2025 (2) TMI 1384 - AT - Customs

Classification of marine gas oil in ship breaking-Apex Court precedent governs and reverses separate oil classification.

Classification of marine gas oil found aboard vessels sent for breaking concerned whether such fuel is an integral part of the ship or a separate taxable ... Classification of goods for customs purposes - treatment of bunker/marine gas oil in vessels sent for breaking - Whether the goods i.e. Marine Gas Oil which were brought in vessel for breaking purposes was properly considered as part of the ship or should have been considered as oil. - HELD THAT:- AR reiterates the findings of the lower authority and leaves the matter to the discretion of this court. This Court finds that the matter already stands decided by the Apex Court The department considered the same as classifiable as oil separately under Chapter 27 whereas the party claimed that it was part of the ship only and therefore classifiable under Chapter 89 as the ship itself. The learned advocate states that the matter is no more res-integra and it has already been decided at the level of the Apex Court in the matter of M/s. Mahalaxmi Ship Breaking Corporation Etc. Vs Commissioner of Customs, Bhavnagar [2023 (4) TMI 1250 - SC ORDER] Appeal is therefore allowed following the aforesaid decision. Appeal allowed. Issues: Whether the oil (marine gas oil) present in bunker tanks of a vessel brought for breaking up is to be assessed separately as oil or treated as part of the ship for classification and assessment.Analysis: The determining question is whether the oil carried in the vessel's bunker tanks should be treated independently under tariff provisions for oil or as an integral component of the ship when the vessel is imported for breaking. The Tribunal considered the authoritative decision of the Apex Court addressing identical issue and followed its holding that the later view - treating the oil as part of the ship for assessment when the vessel is sent for scrapping - is correct. The earlier contrary view of separate assessment was disapproved by that higher court, and the Tribunal applied that precedent to the facts before it.Conclusion: The oil in the bunker tanks is to be assessed as part of the ship; the appeal is allowed in favour of the appellant.