2002(09)LCX0196
IN THE CEGAT, SOUTH ZONAL BENCH, BANGALORE
S/Shri G.A. Brahma Deva, Member (J) and S.S. Sekhon, Member (T)
WILLIAM GOODACRE & SONS (I) LTD.
Versus
COMMR. OF CUS., COCHIN
Final Order No. 1178/2002, dated 6-9-2002 in Appeal No. C/1189/98
CASE CITED
William Goodacre & Sons (I) Ltd. v. Commissioner — 1997(05)LCX0099 Eq 1997 (094) ELT 0267 (Tribunal) — Referred [Para 3(a)
Advocated By : Shri A.K.J. Nambiar, Advocate, for the Appellant.
Shri L. Narasimha Murthy, JDR, for the Respondent.
[Order per : S.S. Sekhon, Member (T)]. - The issue in this appeal is classification of second hand dye vats imported by the appellant.
2. (a) The item imported and declared were 10 numbers second hand used machinery vide Bill of Entry No. 00157, dtd. 11-5-1990 as :-
(i) 3 Nos. Dye Vats complete with circulation + all equipments + fittings 1 No. Lab type Coir Test dyeing unit
(were classified under Heading 8451.40 read with Notification 59/87; Duty @ 35% + 45% + NIL CVD)
(ii) 5 Nos. Dye Vats complete without circulation + all equipments + fittings
1 No. Lab type sample dyeing vat for test dyeing and colour matching coir
[were classified under Heading 7326.90 read with Notification 85/90; Duty @ 155% + 45% + 15% + 5% (SED)]
After importation, the appellant contended that the six items at Sl. No. (ii) above should also merit classification under Heading 8451.40 read with Notification 59/87 and accordingly preferred a refund application for Rs. 2,83,155.20 towards excess duty paid.
(b) The refund claim preferred by the appellant was rejected, by the original authority on the ground that the six items in question were without circulation and hence general use machinery, not identifiable for use in any particular industry. The classification of the items under Heading 7326.90 was therefore upheld.
(c) On appeal, the Commissioner (Appeals), by Order-in-Appeal No. 406/91, dated 20-8-1991 allowed the appeal on finding that the Examination report of the customs authorities clearly showed that the Vats in question were fitted with various accessories, which are in the nature of equipment referred to under Heading 7309 of the HSN Explanatory Notes. It was also found that the Vats in question were clearly identifiable with use in the Coir industry and hence could not be considered as of general use.
(d) The department preferred an appeal against the above order before the CEGAT, vide Order No. 1120/97, dtd. 26-5-1997, the Hon’ble Tribunal found that while it was not open to the department to seek a re-classification under heading 7309, which was not originally canvassed before the lower authorities, the matter would have to be remanded to the Commissioner (Appeals) for giving specific reasons for classifying the goods under Heading 8451.40.
(e) In de novo proceedings the Commissioner (Appeals), vide Order-in-Appeal No. 9/98, dtd. 22-6-1998, took a new ground that the items in question were not machines as known in trade/technical parlance and hence the correct classification ought to have been under Heading 7309. However, since the CEGAT had not permitted an alternate classification, the classification was effected under 7326, which according to the Commissioner was more appropriate classification.
(f) This appeal is preferred against the afore-mentioned order in remand by the Commissioner (Appeals).
3. We have heard both sides and considered the matter and find :-
(a) The Tribunal’s order was a de novo adjudication on a limited issue, as can be seen from Para 4 of the order No. C/1120/97-B2, dtd. 26-5-97 [1997 (094) ELT 0269 (Tri.)] which reads as under :-
“4. As regards the claim made by the importer for classification under Heading 8451.40, we notice that the Collector (Appeals) was required to have considered the HSN notes on this Chapter which deals with the classification of Vat as well. In view of the Collector having not arrived at the finding to accept the classification under Heading 8451.40, we therefore, set aside the impugned order and remand the matter to the Commissioner (Appeals) for de novo adjudication on this limited issue. Thus the appeal is allowed by remand. The importers are at liberty to produce such evidence, as they deem proper to substantiate their claim. The Commissioner (Appeals) shall give them a personal hearing deciding the case.”
The Commissioner in the remand proceedings vide his order No. C28/AP/3/97-AU-Cus., dtd. 22-6-98 has not given any reasons that classification under Heading 8451.40 and has specifically held classification under 8451.40 is ruled out. This was not the mandate in the remand proceedings. The Commissioner has proceeded beyond the remand proceedings and his order of classifying the subject rules under import under Customs Tariff Heading No. 7326.90 cannot be upheld.
(b) We find that the question of components of machinery have been engaging the attention of the Customs assessing authorities from time to time. From the perusal of THE REPORT OF THE MACHINERY COMMITTEE, 1922, appointed by Government of India (Published in Indian Customs Tariff Guide, 13th Edition, Appendix) it is seen that the test to determine Machinery or and component with the single question was “Is this article adopted for use in the equipment of an industrial concern ?” Without any qualification by the further question; “is it also equally well adopted for other use ?” This answer to this question to our mind has been incorporated in Section XVI Note 4 of the Customs Tariff Act, 1975, which reads as under :-
“4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function.”
The entities under dispute are an import for use in COIR DYEING INDUSTRY and have to be used with the other entities classified under 8541.40. Applying single question test, prescribed by the Machinery Committee Report and reading it with Chapter Note 4, to the entities under import, we find that the same would get classified under 8451 since the HSN head notes under 8451 specifically provide that “many of the machines of this heading are nothing more than vats/tanks, or other containers fitted with simple mechanical features. These notes conclude with the following stipulations “to fall in the heading, the apparatus must have such mechanical features and must be clearly intended for treating textiles.” From the earlier order of the Commissioner, on record, we find that the Commissioner (Appeals) in that order had come to a very categorical finding that Import Licences specifically referred to Coir Products and Coir Yarn as the end product and the appellants request for Import Licence has been amended by the Coir Board. After recording this, the ld. Commissioner records “It is also seen from the technical literature available as part of the case refers that the imported vats has been specifically made for dyeing coir yarn and that the capacity per both is 200 Kgs of Coir Yarn per both.” Thereafter he concludes that the vats imported by the appellants were not of general purpose because of the fittings attached. We find that the Commissioner (Appeals) in the order impugned before us has merely gone by HSN notes and records that “neither on the trade parlance or technical terms such containers i.e. vats used in the dyeing industry with the abovesaid seven items could be called dyeing machines”. He has not recorded, what is the evidence available to derive the trade parlance material or other evidence, which has led him to these conclusions. We do not find any such material. On the contrary, need for Coir Industry Dyeing is on record. He has not given a finding on applicability or otherwise of Note 4 to Section XVI of the Tariff. We find that when it is unquestionably recommended by the Coir Board as ‘Coir Dyeing Machinery’ required by the appellants, then there is no reason to come to a conclusion that in commercial parlance and/or technical manner, the entity under import cannot be considered as Coir Dyeing Machinery or components thereof. In any case, we find no reasons to conclude that the vats have not been adopted for a specific industrial purpose viz., Coir dyeing in this case. The answer to the alternate question whether they could be used for any other purpose to our mind as held by the Machinery Committee report in 1922 is redundant. We would therefore uphold the classification under 8451.40.
(c) As between the Headings 7326.90 and 8551.40 [8451.40] (sic), the latter classification, based on .the Chapter and Section Notes and Rules of Interpretation viz. the following reasons has to be preferred for the reasons :-
Note 1 to Section XV (covering Chapter 73) clearly excludes Articles of Section XVI (Chapter 84) and Note 4 of the Chapter XVI makes it clear that the appropriate heading has to be 8451.40 Rule 3(c) of the Interpretation Rules would mandate a classification under 8451.40
4. In view of our findings, we would set aside the order and classify the entities under 8451.40 and order consequent relief, if any, as per law. Appeal disposed of accordingly.
Equivalent 2002 (146) ELT 130 (Tri. - Bang.)
Equivalent 2002 (053) RLT 1048