Fuel oil in vessel engine room tanks classifies with the vessel under Heading 89.08, not separately as fuel oil.

Fuel oil contained in engine room tanks of imported vessels for breaking was treated as an integral part of the vessel machinery and engine, following Gujarat High Court authority and the relevant customs circular. It was therefore classifiable with the vessel under Heading 89.08 of the Customs Tariff Act, 1985, rather than separately under Heading 27.10. The contrary classification in the impugned order could not be sustained, and the appeals were allowed.

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

Analysis: The issue was treated as no longer res integra in view of the Gujarat High Court decisions relied upon, which held that fuel and oil contained in the engine room tanks form an integral part of the vessel machinery and engine. On that basis, such fuel oil falls within the relevant circular dealing with oil in vessel machinery and engines and is classifiable along with the vessel under Heading 89.08 rather than independently under Heading 27.10.

Conclusion: The fuel oil in the engine room tanks was held classifiable with the vessel under Heading 89.08, not under Heading 27.10, and the contrary view in the impugned order could not be sustained.

Final Conclusion: The impugned orders were set aside and the appeals were allowed.

Ratio Decidendi: Fuel oil contained in the engine room tanks of a vessel forms an integral part of the vessel machinery and is classifiable along with the vessel under Heading 89.08 of the Customs Tariff Act, 1985.

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