1996(04)LCX0053

BEFORE THE COMMISSIONER OF CUSTOMS & CENTRAL EXCISE (APPEALS), MADRAS

Shri A.K. Raha

IN RE : SPIC LTD.

Order-in-Appeal No. M. Cus.701/96, dated 17-4-1996

Advocated By : Mrs. Komala Chowdhury, Consultant, for the Appellant.

None, for the Respondent.

[Order]. - This appeal is against the Order No. S45/EPG/100/94 Gr. 5A passed by Asstt. Commissioner (Gr. 5A), Custom House, Madras 1.

2. The present appellant M/s. Southern Petrochemical Industries Corporation Ltd., Madras had imported one vibrating screen machine, two vibrating feeder machines, two crsuher machines and spares under EPCG scheme. They requested that the machineries originally assessed under concessional rate of duty.

3. The Lower Authority had ordered that the vibrating machine, crushing machines, feeding machines be classified under sub-heading 8479.89 and be assessable to duty at the appropriate rate. The spares imported for this machinery shall be assessable on merit under appropriate heading and rate of duty. Being aggrieved by the above order the appellant has filed this appeal with facts and grounds of the appeal and requested for personal hearing.

4. It is submitted by Mrs. Komala Chowdhury, Consultant that in the instant case, three machines have been imported by the appellant viz, Vibrating Screening Machine and Vibrating Feeder Machine and Crusher Machine. It is the case of the appellant that Vibrating Screening Machine and Crusher Machine are classifiable under sub-heading 8474.10 and sub-heading 8474.20 respectively while Vibrating Feeder Machine is classifiable under sub-heading 8428.39.

5. The functioning of the machines has been broadly described during the personal hearing and a detailed note has already been produced in this regard.

6. In sum, it is pleaded that the distinction made by the lower authority between mineral substance and mineral product is superficial as the tariff does not warrant any such distinction. In support, a reference has been made to Section V which offers a general Heading of mineral products. It is submitted that under Section V, there are three chapters and the relevant chapter in the present context is Chapter 25 which covers salt. According to the submissions made, it was not correct on the part of the lower authority to treat salt as a mineral product, distinctive from mineral substance, as Chapter 25 does not [make] any such distinction. Merely because Chapter 25 is covered by Section V which has a general title viz., “Mineral Products”, it should not be concluded that all products covered by the said Chapter are only mineral products and not mineral substances, my attention is specially drawn to Heading 25.30 which covers ‘mineral substances not elsewhere specified or included’. From the very expression ‘not elsewhere specified or included’, the learned Counsel has pleaded that it can be reasonably inferred that other preceding Heading also cover mineral substance as otherwise the expression ‘not elsewhere specified’ would not have been relevant. Besides, it is also submitted that not a single Heading under Chapter 25 refers ‘Products’.

7. A reference has also been made to the Explanatory Notes in Page 1305 under Heading 84.74. The relevant extracts reads as under :-

“This heading covers :-

(1) Machinery of a kind used, mainly in the extractive industries, for the treatment (sorting, screening, separating, washing, crushing, grinding, mixing or kneading) of solid mineral products (in general the products of Section V of the Nomenclature) such as earth (including earth colours), clay, stone, ores, mineral fuels, mineral fertilisers, slag cement or concrete."

8. It is submitted that it is evident from the above Explanatory Notes that the operations such as sorting, screening, separating, washing, crushing, etc. are not limited to mineral substances only, as was presumed by the lower authority by reading the general description against Heading 84.74. Those operations also pertain to mineral products, as clearly stated in the abovesaid, Explanatory Notes. In sum and substance, therefore, a point has been made that no distinction should be made between mineral substances and mineral products in so far as classification of the impugned machineries is concerned. It is also urged by the learned Counsel that salt can be treated as both mineral substance and mineral product. The learned Counsel has also referred to the meaning assigned to the word `mineral’ in Tata McGraw Hill Encyclopaedia of Science and Technology which reads as under :-

“a naturally occurring substance with a characteristic chemical composition expressed by a chemical formula”. Further it is stated that “minerals usually have both a chemical name and a mineral name. Thus, lead sulphide occurring in nature is called galena and sodium chloride is called halite”.

It is, thus, the case of the appellant that sodium chloride falls in the category of mineral substance only, as per the abovesaid Encyclopaedia.

9. As regards classification of Vibrating Feeder Machine, it is submitted that such Vibrating Feeder Machine was correctly classifiable under sub-heading 8428.30 as Conveyor and the main function of the machine is to convey salt to crusher. It has been described in the invoice as Vibrating Feeder Machine designed to feed inputs viz., salt into the crusher machine. Such type of conveyors, according to the submissions made, is squarely covered by Heading 84.28. It is submitted that all three machines in question were covered by C.N. 59/87. A reference in this regard has been made to Sl. No. 20 and Sl. No. 46 of the Table in the said Notification. It is also pleaded that even assuming that the goods were classifiable under Heading 84.79, as held by the lower authority, the impugned goods were still eligible for the concessions under the abvoesaid Notification, as the same were to be used for the production of a commodity viz, caustic soda. In this regard, a reference has been made to Sl. No. 50 of the Table in the Notification. Last but not the least, it has also been submitted by the learned Counsel that Rule 1 of the General Rules of Interpretation of the Customs Tariff provides as follows :-

“The titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the heading and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require”.

10. It is urged by the learned Counsel that the title of the Section should not be relied upon to decide classification of a product or machine. The classification, on the other hand, shall be determined according to the terms of the Heading and the Heading relating to the Chapter Notes. It is the case of the appellant that if one does not refer to the title of Section V, there is no warrant to treat salt as only mineral product and distinct from mineral substance as the tariff, as such, has not made any such distinction between mineral product and mineral substance. In view of the above reasons, it has been urged that the Order-in-Original may be set aside and the classification together with assessment may be settled on the above line, as submitted by the appellant.

F I N D I N G S

11. I have carefully considered the written and oral submissions made by the appellant through their Counsel, Smt. Komala Choudhury.

12. The short questions that arise for determination in this case are as under :-

(i) Whether Vibrating Screening Machine was classifiable under sub-heading 8474.10 read with C.N. 59/87 (Sl. No. 46 of the table) as contended by the appellant or under sub-heading 8479.89, as held by the lower authority.

(ii) Whether Vibrating Feeder Machine were classifiable under sub-heading 8428.39 read with C.N. 59/87 (Sl. No. 20 of the table), as contended by the appellant or sub-heading 8479.89, as held by the lower authority.

(iii) Whether the Crusher Machines were classifiable under sub-heading 8474.20 (Sl. No. 46 of the table) read with C.N. 59/87, as contended by the appellant or under sub-heading 8479.89, as held by the lower authority.

(iv) Whether the spares for the Crusher Machine were classifiable under sub-heading 8479.90, as contended by the appellant or on merits, as held by the lower authority.

(v) Assuming that the goods were correctly classifiable under sub-heading 8479.89, as held by the lower authority, whether the appellant were eligible for the concessions under C.N. 59/87 with reference to Sl. No. 50 of the table, as the machineries, according to them, were to be used for the production of a commidity viz., caustic soda.

13. Let us take up the last issue first. It has been held by the lower authority that the impugned machineries not being covered by any other heading or sub-heading or Chapter 84, were correctly classifiable under the residuary heading of 84.79 (sub-heading 8479.89).

14. It has been pleaded by the learned Counsel that even assuming but not admitting that the impugned machineries were classifiable under the aforesaid residuary Heading under Chapter 84 which covers ‘machines and mechanical appliances having individual functions not specified or included elsewhere in this Chapter’, the goods were still eligible for the concessions under C.N. 59/87, as amended, with reference to Sl. No. 50 of the Table appended in the said Notification. Said Sl. No. 50 covered goods falling under Heading 84.79 and read as under :-

`goods falling under sub-heading Nos. 8479.20, 8479.30, 8479.40 sub-heading No. 8479.81 excluding wire coil winders; and machinery used for the production of a commodity’. It is the case of the appellant that the impugned three machineries were to be used for production of caustic soda which is a commodity in the Customs Tariff. Hence, the aforesaid machineries were clearly eligible for the concessions under the C.N. 59/87. On perusal of the Notification under reference as cited above, I am inclined to agree with the sub- missions made by the learned Counsel. There can not be any dispute as to the fact that the machineries in question., viz, Vibrating Screening Machine, Vibrating Feeder Machines and Crusher Machines were imported for processing salt in order to manufacture caustic soda which is, undoubtedly, covered in the Customs Tariff as also in the Central Excise Tariff. Thus, it is crystal clear that the machineries in question were eligible for the concessions under the aforesaid Notification. However, the same thing can not be said about the spares which, according to the appellant, were classifiable under sub-heading 8474.90. Spares falling under the said sub-heading have been specifically excluded from the scope of the said Notification at Sl. No. 46. Sl. No. 50 also covers machinery used for the production of a commodity and not the spares for the machinery. Thus, the issue regarding the benefit of Notification under C.N. 59/87 in so far as the impugned three machineries are concerned can be taken as settled in favour of the appellant provided the classification of the machineries under sub-heading 8474.89, as decided by the lower authority is taken as correct.

15. Working in the reverse order, let us now take up the issue of classification of the spares.

16. It is the case of the appellant that the spares in question were relatable to the Crusher Machines, and, therefore, the same ought to be classifiable under sub-heading 8474.90 as the Crusher Machines were correctly classifiable under sub-heading 8474.20. Before we come to any conclusion in this regard, we have to necessarily examine the issue pertaining to the classification of Crusher Machines and together with that, the other two machines as well, viz., Vibrating Screening Machines and Vibrating Feeder Machines.

17. As regards classification of the Crusher Machines, Vibrating Screening Machine and Vibrating Feeder Machines, it has been held by the lower authority that such machines were not classifiable under Heading 84.74 as the operations involved in those machines pertain to salt which is a mineral product and not mineral substance. According to the lower authority, sub-heading 84.74 refers to the following two types of machines :-

18. Since the operation of the machineries in question as per the Tariff Heading/sub-heading were relatable to Mineral substance only and not Mineral product, whereas the impugned machineries were imported for the processing of salt which is a Mineral product, the lower authority has held that the impugned machineries were not covered by Heading 84.74 or any of the sub-headings therein. The question that essentially falls to be answered in this context is whether salt can be taken as Mineral substance for the purpose of classification of the impugned machineries under Heading 84.74. Conversely, the question may arise whether the impugned machineries imported for the purpose of processing mineral product can also be taken as covered by Heading 84.74 by virtue of the Explanatory Notes in HSN at page 1305 under Heading 84.74.

19. It is the case of the appellant that a distinction ought to be made betwen Vibrating Screening Machine and Crushing Machine on one hand and Vibrating Feeder Machines on the other hand. It is their case that former two machines were correctly classifiable under Heading 84.74 (sub-heading 8474.10 and sub-heading 8474.20 respectively) while Vibrating Feeder Machine was correctly classifiable under sub-heading 8428.39 as a conveyor. It is also their case that all three machineries were squarely covered by C.N. 59/87 (Sl. No. 46 and Sl. No. 20 of the table).

20. Let us now take up the issue of classification of Vibrating Screening machines and Crushing machine. Both the machines in question were, undisputedly, imported for processing salt. Heading 84.74 reads as under :-

“Machinery for sorting, screening, separating, washing, crushing, grinding, mixing or kneading earth, clay, stone, ores or other Mineral substances in solid (including powder or paste) form;.........”

21. It is the case of the Department that salt is a Mineral product and not substance and in coming to that conclusion, reference has been made to Chapter 25 (Heading 25.01). It has been pointed out that Chapter 25 under Section V has a general title - ‘Mineral Product’. Therefore, presumption of the lower authority is that all the goods figuring under Section V (Chapters 25 to 27) were necessarily Mineral products and not Mineral substances. As against the above contention, it has been urged by Smt. Choudhury, learned Consultant, that the distinction made by the lower authority between Mineral substances and Mineral product is superficial as the tariff does not make any such distinction. In support, a reference has been invited to Heading 25.30 which covers `Mineral substances not elsewhere specified or included’. Thus, it is evident that Mineral substances were also covered by Chapter 25 falling under Section V. That apart, the general description against Heading 25.30 also suggests that other Heading that precede Heading 25.30 also cover Mineral substances as otherwise the expression `not elsewhere specified’ would not have been relevant. On a careful perusal of the Customs Tariff as also Central Excise Tariff of 1993-94, it is seen that in Central Excise Tariff, Mineral substances, not elsewhere speci- fied, have been covered under Heading 25.05 and sub-headings under the said Heading specifically cover the following Mineral substances that have been expressly covered by various Headings under Chapter 25 in the Customs Tariff :

22. From the above table, it is evident that several items appearing under Chapter 25 in Customs Tariff and preceding Heading 25.30 have been expressly described in the Central Excise Tariff as `Mineral substances not elsewhere specified’. Moreover, the term `Mineral product’ has not been used in any of the Headings in Chapter 25 and it appears only as a title of Section V. Thus, it will be reasonable to infer, from the above facts, that the Tariff has not made any distinction between Mineral substances and Mineral products. It would, therefore, not be correct to make a distinction between the above two words. In common parlance, though, Mineral substances would mean a substance occuring in nature, obviously, in the context of Customs and Central Excise Tariff, such Mineral substances are to be taken as products when these have been processed without losing its basic character. A reference was made to the Chemical Examiner, GR. I, in the Custom House and the following opinion was communicated :

`Sodium Chloride commonly known as salt, which is a mineral substance when associated with impurities may be considered as a mineral product. Hence, any mineral substance associated with impurities which requires to undergo processes like, separating, crushing, powdering, conveying, etc., is called as a mineral product. Hence, there is no difference between mineral substance and mineral product’.

23. It is pertinent to mention here that the machines imported by the appellant were for screening and crushing salt as also feeding salt into the Crusher. Before the above processes are undertaken, technically, the salt, as a raw-material, can be described as Mineral substance. However, the distinction between the salt as mineral product and the salt as mineral substance is superficial and from the point of view of Customs and Central Excise Tariff, such distinction is totally irrelevant.

24. It has been pointed out by the learned Counsel that at page 1305 of the Harmonised System of Nomenclature under Heading 84.74, it is stated as under :

“This Heading covers

1. Machinery of a kind used mainly in the extractive industries for the treatment - (Sorting, screening, separating, washing, crushing, grinding, mixing or kneading) of solid Mineral Products (in general the products of Section V of the Nomenclature) such as earth (including earth colours), clay, stone, ores, mineral fuels, mineral fertilizers, slag cement or cement concrete".

25. It is submitted by the learned Counsel that the above Explanatory Notes makes it clear that the operation such as sorting, screening, separating, washing and crushing, etc. are not limited to Mineral substances only, as was presumed by the lower authority by reading the general description against the Heading 84.74, but to Mineral Products as well. On perusal of the Explanatory Notes under reference, it is seen that the submissions made by the learned Counsel are factually correct. Though the description against the Heading 84.74 appears to relate the operations such as screening, crushing, etc. to Mineral substances, the Explanatory Notes in HSN under Heading 84.74 clearly relate those operations to Mineral products. It is, thus, further evident that HSN has not made any distinction between Mineral substances and Mineral products, in the above context. In any case, according to the opinion of the Chemical Examiner, there is no difference between Mineral substance and Mineral product in so far as Sodium Chloride is concerned. I am, therefore, inclined to think that the impugned machineries viz., Vibrating Screening Machines and Crushing Machines were correctly classifiable under sub-heading 8474.10 and 8474.20 respectively read with C.N. 59/87 (Sl. No. 46 of the table).

26. As regards classification of Vibrating Feeder Machine, it is the case of the appellant that the impugned machine was correctly classifiable under 8428.30 as conveyor as the main function of the machine was to convey salt to Crusher. It has also been described in the invoice as Vibrating Feeder machines designed to feed salt into the Crusher Machine. From the write-up and the drawings produced, it is evident that the impugned machine was nothing but a conveyor and, therefore, covered by Heading 84.28. Sl. No. 20 of the table in Customs Notification 59/87 covered goods falling under all the sub-headings of Heading 84.28. Therefore, the Vibrating Feeder machine was eligible for the benefit of the aforesaid Notification.

27. As regards the classification of spares of the Crusher Machines which were correctly classifiable under sub-heading 8474.20, there is no doubt that parts of those machines would be covered by sub-heading 8474.90. Thus, there is no justification in classifying those spares on merits.

28. From the above facts and circumstances of the case, it is clear that there is no justification in classifying the impugned three machineries under the residuary sub-heading 8479.89, when those machineries were covered by other sub-headings under Chapter 84. Similarly, the spares were correctly classifiable under sub-heading 8474.90 and not on merits, as held by the lower authority.

O R D E R

29. For the reasons stated above, the Order-in-Original is set aside and the appeal is allowed. The Vibrating Screening Machine and Crusher Machine be assessed to duty under sub-heading 8474.10 and 8474.20 respectively read with C.N. 59/87. Vibrating Feeder Machines be assessed to duty under sub-heading 8428.30 read with C.N. 59/87. The spares be assessed to duty under sub-heading 8474.90.

Equivalent 1997 (91) ELT 223 (Commr. Appl.)