In a recent case, the department in its order failed to mention the duty to oil contained in the Bunker Tank,the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT)set aside non-speaking order of the Commissioner.
M/s. Navyug Ship Breaking Co., the Appellant imported Vessel for breaking up. CTH 8908 00 00 covers “Vessels and other floating structures for breaking up”. In the course of the 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 as held by the High Court in the case of Priya Holdings (P) Ltd v CC – 2013 (288) ELT 347 (Guj).
Regardingthe oil contained in a bunker outside the Engine Room, the appellant paid duty under protest as according to the appellant all bunkers whether inside or outside the engine room are classifiable along with the vessel only. The said bill of entry was assessed provisionally on 29-6-2018 classifying the oil contained in the bunker inside and outside the engine room under CTH 2710.
By Speaking Order of assessment dated 12-7-2018, the Assistant Commissioner of Customs, relying upon CBIC circular no. 09/2018 dated 19.04.2018, held that the oil contained in Bunker tanks in the 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 and reassessed the bunkers inside the engine room tank to CETH 2710.
However, no speaking order was passed as regards, the Oil contained in Bunker tanks outside the Engine room of the said Vessel. The appellant vides its letter dated 16.7.2018, inter alia pointed out that the issue of classification of fuel oil, MGO, and lubricating oil inside the engine room and outside the engine room, both are involved, and that all such Oil, according to the appellant being incidental to the import of vessel, is required to be classified under CTH 8908. The Commissioner (Appeals) by Order-In-Appeal (OIA) dated 304-2019 upheld the Order of assessment dated 12-07-18.
It was held by the Tribunal that “the impugned Orders holding that Oil inside the Bunker Tanks in engine rooms are to be assessed to duty under CTH 27.10 are liable to be set aside and Oil contained in Bunker Tanks in Engine Room of Vessel imported for breaking up is classifiable under CTH 8908 along with the such vessel.”
The CESTAT bench consists of Mr Ramesh Nair, member (judicial) and Mr Raju, member (technical) held that if the tanks containing Oils are connected tothe pipeline with the engine or machinery of the vessel, there may be no reason why the same cannot be treated as an integral part of the engine or machinery of the vessel.
In the absence of a speaking order on that part of the issue, the Tribunal directed the adjudicating authority to pass a speaking order in respect of duty about Oil contained in Bunker Tanks outside the engine room of the vessel. While allowing the appeal, the impugned orders wereset aside.
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