs Act, 1962. As regards the vessel for conversion into costal run/ trade as detailed in
para 3.4, since the changes in the duty structure for levy of CVD on vessels which are being
converted for coastal trade was initially imposed from 1.3.2011, and subsequently
retrospective exemption has been provided for the period 1.3.2011 to 16.3.2011 vide clause
129 of the Finance Act, 2012, the requirement for filing IGM and Bill of Entry may be insisted in
all such cases w.e.f. 17.03.2012, that is the date from which levy of CVD has come into force.

5. It is also clarified that all vessels including foreign going vessels for its entry into /
exit from the country during its journey as foreign going vessel and the Indian flag vessel /
Indian Ship for subsequent use as foreign going vessel would not require filing of IGM and Bill
of Entry as conveyance, since the same are not imported goods to be cleared for home
consumption.

6. Accordingly, the field formations may adjudicate the cases involving any violation
where the IGM or Bill of Entry in respect of import of vessel were not filed at the time of import,
on its first arrival in India or on its conversion into coastal trade and appropriate penal action
be taken against the offenders.
7. The above instructions may be brought to the notice of all the concerned
immediately through appropriate Public Notice.

8. Receipt of this Circular may be kindly acknowledged.

Yours faithfully,

(G. S. Sinha),
OSD (Customs IV)
Copy to:
Internal circulation (as usual).