1997(11)LCX0007

IN THE CEGAT, EASTERN BENCH, KOLKATA

Shri P.C. Jain, Member (T) and Smt. Archana Wadhwa, Member (J)

BOSKALIS DREDGING INDIA PVT. LTD.

Versus

COMMR. OF CUS., BHUBANESWAR

Order No. A-1436/CAL/97, dated 6-11-1997 in Appeal No. C/R-6/97

CASE CITED

Amership Management Pvt. Ltd. v. U.O.I. — 1996(01)LCX0013 Eq 1996 (086) ELT 0015 (Bom.) — Referred ....... [Para 5]

Hindustan Ferodo Ltd. v. Collector — 1996(12)LCX0029 Eq 1997 (089) ELT 0016 (S.C.) — Referred ..................... [Para 5]

Advocated By :   Shri G.L. Rawal, Advocate, for the Appellant.

Shri R.K. Roy, JDR, for the Respondent.

[Order per : Archana Wadhwa, Member (J)]. - Brief facts of the case are as under :-

1. The appellants herein, M/s. Boskalis Dredging India Pvt. Ltd. entered into a contract with M/s. Paradip Port Trust for dredging of a Coal Handling Berth. For this purpose, the appellant firm imported an old and used Cutter Suction Dredger in operational condition together with its equipment and other functional items. The appellants filed six different bills of entry in respect of different types of items imported along with the main body of the Dredger. These items can be broadly categorized as Dredger; Pipes c/w flanges; Rings & Nuts and Bolts; Anchors; Pontoons; Delivery valves, Spuds, Cutter Heads, Truck Tyres for use as Fenders; various Spare Parts and Consumable Stores.

2. The various items in respect of which different bills of entries were filed by the appellant company are as under :-

3. The appellant firm claimed classification of all the above items under Chapter sub-heading 8905.10 and ‘nil’ rate of duty in terms of Notification Nos. 133/87-Cus., dated 19-3-87 and 106/92-Cus., dated 1-3-92. The goods were initially assessed to duty provisionally pending submission of R.B.I. Certificate regarding foreign exchange transaction. One OH Dredger Anchor Handling Pontoon Type and one Cutter Suction Dredger were assessed at ‘nil’ rate of duty by extending the benefit of Notification No. 133/87. However, dispute arose in respect of other items as to whether the same are parts of the Dredger liable to be extended the benefit of notification in question or the same are required to be assessed separately and individually under their respective headings attracting duty. The appellants’ claim is that all the items imported by the two different vessels though covered under different invoices showing separate prices of each item and though covered under different bills of entry essentially comprise a complete Dredger and merit classification under sub-heading 89.05 and as such, attract Notification No. 133/87. The appellants’ claim is that the Dredger being a huge item cannot be imported in its complete form and as such, the same was despatched by their parent company, M/s. Boskalis of Netherlands in semi-knocked-down condition.

4. After the due process of adjudication, Assistant Commissioner vide his impugned Order allowed the benefit of notification in respect of Cutter Suction Dredger only. All other items were held to be classifiable under various heads of Tariff, as proposed in the notice and attracting the higher rates of duty. Benefit of Notification No. 106/92-Cus., dated 1-3-92 was also denied in respect of the spares as the same were held not to be of the type used for repairing of Dredger as the same were hand-tools, safety helmets, gloves, refrigerators, crockeries and miscellaneous other consumables etc. Appeal against the above Order of the Assistant Commissioner also failed before the Commissioner (Appeals) who vide his impugned Order dated 31-12-96 upheld the same. Hence the present appeal before the Tribunal.

5. Appearing on behalf of the appellants, Shri G.L. Rawal, learned Advocate did not dispute the order of the authorities below relatable to the general purpose items and consumables held to be outside the scope of Notification Nos. 133/87 and 106/92-Cus, by the authorities below. He restricted his claim to the various types of pipes used for discharge of the Dredged material. He submitted that the Cutter Suction Dredger imported by the appellant firm was in the form of a Pontoon. The main Pontoon structure contained only Dredge pumps, main engines, drives etc, but the other essential items tacked separately like the Spuds, Cutter Heads, Anchors, Submerged Pipes, Suction Pipes, Off-shore Pipes, Pick Points, Pontoons for holding the Off-shore Pipelines for discharging the dredged materials - Suction Pipe, Submerged Pipe and Shore-line Pipe are essential parts of the Dredger. He pointed out that the function of a Dredger is not only to dredge the material but also to shift the dredged material to a distant place through a continuous pipeline system. He drew the attention of the Bench to the impugned Orders passed by the authorities below and submitted that though they have agreed with the appellants regarding “constructional and functional characteristic of the dredger” with reference to the dredging and discharge operation, but did not agree to treat the discharge-system as a part of the Dredger. Shri Rawal argued that the classification is to be functional-based and without the discharge system of Dredger, the same would not be able to function inasmuch as the dredged material would get accumulated and would need re-emptying after short intervals. He submitted that entry 89.05 is to be interpreted keeping in view the functional aspect, which is dredging. Navigability is subsidiary. This entry came up for interpretation before the Bombay High Court in the case of M/s. Amership Management Pvt. Ltd. v. Union of India reported in 1996(01)LCX0013 Eq 1996 (086) ELT 0015 (Bom.). He also referred to the fact that the Department sought expert's opinion on this issue and as the same was in favour of the appellants, the same was not brought on record in spite of the notice given by the Advocate for putting the said opinion on record. He placed a copy of the examination report by the expert before us and drew the attention to a para at page 4 which reads as “After examining the machinery, its parts and allied equipments and on being explained about the dredging operation, it appears that the pipeline as a whole (submersible, floating and on shore) forms a part and parcel of the Dredger. Without the aid of the pipeline, such a non-self propelled Cutter Suction Dredger cannot work”. This report is submitted to Assistant Commissioner of Customs, Paradeep after examining the C.S.D. (Cutter Suction Dredger) and its auxiliaries imported by M/s. Boskalis Dredging India Pvt. Ltd., Bombay on re-export basis under Para No. 30(c) of Export-Import Policy, 1992-97, as per Assistant Commissioner’s Order No. VIII-Cus. 6/71/PDP/96/Pt.1 dated 24-4-96. He further submitted that burden to prove classification lies heavily on the Department and relied upon Supreme Court’s decision in the case of Hindustan Ferodo Ltd. v. Collr. of C. Ex., Bombay reported in 1996(12)LCX0029 Eq 1997 (089) ELT 0016 (S.C) = 1996 (017) RLT 0807 (S.C.). The learned Advocate heavily relied upon the British Standard Specification (BS 6349 Part 5 : 199 - paras 4.4.1 and 4.4.2) in support of his submission that in Cutter Suction Dredger of the type imported by the appellant, discharge from the dredge pumps passes over the stem of the Pontoon to a heavy hose connected with a floating pipeline which is further connected to an on-shore pipe. He further submitted that a reference to Notification No. 106/92-Cus. was only in the alternative and should not be viewed as a contradiction in the appellants’ claim as has been done by the first appellate authority. In support of his above submission, Shri Rawal has relied upon a number of decisions of the Tribunal and the Honourable Supreme Court.

6. Countering the arguments of the appellants, Shri R.K. Roy, learned JDR has submitted that each classification case has to be decided on the facts of each case and no analogy can be permitted. He submitted that as is clear from the Tariff Entry, only Dredger is mentioned and if the pipelines are allowed as a part of the Dredger, the same would amount to a full-fledged dredging system. He, further, submitted that the Commissioner (Appeals) has passed a detailed and reasoned Order, and reiterated the reasonings adopted by the first appellate authority.

7. Learned JDR submitted that the appellants’ argument that a Dredger cannot work without pipelines and as such, the same should be considered as a part of the Dredger, is not legally sound inasmuch as a generator cannot work without transmission system, but nevertheless, transmission system is not a part of the generator. Going by the definition of the terms, Dredger and Dredging, given in Chambers Dictionary of Science and Technology (revised edition), learned Departmental Representative submitted that excavation under water is the main function of the Dredger which can be performed by the main body staying in stationary position without the paraphernalia of the pipeline system. The requirement of the other parts such as pipelines, attendant vessels, barges are not mandatory inasmuch as the same are required for disposal of dredged materials after the dredging operation depending upon the Geo-physical contour of the area, purpose of dredging, scope of work and contractual obligations. Parts required for reclamation of land certainly cannot be considered to be the parts of the dredger. In view of the above submissions, he prayed that the pipelines cannot be classified as Dredger along with the Mother Craft under Chapter 89.

8. We have carefully considered the submissions of both sides. The short point required to be decided in the instant case is as to whether the pipelines which are required for disposal of the dredged material, have to be considered as a part of the Dredger or the same would qualify for their classification as independent items. Both sides have vigorously argued in support of their views.

9. Shri Rawal, ld. Advocate for the appellants has placed an expert’s opinion which, according to him, was obtained by the Department. But the same was not brought on record in spite of the appellants’ legal notice to do so as it was in favour of the appellants. Though we have seen that later, but we do not intend to rely upon the same as it was not a part of the original proceedings before the adjudicating authority. Though, we are of the firm opinion that the adjudicating authority having obtained such expert’s opinion, should have made the same a part of the proceedings before him, irrespective of whether the same was in favour of or against the appellant company, however, we find that Dredging and Dredger are defined in the Chambers Dictionary of Science and Technology (revised edition) as follows :-

“Dredging : A form of excavation conducted under water.

Dredge :  (Civ. Engg.) Any apparatus used for excavation under water.        (Mining).

Barge or twin pontoons carrying chain of digging buckets or suction pump, with over gear such as jigs, strices, trommels, trailing stackess, manoerining anchor lines and power producer.

Dredger Excavator : It is defined in the above-named dictionary as a mechanical excavator working on the same principle as a ‘bucket ladder dredger’, but adopted for use on land.

Bucket Ladder Dredger : It is a vessel of small draught having a series of bucket moving in a continuous chain reading down into the material to be dredged and lifting it for discharge into the vessel itself or into an attendant vessel.”

10. From the definitions of various Dredgers as extracted above, we find that Dredging, no doubt, means excavation. But there is definitely a need for continuous lifting of the dredged material and dumping the same at some other place. This can be done by a separate disposal system or discharge system can be a part of the Dredger by itself. Referring to the British Standard Specification (BS 6349, Part - 5 : 199), we find that there are various types of Dredgers like Stationary Suction Hopper Dredger, Trailing Suction Hopper Dredger, Cutter Suction Dredger etc. The Dredger in the instant case is a Cutter Suction Dredger in contrast to the Hopper Dredger which keeps the dredged material in its hold (hopper). When the hold is filled up, the said Hopper Dredger moves to the designated area of discharging dredged materials without the assistance of any pipelines. In such type of Hopper Dredgers, neither the Suction Pipe nor the Discharge Pipe may be essential. In the case of Cutter Suction Dredger, the procedure for carrying out the dredging work is different. The Cutter-Head is fitted with the Dredger with a Suction Pipe beneath it. The said Cutter cuts the earth, rock etc. under the water when the dredged material accumulates. As these dredged material has to be taken from the Dredger for the continuous uninterrupted dredging work, Suction Pipe sucks the dredged material. The Suction Pipes are connected with the discharge pipe with the aid of flanges/belts, nuts and bolts etc. The discharge pipes then throw these dredged material at the designated area which may be at a distant place. It is this function of the Cutter Suction Dredger which involves the dredging as well as the discharging, which makes the Pipelines an essential part of the Dredger inasmuch as without these Pipelines the Dredger of the type in question will not be able to work properly. Para 4.4.1 of the British Standard Specification is being reproduced below for better appreciation :-

“4.4.1. General

.... .... .... A Cutter Suction Dredger may be self-propelled but is more commonly dumb (non-self-propelled). Dredging only takes place with the dredger moored in some way and it involves an initial powerful cutting action with suction and pumped discharge to barges or more commonly, via a pipeline to a remote onshore area for disposal of land reclamation.

The Cutter Suction Dredger is normally rated according to either the diameter of the discharge pipe, which may range from 150 mm to 1100 mm. or by the cutterhead driving horsepower, which may range from 20 to 5000, or in the case of very large dredgers by the total installed horsepower.........….

The main pontoon structure contains the dredge pumps (s), the main engines and all ancillary engines, drives and equipment. ......

The discharge from the dredge pumps (s) passes over the stern (or opposite end to the cutter) of the pontoon to a heavy hose or flexible coupling, to which is connected a floating pipeline (see A. 4.5.3) which in turn is connected to an onshore pipeline. Sometimes an intermediate sea bed pipeline may be used.”

Para 4.4.2 of the British Standard Specification is also being reproduced below for better appreciation :-

“4.4.2. Pipelines

Pipelines affect both the performance and operational efficiency of the Cutter Suction Dredger. The diameter of the pipeline has a direct bearing on the efficiency of the hydrotransport process. Pipelines fall into the following two categories.”

11. From the above description of the Cutter Suction Dredger also, we find that Pipelines attached with the Suction Dredger forms an indispensable part of the main mother craft. The cutterhead, which may be electrically or hydraulically driven, encloses the suction intake of a centrifugal dredge pump. The cutterhead is mounted at the extremity of a fabricated steel structure, termed the ‘ladder’, which also supports the suction pipe. The technical and practical requirement of disposal of the dredged material makes the Pipelines a part of the main Dredger. We find that the evidence relied upon by the appellant firm in the shape of the British Standard Specification, strongly favour their case. Accordingly, we hold that the various types of Pipelines are a part of the Dredger itself, qualifying for their classification under Chapter 8905.00 as Dredgers and therefore, they are entitled to the exemption Notification No. 133/87-Cus., dated 19-3-87. As we have held Pipelines as a part of the Dredger enjoying exemption under Notification No. 133/87, the appellants’ further claim of exemption under Notification No. 106/92 dated 1-3-92, in the alternative, does not require any consideration. The appeal is thus allowed.

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Equivalent 2001 (135) ELT 1396 (Tri. - Kolkata)

Equivalent 1998 (024) RLT 0540