1981(04)LCX0007

GOVERNMENT OF INDIA

(REVISION CASE)

IN RE : PREM HEAVY ENGINEERING WORKS PVT. LTD.

Order-in-Revision No. 327B of 1981, dated 29-4-1981

Important Para : 4

Advocated By : Mr. L.U. Balani, Advocate.

[Order per: D.N. Mehta, Additional Secretary and K.L. Rekhi, Joint Secretary]. - This case relates to the import of a consignment of Reduction Gear Box for the manufacture of Sugar Mill Machinery by M/s. Prem Engineering Works Private Limited, Meerut. The goods were classified by the lower authority under Heading 84.63 of CTA, 1975 as gear box. The petitioners claim that the goods are part of sugar manufacturing and refining machinery falling under Heading 84.30(2) of CTA, 1975 and as such these are entitled to the benefit of the Notification No. 35-Cus./79 in terms of which parts of machine falling, inter alia, under Heading 84.30(2) of CTA, 1975 are to be assessed at the same rate of duty as under the said Heading 84.30(2) of CTA, 1975. The Assistant Collector as well as the Appellate Collector have held that the impugned Gear Boxes do not constitute part of the roller mills which are sugar manufacturing and refining machinery classifiable under Heading 84.30(2) inasmuch as the roller mill is a complete machinery even without the gear box and the mechanism for transmitting power for its driving through the impugned gear box does not constitute a part of the roller mill as a single unit.

In the revision application, the petitioners have claimed benefit under Notification No. 35-Cus./79 on the ground that the impugned goods are part of roller mill which is sugar manufacturing machinery falling under Heading 84.30(2)-a heading which is covered by the said Notification No. 35-Cus./79.

2. At the time of personal hearing Shri Balani who explained the petitioner’s case contended that “since the gear box is a part of the sugar mill machinery as indicated by the Drawings where it is used with the rollers (the rollers are required to move at a slow speed of 7 rpm) for the extraction of juice from the sugar-cane, whereas the power supply from the prime mover is at the rate of 1000 rpm, it becomes necessary to have reduction gears for reducing the speed for the operation of the rollers which are undisputedly a part of the sugar mill machinery. They, therefore, contend that having satisfied the other conditions mentioned in Notification No. 35/79 by way of production of a certificate from D.G.T.D. that the goods imported are part of sugar mill machinery and they are intended for initial setting up of sugar mill plan-in fact, this import was allowed against the specific order for the supply of sugar mill machinery to actual users-there is no reason why they could not be given the benefit of lower rate of duty under Notification No. 35/79. They also drew attention to a subsequent clarification issued by Government of India vide Notification No. 129/80 by which it has been made abundantly clear that it was not necessary for a part of sugar mill machinery to be classifiable under Item 84.30(2) so as to get the benefit of the aforesaid exemption notification. In other words, even if a part was classifiable under an Item other than Item 84.30(2), the benefit of exemption under Notification No. 35/79 would be available so long as that part was required for a sugar mill machinery classifiable under Item 84 30(2) and that too for its initial setting up”.

3. The lower authorities, according to Shri Balani, were not justified in rejecting their claim for benefit of the aforesaid exemption notification on the ground that the Chapter Notes and Section Notes read with Item 84.30(2) put the goods outside the purview of Item 84.30(2). As they see it, the Explanatory Notes or the Chapter Notes would have been relevant only if the condition for the part to be classifiable under Item 84.30(2) were a must for getting the benefit of exemption notification. Here, all that was required was whether the goods imported were part of the sugar mill machinery or not. Since the rollers could not work without this particular article, it should be treated as part of the sugar mill machinery; since it was tied up with the rollers and the rollers are a must for the sugar mill machinery. The consideration that these goods are on the same footing as prime movers and as such they are machines by themselves and have uses in machinery other than sugar mill machinery should not have the effect of depriving them the benefit of Notification No. 35/79 which is not hedged by any such inhibitory requirements on a plain meaning. He, therefore, requested that irrespective of whether these goods on their imports are classifiable under Item 84.30(2) or not, they should be treated as part of the sugar mill machinery for purposes of Notification No. 35/79 giving the benefit thereof.

4. The Government of India have carefully considered the written as well as oral submissions made by the petitioners. The short point for decision is whether the impugned gear boxes can be considered to be part of roller mills so as to get the benefit of exemption Notification No. 35-Cus./79, notwithstanding the fact that they are classifiable on merit under Heading 84.63 of CTA, 1975. The Government observe that the lower authorities have unduly tied up the question of entitlement to the benefit of the Notification No. 35-Cus./79 with the question of classification of the impugned goods under Heading 84.30(2) vis a-vis Heading 84.63 of CTA 1975. In the Government’s view this is clearly irrelevant and not intended since the two questions dealt with by the lower authorities have got no nexus with each other. The Government observe that the impugned gear box is performing the function of reducing the speed and it is a must for connecting the turbine output to the inside of the roller mill. The gear box is required in the plant because they are generating the motive power by a steam turbine running at a high speed and in order to meet the requirement of roller mills which runs at a low speed, these gear boxes are used. The Government agreed with the lower authorities that the impugned gear boxes are correctly classifiable on merit under Heading 84.63 of CTA, 1975 inasmuch as the gear boxes are specifically mentioned under the said Heading 84.63 of CTA, 1975. Yet the Government see no reason why the impugned gear boxes should not be treated as a part of the roller mill for purposes of Notification 35-Cus./79. In view of the construction, design and use of the impugned gear box, the Government hold that once the roller mill is accepted as an article classifiable under Heading 84.30(2) of CTA, 1975’ the gear box which is a must for the proper functioning of that article i.e. the roller mill, will automatically constitute a part for the purpose of concessional assessment. Government observe that a mill comprises several machines by way of its part and a gear box as a machine has a place in it since it is essential for the proper working of the roller which is another part of the sugar manufacturing machinery more so when the petitioners have produced a certificate from DGTD to the effect that the goods imported are part of the sugar mill plant. Not to do so would defeat the very purpose of the concession contemplated in the Notification No. 35-Cus./79.

5. In view of the foregoing, the Government hold that the impugned goods are entitled to the benefit of Notification No. 35-Cus./79 subject to compliance with the other procedural requirements envisaged in the notification. The Government, therefore, set aside the appellate order and allow the revision application with the direction to extend the benefit of the Notification No. 35-Cus./79 subject to compliance with other procedural requirements evisaged in the notification

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Equivalent 1981 (8) ELT 380 (G.O.I.)