2002 (7) TMI 362 - AT - Central Excise

Summary

Issues:
1. Classification of sunken dredger for duty determination.
2. Disposal of dredger II and its classification under Central Excise Tariff Act, 1985.
3. Assessment of duty and penalty imposed by the Commissioner.

Issue 1: Classification of sunken dredger for duty determination

The appellants appealed against the Commissioner's order confirming a demand for duty, penalty, and interest on a sunken dredger, 'Mondovi-II', acquired from Marmugoa Port Trust. The dredger sank during repairs and was sold as scrap to Hindustan Shipyard Ltd. The Central Excise authorities considered it dutiable under Chapter sub-heading 7230.00. However, the Tribunal found that the dredger never reached a stage fit for breaking up under Heading 8908.00. The salvage from the sunken wreck was not considered goods liable for duty under Heading 7327.00. The Tribunal concluded that if duty was to be imposed, it should be directed at Hindustan Shipyard, the repairer, as they caused the sinking, making them liable for duty on the salvaged scrap.

Issue 2: Disposal of dredger II and its classification under Central Excise Tariff Act, 1985

Regarding 'Dredger II', the appellants disposed of it on an 'as is where is no complaint basis' as it was no longer fit for optimal technical performance as a dredger. The Tribunal noted that there was no evidence to show how the dredger became fit for breaking at the time of disposal. The order highlighted the lack of proof that a vessel not seaworthy could not be refurbished to be seaworthy again, thus questioning its classification under Heading 8908. The Tribunal found insufficient clarity on when a dredger cleared under Heading 8905 becomes liable for reclassification under Heading 8908. Consequently, the Tribunal did not uphold the classification of 'Dredger II' under Heading 89.08 and rejected the demand for duty under that heading.

Issue 3: Assessment of duty and penalty imposed by the Commissioner

The Tribunal, based on its findings, concluded that the entities in question were not eligible for classification under 8908.00, and thus, the demands, penalties, and interests imposed by the Commissioner were not upheld. The Tribunal did not delve into the question of reprocessing the dredgers under different headings or the issue of time-bar limitation for the demands. Ultimately, the Tribunal set aside the Commissioner's order, allowing the appeal due to the lack of justification for classification under Heading 8908.00 of the Central Excise Tariff Act, 1985 in this case.

This detailed analysis of the judgment from the Appellate Tribunal CEGAT, Bangalore provides a comprehensive overview of the issues involved and the Tribunal's findings on the classification of the sunken dredger and the disposal of 'Dredger II' under the Central Excise Tariff Act, 1985, ultimately leading to the decision to set aside the Commissioner's order.