2019 (2) TMI 1800 - AT - Customs

Classification of imported goods - Speed Boat - classified under CTH 8906 00 90 or under CTH 8905 90 90 of Customs Tariff Act, 1975? - N/N. 21/2002-Cus., dated 1-3-2002 - HELD THAT - Surveying activity in the sea requires movement of vessel from one place to another which can be done only if there is a navigation and which is primary in nature. The Boat Licence issued to appellant indicates that this speed boat is capable of carrying cargo and passengers in fair weather, which would mean that speed boat has navigation as a primary function. If a vessel needs to be classified under Chapter Heading 8905 90 90, the vessel should be of such a nature wherein navigability is subsidiary to the main function. Nothing is on record to show that the vessel imported in the case in hand had equipments in order to indicate that the primary function of the vessel was for surveying and taking soundings. It is on record that the vessel is capable of navigating on his own which is a primary function for surveying - the classification of chapter heading adopted by Revenue under 8905 90 90 is erroneous and cannot be sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of imported speed boat under Customs Tariff Act, 1975.

Analysis:
1. The appellant imported a speed boat with 2 diesel engines and classified it under Chapter Heading 8906 00 90, claiming a 'nil' rate of duty under a specific notification.
2. The assessing officer reclassified the speed boat under Chapter Heading 8905 90 90, not eligible for the duty benefit, based on the purpose of surveying and taking soundings at dredging sites.
3. The adjudicating authority relied on a Chartered Engineer's certificate to support the reclassification.
4. The first appellate authority upheld the reclassification, stating that the speed boat's primary function was not navigation but for specific dredging activities.
5. The appellant argued that vessels under Chapter Heading 8905 90 90 have navigability as a subsidiary function, while the speed boat in question was self-propelled and capable of carrying passengers, indicating navigation as its primary function.
6. The Tribunal noted that surveying activities at sea require navigation, and the boat license indicated the speed boat's capability for navigation and passenger transport in fair weather.
7. It was concluded that the vessel's primary function was navigation for surveying purposes, not solely for surveying and taking soundings, as claimed by the revenue.
8. The Tribunal held that the reclassification under Chapter Heading 8905 90 90 was erroneous, and the impugned order was set aside, allowing the appeal.

This detailed analysis of the judgment provides a comprehensive understanding of the classification issue regarding the imported speed boat under the Customs Tariff Act, 1975, and the reasoning behind the Tribunal's decision to set aside the reclassification order.