Raj Continental Exporters Pvt. Ltd. vs Commissioner Of Cus., Madras>1998(05)LCX0121

1998(05)LCX0121

IN THE CEGAT, SOUTH ZONAL BENCH, MADRAS

S/Shri S.L. Peeran, Member (J) and V.K. Ashtana, Member (T)

RAJ CONTINENTAL EXPORTERS (P) LTD.

Versus

COMMISSIONER OF CUS., MADRAS

Order Nos. 1156 to 1160/98, dated 27-5-1998 in Appeal Nos. C/1962-1964/91-B, C/2412/89-B and C/2139/91-B

Cases Quoted

Collector v. Continental Exports — 1987(07)LCX0044 Eq 1989 (043) ELT 0310 (Tribunal) — Relied on [Paras 10, 13]

Collector v. Handicraft Exports — 1997(04)LCX0036 Eq 1997 (093) ELT 0006 (S.C.) — Referred [Para 12]

Advocated By : Shri Krishna Srinivasan, Advocate, for the Appellant.

Shri S. Murugandy, JDR, for the Respondent.

[Order per : S.L. Peeran, Member (J)]. - In all these appeals, common question of law and facts are involved hence they are taken up for disposal as per law.

2. In the case of Continental Exporters, the Commissioner has disposed of six appeals while in the case of Sapna Garments, the Commissioner has disposed of single appeal. In the case of Continental Exporters, the question involved is the classification of Numbering Machines and applicability of Notification No. 16/85. The appellant had imported an item described as “Component Printing Machines” and sought clearance of the goods in question on the strength of additional licences for OGL goods (Appendix - 1B). They sought classification of the goods under Heading 8443 and also the benefit of the said Notification, which among other items includes Component Numbering machine. The lower authority held that said notification grants exemption to the specified goods that imported for using garments or hosiery industry. Since the appellants had sought clearance of goods in question for production of additional licences for OGL goods, under Appendix - 1B they are only traders and as such, could not claim the benefit of the said Notification. He accordingly held that the goods are correctly classifiable under sub-heading 8472.90 of the Customs Tariff. The Commissioner on consideration of the pleas rejected both the classifications and has remanded the matter to the lower authority to examine whether the goods in question are correctly classified under 9611 for Customs duty and CV duty or any other entry on the Customs/Excise Tariff and pass appropriate order determining the duty payable in accordance with law after observing principles of natural justice. He has refrained from expressing any views on whether the goods imported could be covered under the additional licence that had been produced before the lower authority.

3. The Commissioner has examined the catalogue of the item and has noted that the item has described as `Printing machines’ of different models having 5/6/7 serial numbering facilities and they are all designed for operation in the hand. He has noted that Heading 8472 covers “Office machines of different descriptions”. He has examined HSN Notes appearing under the heading “Office Machines” description of which includes a wide range of machines used in office, shops and factory, workshops, for doing office work and the heading clarifies that this heading would include only such goods which have a base for fixing or fixing on a table, desk, etc. It further clarifies that the Heading 8472 does not include hand-operated date sealing or similar stamps which are covered under Heading 9611. The Commissioner after examining the catalogue in question held that the machines do not have a base for fixing or fixing on a table, desk, etc. and hence he over-ruled the classification under 8472 as adopted by the Assistant Commissioner. He has then proceeded to examine the appellants’ claim for classification under Heading 8443 and noted that the heading covers printing machine for use ancillary to printing. He has referred to the explanatory notes of H.S.N. under the heading at page No. 1240 and noted the clarification that the sub-heading covers machines “whether or not presented separately” for use ancillary to printing exclusively designed to operate printing machines and used during or after the printing operation and among other items includes serial numbering machines. He has noted that Heading 8443.11 to 8443.50 covers different types of printing machinery but 8443.60 covers machines used for ancillary to printing. He has observed that this obviously means that machines classifiable under the said sub-heading should be such which are for use ancillary to printing. He has held that the numbering machine in question of simple hand-operated numbering machines which function independently and has no use as a machine ancillary to printing as envisaged under sub-heading 8443.60 and noting that the heading covers only such machines which are exclusively designed to operate with printing machine he has rejected their claim. He has held that the party has not produced any material to establish that the goods in question have been exclusively designed to operate printing machines. He has held since the Chapter 84 is not covered the matter has to be remanded to consider Heading 9611 for both Customs duty and CV duty or any other entry under Customs/Excise Tariff.

4. In these set of appeals the appellants have challenged the setting aside of both the entries made by the authorities and as claimed by the party. They have stated that Commissioner cannot introduce a totally new case and it is violative of principles of natural justice. He has to accept the Department’s case for classification or accept the appellant’s claim and cannot set aside the order to consider a fresh case which has not been made out by the Revenue. They have also stated that benefit of the Notification No. 16/85-Cus. cannot be denied to them as the appellants are using the said item in garment or hosiery industry and it is used as a packing machine and the serial number 59 of the Notification grant benefit to the packing machine and hence the benefit is required to be extended.

5. We have heard both sides in the matter. Ld. Advocate Shri Krishna Srinivasan reiterated the grounds made in the appeal memorandum and strongly urged for classifying the item under sub-heading 8443.60 which has description “machines for use ancillary to printing”. He submits that the department’s classifying the item as other office machines in the receivable item under sub-heading 8443.90 is not appropriate as the type of machines which are shown in the main heading are the type of hectography or staplers duplicating machines, addressing machines, automatic bank note dispensers, coins sorting machines, coin counting or rapid machines, pencil sharpening machines, perforatory or stapling machines. This machine performs the act of numbering and such numbering is done to printed material and hence it has to be used as ancillary to printing machines. Ld. Advocate submits that the machine is also used after packing to put the numbers and hence the benefit of notification has to be extended to them.

6. Ld. D.R. submits that Commissioner has rightly remanded the matter as the item does not come within the examples in other office machines, it is rightly classifiable under Heading 9611 which deals with `Data, sealing or numbering stamps and the like (including devices for printing or missing letters)’; it is not for operating in the hands; hand-operated, composing sticks & note printing sets incorporating such composing stick. He also points out that the item cannot be classified under sub-heading 8443.60 as the heading covers only machines for uses ancillary to printing. Even HSN notes at Page 239 under Heading 8443 excludes hand-operated data and similar stamps of Heading 9611. The explanatory notes at page No. 1240 clearly indicates that machines for use ancillary to printing covers machines (whether or not presented separately) for uses ancillary to printing exclusively designed to operate with printing machines and use to number or after the printing operation for further making the sheets or rolls of paper. The explanatory notes does not include the hand-operated numbering machine while it includes serial numbering machines, small accessory machines operating with rolls of figures. The type of numbering machine included under this Heading at page No. 1240 does not represent the present hand-operated small numbering machine which looks like stamping machine. He also submits that Notification specifically covers only to packing machine, and as the machine is not one such, hence the benefit of Notification No. 16/85 cannot be extended.

7. On a careful consideration of the submissions we notice that the machine in question is like a stamping machine, which has got a serial number. This is used for putting the numbers and can be used in any place by hand-operation. The Commissioner has clearly noted that the machine is numbering machine of different models having 5/6/7 digit serial numbering facilities, and the numbering machines/stamping design for operating in the hand. He has examined the HSN Notes pertaining to Heading 84.72 and found that the item is not in keeping with the illustrations given under `other office machines’. We have also examined Heading 84.72 under which the lower authorities had classified the item and find that the item does not fall under `other office machines’. It is not akin with the illustrations given therein. As noted earlier, under the other office machines, the examples given are in the nature of hectograph or stencil duplicating machines, addressing machines, automatic bank note dispensers, coin sorting machines, coin counting/wrapping machines, pencil sharpening machines, perforating/stapling machines. As the item does not come in any of the type of illustrations given and it is not akin to such a machine which is generally used in office, therefore the Commissioner has rightly rejected the classification adopted by the lower authorities. Ld. Counsel has taken a plea that the Commissioner (Appeals) has no power to remand the matter for de novo when Revenue has not contested the classification. There is no force in this submission because the appellant themselves had challenged the correctness of the classification under this heading. On such a challenge the Commissioner was bound to examine the correctness of the same. And having found the same to be incorrect has proceeded to examine the appellant’s claim. The appellant’s claim has also been found to be incorrect. In such a situation like this, he has remanded the case by suggesting an alternate heading. The direction does not imply that the authority is bound by the heading suggested by the Commissioner (Appeals). The matter has been left open for the authorities to reconsider the classification aspect and to arrive at the correct classification. We are not in a position to accept the plea of Counsel that the procedure adopted by the Commissioner (Appeals) is incorrect in law.

8. Now we are required to examine the appellant’s claim for classifying the machine under sub-heading 8443.60 as “machines for uses ancillary to printing”. The Commissioner (Appeals) has examined the HSN Notes under this heading and has come to the conclusion that the machinery does not function as ancillary to printing machine in terms of HSN Notes under Heading 84.43. We have examined the HSN Notes and find at page No. 1239 that the heading includes numbering, dating, extra, machines (other than hand-operated date and similar stamps of Heading 96.11) operating irons, bands of letters or figures etc. whether or not inked. The explanatory note does not include hand-operated numbering machines. However, under the heading `machines for uses ancillary to printing’ at page No. 1240 the explanatory notes states this heading covers `machines (whether or not presented separately) for use ancillary to printing exclusively designed to operate with printing machines and used during or after the printing operation for feeding, handling or further working the sheets or rolls of paper’. As can be seen from this explanatory notes, the group covers machines for uses ancillary to printing and they have to be exclusively designed to operate with printing machines. That the present item is not used as an ancillary to printing and exclusively with printing industry. It is a general purpose hand-operated stamping, numbering machine and it has not been designed exclusively to operate with printing machines. Therefore the Commissioner’s reading of HSN Explanatory notes at page 1240 is correct one, to hold that the item does not fall within the sub-heading 8443.60 which covers `machines for use ancillary to printing’. As has been noted at page 1239 under Heading 8443, the hand-operated data similar stamps of Heading 96.11 are excluded while numbering, dating, etc. machines alone are included under Heading 84.43. It follows that the numbering, dating, etc. machines operating with irons, bands or letters or figures, etc. whether or not inked alone are covered under Heading 84.43 and not hand-operated data and similar stamps numbering machines which HSN suggests for classification under 96.11. Therefore, the Commissioner has suggested to the lower authority to examine the heading under 96.11 for classification purpose. Although it is his personal opinion, the same is not binding on the original authorities. The original authorities may examine the heading under the Customs Tariff for classification and they may also examine the practice adopted by Customs House for classification of the main item.

9. As regards the claim for the benefit of Notification No. 16/85-Cus., dated 1-2-1985 as amended, Sl. No. 59, the description given is “Packing machines”. Admittedly the machine is only numbering machine and not a packing machine and hence the benefit cannot be extended although the notification covers for items used in garment or hosiery industry, however, the item should come within the ambit of description of packing machine. The item is admittedly a numbering machine and it cannot be considered as a packing machine and hence the benefit of the Notification has been rightly denied by the Commissioner in the impugned order. Therefore, we do not find any merit in these appeals and hence we reject the same.

C/2139/91-B (M/s. Sapna Garments)

10. Appeal No. C/2139/91-B deals with an item described as “T.G. Gun Tucker”. The appellants had sought benefit of Notification No. 125/86. The lower authorities in the impugned order held that the goods in question have correctly used and as such it cannot be stated that the goods have been imported for use in the food processing/packaging of articles. The lower authorities had also noted that the appellant has sought clearance in the capacity of a trader and not as an actual user. The appellants had stated before the Commissioner that the imported item is stapling machine T.G. Gun Tucker. They had stated that in the case of CC, Madras v. Continental Exporters, the CEGAT in their Orders No. 1210 - 1212B [1987(07)LCX0044 Eq 1989 (043) ELT 0310 (Tribunal)] had ruled that Gun Tucker Model TG Tucker is a packing machine covered by Notification No. 47/84 which was predecessor to Notification No. 125/86. It was argued before the Commissioner that the lower authority had rejected the claim of Notification solely on the ground that these machines are exclusively used in food processing industry. They pointed out that the Notification does use the word “exclusively” and it was not open to the authorities to add or to delete any word from the Notification. The Commissioner, after detailed examination of the pleas raised before him, held that while it is true that Notification does not stipulate any condition that goods should have exclusive use in the intended industry nor does it stipulate any actual user condition. He has held that the fact remains that proper officer while making assessment of the goods with reference to particular exemption notification has to himself satisfy that it will be within the overall scheme of the Notification to allow the benefit of concessional duty. He has noted that the goods in question are general purpose goods. They have also not imported in the capacity of the actual user who can be expected to use these goods for packing of food articles and thereby satisfy the condition of the Notification. He has held that while certain items can be used only in food processing, packing industry, there would be no condition in giving the benefit of the Notification in respect of such items. He has noted that the item admittedly has multiple use and the benefit of Notification can be given merely on a declaration that these have been imported for use in food industries and too by a person who is not engaged in processing, packaging food articles. He has distinguished the judgment of the Tribunal cited supra on the ground that the judgment deals with stapling machines and the Tribunal has held that goods were packing machines, case packing machines covered in Notification No. 47/84. He held that the judgment is clearly distinguishable as the item does not come within the ambit of the said notification.

11. The appellants in this appeal contend that the Commissioner should have seen that the issue before him for consideration was whether the `Case packing machine’ imported by them would warrant the benefit of Notification No. 125/86 without exclusive use in the food industry or actual user condition as cited by the lower authority while denying the benefit of the notification. They stated that the notification does not stipulate any condition that the goods should have exclusively used in the intended industry nor stipulate any actual user condition and hence the authorities cannot interpret the notification to mean so.

12. We have heard Ld. Counsel and Ld. D.R. in the matter. Both emphasised their points. Ld. Advocate submits that though they are not using the machines in the garment industry and they are trading in it, yet the benefit has to be given to the item as this can be used in stapling wooden cots. Ld. DR submits that the notification in question deals with food industry and the item being general purpose item, the benefit cannot be extended. He relies on the judgment rendered in the case of CC v. Handicraft Exports as reported in 1997(04)LCX0036 Eq 1997 (093) ELT 0006 (S.C.). In this case the Supreme Court has held that wherein a Notification the goods are “used in the leather industry”, the notification pertaining to “Buckles and other embellishments for footwear” in Notification No. 29/79-Cus., dated 10-2-1979, the Hon’ble Supreme Court while interpreting the rule said that the importer will have to prove that the goods were not only capable of being utilised as embellishment for shoes but also that they were imported for that purpose. The Supreme Court further held that it has to be shown that the goods were actually used as embellishment.

13. On a careful consideration of the submissions made on both sides, we notice that the item in question is stapling machine model T.G. Gun Tucker and the appellant had sought clearance on the basis of additional licence for OGL goods in Appendix - 1B of Import and Export Policy. The item has been classified under sub-heading 8465.99 which is a residuary entry, other in the main Heading 8465 which deals with machine tools (including machines for nailing, stapling, glueing or otherwise assembling) for working wood, cork, bone, hard rubber, hard plastics or similar hard materials. The classification is not in dispute. It is only the claim of benefit of Notification No. 125/86 for item 28 which deals with case packing machines, for which the appellants are seeking the benefit. There is no dispute raised with regard to the use of the item as a case packing machine and the Tribunal’s judgment rendered in the case of CC v. Continental Exporters in Order Nos. 1210 - 1287/B2, dated 23-7-1997 [1987(07)LCX0044 Eq 1989 (043) ELT 0310 (Tribunal)] has been dealt with. The lower authority has held that notification in question namely 125/86-Cus. deals with Food processing and Packing machines and the importer not coming within such a category and not being actual user also cannot claim the benefit of the notification meant for food processing and packing machines. We notice that Notification No. 125/86 merely states that in exercise of powers confirmed by sub-section 1(1) of [Section] 25 of the Customs Act, 1962 (52 of 1962), the Central Govt. being satisfied that it is necessary in the public interest so to do hereby exempts the goods specified in Column 2 of the Table hereto annexed and falling under the Chapter 84 of the First Schedule to the Customs Act, 1975 (51 of 1975), when imported to India from -

(a) ........

(b) ........

We notice from the Table of the notification that Serial number 2 gives the description of goods, the first Sl. No. deals with food processing machines namely fruit and vegetable cutting, coring, cubing, slicing, seeding/clearing, removing and stem removing machines while serial number 2 deals with others items mentioned therein. The notification does not cover only for the food, food processing and packing machines. It merely refers to the goods specified in Column 2 of the Table. Had the notification mentioned that it exempts only to food processing and packing industry, then the lower authority would have been right in interpreting that notification applies only to food and packing machines used in those industries alone. They have to examine even the individual description of goods in the Table. Sl. No. 28 deals with case packing machine. The same description was found in serial number 17 of Notification No. 47/84-Cus., dated 1-3-1984 as amended by Notification 221/84-Cus., dated 13-8-1984, No. 66/85-Cus., dated 17-3-1985. The Tribunal on interpretation of this notification in respect of various types of models of staplings held that they fall within the description of “packing machines”. The authorities on such interpretation rejected the Revenue appeal. In view of the Tribunal’s judgment holding that stapling machines also come within the ambit of “Packing machines”, we have to apply the ratio of it, to the present case also which deals with the item “Industrial Stapling Machine Model T.G. Gun Tucker”. The citation referred to by ld. DR pertains to a different notification wherein the notification has the words “used for leather industry”. In the present case in the body of the notification, food processing and packing machines is not to be found but only it exempts the goods specified the description in Column 2 of the table annexed and falling under Chapter 84. Sl. No. 28 pertains to case packing machine which is identical description in the Notification Nos. 47/84 and 16/85-Cus., dated 1-2-1985 deals with the order of the Tribunal in the cited case and hence in view of the said Tribunal’s judgment we have to hold that the appellants are entitled for benefit of notification. There is no restriction in the notification to actual user also therefore, the lower authorities contention that Notification applies only to actual users does not flow from the reading of notification. Therefore, the appellant’s contention in so far as this appeal is concerned is required to be accepted by allowing the appeal, which we order accordingly.

_______

Equivalent 1998 (103) ELT 598 (Tribunal)