2024 (8) TMI 1224 - AT - Customs

Classification of imported goods - oil contained in bunker tanks in engine room of vessel imported for breaking up - classifiable under CTH 8908 along with such vessel or not - HELD THAT - Similar issue has been decided by Hon'ble Tribunal West Zonal Bench Ahmedabad of the Appellant in NAVYUG SHIP BREAKING CO., DHAN STEELS PRIVATE LIMITED. AND OTHERS VERSUS C.C., JAMNAGAR (PREV) 2022 (12) TMI 100 - CESTAT AHMEDABAD on the similar issue in favour Ship Breakers of Alang allowing their appeal on the issue and set a siding the assessment of B/Es and OIA NO. OIA-JMN-CUSTM-000-APP-004- 072-18-19 dated 30.04.2019 issued by Commissioner (Appeal) Customs, Ahmedabad and with the common finding that oil contained in bunker tanks in engine room of vessel imported for breaking up is classifiable under CTH 8908 along with such vessel. Appeal allowed.

Summary

Issues:
1. Classification of oil contained in bunker tanks in engine room of imported vessel for breaking up.
2. Applicability of Circular No. 37/1996-Cus dated 03.07.1996.
3. Consistency of decisions across different tribunals and courts.

Analysis:
1. The appeals involved the classification of oil contained in bunker tanks in the engine room of an imported vessel meant for breaking up at a Ship Breaking Yard. The appellant argued that the oil was an incidental part of the vessel and should be classified under heading No. 8908 of the Customs Tariff Act, 1975. The appellant's contention was rejected by lower authorities, leading to the appeal.

2. The appellant highlighted the applicability of Circular No. 37/1996-Cus dated 03.07.1996, which provided instructions for declaring goods, including oils, during importation of vessels. The appellant emphasized that the oils were declared in the bill of entry as per the circular's instructions, supporting their classification argument.

3. The Tribunal noted that similar issues had been previously decided in favor of ship breakers at the Hon'ble Tribunal West Zonal Bench Ahmedabad. The Tribunal referred to Final Order No. A/11792-11851/2022, where appeals involving the same issue were allowed, setting aside assessment orders. The Tribunal also mentioned a case where the department had appealed before the Supreme Court, which upheld the view that the oil in bunker tanks is to be assessed as part of the vessel to be scrapped.

4. Considering the precedents and consistent rulings, the Tribunal allowed the appeals, stating that the oil contained in bunker tanks in the engine room of the imported vessel for breaking up is classifiable under heading No. 8908 along with the vessel itself. The Tribunal's decision was in line with the Supreme Court's ruling in a similar case, dismissing the Revenue's appeals and affirming the classification of oil as part of the vessel.

5. Ultimately, the appeals were allowed, and the judgment was pronounced in open court on 27.08.2024, in favor of the appellant ship breakers, based on the classification of the oil in bunker tanks in imported vessels for breaking up.