1995(05)LCX0134
BEFORE THE COLLECTOR OF CUSTOMS (APPEALS), CALCUTTA
Shri B.N. Das
In Re : NIGHTINGALE ENGG. INDUSTRIES PVT. LTD.
Order-in- Appeal No. Cal. Cus. 282/95, dated 24-5-1995
Cases Quoted
G.N.B. Credit Pvt. Ltd. — Order-in-Appeal No. 281/95, dated 23-5-1995 [Para 8]
U.P. Coo-operative Federation Ltd. v. UOI — 1982(09)LCX0009 Eq 1983 (012) ELT 0329 (Del.) [Paras 10, 19]
Bengal Tools [Para 11]
Collector v. Swastik Woollen (P) Ltd. — 1988(08)LCX0070 Eq 1988 (037) ELT 0474 (S.C.) [Para 16]
Collector v. Krishna Carbon Paper Co. — 1988(09)LCX0051 Eq 1988 (037) ELT 0480 (S.C.) [Para 16]
Collector v. S.S. Enterprises — 1994(08)LCX0098 Eq 1994 (074) ELT 0794 (SC) [Para 20]
K. Mohan & Co. v. Collector — 1983(12)LCX0048 Eq 1984 (015) ELT 0430 (Tribunal) [Para 23]
Advocated By : None, for the Appellant.
S/Shri S.K. Bagaria and Hasmukh Kundalia, Advocates, for the Respondent.
[Order]. - The Assistant Collector of Customs for Tribunal and Review Cell Custom House, Calcutta, filed the instant appeal in terms of order of review passed by the Collector of Customs, Custom House, Calcutta u/s. 129D(2) of the Customs Act, 1962 on 24-5-1994.
The brief facts of the case are that the respondent firm M/s. Nightingale Engineering Industries Pvt. Ltd., (hereinafter called the respondent) had filed a Bill of Entry Sl. No. 1238, dated 24-6-1993 for clearance of 10 numbers of Power Tiller. They had claimed classification of the power tillers under Tariff sub-heading 8432.80. The assessing officer was of the view that the tracting unit should be classified under Heading 87.01 and the agricultural implements under Heading 84.32 which was contested by the importer. The matter was finally adjudicated by the Additional Collector of Customs who passed an order dated 30-7-1993 after granting personal hearing to the respondents. In the said order the Power Tillers were held as correctly classifiable under Tariff sub-heading 8432.80 as claimed by the respondents. Accordingly, the goods were assessed and allowed to be cleared.
2. The order of the Additional Collector passed on 30-7-1993 has been held to be non-speaking and therefore not legal and proper for which the instant appeal has been filed.
The grounds of appeal are as under :-
(i) That classification of Power Tiller has been finalised recently pursuant to various court orders and it has been decided that the tracting unit of power tiller is to be classified under Tariff Heading 87.01 and various agricultural attachments under Tariff Heading 84.32 when separate values are available. In absence of separate value, the power tiller is to be assessed under Heading 87.01.
(ii) That the goods are walking tractors as evident from catalogue. The roto tiller is not in-built/integrated in the tractor portion. The roto tiller is not self-propelled and it derives its power from the tractor through gear box. The imported goods are nothing but pedestrian controlled tractor and are clearly covered by Tariff Heading 87.01 and such goods are like normal tractors designed for use with inter-changeable equipment which they may operate by means of a general purpose power take-off.
(iii) The HSN Explanatory Notes at page 1209, volume 3 under Tariff Heading 84.32 clearly indicate that some agricultural machines like ploughs, harrows etc., are designed solely to be hauled by a tractor linked by coupling device. Such machines are mounted and changed in the field. All these machines remain in Heading 84.32 even if they are presented with the tractor (whether or not mounted with tractor). The tractor itself is classified separately under Heading 87.01
(iv) That the importer’s contention that classification of power tiller is given in Notification Nos. 65/86-C.E. and 326/86-C.E. falling under Heading 84.32 and Central Excise Department is charging duty on the Power Tillers under Heading 84.32 is not tenable in absence of any documentary evidence. It is not disputed that the Power Tillers fall under Tariff Heading 84.32. Only those Power Tillers where both the tracting unit and inter-changeable agricultural implements make an integral unit and the agricultural equipment are self-propelled fall under Heading 84.32. In the instant case, the tractive force and the inter-changeable agricultural implements do not make an integral unit and as such implements are not self-propelled and hence its classification is beyond the scope and purview of Heading 84.32.
(v) Finally, it has been contended that since the tractive unit and the agricultural machines are not one integrated unit but separable and inter-changeable, the tractor portion will fall under Tariff Heading 87.01 and the agricultural implements under Heading 84.32.
3. On receipt of the Department’s appeal it was observed that vital documents like the review order passed under Section 129D(2) of the Customs Act 1962, copy of bill of entry, copy of invoice, copy of catalogue had not been provided by the Department. However, a show cause notice under Section 128A(3) ibid was issued to M/s. Nightingale Engineering Industries Pvt. Ltd., on 5-1-1995 as to why the 10 numbers of Power Tillers imported by them vide the B/E mentioned (supra) should not be classified under Tariff Heading 87.01 and duties should not be levied accordingly.
4. Personal hearing in the case was fixed on 18th January, 1995. No one turned up from the Department’s side, Shri Hasmukh Kundalia, Advocate upon instructions received from his client M/s. Nightingale Engineering Industries Pvt. Ltd., intimated that copy of the Department’s appeal had not been served upon him and without the same along with all relevant papers, it will be difficult for his client to appear for hearing and make necessary submissions. It appeared to be a lapse of the Appeal Unit, The Advocate’s representative was supplied the copy of show-cause memo as well as copy of appeal and on 25-1-1995 the respondents replied to the show-cause issued u/s. 128A(3) ibid. He also filed a copy of his reply dt. 24-1-1995 to the S.C. Notice issued from file No. S2-41-94 SIB addressed to the Collector of Customs, Custom House, Calcutta. It thus transpired that for the same Bill of Entry No. 1238, dated 24-6-1993 which was adjudicated vide order, dated 30-7-1993 by the Additional Collector of Customs against which an appeal has been filed on 24-6-1994 by the Department u/s 129D(4), a show-cause has been issued to the importer on 2-9-1994.
5. In their written submissions to the show-cause notice issued u/s 128 A (3) M/s. Nightingale Engineering Industries Pvt. Ltd., (the respondents) have made the following points :-
(1) That the notice issued u/s. 129A(3) is barred by limitation u/s 28 of the Customs Act read with second proviso to Section 128A(3).
(2) That the matter of classification of the said Power Tillers had been gone through by the adjudicating authority and on being satisfied that the imported items were agricultural machinery for ploughing and cultivation, the order classifying the goods under Tariff sub-heading 8432.80 was passed. The allegation that the order passed by the learned Additional Collector was not a speaking order is not correct. Full and detailed examination was made by the Customs Authorities as well as the learned Additional Collector of all the relevant facts, documents, records and provisions of law. The technical literature of the foreign supplier was also properly examined. After all such examination and scrutiny and after being fully satisfied, he had come to the conclusion that the tractive force is generated inside the machine itself and there is no separate tractor attached to it.
3. On the point whether the Power Tillers imported by the respondents could be treated or regarded as Tractors and be accordingly classified under Heading 87.01 instead of Heading 84.32, they referred to the show cause notice, dated 2-9-1994 bearing No. S2-41/94 SIB to which they have furnished a detailed reply. In order to avoid repetition and prolixity a copy of the said reply was filed for treating the same as part of their instant objection petition. In the said reply the following points have been raised :-
(a) For the purpose of Chapter 87 of the Customs Tariff, Tractors have been specifically defined in Note 2 thereof. According to Note 2 “tractors means vehicles constructed essentially for hauling or pushing another vehicle, appliance or load, whether or not they contain subsidiary provision for the transport in connection with the main use of the tractor, of tools, seeds, fertilizer or other goods.” The said definition given in Chapter Note 2 of Chapter 87 is not at all satisfied in respect of the Power Tillers imported by them. The power tillers imported by them were not capable of performing any such function. The Power Tillers were specifically designed for tilling the soil in the fields, orchards etc., This apart these are not capable of performing any other function. Secondly, the said Power Tiller is a compact unit having in-built tracting unit within the tilling mechanism. The said Power Tillers have got no mechanism by which any other attachment can be fitted therewith or by which any function of hauling or pushing another vehicle, appliance or load can be performed by it. As a matter of fact, the said Power Tillers even do not have any power outlet through which the engine power can be transmitted for utilization for any other attachment. Thirdly, the said Power Tiller is in itself the prime mover and uses a rotavator as the tilling device, The power generated by the engine is transmitted to the rotavator through specially designed gear of which one portion is in the gear box of the machine frame and other portion is in the shaft of the rotavator. Upon receiving the power from the engine, the rotavator starts rotating and in this way the job of tilling soil is performed. Fourthly, in the said Power Tillers the power generated by the engine is almost entirely used by the rotavator, the wheels having the function of only regulating and maintaining a uniform forward speed.
(b) Evidences in support of their contentions were also cited. These evidences are as follows :
(i) In a certificate, dated 28-4-1994 the Head of the Department of Agricultural Engineering, Faculty of Agriculture, Bidhan Chandra Krishi Viswa Vidalaya has clearly certified the Power Tillers imported from China National Constructional and Agricultural Machinery Import & Export Corporation as Power Tillers both technically and commercially, in which tractive part of the machine makes up one integral unit, though the goods have been described in the said manuals as walking Tractor. In Indian Standards, IS : 9935-1981 title - Test Code for Power Tillers - Walking Tractor has been defined as “power tiller”.
(ii) In the hand-book of Agricultural Machinery Terminology by Bureau of Indian Standards, various types of agricultural tractors have been defined in paragraph 2.1.1 and various types of Power Tillers have been defined in para 2.1.2. It would clearly appear from the said definitions that Tractor is a self-propelled wheeled vehicle having two axels or a track lying or semi-track laying machine, more particularly designed to pull, push, carry and operate implements and machines used for agricultural work. On the other hand, power tiller is a prime mover in which the direction of travel and its control for full operation is performed by the operator walking behind it. The definition of tilling type Power Tiller as given in paragraph 2.1.3 of the said publication is clearly satisfied in respect of the Power Tillers imported by them.
(iii) In another ISI Publication No. IS : 9939-1981 (Glossary of Terms Relating to Agricultural Tractors and Power Tillers) various types of agricultural tractors have been defined in paragraph 11.1 and its various sub-paragraphs. None of the said definitions are satisfied in respect of the Power Tillers imported by them. On the other hand definition of Power Tillers in paragraph 11.2 is fully satisfied in respect of the goods imported by them.
(iv) In another publication bearing IS : 9935-1988 (Test Code for Power Tillers) the Bureau of Indian Standards has laid down the methods for testing of Power Tillers. From the said publication also it would be clearly evident that tilling type Power Tiller is the one which uses engine power driven tilling device such as rotary, crank or screw [blades]. The said definition is fully satisfied in respect of the Power Tiller imported by them.
(v) In the Indian Trade Classification published by the Govt. of India and based on HSN, rotary tiller is classified under Heading 84.32.
(vi) The fact that such Power Tillers are classifiable under Heading 84.32 of the Customs Tariff and are agricultural machinery for soil preparation or cultivation is also clearly evident from the various notifications issued by the Central Government itself, such as Notification Numbers 64/86-C.E., 65/86-C.E., 326/86-C.E., 59/87-Cus. etc.
(vii) Explanatory Notes given in the Harmonized Commodity Description and Coding System (hereinafter called the HSN) below Heading No. 87.01 make it quite clear that the said heading does not cover propelling bases specially designed, constructed or reinforced to form an integral part of machine performing a function such as lifting, excavating, lebelling, etc., even if the propelling base uses traction or propulsion for the execution of this function. Similarly, the Explanatory Notes given below Heading 84.32 clarify that in respect of machines designd solely to be hauled or pushed by a tractor to which they are linked by a coupling device or in respect of the machines which are operated by a general purpose power take-off on the tractor and which machines are mounted and changed in the fields etc., the tractor itself is classifiable under Heading 87.01. The said explanatory notes given below the Heading 84.32 [have] got no relevance or application whatsoever in respect of the Power Tiller imported by them which is an integral unit and wherein there is no separate or independent tractor but the tracting unit is inbuilt in the tilling mechanism itself and which has got no general purpose power take-off. In such cases, the question of classifying any tracting unit separately does not and cannot arise.
(viii) They also referred to an evaluation of the said power tillers by a surveyor approved by IDBI, IFCI, Govt. of India as well as the Calcutta High Court. The said surveyor after physical examination has clearly certified that in the said Power Tillers the tracting unit is in-built in the tilling mechanism without any inter-changeability [of] implements and that the said Power Tillers cannot be treated [as] tractors but are only tilling type Power Tillers. It has further been certified in the said report that the said Power Tillers have no power take-off to transmit power to any other machine or implement [nor] the same have any mechanism to connect any implement to the same. It has also been certified in the said report that in the said Power Tillers engine power is transmitted directly to the tilling device.
(ix) In a certificate issued by the Head of Department of the University of Agricultural Sciences, Bangalore, it has been certified that such Power Tillers are technically as well as commercially known as Power Tillers and that in the said Power Tillers tractive part and the machine make up one integral unit.
(x) The Government of Assam, Directorate of Agriculturel after getting such Power Tillers tested by a team of engineers at the field level and after being fully satisfied in the matter, has approved the said Power Tillers for mass use by the farmers in the State of Assam, and Public Notice, dated 7-4-1994 has been issued for this purpose.
(xi) The said Power Tillers are being regularly sold by M/s. Bengal Tillers Ltd., to various farmers in the State of West Bengal on the recommendations of M/s. West Bengal State Seed Corporation Ltd.
(xii) In the various advertisements in newspapers, magazines etc., the said goods are always advertised as Power Tillers.
(xiii) The Govt. of West Bengal, Department of Agriculturel in a communication dt. 12-4-1994 after examining the performance, quality etc., of the said Power Tillers has accepted the same as Power Tillers and has recommended for inclusion of the same in the list for distribution to different Government Schemes of the State of West Bengal.
(xiv) The West Bengal State Co-operative Agricultural and Rural Development Bank Ltd., has also enlisted the said Power Tillers upto 31-3-1995 in respect of areas of operation of all member banks and all it branches and has certified this fact in a communication, dated 27-5-1994.
(xv) Such Power Tillers are accepted as Power Tillers also by the Assam State Development Corporation for Other Backward Classes Ltd. as will be clear from a communication dated 8-8-1994.
(xvi) The purchase of Power Tillers is finalised by various cooperative and other banks including nationalised banks and the said banks have always accepted the said Power Tillers as Power Tillers.
(xvii) Various societies and committees for assisting the farmers have also all along treated and regarded the said Power Tillers as Power Tillers as will be evident from their communications.
(xviii) The various farmers who have purchased the said Power Tillers have always used the same as Power Tillers.
(xix) The Department of Farm Machinery, Faculty of Agricultural Engineering, Rajendra Agricultural University in Bihar also treats the said Power Tillers as Power Tillers as would be clear from its communication dt. 9-9-1994.
(xx) Similar Power Tillers are also manufactured in India by M/s. VST Tiller Tractors Ltd., Bangalore as would be evident from invoice numbers 000239, dated 29-4-1994 and 90557, dated 19-8-1994. The Power Tillers manufactured by the said manufacturer in India are also being classified by the Central Excise Authority under Heading 84.32.
(c) With regard to the allegations made in paragraph 2 at page No. 7 of the show cause notice, dated 2-9-1994 on parts of Power Tillers they stated that due to the said parts the Power Tillers cannot be treated as tractor. If it was so, the part list showing parts manufactured for Power Tillers by M/s. VST Tillers Tractors Ltd., Bangalore. and M/s. Kerala Agro Machine Corporation Ltd., Kerala would not be called as parts of Power Tillers.
(d) In respect of the alleged evidence in the show-cause notice it was mentioned that apart from the manufacturer’s catalogue no other document or evidence has been relied upon. With regard to reliability of printed catalogues, manuals, they commented that the narrations and materials were given more by way of marketing gimmick.
(e) At the time of import no agricultural implements were fitted or at any time such implements were imported by them. Besides, it is not at all possible to fit any such agricultural implements with the said Power Tillers. The allegation that the said Power Tillers were capable of being used as a means of traction as well as PTO (power take off) transmission is also factually incorrect and totally without any basis. In the said Power Tillers there is no PTO. PTO has been defined in paragraph 2.20 of ISI publication No. IS : 9939- 1981 (Indian Standard Glossary of Terms relating to Agricultural Tractors and Power Tillers). It reads “power take off-shaft usually externally splined to transmit torsional power to another machine. It is abbreviated as PTO”. There is no PTO at all in the said Power Tillers imported by them nor there is any possibility of the same being used as a means of traction of power transmission for operation of any other equipment or implement. The only function for which the said Power Tillers can be used and for which the same have been specially designed and constructed is tilling of soil. There is simply no possibility of the said Power Tillers being used for ploughing, harrowing, harvesting or transportation.
(f) They denied and disputed that any pedestrian controlled tractors were imported by them or that the Power Tillers in question were pedestrian controlled tractors. That there was no mis-declaration on their part at any point of time resulting in alleged mis-classification under Heading 84.32 and evasion of alleged duty.
(g) They denied and disputed that the manufacturer’s catalogue in any way established that the Power Tillers were tractors or that any manipulations were made in the said catalogue.
(h) The fact that the Power Tillers are also known as walking type tractors has also been mentioned in the ISI Publications stated above. However, the fact is that the said Power Tillers do not at all satisfy the definition given in Chapter Note 2 of Chapter 87. They denied and disputed that the Power Tillers imported by them were or could be treated as `Two Wheeled Tractors’ or that the same were in any way designed for pulling and driving or for use as power source for other operations or as a driver vehicle with a trailer as alleged.
6. The show cause notice dated 5-1-1995 was scheduled for hearing on 5-5-1995 along with another appeal filed by M/s. G.N.B. Credit Pvt. Ltd. The respondent, namely, M/s. Nightingale Engineering Industries Pvt. Ltd. were represented by S/Shri S.K. Bagaria and Hasmukh Kundalia, Advocates. It was submitted that the demand is barred by time. That the order of the Additional Collector was a speaking order. On merit the case is identical to that of M/s. G.N.B. Credit Pvt. Ltd. for which detailed submissions for this case as well and furnished a paper Book containing the copies of relevant certificate and documents.
7. I have gone through the case records and have considered carefully the points put forward by the Deptt. and the points convassed by the respondent. However, before I advert to the issue I would like to record the irregular way in which the Deptt. has proceeded in the matter. After filing the appeal on 24-6-1994 on the basis of review order passed under Section 129D(2) of the Customs Act 1962 on 24-5-1994, a show cause notice was issued by the Deptt. on 2-9-1994 against the same consignment and the said show cause notice was adjudicated vide order No. 9/95, dated 27-1-1995.
8. In so far as the appeal filed before me is concerned, the basic question involved here is whether the Power Tillers imported by the respondent are classifiable under Tariff Heading 84.32 as claimed by the respondent or under Tariff Heading 87.01 as contended in the appeal filed on the basis of review order of the Collector of Customs. In this connection I would observe that an identical issue has been decided by me in the matter of appeal filed by M/s. G.N.B. Credit Pvt. Ltd., Todi Mansion P-15, India Exchange Place, Calcutta - 700 073 vide Order-in-Appeal No. 281/95, dated 23-5-1995. I feel the same order is applicable to this matter. The findings of that order are reproduced below :
9. “This is a case of classification dispute and I have to determine whether the imported goods are classifiable as Power Tiller under Heading 84.32 or as Tractor under Heading 87.01.
10. The appellants in their lengthy arguments have confidently claimed the imported goods as Power Tiller, assessable under Heading 84.32 and they have furnished the following documents in support of their claim and contention :-
(i) Certificate of Bidhan Chandra Krishi Visva Vidyalaya;
(ii) Test Code of power tiller laid down by ISI;
(iii) Indian Trade Classification published by the Govt. of India;
(iv) Approval of Govt. Undertakings;
(v) Order placed, certificates given and approvals granted by various Cooperative Societies, Banks, Krishi Unnanyan Samities, etc.;
(vi) Evaluation report of the said Power Tiller by Major (Retd.) S.C. Ghosh;
(vii) Certificate of University of Agricultural Sciences, Bangalore;
(viii) Certificate of Rajendra Agricultural University, Deptt. of Farm Machinery;
(ix) Invoice of the Indian manufacturers of similar Power Tiller under Rules 52A and 173 of the Central Excise Rules, 1944 to show that the same are classified by the Central Excise authority in India under sub-heading No. 8432.00;
(x) Board’s circular dated 6-3-1990 bearing file No. 99/22/89-CX. 3;
(xi) Hong-kong Imports & Exports Classificattion List; and
(xii) Case decision reported at 1982(09)LCX0009 Eq 1983 (012) ELT 0329 (Del.).
11. On the other hand, the adjudicating authority vide his present order, has confirmed the assessment under Heading 87.01 on the grounds that the imported item is nothing but Tractor in terms of Chapter Note of 87. He has also relied upon the earlier decision taken in the case of M/s. Bengal Tools wherein also, similar order was passed. According to the adjudicating authority, the goods are correctly assessable under Heading 87-01 as per the wording of the statute. In his final analysis, the adjudicating authority has observed that the subject equipment is to be classified under two headings - tractor portion will fall under the Heading 87.01 and the agricultural equipment/implement will fall under Heading 84.32. In the opinion of the adjudicating authority, the tractor portion and agricultural equipment/implements are detachable and not in-built. However, the adjudicating authority in his order has clearly observed, “the wording of the above notification is Power Tiller falling under Heading 84.32. It is not disputed that the Power Tiller falls under Heading 84.32. Only those Power Tillers where both the tractive unit and the interchangeable agricultural implements make an integral unit and the agricultural equipments are self-propelled, fall under Heading 84.32. In the instant case, the tractive force and the interchangeable agricultural implements do not make an integral unit and as such implements are not self-propelled and hence, its classification is beyond the scope and purview of the Heading 84.32.
12. I observe that the impugned order was passed in terms of the order dated 21-3-1994 passed by the Hon’ble Mrs. Justice Ruma Pal wherein Her Lordship gave a categorical direction to the department as well as to the petitioner, i.e., the appellants. One of the vital directions was that “the Addl. Collector of Customs Mr. C. Vardarajan who according to the petitioners, already had occasion to determine the nature of the machines will consider whether the machines in question are covered by his order dated 2-8-1993 and are classifiable under 84.32". From the contents of the order, it is seen that the adjudicating authority passed an order dated 2-8-1993 determining the nature and classification of the imported machines. But in the present order, it is surprisingly noticed that he has not mentioned anything about his earlier order dated 2-8-1993 passed on similar goods. The appellant has put tremendous emphasis on the earlier order dated 2-8-1993 passed by the adjudicating authority and they have also stated that the items in question involved in the present appeal are similar to the goods which were assessed under Heading 84.32 in terms of the order of the Addl Collector of Customs dated 2-8-1993.
13. From the appeal petition and from the case records, I find that the department was assessing the imported article as Power Tiller under 84.32 extending the benefit of Notification 63/93-Cus. and the present bill of entry was also assessed accordingly and the duty was paid by the appellants. Officials of the DRI, Eastern Zone, intercepted the goods at Docks and seized the same under Section 110 of the Customs Act, 1962 on the ground that the goods were correctly assessable under Heading 87.01. It is surprising how the DRI could question the assessment done without assigning proper reasons. I also find that the Addl. Collector of Customs granted personal hearing to the DRI officers and to the appellants separately at different times and he did not disclose the contention and charges framed by the DRI to the appellants. As a result, the appellants could not get the chance to refute the charges framed by the DRI officers. I agree with the appellants that this is nothing but violation of the principles of natural justice which can vitiate the order passed by the adjudicating authority.
14. I feel that the identity of an article is associated with its primary function. It is only logical that it should be so. When consumer buys an article, he buys it because it performs a specific function for him. There is an association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identifies it in his mind. The Tribunal in a series of cases have noted that the function of an article is the most important criterion for determining the essential character of the article. In the instant case, I feel that proper identification of the imported goods had not been done. The Addl. Collector of Customs has laid emphasis on the Notes of Chapter 87 which reads as “for the purpose of this chapter, Tractors means vehicles constructed essentially for hauling or pushing another vehicle, appliance or load,. whether or not they contain subsidiary provision for the transport in connection with the main use of the tractor, tools, seeds, fertilizers or other goods”. He also relied on the Explanatory Notes to the Harmonised Commodity Description and Coding System for concluding that the items imported are nothing but Tractor and correctly assessable under Heading 87.01. From the catalogue and technical write-up, I find that the nature and function of the goods imported are as follows :
(a) It consists of a diesel engine, two large wheels, a rotavator with shaft and blade.
(b) It has got a tracting mechanism inbuilt with the help of coupling in the tilling mechanism.
(c) The power generated by the engine is transmitted to the rotavator through gear box.
(d) Gear itself is a specially designed one and its one portion is in the gear box of the machine frame and the other portion is in the shaft of the rotavator.
15. On receiving the power, rotavator starts rotating and performs the job of tilling the soil. I do not find that the item imported can be identified or treated a Tractor in terms of Note 2 of Chapter 87 as observed by the Addl. Collector of Customs because the machine in question has not been constructed essentially for hauling or pushing another vehicle, appliance or load.
16. From the above findings, it has been established that the imported machinery is not `Tractor’ in terms of statutory definition in Chapter 87. Then what is the identification of the imported machine? Here I would like to refer to the judgment of the Hon’ble Justice Sabyasachi Mukherjee and the Hon’ble Justice Ranganathan in the case of Krishna Carbon Paper Co. reported in 1988(09)LCX0051 Eq 1988 (037) ELT 0480 (S.C.). Their Lordships held that where no definition is provided in the statute itself for ascertaining the correct meaning of a fiscal entry, reference to a dictionary is not always safe. The correct guide, it appears in such a case is the context and the trade meaning. The trade meaning is one which is prevalent in that particular trade where that goods is known or traded. In the case of Collector of Customs, Bombay v. Swastik Woollen (P) Ltd. and Others, reported in 1988(08)LCX0070 Eq 1988 (037) ELT 0474 (S.C.) = 1988 (018) ECR 0373 (S.C.) the Supreme Court held categorically that in absence of statutory definition for an article, its connotation in trade parlance is the acceptable interpretation.
17. In this case, I find that the items in question are advertised in daily newspaper as “Power Tiller” by different private organisations. Even one Govt. Undertaking, a Co-operative Society of Bangalore has advertised similar goods as Power Tiller in the newspaper. The appellants have furnished the order placed by the Govt. Undertaking where the goods have been described as Power Tiller. The appellants have also submitted certificates of different Universities of Agriculture, Department of Farm Machinery wherein the imported items have been identified as Power Tiller and not Tractor. I think all these tests are quite enough for any fact-finding authority to come to the conclusion that the imported goods are Power Tiller and not `Tractor’.
18. The adjudicating authority in his order admitted that wording of above Notification (63/93-Cus.) is Power Tiller falling under Heading 84.32. It is not disputed that Power Tiller falls under Heading 84.32. Only those Power Tillers where both the tractive unit and the interchangeable agricultural implements make an integral unit and the agricultural equipments are self-propelled, fall under Heading 84.32. The above-mentioned observation of Addl. Collector of Customs is smashed in self-contradiction and the same is neither backed by the statutory definition nor by trade parlance. It is not understood how “the interchangeable agricultural implements” can be in-built or integrated with the tractive unit. His own observation cannot be applied for taxing purpose. Machinery expert of the department at the time of re-examination of the goods did not dispute that the goods are not Power Tiller. His observation was that the tilling unit can be detached from the tractive unit and it was not in-built. I fail to understand his analogy regarding the word `in built’. In modern technology, individual parts of machinery are generally integrated by screw or coupling, like in the present case. It cannot be in-built by `Welding’ because there should be provision for repairing each and every part after opening the threaded screw. This is not all in this case. Power is transmitted to the tilling unit through shaft and small gear and if the tilling unit is detached from the power unit, the gear will be exposed and the gear oil will come out. In that case, the power unit cannot run for a long time.
19. I have gone through the evaluation reports submitted by the appellants and I have also looked into the certificates given by different Govt. approved agricultural universities. I hold that their certificates are more acceptable to the fact-finding authority since they are having expert knowledge regar- ding the subject article, which is lacking in the departmental expert, I find that the adjudicating authority has surprisingly avoided the arguments advanced by the appellants. He has neither discussed those arguments nor assigned any reasons to refute those arguments. He has also not discussed regarding the nature of Power Tiller. He has come to the conclusion from his own understanding and on the basis of report given by officials of the DRI. It is already decided by the [Delhi] High Court, reported in 1982(09)LCX0009 Eq 1983 (012) ELT 0329 (Del.) that “Power Tiller is not Tractor and goods imported should not be classified on the basis of publicity stunts. The manufacturer may call it as tiller- cum-tractor or walking tractor. But the Assessing authority should not go by mere publicity alone. At the time of assessment, the proper officer should try to identify the goods by its essential character and function. I have already discussed in earlier paragraphs that in absence of statutory definition, the connotation in trade parlance is the acceptable interpretation. It is also so decided by the Hon’ble Supreme Court (mentioned supra). In the present case, the adjudicating authority has not gone into the connotation in trade parlance and misguided himself by coming to a conclusion on the basis of his own understanding.
20. I also find that the appellants had furnished several documents, including certificates from Govt. approved organisations and universities but the Additional Collector of Customs has rejected all those documents and evidences without assigning any reason. The Addl. Collector of Customs has relied mainly on the Explanatory Note to the HSN. It is a well settled fact that the Explanatory Note to the HSN is not a statute and accordingly, it has no force in classification matter. In terms of the principles of interpretation of statute, when the imported goods are outside the ambit of Note 2 of Chapter 87 then the lower authority should have gone to try the test of commercial or trade parlance to identify the goods and to classify accordingly. I also find that the lower authority has not discussed regarding the evidence submitted by the appellants proving that the Central Excise Authority are regularly assessing similar machine under Tariff Heading 84.32. The adjudicating authority even did not take pain to verify the matter from the Central Excise Department. As both Customs Tariff and Central Excise Tariff have been framed on the structure of HSN classification of a particular identifiable commodity cannot differ. When the department is refusing to accept the description and classification of the goods as evidenced by the invoice and the bill of entry, then the burden lies on the department to establish that the goods are different (relied upon the case of CC v. SS Enterprises reported in 1994(08)LCX0098 Eq 1994 (074) ELT 0794 (SC).
21. The adjudicating authority could not dispute with evidence the following facts :-
(i) The appellant has imported the goods declaring the same as Power Tiller and the same was along with rotavator.
(ii) The appellant has always sold the said goods as Power Tiller with rotavator.
(iii) No other equipment or attachment has either been imported by the appellant or found in their possession or sold by them.
(iv) There is no evidence that any of the buyers was using the said Power Tiller with any other attachment or equipment supplied by the appellants.
(v) No other attachment or equipment was actually fitted to the machine imported by the appellant to ascertain as to whether there is any possibility of any such fitment.
22. The Addl. Collector of Customs has not examined the following points before concluding that the imported item is a Tractor :-
(a) Whether the said Power Tiller has got any Power Take off.
(b) Whether there is any possibility of power being transmitted to any other attachment or equipment and if so, how and by which process.
(c) When one portion of the gear is in roto shaft and in that case if the roto tiller along with the shaft is removed, how any other portion will at all be in functional position.
(d) What percentage of power goes to the rotavator and what percentage to the wheel
(e) Whether the treating unit is in-built in tilling mechanism as was found by the Customs Authorities themselves during the examination conducted on 13-4-1994.
(f) Whether the said machine can be said to be essentially designed for hauling and pushing another vehicle, appliance or load and if so, why and for what reason and as to what are the relevant technical features of the machine in this regard.
23. All the above-mentioned questions clearly answer that the imported machine is not a Tractor but a Power Tiller in common or trade parlance and as per certificates given by several competent authorities. I hold that the department cannot assess the goods under heading of their choice after rejecting another classification claimed by the importer without giving any cogent reason for the same. This method of classification of goods has been depreciated in several rulings and now it is well settled that the task of classifying the goods has to be done after proper investigation and after finding out the manner in which the goods are understood in the trade by the people who deal with them. Moreover from the records it is clear to me that earlier the department was classifying the subject goods under Heading 84.32 and Addl. Collector of Customs had given order in file for that assessment. Although there is no estoppel in revenue matter but department cannot change the classification all of a sudden without citing fresh facts.
It is decided by the Tribunal reported in 1983(12)LCX0048 Eq 1984 (015) ELT 0430 (Tri.) that Customs authorities should not in absence of fresh facts brought to their notice, contrary to judicial decision or change in law, arbitrarily change a classification in respect of any article or goods. In this case the adjudicating authority has changed the classification arbitrarily without assigning any cogent reason or citing any fresh fact."
24. In view of the foregoing findings, the classification of Power Tiller imported by the respondents will be under Tariff Heading 84.32 and not under 87.01. Consequently, the order, dated 30th July, 1993 passed by the Addl. Collector of Customs is upheld and the departmental appeal is rejected. The cause shown to the show cause notice, dated 5-1-1995 issued under Section 128A(3) of the Customs Act, 1962 and all submissions in that connection by the respondents are accordingly accepted.
Equivalent 1995 (79) ELT 339 (Coll. Appl.)