2001(03)LCX0068
IN THE CEGAT, SOUTH ZONAL BENCH, CHENNAI
S/Shri S.L. Peeran, Member (J) and V.K. Agrawal, Member (T)
CHILLIES EXPORT HOUSE LTD.
Versus
COMMISSIONER OF CUSTOMS, CHENNAI
Final Order No. 395/2001, dated 14-3-2001 in Appeal No. C/452/96-Md.
Advocated By : Shri T. Ramesh, Advocate, for the Appellant.
Shri S. Sudarsan, DR, for the Respondent.
[Order per : V.K. Agrawal, Member (T)]. - The issue involved in this appeal filed by M/s. Chillies Export House Ltd is whether Magnet Separator imported by them is classifiable under Heading 8437.90 of the schedule to the Customs Tariff Act or under Heading 8505.90 as confirmed by the Commissioner of Customs (Appeals) under the impugned order.
2. Shri T. Ramesh, learned Counsel for the appellants submitted that they had imported the impugned goods to be used in their milling mill for removal of foreign metal parts from the vegetables and as it is used in the milling machine, it has to be classified under Heading 8437.90 and not under Heading 8505. He also referred to explanatory note to HSN below the heading where it is mentioned that the heading does not cover Electro-magnets, permanent magnets or magnetic devices when presented with machines, apparatus etc. of which they are designed to form part.
3. Opposing the appeal, Shri S. Sudarsan, learned DR, submitted that as per Note 2(a) to Section XVI of the Customs Tariff Act, parts of machines which are goods included in any of the Headings of 84 and 85 are to be classified in their respective headings; that the exclusion made under Explanatory note to HSN is not applicable as the impugned goods have not been presented with the machines for the purpose of assessment. In reply the learned Counsel submitted that the impugned goods were imported only to be used in their milling machine and nowhere else and this has not been disputed by the Department and it should go as part of the milling machine.
4. We have carefully considered the submissions of both the sides. We find that the Commissioner (Appeals) in the impugned order has considered the matter in detail by referring to Note 2(a) to Section XVI of the Tariff. His findings as contained in Paras 11 to 14 are extracted below which in our view explains the position very correctly.
11. In the instant case, even though the impugned magnetic separators (or permanent magnets) are taken as parts of milling machine, the same fall for classification under Heading 85.05 which specifically covers those parts as goods under the description “permanent magnets” as the impugned magnetic separators were, admittedly, permanent magnets only. Thus, going by Section Note 2(a) of Section XVI, the classification of the impugned goods can be settled or determined, and hence, there is no need to refer to Section Note 2(b) in this case.
12. It may be pertinent to mention in this regard that the correct classification of the goods would be under sub-heading 8505.11 as the impugned magnetic separators were permanent magnets made of metal. Thus, the classification of the goods under sub-heading 8505.90 was strictly not in order. However, since the tariff rate of duty was the same under the above two sub-headings, the above mistaken classification has not affected either the Revenue or the appellant.
13. The Explanatory Note in HSN under Heading 85.05 at Pages 1340 and 1341 provide important clues to the principle of classification in so far as the impugned goods are concerned. Under the sub-heading “Permanent Magnets and Articles intended to become Permanent Magnets after Magnetisation”, it is stated in the Explanatory Notes at Page 1340 that permanent magnets remain classified here, whatever may be their use, including small magnets used, inter alia, as toys. The exclusion from the above heading at Page 1341, inter alia, covers electro-magnets, permanent magnets or magnetic devices of this heading when presented with machines, apparatus, toys, games etc., of which they are designed to form part in which event those goods are to be classified with those machines, apparatus, etc. From the above Explanatory Notes and Exclusion, it is patently clear that permanent magnets, even though used as parts of another machine, shall be classified under Heading 85.05 unless it is presented for classification purpose with the machines, apparatus, etc., of which they are designed to form part. In that event only, permanent magnets should be classified with those machines, apparatus imported along with those permanent magnets. In the instant case, it is evident that the permanent magnets in question have been imported separately and not along with the milling machine. Hence, the impugned permanent magnets were clearly not excluded from the scope of Heading 85.05, as per the Explanatory Notes in HSN.
14. In view of the reasons stated above, I am not inclined to interfere with the original order which is maintainable (except for the fact that the impugned goods were correctly classifiable under sub-heading 8505.11 and not under sub-heading 8505.90.
5. We agree with the findings of the Commissioner (Appeals) and uphold the classification of the impugned goods under sub-heading 8505.90 as we do not find any substance in the submissions of the learned Counsel for the appellants that the goods are used in the milling machine has not been disputed simply for the reason that the provisions of Note 2(a) is applicable for the purpose of classification and no reference to Note 2(b) can be made as it has not been imported along with the machine. Accordingly, the appeal is rejected.
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Equivalent 2001 (134) ELT 0471 (Tri. - Chennai)
Equivalent 2001 (045) RLT 0333