Classification of fuel and oil in a vessel turns on storage versus integration with machinery, supporting separate tariff treatment.

Fuel and oil stored in tanks in the engine room or elsewhere in a vessel were not treated as part of the ship for classification under Heading 89.08. The classification depended on whether the fuel or oil was actually contained in the vessel's machinery and engines; only that integrated material could be treated with the vessel, while separately stored fuel and oil remained classifiable on their own, including under Heading 27.10 where applicable.

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Issues: Whether fuel and oil stored in the engine room or elsewhere in a vessel were classifiable along with the ship under Heading 89.08 or separately under Heading 27.10.

Analysis: The classification turned on the location of the fuel and oil and whether they formed part of the vessel's machinery and engines. The earlier departmental view and the cited circular distinguished between fuel and oil actually contained in the machinery and engines, which could be treated as part of the vessel, and fuel and oil merely stored in tanks in the engine room or outside it, which remained separately classifiable. The later decisions relied upon by the Tribunal also followed this distinction and the High Court had already declined to interfere with the same legal approach.

Conclusion: Fuel and oil kept in tanks in the engine room or outside the machinery were not to be assessed with the ship under Heading 89.08 and were liable to separate classification under the appropriate heading, including Heading 27.10 where applicable.

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