Integral vessel fuel oil classified with the ship under customs tariff heading 89.08, rejecting separate classification.

Fuel oil stored in the engine room tanks of imported vessels meant for breaking was treated as an integral part of the vessel and not as a separately classifiable item under Heading 27.10. Applying the Gujarat High Court's view, CESTAT held that such fuel oil falls with the vessel under Heading 89.08 of the Customs Tariff Act, 1985. The contrary classification adopted in the impugned orders was rejected, the orders were set aside, and the appellants obtained relief on the classification issue.

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Issues: Whether fuel oil contained in the engine room tanks of imported vessels for breaking is classifiable separately under Heading 27.10 or along with the vessel under Heading 89.08 of the Customs Tariff Act, 1985.

Analysis: The issue was treated as covered by the judgment of the Gujarat High Court, which held that fuel and oil contained in the engine room tanks form an integral part of the vessel and fall within the scope of the relevant tariff entry for vessels. On that reasoning, the fuel oil in the bunkers or engine room tanks is not to be classified separately when the vessel itself is assessed under Heading 89.08. The contrary view treating it as independently classifiable under Heading 27.10 was not accepted.

Conclusion: Fuel oil contained in the engine room tanks was held classifiable along with the vessel under Heading 89.08, not separately under Heading 27.10, and the appeals succeeded.

Final Conclusion: The impugned orders were set aside and the appellants obtained relief on the classification issue.

Ratio Decidendi: Fuel oil stored in the engine room tanks of a vessel forms an integral part of the vessel and is classifiable with the vessel under the applicable heading for ships.

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