TMI Blog2009 (2) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., Karnataka. The applicant is a wholly owned subsidiary Indian company of the foreign company, Central Industry Group NV, Netherlands. The applicant states that it intends to manufacture and sell steel plates which would subsequently be used for manufacturing a ship's hull. A ruling on the following question relating to classification of the goods proposed to be manufactured has been sought:- "Whether the steel plates proposed to be manufactured by the applicant is classifiable under chapter sub heading 8906 90 00 or under chapter sub-heading 7326 90 80 of the Central Excise Tariff". 2. The application states that steel sheets would be cut and cold formed to produce steel plates through a computer controlled process. Each steel part will be uniquely marked with a part number. All the completed parts will be collected and stored until a complete section block, in the form of parts, is ready. These would be supplied to the customer in pre-determined batches, taking into account, the building sequence of the receiving shipyard. 3. The applicant contends that the Note in chapter 89 of the First Schedule to the Central Excise Tariff Act, 1985 which covers "Ships, boats an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 5. In response to the Commissioner's comments, the applicant states that what is being manufactured are ship building kits comprising of components bearing unique part numbers, which when assembled would lead to the formation of a complete hull. In the light of the above submission, the question on which the advance ruling has been sought has been slightly modified and it has been stated that the ruling sought, relates to the classification of these ship building kits. This kit, according to the applicant is basically a complete hull, presented in an unassembled condition. Such a collection of sequentially numbered parts, constituting a complete hull can not be classified as "parts of hull" referred to in 73089030. It should rightly be classified under 89069000, which as per Note of Chapter 89, covers an unassembled and disassembled hull. This is the appropriate classification as this tariff item specifically covers hull and Rule 3(a) of the Interpretation Rules states that the more specific description should prevail over the heading providing a more general description. The applicant also relies on judgments in the case of CC Vs Hindustan Motors Ltd., 2003(156) ELT 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The only Note in this chapter states "A hull, an unfinished or incomplete vessel, assembled, unassembled, or disassembled, or a complete vessel unassembled or disassembled, is to be classified in heading 8906 if it does not have the essential character of a vessel of a particular kind" Chapter head 8906 and its sub headings read as follows : "8906 : Other vessels, including warships and lifeboats other than rowing boats 8906 10 00 : Warships 8906 90 00 : Other" "Articles of iron and steel" are covered under chapter 73 of the tariff. The tariff item 7308 90 30 contained therein is reproduced below: "7308 90 30 : Hatchway rails and bulkheads for ships or boats and parts of hull" 11. The General Rules for Interpretation of the tariff contained in the First Schedule to the Central Excise Tariff Act, 1985 are given in the Schedule itself. The first rule of interpretation states: "1. The titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purpose, classification shall be determined according to the terms of the headings and any relative sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hulls, instead of being used to assemble a complete hull. It is not permissible to ignore the actual condition of the goods cleared and assess them on the basis of anticipated future use because the duty becomes exigible at the point of removal from the factory. When an appropriate heading for the goods themselves is available in the tariff, the question of invoking Rule 2 or other subsequent Rules to search for some other appropriate heading, does not arise. The above line of interpretation is succinctly brought out in para 11 of the Supreme Court's Judgement in case of CCE Nagpur Vs Simplex Mills Co. Ltd. 2005(181) ELT 345 (S.C.) which is extracted below: " The rules for the interpretation of the Schedule to the Central Excise Tariff Act, 1985 have been framed pursuant to the powers under Section 2 of that Act. According to Rule 1 titles of Sections and Chapters in the Schedule are provided for ease of reference only. But for legal purposes, classification "shall be determined according to the terms of the headings and any relevant section or Chapter Notes". If neither the heading nor the notes suffice to clarify the scope of a heading, then it must be construed accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are clearly identifiable as such. Such parts and accessories are classified in the appropriate headings elsewhere in the Nomenclature, for example : (1) …….. (2) …….. (3) …….. (4) …….. (5) Masts, hatchways, gangways, rails and bulkheads for ships or boats and parts of hulls, having the character of metal structures of heading 73.08" ( p.1757 of HSN Explanatory Notes ) 14. The judgments in case of Hindustan Motors and BMW cited by the applicant are distinguishable from the present case. In coming to the conclusion that the parts/components imported were classifiable as the finished product i.e. cars/engines, reliance was placed on Rule 2 of the Rule of Interpretation. Resort to Rule 2 is not permissible in the present case as classification is determinable in terms of Chapter note and tariff description in view of Rule 1. There are also other factual differences. In the case of Hindustan Motors, for example, all the parts of an engine were being imported under a single bill of entry whereas in the instant case, the parts of hull are cleared from the factory in separate consignments against different invoices from time to time. 15. In the above background, it ..... 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