Order date – 01 December 2022

Key Pointers –

• The Appellants, Navyug Ship Breaking Co. and others have imported Vessels for breaking up during the period 2018-19. CTH 8908 00 00 covers “Vessels and other floating structures for breaking up.
• In the course of assessment of the Bill of Entry, the Appellant contended that the Vessels imported for breaking up along with the Oil contained in Bunker tanks in the Engine room of the said Vessels would be classifiable under CTH 8908 00 00.
• Assistant Commissioner of Customs, relying upon CBIC circular no. 09/2018 dated 19.04.2018 held that the oil contained in Bunker tanks in Engine room of the said Vessels would not be classifiable under CTH 8908 00 00 along with the vessel, but would be classifiable under CTH 2710. He accordingly re-assessed the bunkers inside the engine room tank to CETH 2710.
• The issue involved here is whether the Oil contained in the Bunker Tanks in the Engine Room/Outside Engine Room of the Vessel imported for breaking up is to be assessed independently of the vessel under CTH 2710 or with the Vessel imported for breaking up under CTH 8908 00 00?
• The Tribunal relied on the decision of the Hon’ble Gujarat High Court in the case of Priya Holdings (P) Ltd v CC– 2013 (288) ELT 347 (Guj) and CC v J.M. Industries- 2014 (302) ELT 382 (Guj) held that Oil contained in the Bunker tanks in Engine Room of vessel imported for breaking up are associated and connected with the machinery and engine of the ship and are regarded as forming integral part of the vessel and therefore classifiable along with the vessel under CTH 89.08 and cannot be assessed to duty independently of the vessel under CTH 27.10.
• The Oil contained in Bunker Tanks outside the engine room of vessel, despite duty was paid under protest, there is, however, no speaking order passed as regards the same. Since there is no speaking order on that part of issue, we direct the adjudicating authority to pass speaking order in respect of duty pertaining to Oil contained in Bunker Tanks outside the engine room of vessel.
• The appeals are allowed.