2003 (11) TMI 376 - AT - Central Excise

Summary

Issues:
Classification of items purchased and sold along with drilling rigs.

Analysis:
The case involved a dispute regarding the classification of various items purchased and sold along with drilling rigs by a company engaged in manufacturing. The Commissioner held that the cost of these items should be included in the value of the drilling rigs cleared by the company as they were essential for the functioning of the rigs. The company contended that these items were not part of the drilling rigs but were equipment used at the site where the rigs were employed, citing a previous Tribunal decision. The Tribunal referred to the Harmonised System of Nomenclature and concluded that items such as drill bits, pipes, and similar tools used in conjunction with drilling rigs should not be included in the value of the rigs. The Supreme Court also upheld this decision in a previous case, emphasizing that only the drilling rig itself should be classified under a specific heading.

The departmental representative argued that the company had previously claimed exemption for these items as parts of rigs before the Customs authorities, and therefore, could not now take a different stand. The company had imported various articles claimed to be parts of rigs and had been granted exemption under a specific notification. However, the Commissioner denied the exemption, stating that the imported goods were not included in the notification's table. The Tribunal noted the inconsistency in the company's stand before the Customs authorities and the current stance taken in the appeal.

The company listed various items it manufactured, claiming that some were parts of a rig and should be included in the rig's value, while others were not necessary for the rig's manufacture and should not be included. The Tribunal remanded the matter to the Commissioner for a precise determination of the value of the rigs based on the principles discussed in the judgment. Ultimately, the appeal was allowed, and the impugned order was set aside, granting relief to the company in the classification dispute.