2013(01)LCX0124

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

S/Shri P.K. Das, Member (J) and Mathew John, Member (T)

Commissioner of Customs, Chennai

Versus

Larsen & Toubro Ltd.

Final Order No. 40024/2013, dated 10-1-2013 in Appeal No. C/410/2010

Cases Quoted -

Advocated By -

Shri K.S.V.V. Prasad, Jt. Commissioner (AR)Jor the
Appellant.
Shri S. Murugappan, Advocate, for the Respondent.

[Order per : Mathew John, Member (T)]. -

The respondents imported certain goods and filed Bill of Entry No. 906999, dated 8-12-2008 declaring the goods to be "1 No. Jack-up Barge Type M 400L (JB-111) along with all standard equipment". Supporting documents like invoice, bill of lading, freight certificate, insurance certificate etc. which supported the description made in the Bill of Entry were also filed. The respondents had claimed classification of the goods under Customs Tariff Item (CTI) 8901 10 40 and had claimed exemption 21/2002-Cus. S. No. 352.


2. On inspection of the equipment with the assistance of technical personnel in the presence of importer's representative it was observed that the subject equipment was not a plain 'barge' but a 'self-elevating platform' consisting of the following constituents :

(a) Hull consisting of 27 containers sized pontoons attached together

(b) Four jack houses of 20" height with hydraulic lifting mechanism on four corners

(c) Four legs of 47.4 meters each to stand on when platform is grounded (now in dismantled condition)

(d) One Diesko hydraulic pumping unit consisting of two Volvo 20KW engines with hydraulic equipment in one cabin

(e) Operators/office cabin with toilet, pantry, etc.

(f) Storage workshop unit in one cabin

(g) 4 winches, on each side of the vessel

(h). Other miscellaneous equipment in a 40' container.


3. The Customs Department also conducted a search operation at the office of the importer at Chennai and recovered certain documents relating to the import of the said goods. The documents recovered during search operations showed the description as "self- elevating platform".


4. During the pendency of the investigation, the importer gave up the claim for classification under CTI 8901 10 40 and claimed classification under CTI 8905 90 90 along with benefit of Notification No. 21/2002-Cus. SL. No. 353. The importer was provisionally allowed to clear the goods as per the said classification.


5. After provisional release of the goods, the Department made a twofold case against the respondent on the following issues namely, -

(h) the respondent misdeclared the description of the goods for claiming exemption available to goods classifiable under CTI 8901 10 40 and

(ii) the classification under which the goods were provisionally cleared that is CTI 8905 90 90 is not correct and the goods should be classified under CTI 8905 20 00 which would result in demand of differential duly to the extent of Rs. 5,09,24,512/-.


6. On adjudication, the Commissioner dropped both the allegations. Aggrieved by the order of the Commissioner, the Revenue has filed this appeal.


7. In the matter of misdeclaration of the goods, the case made out by Revenue is that all the documents submitted at the time of filing the Bill of Entry as detailed in para 1 of the impugned order showed description of the goods to be "1 No. Jack-up Barge" whereas the documents seized in a search operation from the office of the importer as listed in para 6 of the impugned order showed the goods to be "Non-Propelled Self-Elevating Platform Type M-400-L (JB-111)".


8. This document listed in para 6 of the impugned order includes Memorandum of Agreement, purchase order, builder's certificate, certificate of protocol for delivery and acceptance, invoice dated 3-11-2008 importer's letter dated 22-9-2008 etc. It is specifically pointed out that on the same date there is one showing the description as "barge" and another invoice showing the description as "self-elevating platform" which would clearly show that the respondents had intent to evade payment of customs duty by classifying the goods under CTI 8901 10 40.


9. Opposing the prayer, the learned counsel for the respondent submits technical literature showing that the word "barge" is also used for self-elevating platforms. According to him, in commercial parlance the goods is also known as "modular jack-up barges". In support of his claim, he produced print out from the site "http://www.jacknpbarge.com" and the literature shows that the main features of jack-up barges is a self-elevating platform.


10. He further produces evidence to show that this item was registered by the Ministry of Shipping, Road Transport and Highways as a dumb barge. So, according to him, for this type of equipment using the word "barge" as part of the description cannot be taken as a misdeclaration.


11. In the matter of classification of the goods it is first necessary to re-cord the rival entries which are reproduce below :-

12. The learned Authorized Representative for the Revenue also relies on the HSN Notes for Heading 8905 which are reproduced below :-"This heading covers :

(A) Light-vessels, fire-floats, floating cranes and other vessels the navigability of which is subsidiary to their main function.

These normally perform their main function in a stationary position. They include : light-vessels, drill-ships; fire-floats; dredgers of all kinds (e.g., grab or suction dredgers); salvage ships for the recovery o.f sunken vessels; permanently moore air-sea rescue floats; bathyscaphes; pontoons fitted with lifting or handling machines (e.g. derricks, cranes, grain elevators) and pontoons clearly designed to serve as a base for these machines.

House-boats, laundry boats and floating mills are also covered by this group.

(B) Floating docks.
Floating docks are a type of floating workshop used instead of dry docks. They are generally structures of a U-section comprising a platform and side walls, and are equipped with pumping compartments which enable them to be partly submerged to permit the entrance of vessels requiring repair. In some cases they may be towed.

A further type of floating dock functions in a similar manner, but is self-propelled and equipped with powerful engines. These are used for the repair or transport of amphibious vehicles or other craft.

(C) Floating or submersible drilling or production platforms.

Such platforms are generally designed for the discovery or exploitation of off-shore deposits of oil or natural gas. Apart from the equipment required for drilling or production, such as derricks, cranes, pumps, cementing units, silos, etc. these platforms have living quarters for the personnel.

These platforms which are towed or in some cases self-propelled to the exploration or production site and are sometimes capable of being floated from one site to another, may be divided into the following main groups :

(1) Self-elevating platforms which, apart from the working platform itself, are fitted with devices (hulls, caissons, etc.) which enable them to float, and with retractable legs which are lowered on the work site so that they are supported on the sea bed and raise the working platform above the water level.

(2) Submersible platforms, the substructures of which are submerged over the work sites with their ballast tanks resting on the sea bed in order to provide a high degree of stability to the working platform which is kept above the water level. The ballast tanks may have skirts or piles which penetrate more or less deeply into the sea bed.

(3) Semi-submersible platforms which are similar to submersible platforms, but differ from them in that the submerged part does not rest on the sea bed. When working, these floating platforms are kept in a fixed position by anchor lines or by dynamic positioning.

Fixed platforms used for the discovery of exploitation of off-shore deposits of oil or natural gas, which are neither floating nor submersible, are excluded from this heading (Heading 84.30).

This heading also excludes ferry-boats (Heading 89.01) factory ships for processing fishery products (Heading 89.02) cable laying ships and weather ships (Heading 89.06)"


13. It is the contention of the LD. AR that since self-elevating platforms are mentioned under category (C) which has the description "floating or submersible drilling or production platforms", the appropriate classification of self-elevating platforms should be under 8905 20 00 which covers goods of description has the description "floating or submersible drilling or production platforms".


14. Opposing the prayer, the submission of the learned counsel for the respondents is that for goods to be classified under CTI 8905 20 00, it should be capable of drilling into the seabed or producing any natural resources from the seabed as is obvious from the description for the sub-heading. It is not in dispute that the goods imported do not have the capability of drilling into the seabed or producing any goods like crude oil or natural gas. The impugned goods is basically a platform which has facility of a helipad, residential cubicles and workshop facilities where minor mechanical works can be done and have no machineries for drilling into seabed. The counsel also submitted the technical capabilities that are normally required for oil drilling or producing platforms. Since the imported goods does not have such facilities, according to him, there is no justification for classifying the goods under 8905 20 00. However he submits that that the goods will fall under 8905 only and that is why they have given up the initial claim for classification under Heading 8901 which heading will cover only vessels for transport of persons or goods. He argues that once CTI 8905 20 00 is ruled out, the next appropriate CTI is 8905 90 90 which is the CTI under which the goods have been cleared.


15. We have considered arguments on both sides. Considering the trade practice of declaring these goods also as "jack-up barges", 'we give the benefit of doubt to the respondents and hold that there was no attempt on the part of the respondents to misdeclare the goods to evade payment of duty. In the matter of classification, we hold that the goods imported did not have a capability of drilling or producing anything from seabed and therefore the classification under which the goods cannot be classified under CTI 8905 20 00 and therefore the CTI 8905 90 90 under which the adjudicating authority has classified the goods is most appropriate. Therefore, the appeal filed by the Revenue is rejected accordingly.

(Operative portion of the order was pronounced in open court on 10-1-2013)

Equivalent 2013 (293) ELT. 0035 (Tri. - Chennai)

Equivalent 2013 (198) ECR 0380 (Tri.-Chennai)