2006(11)LCX0323

IN THE CESTAT, WEST ZONAL BENCH, AHMEDABAD

Ms. Archana Wadhwa, Member (J) and Shri M. Veeraiyan, Member (T)

Bhikkamal Chotelal

Versus

Commissioner of Central Excise & Customs, Ahmedabad

Final Order Nos. A/167 & 168/2007-WZB/Ah'bad, dated 8-11-2006 in Appeal Nos. C/604 & 605/2000

Cases Quoted -

DEPARTMENTAL CLARIFICATION CITED

C.B.E. & C. Circular No. 37/96.............................................................................................. [Para 3]

Advocated By -

Shri A.D. Maru, Advocate, for the Appellant.

Shri Ajay Saxena, SDR, for the Respondent.

[Order per : M. Veeraiyan, Member (T)]. -

These are appeals filed against the Orders-in-Appeal No. 650 to 651/2000 (81 to 82-CCP) Cus./Comr(A)/Ahd dated 22-6-2000 passed by Commissioner (Appeals), Ahmedabad by which orders of the Assistant Commissioner of Central Excise, Bhavnagar were confirmed.

2. Heard both sides.

3. The appellants are engaged in the ship breaking activity for which they have imported old and used vessels from abroad for breaking up. They imported an old vessel MV Overseas Alice in the first case and MV Anatolly Lunacharkty in second case. They filed bills of entry for these vessels for clearance for home consumption, the bills of entry were finally assessed and the appellants paid full duty (i.e. on imported vessel and quantity of balance bunkers/oils, consumable stores on board the vessel). They filed refund claims on various grounds. They were issued show cause notices proposing to reject the refund claims. The adjudicating authority has rejected the refund claims for Rs. 5,51,180/- and Rs. 2,44,863/- on the grounds that as per the inventory and other documents produced by the appellants it was clear that whatever bunkers/oils were in balance were shown as contained in vessel’s machinery & engines, but kept reserve for future consumption/requirement, such bunker oils cannot be regarded as an integral part of the vessel and as per Board’s Circular No. 37/96, these are to be classified under their own tariff heading and liable to duty applicable thereon. As per survey report conducted by private surveyor M/s. Erricson & Richards (Guj.), Bhavnagar, the vessel contained sufficient useable and pumpeable bunkers and the survey report did not indicate that the bunkers/oils on board the vessel were contained in vessel’s machinery & engine.

4. The gist of the guidelines prescribed by CBEC which were based on the opinion of the World Customs Organization is as follows :-

(a) Movable gears such as lifting and handling machinery, anchors, navigational equipment, machine tools, firefighting equipment form part of vessel’s normal equipment and hence classified u/h 89.08

(b) Fuel and oil contained in the vessels machinery and engines can also be regarded as forming integral part of the vessels and hence be classified u/h 89.08

(c) Spare parts (such as propellers), whether or not in a new condition and movable articles (furniture, kitchen equipment, table-ware etc.) showing clear evidence of use and which have formed part of normal equipment of vessels, are classifiable under heading 89.08

(d) Remaining fuel and oil [other than that mentioned in sub-para (b) above] and other ship stores including drinks and foodstuff are classifiable separately in their own appropriate headings.

5. The appellants claimed that classification of not only fuel and oil contained in the vessel’s machinery and engines has formed part and parcel of the vessel under Ch. Heading 89.08 but also remaining fuel and oil and other ship stores including drinks and food stuff under Ch. Heading 89.08. The original authority have classified fuel and oil other than those contained in the machine and engine and items like food stuff, drinks under appropriate Chapter headings and held them dutiable and accordingly rejected their refund claims.

6. The appellants takes a view that tanks used for storing fuel oil themselves are machines. Such fuel oil and food stuff meant for consumption in ship and not for importation. Moreover, after beaching, the ship came on land mass there never remained any fuel oil and food stuff being consumed. They are dealing with ship breaking activity. They are not importing any fuel oil or food stuff. The master of the ship had not delivered any import manifest or import report as required under Sec. 30 of the Customs Act, 1962. As the price of the ship included all items in the ship segregating some portion of fuel and oil and other ship stores for separate classification and charging higher duty was not warranted.

7. The original authority has finalized the assessment on the basis of CBEC guidelines which is based on the opinion of the World Customs Organization. In case of one vessel the quantity of fuel and oil for which the Concessional rate was claimed is as high as 603.600 mt and in the case of another vessel it is as high as 130.00 mt. The term ship cannot be construed to include everything in the ship as claimed by the appellant. The guidelines of the CBEC which is based on the World Customs Organization opinion, prescribes very reasonable norms as to what can be treated as part and parcel of the ship for assessment and what should be treated for separate assessment. The reasoning adopted by the Commissioner (Appeals) in upholding the findings of the original authority cannot be faulted.

8. The appeals are dismissed.

Equivalent 2007 (211) ELT 0303 (Tri. - Ahmd.)