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Regarding classification of ships & other floating structures
imported for breaking up
Circular No. 37 dated 3rd
July 1996
I am directed to say that doubts have been raised in the
context of an audit para regarding classification of (i) movable gears such as
lifting and handling machinery, anchors, navigational equipment's, machine
tools, fire fighting equipment (ii) bankers, such fuel oil, engine oil and (iii)
ship stores, such as spare parts, food stuffs, alcoholic and other beverages
imported on Board a ship for breaking up. [Para No. 1.01 of the report of the
C.& A.G. of India for the year ended 31st March, 1991 (4 of 1992)]. While
Department was of the view that the articles are classifiable u/ h 89.08 of the
Customs Tariff covering vessel and other floating structure for breaking
up, Audit was of the view that these items are not covered by this beading and
needs to be classified separately in their respective headings.
2. The issue was,
referred to World Customs Organisation, Brussels, who has opined that:
(a) Movable gears such as
lifting and handling machinery, anchors, navigational equipment, machine tools and
fire-fighting equipment form part of vessel�s normal equipment and hence classified u/ h 89.08.
(b) Fuel and Oil contained
in the vessel's machinery and engines can also be regarded as forming integral part of
the vessels and hence be classified u/ h 89.08.
(c) Spares 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.
3. The matter was
also discussed in a tripartite meeting comprising the Ministry of law, Justice
and Company Affairs, the Office of C & AG of India and the Department of
Revenue, where it was decided that opinion expressed by the WCO may be accepted
as guidelines for the determining classification of different items imported on
board the ship for breaking up. The Board has accepted this decision.
4. Accordingly in
respect of articles referred to in para 1 you may apply the advice of the WCO as
per para 2 above and finalise the pending cases of assessment.
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