1999(01)LCX0191
IN THE CEGAT, SOUTH ZONAL BENCH, MADRAS
S/Shri S.L. Peeran, Member (J) and V.K. Ashtana, Member (T)
COMMISSIONER OF CUSTOMS, CHENNAI
Versus
SUNDARAM FASTENERS LTD.
Final Order No. 172/99, dated 27-1-1999 in Appeal No. C/3460/90-B2
Cases Quoted
Sarada Industries v. Jt. Secretary, G.O.I. — 1979(11)LCX0004 Eq 1981 (008) ELT 0262 (Mad.) — Relied on [Paras 6, 7]
Sarada Industries v. Collector — 1987(03)LCX0085 Eq 1989 (041) ELT 0560 (Tribunal) — Relied on [Paras 6, 7]
Collector v. Sarada Industries — 1995(04)LCX0015 Eq 1997 (093) ELT A177 — Relied on [Para 7]
Advocated By : Shri S. Sankaravadivelu, JDR, for the Appellant.
Shri R. Raghavan, Advocate, for the Respondents.
[Order per : S.L. Peeran, Member (J)]. - This revenue appeal arises from Order-in-Appeal dated 12-1-1990 by which the claim of the importer for classification of the goods viz., tools such as tap ribs, taps, knurling dies, punches, ceramic inserts and die assembly imported by them were required to be classified as parts falling within Heading No. 84.66 and hence eligible for classification under Heading No. 98.06 and for benefit of Notification 156/86.
2. The authorities on the other hand assessed to duty at 60% + 45% + additional duty of 20% under Heading No. 8207.40 or 8207.90 CTA/Heading No. 82.07 CET, on the ground that the same are interchangeable tools. The importer urged before the Collector (Appeals) that the items are only tools fit for use on a metal working machine tool. It had also been pointed out that the items in the earlier imports had been classified only under Chapter 84 and granted the benefit of Heading 98.06 read with the relevant notifications. It had also been pleaded that thread rolling dies were exclusively used in certain machine tools and they were required to have been considered as a part of relevant machine rather than under the category of interchangeable tools. The Collector after a detailed examination held that the imported items are functionally parts of machine tools in question and hence they are required to be classified only under Chapter 84 as claimed and giving the benefit of Heading 98.06 read with Customs Notification 156/86. However, he rejected the appeal in so far as the classification for the purpose of CVD and held it to be classifiable under Chapter 82.07 which carries rate at 20% and not 15% as claimed, but granted benefit for basic customs duty and auxiliary duty.
3. It is pointed out by revenue in this appeal that the imported items are interchangeable tools and not parts of the machine tools. It is also pleaded that in terms of Section Note 1(k) of Section XVI, articles of Chapter 82 or 83 are excluded from Chapter 84 and hence the benefit of Chapter 98.06 along with concessional rate of duty cannot be granted. It is also stated that by virtue of Chapter Note 2 to Chapter 82 parts of base metal of articles of Chapter 82 are required to be classified with the articles of which they are parts, except parts separately specified as such and tool holders for hand tools (Heading No. 84.66). The note further states that parts of general use as defined in Note 2 are in all cases excluded from this Chapter.
4. We have heard learned DR, Shri Sankaravadivelu for the Revenue and Shri R. Raghavan, learned Advocate for the assessees.
5. Learned DR reitered the grounds made out in the appeal.
6. On the other hand, learned Advocate submits that the issue is no longer res integra and the matter had been examined by the Madras High Court in the case of M/s Sarada Industries v. The Joint Secretary to the Government of India in W.P. Nos. 2632, 2652 and 3464 of 1977 and by order dated 29-11-1979 [1979(11)LCX0004 Eq 1981 (008) ELT 0262 (Mad.)] the Madras High Court had held that the items in question are not interchangeable tools but parts of machines and in this regard the High Court has looked into several judgments and case laws including Chapter Notes relied herein. He produces copy of the said judgment. This judgment was also referred by the Tribunal comprising of Three Members in the case of Sarada Industries v. C.C. reported in 1989 (041) ELT 560 and it was clearly held that thread roll dyes for use in thread rolling machines are classifiable under Heading 84.45/48 of the Customs Tariff Act, 1975 analogous to Item 72(3) of Indian Customs Tariff. He submits that the judgment of the Tribunal and the Madras High Court are binding and is required to be applied in the present case.
7. On a careful consideration and on perusal of these judgments it is clear that the Madras High Court as well as the Tribunal in the case of Sarada Industries in respect of the same goods have clearly held that they are parts of machines and are required to be classified under Chapter 84 and have ruled out Chapter 82. The revenue’s claim is that the item has to be considered as interchangeable tools for hand tools and to be classified under Chapter Heading 82.07. In this regard Note 1(k) of Section XVI is relied which included articles of Chapter 82 or 83. In the first place to apply this Note 1(k) of Section XVI, we have to arrive at the classification under Chapter 82. Since Chapter 82 has been clearly excluded and the Tribunal in the Sarada Industries case has held the item to be clearly parts of machine tools, therefore, they cannot be considered as interchangeable tools and hence the Collector (Appeals)’s order is sustainable and is required to be accepted. Furthermore, 84.66 specifically deals with parts and accessories suitable for use solely or principally with the machines of Heading Nos. 84.56 to 84.65. Chapter Headings 84.56 to Chapter 84.65 deals with machine tools of various types. Therefore, parts and accessories suitable for use solely or principally with the machines of these headings are required to be classified only under 84.66 and not under the heading interchangeable tools under Chapter 82.66. Therefore, the classification arrived at by the Collector (Appeals) in terms of the prayer made by the appellants is totally sustainable as there is no dispute by the revenue that the items are not used as parts in the machine tools. In the case of Sarada Industries the Hon’ble Madras High Court went into great detail on technical aspects of the matter and held the item to be parts of machine tools under Heading 72(3) which deals with component parts of machinery as defined in items Nos. 72, 72(1), 72(2) of Indian Customs Tariff and rejected the claim for classification as adopted by revenue under Item 71 which dealt with hardware, iron mongery and tools and parts thereof, all sorts, not otherwise specified, including incandescent mantles but excluding machine tools and agricultural implements. - (a) tools and parts thereof." This ratio has been applied by the Tribunal in respect of new Tariff in their own case and held the item to be classifiable only under 84.48 of Customs Tariff Act, 1975. It is seen that the Supreme Court has also approved this judgment as can be seen from the extract of Court Room Highlights appearing in 1997 ELT A177.
8. In that view of the matter, there is no infirmity in the impugned order and, therefore, the matter having been decided correctly by Madras High Court and followed by the Tribunal, there is no merit in this appeal and hence this appeal is rejected.
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Equivalent 1999 (111) ELT 796 (Tribunal)
Equivalent 1999 (032) RLT 0310