2009 (5) TMI 955 - AT - Customs

Summary

Issues involved: Classification of remaining fuel and oil (bunkers) & food-stuff available as ship store in the ship imported for breaking.

Classification of fuel and oil in ship for breaking:
The appellant argued that fuel oil and fuel in bunker used for running the ship should not be classified separately as the ship was purchased for breaking, not for fuel. They contended that the fuel system is critical for ship operation and safety, and the fuel is permanently connected to the ship's machinery. The appellant also challenged the retrospective effect of a circular and the levy of interest on differential duty. However, the Jt. CDR cited various Tribunal decisions supporting the separate classification of fuel and oil in ship tanks connected to the engine. The Tribunal held that the matter is settled by precedent decisions, rejecting the appellant's arguments and upholding the classification of fuel and oil separately. The Tribunal also granted the benefit of interest liability introduced in 2006 and remanded one case for reassessment based on corrected quantity information.

Decisions cited by Jt. CDR:
The Jt. CDR referred to several Tribunal decisions, including M/s. Bhikkamal Chhotelal, M/s. Saibaba Ship Breaking Corporation, M/s. Shiv Marine Industries P. Ltd., M/s. Alang Ship Breaking Ltd., M/s. Bhikkamal Chhotelal v. C.CE, Ahmedabad, and CESTAT AHD's Final Order in the case of CC (P), Jamnagar v. M/s. Mercury Marine Industries Pvt. Ltd., to support the classification of fuel and oil in ship tanks connected to the engine.

Conclusion:
The Tribunal, after considering arguments from both sides, upheld the separate classification of fuel and oil in ship tanks connected to the engine based on precedent decisions. The Tribunal rejected the appellant's contentions and granted the benefit of interest liability introduced in 2006. In one case, the matter was remanded for reassessment based on corrected quantity information.