1997(06)LCX0022

IN THE CEGAT, SOUTH ZONAL BENCH, MADRAS

S/Shri V.P. Gulati, Vice President and T.P. Nambiar, Member (J)

TTG INDUSTRIES LIMITED

Versus

COMMISSIONER OF CUSTOMS, MADRAS

Order No. 1722/97, dated 26-6-1997 in Appeal No. C/R-44/97

CASE CITED

Ranadip Shipping & Transport v. Collector — 1989(03)LCX0029 Eq 1989 (041) ELT 0392 (Bom.) — Referred      [Para 3]

Advocated By : Shri M.S. Kumaraswamy, Consultant, for the Appellant.

 Shri S. Arulswamy, JDR, for the Respondent.

[Order per : V.P. Gulati, Vice President]. - The issue in the appeal relates to the classification of the goods which have been described in the invoice as a Crane having a capacity of 90 Tonnes. The learned lower appellate authority has held the goods to be classifiable under Tariff Heading 87.05 while the appellants seek the classification of the same under Tariff Heading 84.26. The two competing items are reproduced below for convenience of reference :

2. The learned Consultant for the appellants has pleaded that the crane imported by the appellants is special purpose crane having a telescopic boom for raising heavy loads to a high level. The appellants have imported this crane, he pleaded, for the installation of the Wind Mills which comprise of certain parts which have to be fixed at a great height. He has pleaded that the crane is mounted on a chassis which is specially designed for the crane and which has got 16 wheels. The movement provided by the tyres and the chassis is for the crane to be installed at specific places for raising the loads to the desired level for installation purposes. He has pleaded that the learned lower authority failed to take note of the fact that Tariff Heading 84.26 is specific for cranes and even the work trucks fitted with the crane are covered thereunder. He has pleaded that the learned lower authority mis-directed himself in interpreting the scope of the HSN Notes inasmuch as under the HSN the scope of the items which fall under the Tariff Heading 87.05 is only in respect of such of those which are ordinarily used either on the road or for movement of some of the vehicles which may get stranded or in the factories and work spots for lifting the loads from one place to the other. He has pleaded that the equipment in question is specially designed to function only as a crane and not as a lorry. Item 87.05, he has pleaded covers only lorries on which the cranes have been mounted. He has pleaded the appellants’ equipment i.e. the crane mounted on a chassis, it cannot be considered as a chassis of either of a lorry or a truck. He has pleaded that this position is also not controverted in the order of the learned lower authority. The learned lower authority, he has pleaded has only gone by the Chapter Note (2) to Chapter 84.26 as set out in the HSN wherein the following has been set out :

(2) Machines Mounted on automobile chassis or lorries

Certain lifting or handling machines (e.g., ordinary cranes, light breakdown cranes) are often mounted on what is in fact an essentially complete automobile chassis or lorry in that it comprises at least the following mechanical features; propelling engine, gear-box and controls for gear-changing, and steering and braking facilities. Such assemblies fall to be classified in Heading 87.05 as special purpose motor vehicles, whether the lifting or handling machine is simply mounted on the vehicle or forms an integral mechanical unit with it, unless they are vehicles designed essentially for transport purposes falling in Heading 87.04.

3. He has pleaded, a reading of this Note would show that the cranes covered thereunder are ordinary cranes and light break down cranes and the cranes of the capacity of 90 tonnes as imported would not fall under this heading. He has, therefore, urged that the Item 84.26 being specific for cranes would be more appropriate for the purpose of classification of these goods. In this connection he has also referred to the judgment of the Hon’ble Bombay High Court in the case of Ranadip Shipping & Transport v. CC, Bombay reported in 1989(03)LCX0029 Eq 1989 (041) ELT 0392 (Bom.) = 1989 (022) ECR 0275 (Bombay). This judgment, he has pleaded was rendered in the context of the earlier tariff which was based on BTN. He has pleaded, however, the ratio of this decision would be applicable to the facts of this case also as the scope of the Item 87 in the earlier tariff and the present tariff is similar. The Hon’ble High Court has analysed the position in the light of the submissions which are made. The relevant Paras 10 & 11 are reproduced below for convenience of reference :

“10. Shri Bharucha, in support of his submissions, that the popular meaning should be attached to the consignment, made a reference to a certain passage from Encyclopaedia Britannica and it may be advisable to re-produce the same. They are as follows :

“Materials — Handling Equipment

Materials-handling equipment may be classified in terms of the type of product handled, thus including machinery for bulk products in large continuous volumes; continuous processing based on industrial-parts movement; discontinuous processing of a wide variety of goods; and order filling of large varieties of goods.

A second classification relates to the mobility characteristics of the materials-handling equipment and includes both stationary and movable facilities.

A third classification, which identifies the type of equipment itself, includes wheeled carts, power and lift trucks, trailer trains, racks and pallets, bins and boxes, mono-rails and conveyors, containers, unit loads, and cranes and hoists.

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Power trucks.This equipment improves the productivity of labour by increasing both the speed and the size of load. Forklifts are among the most common power trucks now used. Trucks for general packaged merchandise usually are designed to convey from 2,000 to 4,000 pounds (900 to 1,800 kilograms). Power trucks of larger capacity are designed for special product handling. Lumber yards, for example, having large capacity trucks usually of a straddle type that can lift 10,000 to 20,000 pounds (4,500 to 9,000 kilograms) of lumber.

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Cranes and hoists. Generally employed for very heavy lifting and moving of machinery and materials, cranes and hoists may be fixed or movable.

Jib cranes, which consist of single arms attached to walls or other structures, have the capability of swinging through an angle of 180^o to 360^o and therefore are useful for positioning material. Jib cranes are frequently observed in high-rise building construction, where they are set on the topmost floor to move construction materials vertically to the floor that is being worked and horizontally to the place where needed.

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Mobile cranes are wheeled devices with their own motive power, which enables them to move over wide areas. They are generally of jib type with a single boom attached to the mobile body."

11. If regard is had to the aforesaid observations and as I view the consignment which is reflected in the brochure at Exhibit `A’ to the Petition, it would be evident that it is a machine which squarely falls under Heading 84.22. That Heading specifically includes lifting, handling, loading, or unloading machinery, telphers and conveyors. By way of example, cranes and transporter cranes have been specifically mentioned. The said heading does not rest by mentioning merely cranes but also mentions transporter cranes. In my view it was intended to include the present consignment though the same is mounted on chassis fitted on wheels which is propelled by mechanically propelled boom. The cranes which are mobile have not been excluded though what is excluded has been specifically provided for in Note 1 of Chapter 84. Hence I see no reason why the said consignment cannot squarely fall under Heading 84.22. As regards Heading 87.07, the same does not deal with cranes but concerns itself with works, trucks, etc. The example contained in the said heading no doubt makes a reference to forklift trucks and straddle carriers. That would not, however, detract the present consignment from falling in Heading 84.22 as the present consignment is more aptly described as `cranes than fork-lift trucks’. The present consignment cannot answer the description of trucks as the primary object of this machinery is the handling of goods and not its transporation."

4. The learned JDR for the department Shri Arulswamy has pleaded that the HSN Notes have to be the guiding factor for the purpose of assessment of the goods and has pleaded that in terms of the HSN Notes as under Chapter Note 84.26, the appellants goods were assessable under Tariff Heading 87.05. He has pleaded that the learned lower authority has rightly relied upon this HSN Notes to arrive at his conclusion.

5. We have considered the pleas made by both the sides. At the outset we would like to observe that since Customs Tariff is based on the HSN, the notes set out in the HSN are relevant for interpreting the Customs Tariff. In the present case the Note as has been set out above clearly states that such of those lorries or vehicles which are in the nature of ordinary cranes or break down vehicles would fall under 87.05. The question, therefore, to be examined is whether the goods imported by the appellant can be taken to be answering to the above description. In this connection we take note of the fact that the capacity of the crane which is not disputed by the revenue is 90 tonnes. A 90 tonnes crane cannot by any stretch of imagination be considered as ordinary crane which is used day-to-day in the factories and workshops or at sites. The crane has been specially designed to handle heavy loads and has got a collapsible boom as has been explained to us, with a view to carry the loads to great heights of about 40 mtrs. A crane which carry loads up to a height of 40 mtrs. cannot be considered as an ordinary crane. Further from the catalogue we find that the chassis has a 16 tyre wheel base and its axis are specially designed for taking the crane load and these axils are heavy duty once. It has not been shown by the authorities that the chassis base can be considered as a lorry for purpose of consideration of classification under Tariff Heading 87.05.

6. On facts, therefore, we hold that in terms of the HSN notes, the goods do not fall within the scope with respect to items covered under Tariff Heading 87.05. In that view of the matter, we hold that the appellants plea for classification of the crane under 84.26 has to be allowed. We draw support for our view from the ratio of the judgment of the Bombay High Court which has dealt with the similar matter.

7. We, therefore, order the classification of the goods under Tariff Heading 84.26 with consequential relief.

Equivalent 1997 (95) ELT 489 (Tribunal)