2018 (11) TMI 931 - AT - Customs

Classification of goods - Cutter Suction Dredger - whether classified under CTH 8905 1000of CTA or under chapter heading 90.31? - Held that - Cutter Suction Dredger which was imported is with the production measuring equipment as a part and parcel of the dredger - the production meter is so integrated with the dredging equipment that it cannot be dismantled and is used for as an integral part of the dredger imported. The first appellate authority was correct in holding that production measuring equipment is part and parcel of the dredger and cannot be classified separately under chapter heading 90.31 - appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of production measuring equipment under Customs Tariff Act and eligibility for exemption under Notification No. 21/2002-Cus.

Analysis:
The appeal was filed by Revenue against an Order-in-Appeal regarding the classification of a Cutter Suction Dredger and production measuring equipment. The respondents ordered the Dredger with additional features, including production measuring equipment, seeking duty exemption under Notification No. 21/2002-Cus. The Revenue authorities directed the filing of a separate Bill of Entry for the production measuring equipment under a different tariff heading and denied the exemption. The adjudicating authority classified the equipment under a separate chapter heading and held it ineligible for exemption. The first appellate authority, after examination, concluded that the production measuring equipment is part of the Dredger and set aside the original order.

The Revenue argued that the exemption notification applies only to goods falling under a specific chapter heading and the production measuring equipment does not qualify. They contended that the equipment is part of the dredging system and not a separate item eligible for exemption. The Counsel for the respondent highlighted the examination report stating the integration of the production meter with the dredging equipment.

Upon reviewing the submissions and examination report, the Tribunal found that the production measuring equipment is an integral part of the Dredger and cannot be dismantled for separate classification. The first appellate authority's decision was supported, emphasizing that the equipment forms part of the dredging system and should not be classified separately. The Tribunal concurred with the appellate authority's findings, upholding the impugned order and rejecting the appeal.

In conclusion, the Tribunal upheld the Order-in-Appeal, confirming the classification of the production measuring equipment as part of the Dredger and its ineligibility for exemption under Notification No. 21/2002-Cus. The decision was based on the physical integration and functional necessity of the equipment within the dredging operation, aligning with the interpretation that the Dredger constitutes a complete dredging system.