Customs classification of ship stores: only fuel in machinery forms part of the vessel, while other onboard goods are separately dutiable.

Only fuel and oil contained in a vessel's machinery and engines can be treated as an integral part of the vessel for classification under Heading 89.08; remaining bunker oil, consumable stores, foodstuff and drinks found on board are separately classifiable under their own headings. Applying Customs Board guidelines said to reflect World Customs Organization guidance, CESTAT Ahmedabad upheld the customs authorities' assessment and rejected the attempt to extend "vessel" to all items on board for concessional treatment. The refund claims based on treating all such items as part of the vessel were therefore not sustainable, and the appeals failed.

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Issues: Whether bunker oil, fuel, consumable stores, foodstuff and drinks found on board imported old vessels could be treated as part of the vessel under Heading 89.08, and whether the refund claims based on such classification were sustainable.

Analysis: The imported vessels were assessed on the basis of the Customs Board's guidelines, which were stated to reflect the opinion of the World Customs Organization. Under those guidelines, only fuel and oil contained in the machinery and engines, and other normal equipment forming an integral part of the vessel, could be classified with the vessel under Heading 89.08. Remaining fuel and oil, as well as ship stores, foodstuff and drinks, were to be classified separately under their appropriate headings. The quantities involved were substantial, and the term vessel could not be stretched to include everything found on board for the purpose of concessional assessment. The assessment made by the original authority and affirmed in appeal was therefore held to be correct.

Conclusion: The claim that all fuel, oil and ship stores on board formed part of the vessel was rejected, and the refund claims were not allowable.

Final Conclusion: The classification adopted by the customs authorities was upheld and the appeals failed.

Ratio Decidendi: Only fuel and oil contained in the vessel's machinery and engines can be treated as an integral part of the vessel for customs classification; remaining fuel, oil and ship stores are separately dutiable under their own headings.

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