2004(01)LCX0189

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

R.M.S. Khandeparkar and J.P. Devadhar, JJ.

KIRLOSKAR PNEUMATIC COMPANY LTD.

Versus

UNION OF INDIA

Writ Petition No. 731 of 1990, decided on 16-1-2004

CASES CITED

Commissioner v. Wood Craft Products Limited— 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.) — Referred [Paras 8, 12]

Commissioner v. Ingersoll-Rand (I) Limited — 2003 (056) RLT 0592 (Tribunal) — Referred. [Para 8]

Kirloskar Pneumatic Company Limited v. Collector — 1996(12)LCX0087 Eq 1997 (090) ELT 0428 (Tribunal) — Referred               [Para 8]

Kirloskar Pneumatic Company Limited v. Collector — 2002(02)LCX0430 Eq 2002 (145) ELT A159 (S.C.) — Referred [Para 8]

REPRESENTED BY :        S/Shri D.B. Shroff with S. Chandarana i/b. M.K. Ambalal & Co., Advocates, for the Petitioner.

S/Shri A.J. Rana, Sr. Advocate with H.V. Mehta i/b. T.C. Kaushik, Advocates, for the Respondent.

[Judgment per : J.P. Devadhar, J.]. - The issue raised in this petition is whether the spring plates imported by the Petitioners are classifiable under Heading 73.20 of the Customs Tariff Act as claimed by the Revenue, or under Heading 8414.19 of the Customs Tariff Act, as claimed by the Petitioners.

2. The Petitioners inter alia manufacture air and gas compressors over 7.5 H.P. for use in refrigeration and air-conditioning equipment and other air compressors for use in pneumatic operations (‘said compressors’ for short). For manufacture of the said compressors, the Petitioners require variety of ‘spring plates’. These spring plates are not manufactured in India and are required to be imported. According to the Petitioners, these spring plates are not springs, as envisaged in common parlance. They are not available off the shelf in the market and they do not have a general use. These spring plates are manufactured out of high carbon steel sheets and are configurated with an accurate profile over a laser cutting machine. These items are manufactured against the Petitioners’ specific drawings and each spring plate has a specific profile or configuration required to suit a specific application of a particular compressor.

3. The Petitioners have been importing spring plates from time-to-time. By the impugned order dated 7th February, 1990 the Assistant Collector of Customs has classified the spring plates imported by the Petitioners under Heading 73.20 of the Customs Tariff Act (‘CTA’ for short) as against classification claimed by the Petitioners under Heading 8414.90 of CTA. Challenging the said order of the Assistant Collector of Customs, the present petition is filed.

4. The Customs Tariff Heading relevant for the purpose herein read as follows :-

5. Chapter 73 falls under Section XV of CTA. Note 1(f) of Section XV provides that the chapters covered under the said section do not cover articles falling under Section XVI of CTA. Note 2 to Section XV further provides that throughout the Schedule in the C.T.A. the expression ‘parts of general use’ means inter alia springs and leaves for springs of base metal, other than clock or watch springs (Heading No. 91.14). Chapter 84 falls under Section XVI of the CTA. Note 1(g) of Section XVI provides that the chapters covered under the said section do not cover parts of general use, as defined in Note 2 of Section XV of base metal (Section XV), or similar goods or plastics (Chapter 39).

6. From the aforesaid provisions, it is clear that compressors used in refrigerating equipment and air compressors and parts in respect thereof are covered under Chapter 84 of the CTA. However, in view of the Section Notes to Sections XV and XVI, spring plates, though specially designed for compressors used in refrigerating equipment would be classifiable under Section XV and not under Section XVI of the C.T.A. These spring plates which are parts of compressors though designed for specific use are expressly excluded from Section XVI and, therefore, have to be held to be classifiable under Section XV of the C.T.A.

7. In the present case, the Assessing Officer has not disputed the contention of the Petitioners that the spring plates imported by the Petitioners are specially designed for the compressors and the same are not of general use. However, the Assessing Officer has held that even if the spring plates are specially designed and for specific use they are still classifiable under 73.20 by virtue of Section notes to Sections XV and XVI of the C.T.A.

8. Mr. Shroff, learned Advocate for the Petitioners submitted that the C.T.A. is modelled on the system of classification derived from the International convention called the Brussel’s Convention on the Harmonised Commodity Description and Coding System (HSN) and the Explanatory Notes to HSN clearly provide that the identifiable parts of machinery in Section XVI are excluded from Heading 73.20 of HSN. Relying upon the decision of the Apex Court in the case of CCE v. Wood Craft Products Limited [1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.)] it was submitted that spring plates of compressors cannot be classified under Chapter Heading 73.20 of the C.T.A. Mr. Shroff relied upon the judgment of the CEGAT in the case of Commissioner of Customs v. Ingersol-Rand (I) Limited reported in 2003 (056) RLT 0592 (T), wherein it is held that the ‘set of springs and channel’ which are parts of compressor are classifiable under Heading 84.14 of the CTA. Mr. Shroff fairly brought to our notice that in the Assessees’ own case reported in 1996(12)LCX0087 Eq 1997 (090) ELT 0428 (Kirloskar Company Limited v. Collector of Customs), the Tribunal has held that springs of all types are classifiable under Chapter 73.20 of the Customs Tariff Act. Mr. Shroff also brought to our notice that the Petitioners had filed an SLP before the Apex Court. However, the same was dismissed as withdrawn leaving the question of law open [See 2002(02)LCX0430 Eq 2002 (145) ELT A159 (S.C.)]. Mr. Shroff submitted that in view of the fact the identifiable parts of the machinery falling under Heading 84 are specifically excluded from Chapter 73 of the CTA, the Assessing Officer was not justified in classifying the same under Chapter 73.20 of the CTA.

9. Mr. Shroff further submitted that the spring plates imported by the Petitioners are not springs in the real sense. He submitted that merely because the specially designed parts of a compressor are called as spring plate they cannot be classified under Tariff Heading 73.20 of the C.T.A. He submitted that the spring plates being identifiable parts of compressors are properly classifiable under Chapter Heading 8414.90 of the C.T.A.

10. Mr. Rana, learned Senior Advocate appearing on behalf of the Respondents/Revenue on the other hand supported the order passed by the Assessing Officer. Mr. Rana submitted that Notes to Section XV and XVI clearly show that springs of all types are included in Chapter 73.20 of the CTA and, therefore, no fault can be found with the order passed by the Assessing Officer.

11. We have heard Counsel on both sides. In the present case it is not in dispute that the spring plates imported by the Petitioners are manufactured as per specification and are meant for specific use in the compressors and are not manufactured for general use. Thus, spring plates are parts of compressors. As compressors are classified under Tariff Heading 84.14, the parts of compressors would ordinarily be classifiable under Tariff Heading 8414.90. However, Section Notes to Sections XV and XVI of the C.T.A. clearly provide that springs and leaves for springs, of base metal, other than clock or watch springs would be classifiable under Section XV. In other words, section notes to Sections XV and XVI clearly provide that springs and leaves for springs though specially designed for a particular product are liable to be considered as ‘parts of general use’ and accordingly would fall under Chapter Heading 73.20 contained in Section XV.

12. The contention of Mr. Shroff that the spring plates are not the springs as generally understood cannot be accepted because admittedly what is declared in the Bill of Entry is ‘spring plates’ and under the C.T.A. all kinds of springs and leaves for springs are specifically covered under Heading 73.20 of the C.T.A. Reliance was placed by the Petitioners on Explanatory Notes to HSN. It is true that the Explanatory Notes to HSN as held by the Apex Court in the case of Wood Craft Products Limited (supra) can be looked into in case any doubt arises regarding in the interpretation of the term used in the C.T.A. In the present case, perusal of the Section Notes to Sections XV and XVI clearly show that springs and leaves for springs, irrespective of the fact that they are identifiable parts of compressors falling under Chapter XVI are specifically made includible in Section XV. Under these circumstances, it will not be possible to import the Explanatory Notes to Section XV which excludes identifiable parts of machines falling under Section XVI from the perview of Section XV of HSN. In other words, although the explanatory Notes to HSN provide that identifiable parts of machines falling under Section XVI would be classifiable under Section XVI and not under Section XV, the said exclusion contained in the HSN does not find place in the C.T.A. To import such exclusion contained in the HSN into the C.T.A. would render the express provisions of C.T.A. nugatory. Such a construction which renders the express provisions contained in the C.T.A. nugatory cannot be accepted. Therefore, on a plain reading of the Section Notes to Sections XV and XVI of the C.T.A., we are of the opinion that the springs plates are classifiable under Chapter Heading 73.20 of Section XV of the C.T.A.

13. Accordingly, the petition fails. Rule is discharged, with no order as to costs.

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Equivalent 2004 (165) ELT 0511 (Bom.)

Equivalent 2004 (093) ECC 0418 (Bom.)