Commissioner of Customs, Chennai vs Sterlite Industries (India) Ltd.>2001(07)LCX0386

2001(07)LCX0386

IN THE CEGAT, SOUTH ZONAL BENCH, CHENNAI

S/Shri S.L. Peeran, Member (J) and Jeet Ram Kait, Member (T)

COMMISSIONER OF CUSTOMS, CHENNAI

Versus

STERLITE INDUSTRIES (INDIA) LTD.

Final Order No. 1113/2001, dated 13-7-2001 in Appeal No. C/R-26/97/Md

Cases Quoted

Commissioner v. SPIC Ltd. — 1998(07)LCX0306 Eq 1999 (113) ELT 0579 (Tribunal) — Distinguished. [Paras 6(a), 8]

Commissioner v. Chemilab Corporation — 1997(10)LCX0130 Eq 1998 (100) ELT 0395 (Tribunal) — Distinguished [Paras 6(b), 8]

Commissioner v. Chemilab Corporation — 1998(06)LCX0214 Eq 1999 (112) ELT 0475 (Tribunal) — Distinguished [Paras 6(b), 8]

Advocated By : Shri S. Arumugam, DR, for the Appellant.

Shri A.S. Sundararajan, Advocate, for the Respondent.

[Order per : Jeet Ram Kait, Member (T)]. - By this appeal the Revenue challenges the order-in-appeal No. M.CUS : 1543/96 dated 13-9-1996 passed by the Commissioner of Customs and Central Excise (Appeals), Madras by which the Commissioner (Appeals) allowed the appeal filed by the assessee by holding that the goods i.e. X-ray Spectrometer imported by the assessee is classifiable under sub-heading 9027.30 of the CTA 1975/CET 1985.

2. The brief facts of the case are that the assessee (hereinafter referred to as the importer) imported ‘Rigaku/Fully Automated Sequential X-ray Spectrometer’. It was assessed under sub-heading 9022.19 of the CTA, 1975 with a basic rate of Customs duty at 50% + 2% with additional duty of Customs at 10% under heading 90.22 of CET, 1985. The lower authority confirmed this vide his order-in-original No. 277/96 dated 28-8-1996 issued from F. No. (S59/147/6 Gr. 5B) directing the importer to pay the duty accordingly. The importer filed an appeal before the Commissioner (Appeals) claiming that the impugned goods be reassessed to duty under sub-heading 9027.30 attracting duty @ 25% + 2% + 10% (CVD). The Commissioner (Appeals) applying Rule 3(c) to the Interpretative Rules has allowed the appeal observing that the impugned equipment would be equally classifiable under both the headings viz 90.22 (as an X-ray equipment) and 90.27 (as Spectrometer). According to Rule 3(c) to the Interpretative Rule, the heading that appears last should be preferred.

3. The Commissioner (Appeals) after considering the written and oral submissions made by the importer has held as under :

“I have carefully considered the written and oral submissions made by the appellant through their Counsel, Shri A.S. Sundar Rajan.

The short question that arises for determination in this case is whether the impugned X-ray Spectrometer is classifiable under s/h 9027.30 as Spectrometer or under s/h 9022.19 as X-ray apparatus/equipment.

The learned Lower Authority has held that the impugned item was correctly classifiable under s/h 9022.19 as the Spectrometer in question was X-ray based and, therefore, the same should fall under heading 90.22 only. It is now the case of the appellant as pleaded by the learned Counsel that in terms of Rule 3(a) of the Rules for Interpretation of the Tariff, the more specific heading should be preferred to the more generic heading. It is submitted by the learned Counsel that the impugned item has been invoiced as X-ray Spectrometer and has been described as such in the Bill of Entry as well. The main function of the equipment is as Spectrometer as the equipment is meant to analyse the metal content. The distinction between a non-X-ray Spectrometer and X-ray Spectrometer, according to the learned Counsel, is that the latter draws its source from X-ray, while the former draws its source from other than X-ray. Otherwise, there is no distinction as both the types of Spectrometers have identical function viz., analysis of metal. From the above point of view, it is submitted that the impugned apparatus was specifically covered by the entry under s/h 9027.30; even though it is submitted that generically it may be covered by s/h 9022.19 as a X-ray apparatus. It is pleaded by the learned Counsel that even assuming that Rule 3(a) was not applicable in the instant case, in terms of Rule 3(c) if the item in question is equally classifiable under more than one tariff heading, the tariff heading that appears later should be preferred to the one appearing earlier. Since heading 90.27 comes later than heading 90.22, it is the case of the appellant that the impugned item is correctly classifiable under heading 90.27 only. Alternatively, it is also pleaded that if Rule 3(c) is also taken as not applicable, in terms of Rule 4 of the Rules for Interpretation of the Tariff, the impugned item should be taken as more akin to Spectrometer going by its function rather than X-ray apparatus.

The above plea set forth by the learned Counsel has been duly considered. The moot question that we have to address here is what provides the essential character to the impugned equipment or apparatus, whether its X-ray source or the function as Spectrometer. The catalogue produced by the appellant, however, does not throw any light on the essential character of the impugned apparatus, as the catalogue merely describes the Spectrometer as a X-ray Spectrometer. Both X-ray apparatus and Spectrometer are specifically covered by tariff entries under Chapter 90. I am, therefore, of the view that the impugned equipment should be held as equally classifiable under both the headings viz., 90.22 as an X-ray equipment and 90.27 as Spectrometer. In such a situation, Rule 3(c) of the Rules for Interpretation becomes applicable as according to Rule 3(c), the heading that appears last shall be preferred. In the instant case, heading 90.27 appears latter than the other heading and, therefore, I am inclined to hold that the goods are correctly classifiable under s/h 9027.30 by virtue of Interpretative Rule 3(c).”

4. Aggrieved by the above findings of the Commissioner (Appeals), the Revenue has come in appeal on the following grounds :

The Commissioner (Appeals)’s order for re-classification of the impugned goods under sub-heading 9027.03 is not correct for the following reason:

(1) It is seen from the catalogue that the “Rigaku Automatic Sequential X-Ray Spectrometer” is a Spectrometer coupled with an X-ray system. Heading 9022 covers all apparatus based on the use of X-rays whether it is for medical, industrial or other purposes. As per HSN Notes, at page 1501, it has been clearly stated as under :-

“The heading also covers :

Special Apparatus (X-ray ditraction and X-ray Spectrometry equipment), used for the examination of the material; the X-rays are diffracted by crystals and then made to fall on a photographic film or an electronic counter.

The system structure shown in the catalogue of the impugned X-ray Spectrometer is akin to the above description given in the H.S.N. Therefore the imported RIX Rigaku Fully Automatic Sequential X-Ray Spectrometer is actually classifiable under heading 9022.19 as classifiable by the lower authority.”

(2) HSN notes for heading 9027 (page 1518) clearly excludes X-ray etc. apparatus from the purview of heading 9027. Therefore the Commissioner (Appeals)’s order for reassessment of the impugned X-ray Spectrometer under heading 9027 is not correct.

(3) The Commissioner (Appeals)’s finding that the impugned equipment is equally classifiable under heading 9022 (as an X-ray equipment) and under heading 9027 (as Spectrometer) and therefore in such a situation Rule 3(c) of the Rules for Interpretation becomes applicable is also not applicable in this case. Since the impugned X-ray Spectrometer is excluded from heading 9027 and the H.S.N. for 9022 explicitly states that X-ray diffraction and X-ray Spectrometer equipment are covered under heading 9022 only. Therefore, the finding of the Commissioner (Appeals) in this regard is also not based on facts and is against the scheme of classification in the Chapter Notes.

5. Shri S. Arumugam, learned DR appearing for the Revenue re-iterated the grounds of appeal and pleaded for restoring the order-in-original passed by the original authority. He invited our attention to Section XVIII of HSN under main heading ‘Apparatus based on the use of X-Rays’, para (C) (1) & (2) where it is specifically mentioned as under :

(1) Special apparatus (X-Ray diffraction and X-ray spectrometry equipment) used for examination of the crystalline structure as well as the chemical composition of materials; the X-rays are diffracted by crystals and then made to fall on a photographic film or an electronic counter.

(2) Apparatus for radioscopic examination of bank notes or other documents.

6. Shri A.S. Sundararajan on the other hand submitted that the Commissioner (Appeals) has passed a well reasoned order and the same is required to be upheld. He also relied upon the following case laws in support of his plea :

(a) CC Madras v. SPIC Ltd. reported in 1998(07)LCX0306 Eq 1999 (113) ELT 0579 (Tribunal) wherein it was held that polishing kit is necessary for efficient functioning of the Spectrometer and is classifiable under heading 90.27 of the CTA, 1975.

(b) CC Bombay v. Chemilab Corporation and CC Calcutta v. Chemilab Corpn - reported in 1997(10)LCX0130 Eq 1998 (100) ELT 0395 (Tribunal) and also 1998(06)LCX0214 Eq 1999 (112) ELT 0475 (Tribunal). In both these decisions pertaining to the same assessee, certified reference material for spectrometers (accessories for spectrometers) were held to be classifiable under heading 9027.30 of the CTA, 1975 by extending the benefit of Exemption Notification No. 79/93-Cus.

7. We have carefully considered the submissions made by both the sides and perused the records. We find that the short question that arises for our consideration is whether the goods viz. X-ray Spectrometer imported by the importer is classifiable under sub-heading 9027.30 as Spectrometer or under sub-heading 9022.19 as X-ray apparatus equipment. We are of the considered opinion that X-ray Spectrometer imported by the importer is classifiable under sub-heading 9022.19 as apparatus based on the use of X-rays. It could be seen from the HSN Note appearing under Section XVIII under main heading ‘Apparatus based on the use of X-rays’ wherein it has been mentioned that the heading covers :

(a) Special apparatus (X-ray diffraction and X-ray spectrometry equipment) used for the examination of the crystalline structure as well as the chemical composition of materials; the X-rays are diffracted by crystals and then made to fall on a photographic film or an electronic counter.

(b) Apparatus for radioscopic examination of bank notes or other documents.

8. Since X-ray Spectrometer is covered under Section XVIII of HSN, the goods in the present case correctly fall under sub-heading 9022.19 as contended by the Revenue. The case laws cited by Shri A.S. Sundararajan, learned Counsel for the respondents i.e. CC Madras v. SPIC Ltd. reported in 1999 (113) ELT 579 is distinguishable because that was a case where classification of polishing kit was held to be necessary for efficient functioning of the Spectrometer. Similarly another case law cited by the learned Counsel for the respondents in the case of CC Bombay v. Chemilab Corporation and CC Calcutta v. Chimlab reported in 1998 (100) ELT 395 and 1999 (112) ELT 475 is also distinguishable from the facts of the present case as that was a case where accessories for spectrometers were held to be classifiable under heading 9027.30. Both the above case laws do not apply to the facts and the legal issues involved in the present case. Therefore, we find lot of force in the submissions made by the learned DR. We are, therefore of the considered opinion that the goods imported by the respondents are correctly classifiable under 9022.19 of the CTA 1975. We, therefore, set aside the impugned order and allow the appeal filed by the Revenue.

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Equivalent 2002 (147) ELT 0705 (Tri. - Chennai)