TaxTMI 
TaxTMI 
2012 (11) TMI 532
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....se from the Tribunal: "Whether the bunkers containing oil were to be treated as part of the vessel's machinery so as to attract Entry No.89.08 of the Schedule to the Customs Tariff Act, 1985?" 2. The facts stated briefly are that the M/s Priya Holding (P) Ltd. (the respondent herein) imported an old ship M.V. BORROVICHI at the ship breaking yard, Sosiya for the purpose of breaking up and filed Bill of Entry No.067 dated 12.11.90 for home consumption/clearance before the Superintendent of Customs and Central Excise, Alang in terms of section 46 of the Act. The Bill of Entry was assessed to duty amounting to Rs.50 ,52,210 which was paid by the respondent. Subsequently, the Superintendent issued Demand Notice to the respondent for levy o....
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....r Heading No.89.08 of the Customs Tariff Act, and not the fuel kept in the engine room, which cannot be treated as a part of the engine and machinery. He, accordingly, held that the bunkers, that is, fuel and oil in a tank kept in the engine room cannot be treated as "remaining fuel or oil" or fuel or oil in engine and machinery, and accordingly, cannot be called as forming part of vessel, and therefore, is not classifiable under Chapter Heading No.89.08 of the Tariff Act as clarified by the Board under para (d) of its Circular. The respondent carried the matter in second appeal before the Tribunal. 3. The Tribunal, in the impugned order, held that the Board's Circular No. 37/96-Cus dated 03.07.1996 had been issued after consulting World....
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....be forming part of the vessel's machinery and engine, and hence, the Tribunal has erred in holding that the same should be classified under heading 89.09 with the ship. According to the learned counsel the Tribunal has erred in equating engine with engine room and that the interpretation put forth by the Tribunal is contrary to the provisions of the circular. On a simple reading of the circular, it is clear that the fuel and oil contained in the vessel's machineries and engines only can be regarded as integral part of the vessel, and hence, be classified under heading No.89.08 and that, by no stretch of imagination, can the engine room tanks to be considered as part of engine. It was further submitted that the circular envisages fuel and oi....
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....verages imported on Board a ship for breaking-up [Para No. 1.01 of the report of the Comptroller & Auditor General of India for the year ended 31st March, 1991 (4 of 1992)]. While Department was of the view that the articles are classifiable under Heading 89.08 of the Customs tariff covering vessel and other floating structures for breaking up. Audit was of the view that these items are not covered by this heading and needs to be classified separately in their respective headings. 2. The issue was referred to World Customs Organization, Brussels, who has opined that: (a) Moveable gears such as lifting and handling machinery, anchors, navigational equipment, machine tools, fire fighting equipment from part of vessel's normal equipment ....
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.... power that such oil is always in engine department tanks only which are associated and connected with the machinery and engine and ship; that such oil is called "fuel and oil contained in vessel's machinery and engines" regarded as forming integral part of the vessel and no separate duty is leviable thereon. 9. Thus, the case of the respondent was that other tanks containing fuel and oil did not form part of the LDT of the vessel and had to be classified under their own heading and duty had to be charged accordingly. But the fuel and oil contained in the Bunkers, that is, the engine room tanks formed an integral part of the vessel and, therefore, had to be classified along with the vessel under Heading No.89.08. 10. Thus, the issue o....
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....ting that fuel and oil contained in the engine department tanks is always associated and connected with the machinery and engine of the ship which forms an integral part of the vessel. The learned counsel had also submitted that as per the definition of LDT of ship, oil stored in other tanks on the ship are not included in the LDT, however, oil in engine room tanks is included in the LDT and it, therefore, forms part of the vessel and is classifiable along with the ship under Heading No.89.08. Based upon the aforesaid evidence led before it, the Tribunal has, accordingly, come to the conclusion that the fuel and oil contained in the bunkers, that is, engine room tanks of the vessel form an integral part of the vessel, and therefore, would b....