Kiddy Concepts Pvt. Ltd. vs Commissioner of Customs, Chennai>2001(08)LCX0359

2001(08)LCX0359

IN THE CEGAT, SOUTH ZONAL BENCH, CHENNAI

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

KIDDY CONCEPTS PVT. LTD.

Versus

COMMISSIONER OF CUSTOMS, CHENNAI

Final Order No. 1463/2001, dated 31-8-2001 in Appeal No. C/574/2000

Cases Quoted

Asiatic Oxygen Ltd. v. Asstt. Collector — 1991(04)LCX0040 Eq 1992 (057) ELT 0563 (Cal.) — Referred ...... [Paras 4, 10]

Orissa Air Products Ltd. v. Collector — 1997(12)LCX0245 Eq 1998 (103) ELT 0583 (Tribunal) — Referred ....... [Para 4]

Toyo Engineering India Ltd. v. Commissioner — 2000(10)LCX0342 Eq 2000 (122) ELT 0315 (Tribunal-LB) — Relied on [Paras 5, 12, 13]

Advocated By : Shri Anil Kamineni, Advocate, for the Appellant.

Shri A. Jayachandran, DR, for the Respondent.

[Order per : S.L. Peeran, Member (J)]. - This appeal arises from the Order-in-Appeal No. C. Cus. 381/2000, dated 26-5-2000 passed by the Commissioner of Customs (Appeals), Chennai, who on reconsideration of the matter remanded by CEGAT vide its Final Order No. 1573/99, dated 30-8-99 again upheld the assessment order on the Bill of Entry holding that the imported items cannot be considered as Project Imports under Customs Tariff Heading 98.01 and requires to be classified as finished Toys classifiable under Heading 95.03.

In the remand order, the CEGAT had observed that the Commissioner (Appeals) had not passed a speaking order as there was no detailed finding on the following issues/documents submitted by the importer appellant :-

(a) Declared end-use of the items imported;

(b) The Chartered Engineer’s Certificate;

(d) Technical opinion of the professor of IIT Madras (Dr. N.N Nair, HOD); and

(e) Recommendatory letter of Director of Industries, Andhra Pradesh.

The CEGAT had observed that these documents opine that the items imported are not complete toys but merely patterns from which toys could be made after R & D leading to emergence of moulds and the Commissioner had not given any grounds for rejecting the evidence. Therefore, the case required remand for recording a detailed finding and issue of speaking order.

2. The Commissioner gave an opportunity of hearing to the importer and considered the importer appellant’s following pleas :-

(a) They are engaged in the manufacture of children’s play equipments and systems and is a small scale unit registered with the Directorate of Industries, Andhra Pradesh.

(b) They had imported patterns, moulds and components for setting up a new industrial unit from M/s. Automatic Toys, Italy and M/s. Barbieri, Italy.

(d) They had sought registration for import under the Project Import Regulations and sought assessment under Heading 98.01. Since the Custom House had refused to register them under Project Imports they had approached the High Court and based on the High Court’s direction, they were registered under the Project Import Regulations and the goods cleared provisionally at the Project Import rate after furnishing a Bank Guarantee for the differential duty.

(e) They submitted that the lower authority had rejected their claim for extending the benefit of concessional assessment under Heading 98.01 without giving due consideration to the fact that Dr. N.N. Nair, HOD, FRP of IIT, Madras had opined that moulds can be made from patterns only and finished articles could also be used as patterns for the purpose of obtaining moulds and that the resin used for the purpose of manufacturing moulds as an artificial plastic.

(f) They further relied on the opinion of Chartered Engineer and contended that both the material evidence support their plea that the item is covered in terms of the registration granted to them as project import for the benefit of classification under Heading 98.01.

(g) Before the Commissioner also, they submitted that the goods are prototype of toys i.e. one of each type and they are not complete toys and hence cannot be classified as toys under the Heading 95.03. They had submitted that since the goods were to be dismantled for making moulds, there was no trading possible in respect of these goods. They reiterated that SSI recommendation letter dated 15-11-89 supported their bona fide. They submitted that due to the fact that the goods had been drawn out over such a long period. Some of the documents, like, technical opinion from the Head IIT Madras and the Chartered Engineer’s certificate were not available. They had also filed written submissions reiterating that they had developed moulds out of imported patterns/prototype and as and when orders were received, they manufactured toys for amusement parks. They had manufactured 7 units using moulds prepared out of the original authority imported patterns/prototype and supplied the same to the units of amusement parks set up at Hyderabad, Chennai, Bangalore, Coimbatore, Erode and Vijayawada. They further submitted that they continue to be in the business of manufacture of dyes out of moulds prepared from the original imported dyes/prototype which are still available at their factory in a dismantled condition. Hence, they pressed for accepting their assessment and grant of benefit of concession under Heading 98.01.

3. The Commissioner after due consideration rejected their plea by giving a detailed findings as follows :-

“I have carefully gone through the records of the case and the submissions made in the appeal. The issue to be decided here is whether the goods imported by the appellant are eligible for classification under Heading 98.01 of the Customs Tariff and the benefit of assessment as Project Imports. The goods imported against the two bills of entry covered by the order of the lower authority are the following items :

1. Mould for Baby Bumper Car - 1 No.

2. Components for Bumper Car :

(a) Oval Bumping Rubber tyres and tubes - 13 nos.

(b) Steering Wheel - 13 nos.

(d) Bumper Car hand rest fitting - 13 nos.

(e) Fibre glass seats for bumper car - 13 nos.

3. Finished Toys (declared as patterns for obtaining finished products by importer)

(a) Baby Bumper car - 1 No.

(without power supply)

(b) Helicopter - 1 No.

(to be mounted on a mobile base)

(Space craft)

(d) Dumbo Elephant - 1 No.

(e) Horse - 1 No.

(g) Race car Model No. - 1 No.

(Motor racing team)

(h) Mississippi Train - 1 No.

(i) Aircraft (Red arrow) - 1 No.

(j) Aircraft (Red Barron) - 1 No.

4. Finished bases (declared as ‘Patterns for obtaining finished products’ by importer)

5. Hydraulic base - 1 No.

Mechanical base - 1. No.

As far as classification under Heading 98.01 is concerned, the same would cover (in terms of Note 2 to Chapter 98) all goods which are imported in accordance with the Regulations made under Section 157 of the Customs Act, 1962 and the expression used in this heading shall have the meaning assigned to them in the said Regulations. The description of the Item 9801.00 is

“All items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipment, auxiliary equipment (including those required for research and development purposes, testing and quality control), as well as all components (whether finished or not) or raw materials for the manufacture of the aforesaid items and their components, required for the initial setting up of a unit, or the substantial expansion of an existing unit, of a specified :

(1) industrial plant, (2) irrigation project, (3) power project, (4) mining project, (5) project for the exploration for oil or other minerals, and (6) such other projects as the Central Government may, having regard to the economic development of the country notify in the Official Gazette in this behalf; and spare parts, other raw materials (including semi-finished material) or consumable stores not exceeding 10% of the value of the goods specified above provided that such spare parts, raw materials or consumable stores are essential for the maintenance of the plant or project mentioned in 1 to 6 above.”

The goods under import should, therefore, be conforming to the above description. The goods under import which are in the nature of toys/parts of toys clearly cannot be treated as machinery, instruments, apparatus and appliances, control gear and transmission equipment, or as components or raw materials for the manufacture of the above items. The appellant’s contention as seen from the order of the Commissioner (Appeals) dated 17-1-91 is that the goods under import are in the nature of auxiliary equipment. “Auxiliary equipment” has not been defined either in the Tariff or the Project Import Regulations, 1986 and is therefore to be construed strictly by its meaning in common parlance/dictionary meaning. The word “auxiliary” as per most dictionaries refers to something that provides aid or assistance or is subsidiary or additional i.e. an equipment which serves as a supplementary or as reserve for e.g. an auxiliary power system. The appellant’s contention that the ‘patterns’/toys imported would conform to the definition of ‘auxiliary equipment’ is evidently far-fetched.

Before drawing any final conclusions on this matter the six documents listed by the Hon’ble CEGAT are also to be examined. Out of these, as per the appellant’s own submission the case having traversed more than a decade, two of the documents viz. the Chartered Engineer’s certificate and the technical opinion of the Prof., IIT, Madras, are no longer available, on record or with the appellant, for scrutiny. The appellant has however referred to a letter dated 28-8-90 issued by them to the Assistant Commissioner (Gr. 6) which refers to the opinion given by the IIT Professor. Apart from the fact that this document is not a technical opinion, it also merely states that as per the technical opinion the toys after dismantling can be used for making moulds and describes the manner in which this is done. This, only endorses the fact that the goods imported are finished toys. The declared end use of the items as affirmed by their letter dated 12-12-89 again only confirms that finished toys imported would be dismantled for making moulds. Affirmation of end use cannot be the criterion for classification nor serve to establish that finished toys, referred to as ‘patterns’ by the importer constitute ‘auxiliary equipment’ as per CTH 98.01. Similarly, the importer’s affidavit as well as the recommendatory letter of the Directorate of Industries, Andhra Pradesh also only go the confirm that the goods imported are toys/parts of toys and that they have been imported by a unit, which is a small scale unit. There is no dispute or doubt about the genuine existence of the unit or that they are a small scale unit and the only issue to be decided is whether the goods imported, which are essentially finished toys/parts of toys would qualify as goods covered by the description under CTH 98.01. The importer’s affidavit regarding proposed end-use and the recommendatory letter of the Directorate of Industries cannot be the basis for the classification of goods which is to be determined in accordance with the description in Chapter headings and with reference to chapter and section notes.

Thus for classification under Customs Tariff Heading 98.01 the goods must conform to the description in the Tariff Heading 98.01 and also be goods which are imported in accordance with the Project Import Regulations, 1986. It would therefore, be highly misleading to aver that Heading 98.01 is an end-use based classification. End-use, no doubt, is one of the criteria i.e. the goods are to be used for the project. But all goods used for the project cannot qualify for classification under Heading 98.01. They must necessarily conform to the description in the Heading (98.01), and the importer must follow the procedure laid down in the Regulations, 1986. Following the directions of the High Court, as required under the Regulations, the importer had, in fact, registered the project in the Custom House prior to the clearance of goods. However, I find no grounds to accede to the plea that the finished toys are patterns and conform to the description in the heading as they qualify as capital Apparatus/equipment for development purpose and are essential auxiliary items for getting moulds to make the finished toys. The imported goods viz. finished toys are not for obvious reasons either machinery, instruments, appliance or apparatus nor are they auxiliary equipment as the toys do not serve as subsidiary, additional or supplementary equipment. Their classification under Heading 98.01 is therefore clearly ruled out and they merit classification only under CTH 95.03.

For the above reasons, I uphold the order of the lower authority denying the benefit of classification under CTH 98.01 for Project Import assessment.

The appeal is, accordingly, rejected.”

4. Shri Anil Kamineni, appellant’s representative submitted that they had their contract for import project registered on the direction of the High Court and the goods were cleared on provisional assessment. It is his submission that they had produced the necessary evidence to prove that the items are of project imports and Tribunal at the first instance remanded it to scrutinize the evidence and give a detailed finding. It is his contention that the Commissioner (Appeals) again has not scrutinized the evidence which clearly brought out the fact that appellants had only imported prototypes for manufacture of moulds from which equipments were manufactured and supplied to various amusement parks situated in several cities. He contended that in the documents like Bill of Entry, invoices, they had described the equipment as “Children Equipment & Designs and as per proforma”; “Hydraulic Rotating Base, MELC Base, Helicopter, Battle star Galalficar, Red Baron, Dumbo, Red Arrows, Grand Prixy Moto pony with plastic Motor, Mississippi Train, Gogan House, Moto Racing Team” and they cleared the moulds in the Bill of Entry No. 061260 at Rs. 1,18,550/- and same had been accepted. It is their contention that for the items imported in Serial No. 3 to 12 prescribed in the Bill of Entry, they needed one Hydraulic/Mechanical base each, for their completion and operation but they imported only two of these items with bases, one with mechanical base and one with hydraulic base and rest without bases. The bases required for all the subsequently produced play items were made with the help of the two bases imported as prototypes, They had taken import licence from the authorities for the specified goods and the licences were endorsed and that they were used for the goods categorized as “Capital Goods”. The Head of the Department, Department of Fibre Reinforced Plastic, IIT Chennai had clearly certified that the items could be used for producing moulds with the use of glass fibre and resin moulds which were again used to produce required play equipments. He contended that the Chartered Engineer also certified the use of items as Prototype and not for sale in the market and it had no marketability as they were in the nature of prototype. He also contended that the imported items are not complete unit they were not used as play equipments nor they could be sold in the market. They made use of these prototypes to make the moulds and produced the full play equipments by using moulds made by the appellants in their factory which were made with the help of prototypes imported. The Chartered Engineer’s certificate clearly shows that parts imported are only prototypes which were used by the appellants to make the moulds. He, therefore, points out that Commissioner (Appeals) order discarding these evidences and also their use as “Capital Goods” for Project Imports was not justified. They cannot be classified under Heading 95.03 which cover “Other toys; reduced size (scale) models and similar recreational models, working or nor, puzzles of all kinds”. He contended that the imported goods are not complete play equipment in themselves and cannot be used as play items nor could they be sold as play things. They are essential to set up the new unit for manufacturing play equipment and hence they are squarely covered by the project Imports Regulations and accordingly classifiable under Heading 98.01. He further contended that they have obtained special import licence for the goods imported. The licencing authority classified the goods as ‘capital goods’. He contended that capital goods are defined in the Export & Import Policy as “Capital Goods” means any plant, machinery equipment or accessories required for manufacture or production either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological upgradation or expansion. Capital goods also include packaging machinery and equipment refractories, refrigeration equipment, power generating sets, machine tools, catalysts for initial charge, equipment and instruments for testing, research and development, quality and pollution control. Capital Goods may be for use in manufacturing, mining, agriculture, acquaculture, animal husbandry, floriculture, horticulture, pisiculture, poultry, sericulture and viticulture as well as for use in the service sector. Therefore, they contend that their equipment is covered for manufacture/production either directly or indirectly. The goods imported for making the moulds and then produce equipment fall within the category of capital goods. He relied on the following judgments :-

(a) Orissa Air Products Ltd. v. Collector of Customs, Calcutta [1998 (103) ELT 583], wherein the Tribunal held that empty gas cylinders imported for initial setting up of a plant engaged in production of gas are eligible for the benefit of Heading 98.01. It is pleaded that although the gas cylinders are not directly required to manufacture gas but are used as containers for the gas produced in the unit, but still, the benefit of the said heading has been granted as it is used for filling the gas produced.

(b) Further reliance is placed on Asiatic Oxygen Ltd. v. ACC [1992 (057) ELT 563], wherein the High Court observed that the object behind Heading No. 84.66 (Now 98.01) was to promote industrialization and the heading must be construed liberally.

5. Countering the contention of the appellants, ld. DR very forcibly submitted that the contentions of the appellants cannot be accepted as what has been received was in the nature of ‘Toys’. Even, if they are not complete ones, by applying the Interpretation Rule (2) (a), then they have to be treated as ‘parts of toys’ and they have acquired essential characteristics and they are goods in the nature of final products. What is required to be included in Heading 98.01 are items which go to manufacture of the plant or assist in the manufacture of the plant. The plant should produce goods. The very goods which are required for moulds which are nothing but final goods. These cannot be treated as assisting in the manufacture of final product. It is his contention that the Commissioner has given a detailed finding and the same is required to be upheld. On a specific query from the Bench as to how they would distinguish the Larger Bench judgment rendered by the Tribunal in the case of Toyo Engineering India Ltd. [2000 (122) ELT 315]. Ld. DR points out that in the Larger Bench case, the appellants had taken out the goods for setting up a project abroad, same was brought back and wanted it to use the same for setting up a project. The nature of goods was considered by the larger bench as ‘accessories’ in the light of Word Book Dictionary, ‘auxiliary’ means, “a person or thing that helps; aid; syn; accessory”. The items were bumpers and transport equipments which are necessary for constructing the factory. It was pointed out by the ld. DR that in that case the Bench did not permit the DR to raise the pleas pertaining to registration of contract prior to importation in terms of Heading 98.01 as similar pleas had not been raised before the adjudicating authority. He, on being pointed out by the Bench that in the present case, there was no dispute of registration of contract, or licence issued or the documents were not disputed by the Commissioner by rebuttal evidence, ld. DR submitted that although the ld. Commissioner has not dealt with the documents which were directed to be examined by the Bench in the remand order, yet the order is sustainable on merits. He sought for dismissal of the appeal.

6. We have carefully considered the submissions made by both sides and have perused the entire records and re-adjudicated order of the Commissioner of Customs (Appeals), Chennai.

7. The Commissioner of Customs (Appeals), was directed by the Tribunal vide Final Order No. 1573/99, dated 30-6-99 to reconsider the documents submitted by the appellants namely (a) declared end-use of the items imported (b) the Chartered Engineer’s certificate (c) Importer’s affidavit; (d) Technical opinion of Prof. of I.I.T Madras (Dr. N.N. Nair, HOD); and (e) recommendatory letter of Director of Industries, Andhra Pradesh and gave her the following directions :-

“These clearly opine that the items imported are not complete toys but merely ‘patterns’ from which toys would be made after R & D leading to emergence of moulds. The order impugned brushes aside these evidences/arguments without giving any reasons to support their being discarded. We, therefore, find that the order impugned is a non-speaking order which has failed to consider in detail the facts on record. The Order-in-Appeal is therefore set aside and the matter remanded to the first appellate authority for de novo consideration. He, shall hear the appellants and thereafter pass a detailed speaking order which shall contain reasoned findings on all issues agitated before him. The appeal is allowed by way of remand.”

It necessitated for the Tribunal to remand the matter to reconsider the above documents with the reason that the order of the ld. Commissioner was a non-speaking order and the ld. Commissioner has not given any reasons as to why the documents and the evidence on record should not be accepted.

8. In the remand proceedings, the ld. Commissioner as extracted from the finding portion of the impugned order has not disputed the facts (i) that the project has been registered with the Customs department on the basis of directions given by the Hon’ble High Court (ii) that the appellants had produced the above documents in the form of certificate issued by the Chartered Engineer, technical opinion of Professor of IIT, Madras; importer’s affidavit; recommendory letter of Director of Industries, Andhra Pradesh and about specific import licence obtained from the licencing authorities classifying the goods as “capital goods”.

9. In terms of the above findings, and also the directions given by the Tribunal, it was incumbent on the ld. Commissioner to have recorded the reasons as to why these documents and opinions were not acceptable. On a perusal of the Commissioner’s order which is extracted, we notice that the Commissioner has not given any findings on the documents. The proper method would have been to refer back the department’s opinion pertaining to the item not being ‘capital goods’ for consideration for classification as project import under Chapter 98 to the concerned Chartered Engineer, Professor of IIT Madras, importing authorities and recommendory authority i.e. the Director of Industries, Govt.of Andhra Pradesh and put to them the department’s plea and reasonings as to why the item cannot be considered as ‘Project Import’ and should have sought their presence for cross examination. In a remand proceedings, it was incumbent on a Commissioner to have applied her mind on the documents which were before her and then given thought to it by placing it with rebuttal evidence. In the absence of such an examination and getting the rebuttal evidence from the department, it legally follows that the documents have not been challenged and the evidence cannot be brushed aside as of no sequence; on her own premise, presumptions and assumptions, as held by the ld. Commissioner with regard to the pleas raised by the importers in the matter.

10. Be that as it may, the crucial question required for consideration is as to whether the imported items could be classified as ‘project imports’ in terms of the definitions given in the Import Policy and Chapter Heading 98.01. The Commissioner (Appeals) in his order has merely observed that it is “highly misleading to aver that Heading 98.01 is an end-use based classification. End-use, no doubt, is one of the criteria i.e. the goods are to be used for the Project. But all the goods used for the project cannot qualify for classification under Heading 98.01. They must necessarily conform to the description in the Heading (98.01), and the importer must follow the procedure laid down in the Regulations, 1986”. After observing, the ld. Commissioner has noted that there is no dispute raised by the Custom House with regard to registration of the project but she finds no grounds to accede to the plea that the finished toys are patterns and conform to the description in the heading as they qualify as capital apparatus/equipment for development purpose and are essential auxiliary items for getting moulds to make the finished toys. Only on this premise, she has rejected the plea. We are constrained to observe that the ld. Commissioner in fact has not gone in depth to consider the issue and has not given finding on the various pleas raised by the appellants that these ‘patterns’ are nothing but “auxiliary equipment” and that they are not in a marketable stage and cannot be sold in the market. From the items, the moulds are manufactured and from the moulds the required equipment is manufactured for the purpose of sale. This issue has not been dealt with but a mere finding has been recorded that “end-use” cannot be the criteria for classification. The only way to establish that the imported items referred to as “patterns” by the importer to constitute as “auxiliary equipment” as per the CETH 98.01 is to examine the evidence placed on record. It is seen that in the subsequent paragraph, the ld. Commissioner herself stated that end-use is one of the criteria for goods to be classified. The ld. Commissioner has blown hot and cold in holding at one place that for the purpose of classification end-use is not the criteria and in the next line, she records a finding that end-use is one of the criteria for the purpose of use for the project. We notice that the findings of the ld. Commissioner is not sequential and logical. The question of application of Interpretative Rules and Section notes and Chapter notes would not come to play, once we consider the item to be a project import for the purpose of classification under Heading 98.08 as “capital goods”. The criteria of considering the item to be semi-finished or specially designed for use in the manufacture of the final products and the same is required to be classified in terms of the Interpretative Rules and chapter notes would be applicable only for chapters other than Chapter 98.01. Once the item falls within the ambit of Chapter Heading 98.01, then the interpretation has to be liberal as has been held by the Calcutta High Court in the case of Asiatic Oxygen Ltd. (supra).

11. We notice that there is no dispute in the matter that the supplier in the invoice had clearly described the items to be “Children’s Play Equipments & Designs and Drawings as per the proforma invoice.” The import licence also clearly described the goods in the same line and the licence was for the purpose of manufacture of ‘Children’s Play Equipments’. The Chartered Engineer who has issued the certificate dated 14-8-90, which has now been brought on record, has certified that he visited the factory and observed that the items described in terms of the certificate which were imported and dismantled and used as patterns for obtaining moulds in order to develop indigenous children’s play things, exactly as per the imported patterns. He has noted that he has also seen the moulds those obtained for such patterns. He has certified that the imported items except moulds and the Bumper Car, components are used as patterns only and were not sold as such and they were lying in the factory premises of the importer. He has certified that he found all the patterns mentioned above in totally dismantled condition. He has certified that dismantled pieces of imported children’s play equipments cannot be satisfactorily put together now and sold as complete items. He has declared that he personally inspected the items on 14-8-90 and satisfied himself and had no direct or indirect interest in the items; that he has examined and issued the certificate; and the information furnished by him in the certificate is true and correct to the best of his knowledge and belief. M/s. Chartered Engineer (India) have also issued a certificate to the said Engineer certifying him as a Chartered Engineer registered in their institute. The Director of Industries, Govt. of Andhra Pradesh has issued a letter to the Collector of Customs, Madras recommending the importer for considering the imported goods at concessional rates of customs duty and items noted in the bill of entry to be treated as “Project Imports”. The Bill of Entry also described the item as “Children’s Play Equipment, Components, Prototype and Mould as per Proforma”. There is no allegation that appellants have mis-used these items and sold it in the market and that they have not prepared moulds and not manufactured final products. The question that remains for consideration is as to whether the items comes within the ambit of the definition of ‘auxiliary equipment’ or within the term ‘capital goods’ as defined in ‘project imports’ and extracted in the main portion of the order. We agree with the appellants’ contention that there is no contra opinion obtained by the department either in the form of clarification from the Director of Industries for treating the items as not “project imports” or from any Chartered Engineer or any expert or any market survey report to say that the items imported are complete goods and are in marketable condition and were sold as toys. In the absence of any evidence and further in the absence of any reasonable ground to reject the evidence brought on record including the affidavit of the manufacturer, therefore, the ld. Commissioner’s finding rejecting the claim of appellants is required to be set aside.

12. We also notice that the Larger Bench of Five Members of the Tribunal has gone in great detail to consider as to what is an “auxiliary equipment” in the case of Toyo Engineering India Ltd. (supra). The Tribunal in Para 5 has noted the definition of the term “auxiliary”. It noted that “Auxiliary means giving additional help; supplemental or subsidiary; an item not directly a part of a specific component or system but required for its functional operation (Words and Phrases of Excise and Customs by S.B. Sarkar).” The Tribunal has also noted that definition of ‘auxiliary’ as appearing in the World Book Dictionary, to mean “a person, or thing that helps; aid; syn; accessory”. The Tribunal after due consideration upheld the appellant importer’s plea of use of transport equipment to assist and help in setting up a project. The Tribunal has noted that ‘the mere fact that the equipment would be acting as an aid would not debar them from being covered by Heading 98.01 as it specifically mentions auxiliary equipment which according to Dictionary means a thing that helps; aid. The mere possibility of their use subsequently would not debar the importer from the facility of project import. The findings rendered in Para 5 of the above judgment is noted herein below :-

“5. Heading 98.01 covers all the items of machinery including primers, instruments, apparatus and appliances; control gear and transmissions equipment, auxiliary equipments besides components and raw materials re-quired for the initial setting up of a unit or the substantial expansion of an existing unit of a specified industrial plant. We are of the view that the fertiliser plants, for the initial setting up of which the impugned goods were imported by the appellants, is covered by the expression ‘industrial plant’ as it is designed to be employed directly in the performance of processes necessary for manufacture of fertiliser. Once the fertiliser plant is covered by the industrial plants specified in Heading 98.01 of C.T.A., all the auxiliary equipments which are required for the initial setting up of the unit can be imported under the Project Import Scheme. Auxiliary means giving additional help; supplemental or subsidiary; an item not directly a part of a specific component or system but required for its functional operation (Words and Phrases of Excise and Customs by S.B. Sarkar). According to the World Book Dictionary, ‘auxiliary’ means, “a person or thing that helps; aid; syn; accessory”. We also observe that even the Tribunal in PSEB case, after refering to the definition of the word ‘auxiliary’ in Concise Oxford Dictionary observed that equipment which is directly used in the setting up of the project would be an auxiliary equipment. The Tribunal, in that case, did not treat the vehicle as an auxiliary equipment as it was to be used for transport of the transformer to the project site and restricted the term to those equipments which have direct use in the setting up of the project. The Larger Bench of the Tribunal in National Aluminium Co’s case have interpreted the Supreme Court’s decision in P.S.E.B. case and explained as to why the vehicles were not held to be integral part of the power project. We also observe that it is not the case of the department that the construction equipments imported by the appellants were not used in the initial setting up of the plant. The Assistant Collector denied the facility of project import as the ownership of the imported goods would not pass to the project authority and the Collector (Appeals) confirmed the adjudication order holding that the impugned goods would be acting as an aid in the setting up and the importer may utilise the machinery elsewhere in the setting up of another plant. What is required for the purpose of project import is that the equipments should be used in the initial setting up of the specified plant. The mere fact that the equipment would be acting as an aid would not debar them from being covered by Heading 98.01 as it specifically mentions auxiliary equipment which according to Dictionary means a thing that helps; aid. The mere possibility of their use subsequently would not debar the importer from the facility of project import. If the contention of the Revenue is accepted, no equipment can be imported for projects like Konkan Railway Project, Road Development Projects of the National Highway Authority of India, etc. specified under Heading 98.01 as certainly the machinery imported for carrying out these works cannot become a part and parcel of the project or may not be owned by the project authority. We are, therefore, of the view that the grounds on the basis of which both the lower authorities denied the facility of project import to the appellants are not correct.”

13. We notice that the ratio of the above Tribunal judgment would clearly apply to the facts of this case. The importer in the present case is better placed than the importer in the Toyo Engineering India’s case supra. The fact is that the equipment therein did not participate or aid in the manufacture but only helped in construction of the building to set up the project, while in the present case without moulds, final goods cannot be manufactured. In this case, for the purpose of manufacture of the final product, no machinery is required. What is required is “moulds” and from “moulds”, the final goods are made. For preparing “moulds”, patterns is required. Appellants have imported these patterns and they are required to be considered as ‘auxiliary equipment’ as it helps; aids in preparing ‘mould’ so that from the moulds, the final products can be manufactured. Therefore, the contention raised by the appellants that it falls within the definition of ‘capital goods’ is fully justified and we are of the considered opinion that the goods were not “finished toys” as contended by the lower authorities and forcibly argued by ld. DR nor they were parts or semi-finished or in SKD/CKD condition for applicability of chapter notes for classifying the same as ‘toys’ under Heading 95.03. The definition of ‘capital goods’ as is seen in the Import Export Policy is very wide. It includes not only plant, machinery equipment or accessories required for manufacture or production either directly or indirectly, of goods or for rendering services but also include those items required for replacement, modernisation, technical upgradation or expansion. It also includes packaging machinery and other items described therein. The item here is directly going in for production of “moulds”. The ‘moulds’ are in the nature of “accessories” as from the moulds, the final product is manufactured. The final products are manufactured through various ‘accessories’. The appellants have produced evidence before the authorities that the item was not in a marketable condition but were used in their R & D leading to emergence of moulds. They also proved that the final product manufactured from these moulds which were sold to various units of amusement parks set up at Hyderabad, Chennai, Bangalore, Coimbatore, Erode and Vijayawada. Therefore, we hold that “patterns” were required for manufacture of “moulds” which fall within the definition of “accessories”.

14. Thus, we uphold appellants contentions and allow the appeal with consequential relief, if any, as per law. Appeal allowed.

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Equivalent 2002 (148) ELT 0768 (Tri. - Chennai)