2016 (5) TMI 605 - AT - Central Excise

Classification - Pontoon with spuds - Whether to be classifiable under Chapter Heading No. 89.05 eligible for exemption from payment of duty or under Chapter Heading 89.07 attracting rate of duty of 20% ad valorem - Product is a self elevating platform - Held that - as per HSN explanatory notes, the floating articles which answer to description as self-elevating platform get covered under CH. 8905 and floating structure which has drilling or production platform are covered under 8905.20 and any other floating structure is covered under 8905.90. The factual matrix as reproduced herein indicates that the floating structures as manufactured by the appellant and assembled at site are supported by spuds for resting on the sea bed and can be raised or lowered depending on the water level, is undisputed. Therefore, the claim of the Revenue that the product would merit classification under chapter Heading No. 89.07 is incorrect, as the reliance placed by the department that products are pontoon, is misplaced as the very same explanatory notes exclude pontoons having the character of vessel falling under Heading No. 89.01 or 8905. In the case in hand, it is found that Indian Registrar of shipping has registered the floating structure manufactured by the appellant as self-elevating platform and has given at the registration as AF-SEP-RANI & AF-SEP-RAJA . We find strong force in the contention raised by the appellant that same product self-elevating platform was imported back into India after its foreign voyages, was sought to be classified by the department under CTH 8905.2020, the Tribunal has upheld classification under 89.05.9090. Therefore, the arguments by the appellant are acceptable as the classification of the same products when re-imported into India after its foreign voyage would be the same as is manufactured. Hence, the classification of the products manufactured by the appellant is to be held as the products falling under 89.05.90. - Decided in favour of appellant

Summary

Issues Involved:
1. Classification of the product "pontoon with spuds" under the appropriate chapter heading.
2. Eligibility for exemption from payment of Central Excise duty.

Detailed Analysis:

Issue 1: Classification of the Product
The appellant filed a classification declaration for "pontoon with spuds" under Chapter Heading No. 89.05, claiming it as a self-elevating platform eligible for exemption from duty. The lower authorities classified it under Chapter Heading No. 89.07, attracting a 20% ad valorem duty.

The appellant argued that the product is a self-elevating platform used for various purposes like drilling, production, and cementing, and should be classified under Chapter Heading No. 89.05. They referred to previous Tribunal and Supreme Court decisions, as well as HSN explanatory notes, to support their claim that the product is a floating structure primarily used for specific functions and thus falls under Chapter Heading No. 89.05.

The respondent contended that the product is a floating structure assembled at the site, not at the factory, and lacks machinery or crew quarters, which are essential for classification under Chapter Heading No. 89.05. They argued that the product should be classified under Chapter Heading No. 89.07 as "other floating structures."

The Tribunal reviewed the HSN explanatory notes and concluded that self-elevating platforms are covered under Chapter Heading No. 89.05. The product manufactured by the appellant fits the description of a self-elevating platform supported by spuds, capable of being raised or lowered depending on the water level.

The Tribunal found that the Indian Registrar of Shipping had registered the product as a self-elevating platform, which supports the appellant's classification claim. The Tribunal also noted that the same product, when re-imported, was classified under Chapter Heading No. 89.05.90, reinforcing the appellant's argument.

Issue 2: Eligibility for Exemption from Payment of Central Excise Duty
The Tribunal examined whether the product, classified under Chapter Heading No. 89.05.90, is eligible for exemption from Central Excise duty. The Tribunal referred to the HSN explanatory notes, which state that floating articles described as self-elevating platforms fall under Chapter Heading No. 89.05. The Tribunal concluded that the product is correctly classified under Chapter Heading No. 89.05.90 and is eligible for exemption from payment of Central Excise duty.

Conclusion:
The Tribunal set aside the impugned orders of the lower authorities, holding that the product manufactured by the appellant is correctly classified under Chapter Heading No. 89.05.90 and is eligible for exemption from payment of Central Excise duty. The appeals were allowed, and the operative part of the judgment was dictated in court.