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Issues: Classification of imported Gas Lift equipments under Heading 84.59(1) or 84.59(2) of the CTA, 1975
In this case, the Appellate Tribunal CEGAT, New Delhi, heard an appeal regarding the classification of imported Gas Lift equipments under Heading 84.59(1) or 84.59(2) of the CTA, 1975. The appellant claimed assessment under Heading 84.59(2), while the lower authorities classified the goods under Heading 84.59(1, leading to the appeal. The appellant's representatives argued that the recovery of oil from the well is akin to mining of coal and, therefore, the machinery should be classified as designed for the production of a commodity. They cited a judgment from the Calcutta High Court regarding the interpretation of the term "produced" in relation to coal mining to support their argument. On the other hand, the respondent contended that the activity of oil recovery does not amount to production. The Tribunal carefully considered the submissions and referred to the cited judgment, which discussed the concept of production in detail in the context of coal mining. The judgment emphasized that production involves human skill and labor to bring goods to a consumable state, even if they are natural products like coal. The judgment highlighted that processes like raising, breaking, sifting, and grading are necessary before coal can be consumed, indicating production. Drawing parallels between coal and crude oil as raw materials requiring similar processes for extraction, the Tribunal concluded that machinery for lifting crude oil should be classified under Heading 84.59(2) as machinery for the production of a commodity. Consequently, the Tribunal allowed the appeal, set aside the lower orders, and directed appropriate relief based on the classification under Heading 84.59(2).
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