2016(03)LCX0042

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

S/Shri R. Periasami, Member (T) and P.K. Choudhary, Member (J)

KARNATAKA POWER CORPN. LTD.

Versus

COMMR. OF CUS., CHENNAI

Final Order No. 40409/2016, dated 2-3-2016 in Appeal No. C/338/2004-DB

Cases Quoted -

Collector v. Chitra Indus. - 1996(10)LCX0122 Eq 1997 (092) ELT 0571 (Tribunal) - Referred [Para 3]
Commissioner v. Jyoti Electrical Motor Ltd. - 1996(09)LCX0255 Eq 2003 (162) ELT 1117 (Tribunal) - Referred [Para 3]
Sharp Industries v. Commissioner - 1999(01)LCX0164 Eq 1999 (110) ELT 0816 (Tribunal) - Relied on [Paras 3, 6]
Windel Submersible Pvt. Ltd. v. Union of India - 1988(09)LCX0042 Eq 1992 (061) ELT 0421 (Guj.) - Relied on [Paras 3,4, 6]

Advocated By -

Shri Karthik Ranganathan, Advocate, for the
Appellant.
Shri K.C. ]ena, ADC (AR),for the Respondent.

[Order per : R. Periasami, Member (T)]. -

This appeal is restored as per the direction of the Hon'ble High Court order dated 11-6-2015, in C.M.A. No. 1124/2015 [2015(06)LCX0027 Eq 2015 (323) ELT 0303 (Mad.)], wherein the Hon'ble High Court set aside the Final Order No. 42/2011, dated 12-1-2011 of this Tribunal, where the appeal was dismissed for want of clearance from the Committee on Disputes. Accordingly, the appeal is taken up for hearing.


2. The brief facts of the case are that the appellants are a State PSU, imported parts of Hydro Electric Generator i.e., 'Epoxy insulated single turn half coils with accessories and Epoxy insulated single turn half coils wave stator windings etc' vide Bills of Entry No. HD0601030, dated 25-8-1994 and HD555, dated 27-8-1994. The goods were assessed under 8544.11 and the appellant paid duty without protest. Subsequently, they filed the refund claim and claimed the classification under 8503. The Commissioner (Appeals) rejected the appeal. The same was upheld by CESTAT under Final Order No. 541-544/2000, dated 25-4-2000. The Hon'ble Supreme Court in their order dated 9-4-2002 in Civil Appeal No. 6582, 6583 and 6586/2000 set aside the orders and remanded the matter to the Assistant Commissioner to decide the original application dated 27-8-1994. The adjudicating authority in his de novo order held that the goods are rightly classifiable under 8544 and rejected the claim. The Commissioner (Appeals) in her order dated 30-4-2004 upheld the OIO and rejected the appeal. Hence, the present appeal.

3. The Ld. Advocate appearing on behalf of the appellant submits that the imported items are parts of 'hydro electric generators' and they have imported 'epoxy stator coil' in the year 1990 for functioning of the Hydro Electric Project of Sharavathi Power Generation Station. The impugned goods are parts of the generator and it is solely/principally designed for the generator and is classifiable under 8503 as part of generator. He drew attention to the catalogue, sketch diagrams and Section Note of Section (xvi) and submits that as per Section Note 2(b), covers parts suitable for use solely or principally with a particular kind of a machine or with a number of machines of the same heading. He also drew our attention to the letter dated 8-9-1995 issued by the supplier M/s. General Electric Canada INC, wherein the supplier has clearly certified that the supply of epoxy coils and accessories are specially made for hydro electric generating units at Sharavathy Power Generating station and certified that these coils are to be used only on the above generator sets and not elsewhere. He submits that the classification 8544 is only for insulating materials either wire/cables and other insulated electric conductors etc. He submits that classification 8503 specifically covers parts suitable for use solely or principally with the machines of Heading No. 85.01 or 85.02. He relies on the following case laws in support of his contention :
1. Sharp Industries v. CCE -1999(01)LCX0164 Eq 1999 (110) ELT 0816 (Tri.-Chen.)


2. CCE v. Jyoti Electrical Motor Ltd. - 1996(09)LCX0255 Eq 2003 (162) ELT 1117 (Tri.-Del.)

3. CCE v. Chitra Indus -1996(10)LCX0122 Eq 1997 (092) ELT 0571 (Tri.-Delhi)


4. Windel Submersible Pvt. Ltd. v. UOI -1988(09)LCX0042 Eq 1992 (061) ELT 0421 (Guj.)


4. On the other hand, the Ld. AR reiterated the findings of the adjudicating authority and appellate authority and vehemently opposes the appellant's submissions. He drew attention to the Bills of Entry where the appellants have declared that the items were epoxy insulated single turn half coils with accessories, which are rightly classified under 8544. He submits that the classification is determined by the provisions under chapter note and section note and under specific entry. He also submits that judgment of Hon'ble High Court of Gujarat relied on by the appellant is clearly distinguishable as what is imported in that case was stators.

5. After hearing both the sides we find that the short issue involved in this appeal is whether the impugned goods imported and cleared under the said Bills of Entry are classifiable under 8503 as parts of generators or under 8544 as insulated wire/cables as claimed by the Revenue. We find that the appellant is a State PSU imported these parts for use at Sharavathy Hydro Electric Power Generating Station project, which is not in dispute. On perusal of the Bills of Entry, literature, catalogue and schematic/sketch diagrams enclosed with the appeal paper book, we find that as per the invoice dated 30-5-1990 we find that the description at SI. No. 1 was described as epoxy insulated single turn half coils wave stator winding and SI. No. 2 were spares and accessories. On perusal of the copy of the original catalogue of both Hitachi, Japan and General Electric Canada INC., the goods have been described as under :-
"The Hitachi Hi-Mold Coil is a high quality insulation system employed in producing Class F high-voltage stator coils for rotating machines"
As per GE Canada, the goods have been described as "CGE advanced insulation system". From the above descriptions and literatures which is supported by the letter dated 8-9-1995 issued by GE, Canada INC, wherein the principal supplier has clearly certified that these spare epoxy coils and accessories are specially made for the generators at Sharavathy Power Generating Station and can be used only for the above generating units and not elsewhere. This confirms that the goods imported are epoxy stator coils solely/principally used for the generators classifiable under 8501. The lower authority in his order relied Section Note 2 of Section XVI, which is reproduced as under :-

"(a) parts which are goods included in any of the headings of Chapter 85 are in all < ises to be classified in their respective headings.

(b) Other parts, if suitable for use solely or principally with a particular kind of machine are to be classified with the machines of that kind.

(c) All other parts are to be classified in heading 85.03 or failing that, in
85.48."

The Commissioner (Appeals) relied Note 2(a) of Section Note and concluded that the parts which are goods included in any of the headings of Chapter 85 to be classifiable under respective headings. Whereas, the Note 2(b) stipulates the parts suitable for use solely or principally with a particular kind of machine are to be classified with the machines of that kind.


6. In our considered view that Note 2(b) is the relevant note suitable for the present case as the goods are not general parts or insulating materials as per the invoices and the catalogues it is established that these stators are particularly meant for generators only. The Hon'ble High Court of Gujarat in the case of Win-del Submersible Put. Ltd. v. UOI (supra) clearly settled the issue that 'rotors and stators used in monoblock pump which are suitable for electric motors are classifiable under 8503, which has been followed by the Tribunal in the case of Sharp Industries v. CCE (supra).

7. Accordingly, we hold that the goods imported under the Bills of Entries are epoxy stator coils solely designed for power generators for Hydro Power Project and rightly classifiable under 8503 and not under 8544. Accordingly, the impugned order is set aside and appeal is allowed with consequential relief.


8. Before parting we observe that this case pertains to 1990 and for 15 years it is moved to various appellate levels and this is the third round of litigation and wherein at the first round the dispute reached up to the Hon'ble Supreme Court and the Apex Court allowed their appeal and remanded to the Asst. Commissioner to decide the refund application. Considering the period of 15 years' time to reach the final stage and also considering the appellant is a State PSU, Karnataka Power Corporation Ltd., we expect the authorities below to settle their legitimate refund claim on receipt of this order.
(Order dictated and pronounced in the open Court)

Equivalent 2016 (337) ELT 0104 (Tri. - Chennai)