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2023 Supreme(SC) 733
SUPREME COURT OF INDIA
S. RAVINDRA BHAT, DIPANKAR DATTA, JJ.
M/s Dharti Dredging and Infrastructure Ltd. - Appellant
Versus
Commissioner of Customs and Central Excise, Guntur - Respondent
Civil Appeal No. 3005 of 2010
Decided On : 01-03-2023
For the Appellant : Mr. Kumar Visalaksh, Adv., Mr. Udit Jain, Adv., Mr. Ajitesh Dayal Singh, Adv., Mr. Abhay Chattopadhyay, Adv., Mr. Praveen Kumar, AOR.
For the Respondent: Mr. N. Venkatraman, A.S.G., Mr. Mukesh Kumar Maroria, AOR, Mr. V.C. Bharathi, Adv., Mr. S.A. Haseeb, Adv., Ms. Alka Agarwal, Adv., Ms. Ruchi Gour Narula, Adv., Mr. Syed Abdul Haseeb, Adv.
Headnote:Customs Tariff Act - Classification of Goods - 8905 10 00 Summary:
Fact of the Case:
The appellant imported a "Cutter Suction Dredger" and various accessories, claiming exemption under Notification No. 21/2002-CUS. The Assistant Commissioner denied the exemption, but the Appellate Commissioner granted relief for certain items. The CESTAT overturned the Appellate Commissioner's decision.Finding of the Court:
The Court held that the excluded items were integral to the functioning of a Cutter Dredger and thus entitled to exemption.Issues:
Whether the excluded items were essential for a Cutter Dredger and qualified for exemption.Ratio Decidendi:
The court interpreted Note 2 of Section XVII of the Act, emphasizing that parts essential to a specific function should be considered integral and eligible for exemption.Final Decision:
The impugned order was set aside, and the Appellate Commissioner's decision was restored.JUDGMENT :
S. Ravindra Bhat, J.
1. The appellant had imported a “Cutter Suction Dredger” along with other accessories and equipments including Pipes, Anchor Boats, Multicats, Dredging pumping units, Engines and other spares and accessories. These were classified under the Chapter Heading 8905 10 00 of the Customs Tariff Act, 1975 (hereinafter “the Act”). The appellant claimed the benefit of Nil rate of duty, in terms of Notification No. 21/2002-CUS dated 01.03.2002. The appellant had relied upon a certificate dated 27.02.2008 issued by the Chartered Engineer, based on the inspection of the goods. After verification of the Bill of Entry, the Assistant Commissioner was of the opinion that the multicats, M.S. pipes, imported dredging pumping units and other goods were classifiable under different tariff headings and were not entitled to exemption under the notification as “DREDGERS”.
2. Feeling aggrieved, the assessee appellant preferred an appeal to the Commissioner of Customs (Appeals), Guntur (hereinafter “the Appellate Commissioner”). The Appellate Commissioner, by an order dated 30.06.2008, after elaborately analysing the functions of each individual part, granted relief and held that nine items were entitled to exemption. These were set out in paragraph 25 of the Appellate Commissioner’s order, which is extracted for easy reference :
| SI. NO. | DESCRIPTION OF THE GOODS | SI. NO. OF ANNEXURE TO THE BILL OF ENTRY NO. 012/2007-08 dt. 22.02.08 |
| 1. | Dredger Pumping units along with Engines and accessories with two spare engines spare pump casing, spare impeller and necessary accessories | 1 |
| 2. | Floating pipes/hoses 12 Mts length 750 MM Dia | 2 |
| 3. | Air Compressors 5 HP | 3 |
| 4. | Air Compressors 7.5 HP | 4 |
| 5. | Steel Angles Plates | 14 |
| 6. | Pipes | 15 |
| 7. | Pumps | 16 |
| 8. | Wire Mesh | 18 |
| 9. | Outward Engine Boat | 24 |
3. The Appellate Commissioner had while granting relief, relied upon the previous order of the CESTAT reported as Boskalis Dredging India Pvt. Ltd. Vs Commissioner of Customs, Bhubaneshwar, [2001 (135) E.L.T. 1396] (“hereinafter as “Boskalis Dredging India Pvt. Ltd”).
4. The revenue appealed to the CESTAT. The CESTAT relied upon other previous decisions and took into consideration Chapter Note to Section XVII of the Act which states that ‘parts’ and ‘parts of accessories’, could not apply to certain articles, whether or not they are identifiable, as far as the goods of that section were concerned. Note 2(e) was interpreted to held that the parts – which the Appellate Commissioner held were essential to a Cutter Dredger, were separate articles. CESTAT upset the findings of the Appellate Commissioner and restored the order of the Assistant Commissioner.
5. The appellant urges that the impugned order wrongly interfered with the Appellate Commissioner’s determination. It was submitted that each article, that were denied the benefit of exemption, performed functions integrally connected with a Cutter Dredger. Learned counsel relied upon the decision in Commissioner of Customs Vs. Boskalis Dredging India Pvt. Ltd. [2002 (139) ELT A 313 (SC)] by which this Court affirmed the CEGAT’s order in Boskalis Dredging India Pvt. Ltd. (Supra).
6. Learned counsel for the revenue relied upon the decision of this Court in Steel Authority of India Ltd. vs. Commissioner, Central Excise & Customs, Bhubaneshwar [2022 SCC Online (SC) 1232]. In that decision, this Court had to deal with the question as to whether transportation of hot coke from a coke oven battery with the aid of a guide car resulted in transport vehicle i.e., the guide car being an integral part of the coke oven battery. The Court on that occasion had relied upon previous rulings in Saraswati Sugar Mills vs. Commissioner of Central Excise, (2014) 15 SCC 625). In Saraswati Sugar Mills (supra), the Court had the occasion to deal w
