2004 (5) TMI 410 - AT - Central Excise

Summary

Issues: Classification of 'Pontoon with Spuds' under Heading 89.05 or 89.07.00

Analysis:
1. The appellant initially claimed classification under Heading 89.05 for the product 'Pontoon with Spuds.' The Assistant Commissioner sought an amended declaration under Heading 89.07.00 after visiting the marine yard and inspecting the construction plan. The Assistant Commissioner described the product as a floating structure of 10 segments joined together with interlocking pins, with specific dimensions and assembly instructions provided by the appellant.

2. The issue arose regarding the marketable product - whether it was the 'floating structure' or the 'Pontoon with Spuds.' The Letter of Intent from the Buyer specified 'two number pontoon with spuds,' indicating the marketable commodity. The Bill of quotations also detailed charges for fabrication and assembly of spuds at the site, confirming the nature of the product to be 'Pontoon with Spuds.'

3. Legal precedents and directions were cited to support the classification of large-sized machinery assembled at the site. The classification should consider the final assembled product rather than individual components. The appellant's reliance on Interpretative Rules and previous judgments reinforced the argument that the classification of 'floating structures' was not appropriate, and the 'Pontoon with Spuds' should be classified under Heading 89.05.

4. The judgment emphasized the concept of marketability for levy of duty, stating that goods must be marketable to attract duty. The segments as floating structures were not deemed marketable individually, and the levy under Tariff Heading 8907.00 required establishing marketability. The classification and levy should align with the marketable product, which in this case was the 'Pontoon with Spuds' under Heading 89.05.

5. Referring to a Supreme Court case, it was highlighted that the appellant, by manufacturing and assembling the segments into 'Pontoon with Spuds,' qualified as a manufacturer of the final product. This further supported the classification under Heading 89.05 for the assembled product.

Conclusion:
The Tribunal set aside the lower authority's orders and classified the product 'Pontoon with Spuds' under Heading 89.05, allowing the appeal in favor of the appellant.