Vessel fuel classification under import policy: residual Marine Gas Oil in breaking vessels was not a restricted import.

Fuel remaining in the tanks of vessels imported for breaking was treated as an integral part of the vessel for import policy classification, not as a separately restricted import. The Tribunal relied on its earlier view and the DGFT clarification, applying the Foreign Trade Policy principle that doubts on ITC classification are to be referred to DGFT and that such clarification is final and binding for import policy purposes. On that basis, the Marine Gas Oil or HSD was covered under Heading 89.08 and was not liable to confiscation or penalty under the Customs Act. The impugned orders were set aside and the appeals were allowed.

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Issues: Whether Marine Gas Oil or HSD contained in the fuel tanks of vessels imported for breaking is to be treated as a restricted import liable to confiscation and penalty, or as part of the vessel classifiable under Heading 89.08 of the Import Policy.

Analysis: The Tribunal held that the dispute was covered by its earlier decision treating surplus fuel remaining in the tanks of vessels imported for breaking as an integral part of the vessel. It relied on the DGFT clarification and the relevant Foreign Trade Policy provision stating that doubts on ITC classification are to be referred to DGFT and that such clarification is final and binding for import policy purposes. On that basis, the fuel contained in the vessel was not to be treated as a separately restricted import under the Import Policy. Since the import was free under Heading 89.08 for ITC purposes, the consequence of confiscation under the Customs Act and the connected penalty could not survive on these facts.

Conclusion: The issue was decided in favour of the appellants. The Marine Gas Oil or HSD in the vessels' fuel tanks was held not liable to confiscation or penalty on the ground of import policy restriction.

Final Conclusion: The impugned orders were set aside and the appeals were allowed, following the earlier binding view on identical facts.

Ratio Decidendi: Fuel remaining in the tanks of a vessel imported for breaking forms an integral part of the vessel for import policy classification, and a DGFT clarification on such ITC classification is binding for that purpose.

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