2009(05)LCX0302

IN THE CESTAT, SOUTH ZONAL BENCH, BANGALORE

S/Shri T.K. Jayaraman, Member (T) and M.V. Ravindran, Member (J)

Commissioner of Central Excise & Customs, Guntur

Versus

Dharti Dredging & Infrastructure Ltd.

Final Order No. 675/2009, dated 28-5-2009 in Appeal No. C/690/2008

Cases Quoted -

Boskalis Dredging India Pvt. Ltd. v. Commissioner - 1997(11)LCX0007 Eq 2001 (135) ELT 1396 (Tribunal) - Referred [Paras 4,5]

Commissioner v. Jan De Nul N.V. - 2003(04)LCX0123 Eq 2003 (161) ELT 0642 (Tribunal) - Relied on [Paras 4,6]

Advocated By -

Ms. Sudha Koka, SDR, for the Appellant
Shri Aaeel Sheerazi, Advocate, for the Respondent.

[Order per: T.K. Jayaraman, Member (T)]. -

Revenue has filed this appeal against the Order-in-Appeal No. 02/2008-G(Cus.), dated 30-6-2008 passed by the Commissioner of Central Excise & Customs(Appeals), Guntur.


2. We heard both sides.


3. The respondents imported an old and used "Cutter Suction Dredger" in operational condition along with "Standard spares and accessories, pipes", etc. including Multicat-2 numbers and Anchor Boat - 1 number and "Dredging Pumping Unit" to be used with Cutter Suction Dredger- 2 numbers, "Engines" -2 numbers along with "Standard spares and accessories" under Charter Agreement between Jung Hsing Marine Construction Co. Ltd. and the Respondent on re-export basis. The goods were classified under Chapter Heading 8905 10 00 of the Customs Tariff Act, 1975 claiming the benefit of NIL rate of duty under Notification No. 21/2002-Cus., dated 1-3-2002 under SL. No. 353A thereof. The respondents obtained a Certificate from the surveyors. The Assistant Commissioner verified the details of the Bill of Entry and physical inspection was also carried out along with Shri K.P. Vijaya Kumar, Chartered Engineer. The Assistant Commissioner was of the view that the following items do not merit classification under parts/integral parts of the Dredger hired by the importer for a temporary period.

(i) Dredging Pumping Units (2 Nos.)

(ii) Two Engines and some of the parts kept on a barge separately by the importer.

A separate Bill of Entry was also filed. Moreover, the above goods were purchased by the importer from M/s. United Survey and Construction Co. Ltd., Hongkong. Further, the Assistant Commissioner held that except the Main Dredger with fittings and spares, 2 numbers of Multicat, 12 Nos. of Self Floating Pipes and 18 Nos. of M.S. Pipes, all other goods pertain to the respondent. Benefit of exemption notification was not given to those goods which are not integral parts of the dredger. The respondents appealed to the Commissioner (Appeals). The Commissioner (Appeals) partially allowed the appeal of the respondent and held that the following goods falling under Chapter 89051000 of the Customs Tariff Act, 1975, would be entitled for the benefit of the exemption notification.

(i) Dredger pumping units along with Engines and accessories with two spare engines, spare pump casing, spare impeller and necessary accessories.

(ii) Floating pipes/hoses 12 MTs Length, 750 MM Dia

(iii) Air compressors 5 HP

(iv) Air compressors 7.5 H.P

(v) Steel Angle Plates

(vi) Pipes

(vii) Pumps

(viii)Wire mesh

(ix) Outward Engine Boat


4. Revenue is aggrieved over the impugned order on the following grounds:-

(i) The Commissioner (Appeals) did not indicate any reasons for treating the dredging pump, engines, pipes, etc., as integral part of dredger. It is obvious that at the time of import of these goods are under different ownership i.e. the dredger is hired one and the dredging pumps etc. were purchased by M/s. Dharti dredging and Infrastructure Ltd. (sic)

(ii) Further, it is quite pertinent to note that the importer purchased dredging pump and other goods for regular usage and not exclusively for the dredger in question. The dredger will be re-exported after completion of hire period but the pumps and other goods will remain with the appellants in India.

(iii) The dredging pumps and Engines will be used for pumping out the dredged material to long distances as per the requirement. It is a specific additional function and not required during the course of normal dredging work.

(iv) In the instant case, the suppliers of dredger and suppliers of other goods are different, the nature of the transaction is different. The Bill of lading and letter of credits are different. The importer filed one Bill of Entry only to claim exemption benefits to other goods also.

(v) The dredger and other goods in question are distinctive in nature having independent usage. As such, contention for treating the other goods also as dredger is far fetched and against the established principles for classification of goods.

(vi) The Commissioner (Appeals) has relied upon the judgment of the Hon'ble CESTAT in the case of 'Boskalis Dredging India Pvt. Ltd. v. Commissioner of Customs, Bhubaneswar - 1997(11)LCX0007 Eq 2001 (135) ELT 1396'. However, the goods involved in the present case are different from the goods involved in the said case, the ownership of there goods is different unlike in the case Boskalis, the applicability of Section notes was not discussed in the said judgment, and the said judgment did not attain finality.

(vii) The Commissioner (A) did not consider the rationale of the Hon'ble CESTAT judgment in the case of the Commissioner of Customs, Tuticorin v. Jan De Nul N.V. - 2003(04)LCX0123 Eq 2003 (161) ELT 0642 (Tri.-Chennai) on the ground that "the goods involved are different". But, at the same time, Commissioner (A) relied upon Boskalis case even though the goods involved are different and thus the findings of the Commissioner (A) in the said order appears to be self contradictory.

(viii)In view of the foregoing note, it appears that the order passed by the Commissioner (Appeals) is not legal and proper and the same needs to be appealed against.


5. The learned Advocate for the respondent stated that the issue is squarely covered by the decision of the CESTAT in the case of Boskalis Dredging India Pvt. Ltd. v. Commissioner of Customs, Bhubaneswar (cited supra).


6. We have gone through the records of the case carefully. It is seen that the Commissioner (Appeals) has not given any reasons for treating the dredging pump, engines, pipes, etc. as integral part of the dredger. Moreover, at the time of import of these goods, the goods were under different ownership. Further, it is seen that the importer purchased the dredging pump and other goods for regular usage and not exclusively for the dredger in question. In the case of CC, Tuti-corin" v. Jan De Nul N.V. (cited supra), the Tribunal has examined the entitlement of the pumps imported and used for sucking the dredged material. It has been held that the said pump is classifiable under separate heading and the same cannot be considered as parts of dredger and, therefore, the notification benefit cannot be given under notification 23/98-Cus. and 20/99-Cus. The following observations of the Tribunal in the above case are very relevant.

"53. Pumps: The Commissioner has not given the classification of the item but has merely held that they are used to suck the dredged material and push through the pipeline system into the reclamation yard. He has held that without pump, dredging process will be incomplete. He has further in para 4.5 merely held in one line that benefit of exemption as contained in SL. No. 230 of Notification 23/98-Cus., dated 2-6-98 and SL. No. 252 of Notification No. 20/99-Cus., dated 20-2-99 is applicable to the items noted by him in that paragraph without examining as to whether the terms of notification are satisfied or not.

54. On the other hand, the adjudicating authority has held the same to be classifiable under Heading 8413.19 which has a specific heading for "pumps for liquids, whether or not fitted with a measuring device; liquid elevators". He has also held that the item cannot be classifiable under subheading 8905.10 as claimed by the importer by virtue of Section Note 2(e) of Section XVII as noted supra. The item is required to be classified in the appropriate heading and in view of exclusion clause in Section Note 2(e) of Section XVII, the classification adopted by the lower authority under Heading 8413.19 is proper and correct which is upheld by setting aside the Commissioner (Appeals) order."

6.1 While arriving at the above conclusion, the Tribunal has taken into account the following Section Note of Section XVII, which reads as follows :-

"Notes:

2. The expressions "parts" and "parts and Accessories" do not apply to the following articles, whether or not they are identifiable as for the goods of this Section:-

(a) to (d)

(e) machines or apparatus of headings 8401 to 8479, or parts thereof; articles of heading 8481 or 8482 or, provided they constitute integral parts of engines or motors, articles of heading 8483'"


7. The Commissioner (Appeals) has not taken into account the above exclusion clause. In view of this, there is merit in Revenue's appeal and we allow the same by setting aside the impugned order and restoring the Order-in-Original

(Pronounced in open Court on 28-5-2009)

Equivalent 2010 (249) ELT 0054 (Tri. - Bang.)