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of <h1>Tribunal Upholds Classification of Drilling Rigs Under Chapter 8430.00</h1> <h3>COMMISSIONER OF CUSTOMS & C. EX., HYDERABAD Versus KLR. INDUSTRIES LIMITED</h3> COMMISSIONER OF CUSTOMS & C. EX., HYDERABAD Versus KLR. INDUSTRIES LIMITED - 2007 (209) E.L.T. 33 (Tri. - Bang.) Issues Involved:1. Classification of water well drilling rigs mounted on chassis.2. Applicability of the Supreme Court decision in CCE v. LMP Precision Engg. Co Ltd.3. Eligibility for SSI exemption based on classification.Issue-wise Detailed Analysis:1. Classification of Water Well Drilling Rigs Mounted on Chassis:The primary issue revolves around the classification of water well drilling rigs mounted on motor vehicle chassis. The Respondents claimed classification under Chapter Sub Heading 8430.00, which would entitle them to SSI exemption. However, the Original Authorities classified the goods under 8705.00, leading to a demand for differential duty. The classification under Chapter 84 would grant SSI exemption, whereas Chapter 87 would not.2. Applicability of the Supreme Court Decision in CCE v. LMP Precision Engg. Co Ltd.:The Original Authorities relied on the Supreme Court decision in CCE v. LMP Precision Engg. Co Ltd., which classified similar goods under Chapter 87.05. The Respondents argued that the facts of their cases were distinguishable from the LMP case. The Supreme Court in LMP case found no evidence of integration between the chassis and the working machine, classifying the goods under Chapter 87.05. However, the Respondents provided substantial evidence showing that their drilling rigs were not merely mounted on an automobile chassis but were completely integrated with a suitably modified chassis, which could not be used for other purposes.3. Eligibility for SSI Exemption Based on Classification:The Commissioner (Appeals) reviewed the evidence and concluded that the goods in question were completely integrated units, classifiable under Chapter 8430.00. This classification would make the Respondents eligible for SSI exemption. The Commissioner (Appeals) found that the chassis underwent significant modifications to suit the design requirements of the drilling rigs, making them integral and inseparable from the rig. Thus, the goods were rightly classified under Chapter 8430.00, and the Respondents were entitled to SSI exemption.Conclusion:The Tribunal upheld the decision of the Commissioner (Appeals), rejecting the Revenue's appeals. It was determined that the drilling rigs were completely integrated with the modified chassis, which could not be used for other purposes. Therefore, the goods were correctly classified under Chapter 8430.00, making the Respondents eligible for SSI exemption. The Tribunal distinguished the facts of the present cases from the LMP case, emphasizing that the integration between the chassis and the drilling rigs in the present cases was substantial and complete. The orders-in-appeal were deemed legal and proper, and the demand for differential duty was set aside. The Revenue's appeals were dismissed, and the Respondents were granted consequential benefits.
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