2009(02)LCX0046

In the Customs, Excise & Service Tax Appellate Tribunal, Chennai

Ms. Jyoti Balasundaram, Vice President Shri P. Karthikeyan, Member (Technical)

Galaxy (Tuticorin) Agencies

Versus

Commissioner of Central Excise & Customs, Trichy

Final Order No. 211/2009 dt. 13.2.2009 certified on 2.3.2009 in Appeal No. C/374/2001/MAS

Advocated By -

S/Shri S. Jaikumar, Adv. & M. Karthikeyan, Const, for Appellants
Shri V.V. Hariharan, JCDR for Respondent

Per P. Karthikeyan :

M/s. Galaxy (Tuticorin) Agencies cleared a consignment claimed to be a 'dredger' under Bill of Entry No. 648 dated 21.12.1998. The goods were assessed as dredger of CSH 8905.10 attracting 'nil' rate of duty under Notification No. 23/98-Cus. dated 2.6.98. After studying the information furnished by the supplier on the goods under import, certificate issued by M/s. SGS India Limited and the relevant explanatory notes to Sections XVI and XVII, the Assistant Commissioner of Customs found that the impugned goods comprised a dredger of CSH 8905.10 as it had the essential character of a complete dredger. He classified the consignment under CSH 8905.10 following Rule 2 (a) of the Interpretative Rules as the consignment did not include pontoon and outlet pipes. Allowing the appeal filed by the Revenue against the order of the Assistant Commissioner, the Commissioner (Appeals) passed the impugned order vacating the order of the original authority as not sustainable. He found that the consignment comprised separately presented parts and accessories of dredger other than floating structure. The examination report of M/s. SGS India Limited identified the imported goods as hydraulic pump, hydraulic excavator, hydraulic power pack pipes etc. He concluded that, in the light of the certificate of M/s. SGS India Limited, the finding of the original authority that the goods under import could function as a dredger in the absence of pontoons was not based on the examination report or expert's opinion. The goods under import were not a complete dredger but some parts and accessories of dredger. The goods could not function as a dredger unless some more parts were fitted and pontoons or a floating structure were also available. He held that imported goods did not have the essential character of a dredger to classify them as dredger in terms of Rule 2 (a) of the Interpretative Rules. As per the HSN Note under Chapter 89, all separately presented parts and accessories of vessels or floating structures, even if they were clearly identifiable as such, were excluded from Chapter 89 and had to be classified in appropriate headings elsewhere.


2. In the appeal before the Tribunal and during hearing, the appellants have submitted that a floating structure or pontoons is not essentially required for a dredger to carry out its function. A dredger could function also from land. As per the certificate issued by M/s. SGS India Limited, the impugned goods comprised a pump used for dredging sands, minerals etc. under water on a floating structure. The pump was of suction type. The impugned order did not indicate the appropriate classification of the diverse goods under import though it vacated the classification ordered by the original authority as not maintainable. In the absence of finding of appropriate alternate classification for the impugned goods, the order of the Commissioner (Appeals) which vacated the order of the Assistant Commissioner was not sustainable. The appellants also contended that the requirement of classifying separately presented parts of dredger under the respective entries in the tariff appropriate to them did not apply when a complete dredger was imported under knocked down condition. The order of the original authority had correctly classified the impugned goods and the same had to be restored.

2.1 We have also heard Ld. JCDR who defends the impugned order.


3. We have carefully considered the facts of the case and the rival submissions. We find from the order of the Assistant Commissioner that the impugned goods had been examined by SIB of Customs House and found them to be separately presented parts and accessories of dredger (other than floating structure - pontoon). This report appearing in the order in original also listed the parts and accessories under import. The supplier had clarified that the goods involved were a suction type dredger which functioned from a floating structure such as pontoons. M/s. SGS India Limited, also certified after inspecting the goods as pump for dredging sand, minerals etc. under water sans a floating structure. M/s. S.G.S. India Limited further clarified in response to queries from the department vide their letter dated 31.12.98 that the goods under import were a complete suction type dredger without pontoons and outlet pipes. In these factual circumstances, we find that the original authority had correctly classified the impugned goods as a dredger in terms Rule 2 (a) of Interpretative Rules. We find that pontoons are not essential for a dredger as per the tariff and that the impugned goods were a dredger in CKD condition without outlet pipes. Under Note I (B) to Chapter 89 of HSN Explanatory Notes, it is stipulated that,

"Contrary to the provisions relating to the transport equipment falling in other Chapters of Section XVII, this Chapter excludes all separately presented parts (other than hulls) and accessories of vessels or floating structures, even if they are clearly identifiable as such. Such parts and accessories are classified in the appropriate headings elsewhere in the Nomenclature, for example, "

The Commissioner (Appeals) interpreted this note to mean that a dredger imported in dismantled condition cannot be classified as a dredger and that the diverse parts comprising the structure had to be classified in appropriate headings outside Chapter 89. We find that the Commissioner (Appeals) has misread the note. The said note is to the effect that when parts and accessories of vessels or floating structures are imported, they have to be classified under the tariff entry appropriate to each part/accessory. The note is not to the effect that a dredger imported in CKD condition cannot be classified as dredger. On a perusal of the examination report by the SIB of the Customs House, certificate of M/s. SGS India Limited and the clarification from the supplier of the equipment, we are clear that the goods under import constituted a complete dredger in CKD condition. The absence of certain amount of outlet pipes or pontoons does not affect the claim of the impugned goods to be classified as a dredger under CSH 8905.10. In the circumstances we hold the impugned order to be unsustainable. We set aside the impugned order and allow the appeal filed by M/s. Galaxy (Tuticorin) Agencies.

Dictated and pronounced in open Court.

Equivalent 2009 (091) RLT 0947 (CESTAT-Che.)

Equivalent 2009 (239) ELT 0478 (Tri. - Chennai)