Drilling rig valuation turns on item-wise classification: only true rig components enter assessable value, not separate tools or consumables.

Items used with drilling rigs are not automatically includable in rig valuation or classifiable as rig parts. Under the tariff scheme, drilling machines fell under Heading 84.30 and parts suitable for use solely or principally with them under Heading 84.31, but drill bits, drill pipes, drill rods and similar tools were treated as complete goods in themselves rather than constituent parts of the rig. Only items expressly identified as rig components, or shown to be incorporated into the rig, could form part of the assessable value. The blanket inclusion of all disputed items was not sustained; valuation required item-wise determination on whether each item was a true component or a separate spare or tool.

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Issues: Whether the cost of various items purchased and supplied with drilling rigs was includable in the value of the rigs, and whether such items were classifiable as parts of drilling rigs or as independent goods.

Analysis: The relevant tariff scheme distinguished drilling machines under Heading 84.30 from parts suitable for use solely or principally with such machines under Heading 84.31. Items such as drill bits, drill pipes, drill rods and similar tools, though used along with drilling rigs, were treated as goods complete in themselves and not as constituent parts of the rig for valuation purposes. At the same time, items expressly identified as rig parts in the explanatory notes, or items shown to be incorporated in the rig as components, could form part of the rig value. The earlier stand taken before customs authorities and the treatment of the imported goods under Notification No. 155/86 were considered, but the precise inclusion of each item depended on whether it was a rig component or a separate spare or tool.

Conclusion: The rigid inclusion of all disputed items in the assessable value was not sustained. The matter required item-wise determination on the principles stated, with only those goods properly falling as rig components being includable.

Final Conclusion: The appeal succeeded to the extent that the impugned order was set aside and the valuation issue was sent back for fresh determination on an item-wise basis.

Ratio Decidendi: For valuation and classification, items used with drilling rigs are not automatically parts of the rig; only goods that are true components of the rig are includable, while complete tools and consumables used in conjunction with the rig remain separately classifiable.

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