Tugs Classified Under Chapter 89, Not Machinery or Equipment; CESTAT Rejects Exemption Claim but Allows Drawback

The CESTAT held that tugboats fall under Chapter 89 (ships) instead of being classified as machinery or equipment under customs classification. Consequently, a claim for exemption on tugs was rejected; however, a drawback on import duties was allowed. The decision underscores the importance of correct classification under tariff schedules and ensures that importers receive appropriate benefits based on accurate categorization.