Water drilling rigs classification turned on actual manufacture, with rigs held classifiable under Chapter 84.30 and SSI exemption allowed.

Water drilling rigs were classified under Chapter Heading 84.30 because the evidence showed that the manufactured product was the rigs alone, with mounting on a duty-paid chassis taking place outside the factory and not as part of manufacture. The earlier Supreme Court ruling on chassis-mounted drilling rigs was distinguished on facts because the invoices described only water drilling rigs and did not include chassis value. The assessee therefore qualified for Small Scale Industry exemption, and classification under Chapter Heading 87.05 was rejected.

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Issues: Whether water drilling rigs were classifiable under Chapter Heading 84.30, or as drilling rigs mounted on duty paid chassis under Chapter Heading 87.05, and whether the assessee was entitled to Small Scale Industry benefit.

Analysis: The earlier Supreme Court ruling on drilling rigs mounted on duty paid chassis was distinguished on facts. The invoices described the goods only as water drilling rigs, the chassis value was not included in the invoice price, and the evidence showed that mounting on chassis was done outside the factory and not by the assessee as part of manufacture. The Tribunal accepted the factory layout, photographs, invoices, and affidavit, and held that the actual product manufactured was water drilling rigs alone.

Conclusion: The goods were classifiable under Chapter Heading 84.30 and not under Chapter Heading 87.05, and the assessee was entitled to SSI exemption.

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