2015 (9) TMI 1365 - AT - Customs

Whether the fuel oil containing in the engine room tanks is classifiable under heading No. 27.10 or the Vessels under heading as 89.08 of the Customs Tariff Act - Held that - Gujarat High Court in the recent decision in the case of Priya Holding P Ltd (2012 (11) TMI 532 - Gujarat High Court) held that once the fuel oil contained in the bunker i.e., engine room tanks, falls within the ambit of sub para (b), as a natural corollary the same would be classifiable along with the vessel under 89.08 of the Heading No. 89.07 of the Customs Tariff Act. - impugned order cannot be sustained - Decided in favour of assessee.

Summary

Issues involved: Classification of fuel oil in engine room tanks under Customs Tariff Act.

Analysis:
1. The appellants imported vessels for breaking purposes based on an agreement, with the Bills of Entry provisionally assessed. The main issue is the classification of fuel oil in engine room tanks under heading No. 27.10 or vessels under heading 89.08 of the Customs Tariff Act.

2. The Tribunal referred to the decisions of the Hon'ble Gujarat High Court in previous cases to resolve the issue. The High Court had deliberated on whether bunkers containing oil should be considered part of the vessel's machinery, falling under Entry No. 89.08 of the Customs Tariff Act. The Tribunal considered evidence from the Book titled Ship Design and Construction, which highlighted the integral connection between fuel and oil in engine room tanks with the vessel's machinery, supporting classification under Heading No. 89.08.

3. The Authorized Representative for the Revenue cited a previous Tribunal decision upheld by the High Court to support a different classification. However, the recent decision of the Hon'ble Gujarat High Court in the case of Priya Holding P Ltd emphasized that fuel oil in engine room tanks should be classified along with the vessel under Heading No. 89.08 of the Customs Tariff Act.

4. Considering the High Court's recent decision and the evidence presented regarding the integral connection between fuel oil in engine room tanks and the vessel's machinery, the Tribunal concluded that the impugned orders could not be sustained. Therefore, the Tribunal allowed all the appeals filed by the appellants, setting aside the impugned orders.