Vessel classification under Tariff Heading 8901 fails for a dismantled floating structure used as a cement packing plant.

A partially dismantled vessel from which the engine, propeller, navigation equipment and other major components had been removed was not classifiable as a vessel under Tariff Heading 8901. The remaining floating structure was only a cement packing plant, required towing for movement, and was not designed for transport of persons or goods. On that basis, duty could not be demanded on the remnant as a vessel, and the consequential penalty also could not survive. The impugned order was set aside and relief followed.

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Issues: Whether the partially broken vessel with the cement packing plant left intact could be treated as a vessel under Tariff Heading 8901 and whether the demand of duty and penalty could survive.

Analysis: The vessel had been substantially dismantled by removal of the engine, propeller, navigation equipment and other major components. What remained was a cement packing plant in a floating form, which was not a vessel for transport of persons or goods and required towing for movement. The remaining structure could not be classified as a ship merely because it was capable of being floated or transported after limited fabrication. Once the original vessel had been subjected to ship breaking, duty could not be demanded on the remnant as a vessel under Tariff Heading 8901, and the consequential penalty also could not stand.

Conclusion: The remnant structure was not classifiable as a vessel under Tariff Heading 8901, and the demand of duty and penalty were unsustainable.

Final Conclusion: The impugned order was set aside and the appeals succeeded with consequential relief.

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