Indian Organic Chemicals vs Commissioner of Customs, Chennai>2003(05)LCX0034

2003(05)LCX0034

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

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

INDIAN ORGANIC CHEMICALS

Versus

COMMISSIONER OF CUSTOMS, CHENNAI

Final Order No. 401/2003, dated 30-5-2003 in Appeal No. C/934/98

CASES CITED

Brooke Bond Lipton India Ltd. v. Commissioner — 2000(11)LCX0236 Eq 2001 (127) ELT 0569 (Tribunal- Mum.) — Referred [Para 3]

Kumar Traders v. Commissioner — 2001(02)LCX0107 Eq 2001 (129) ELT 0741 (Tribunal) — Referred............... [Para 5]

Ranadey Micronutrients v. Collector — 1996(09)LCX0009 Eq 1996 (087) ELT 0019 (S.C.) — Referred..................... [Para 5]

REPRESENTED BY : Shri R. Raghavan, Advocate, for the Appellant.

Shri A. Jayachandran, DR, for the Respondent.

[Order per : S.L. Peeran, Member (J) (Oral)]. - This appeal arises from Order-in-Appeal No. M. Cus. 799/95, dated 5-5-95. The appellants have imported thread guides and in the Bill of Entry, they claimed the item to be made of plastic. Therefore, it was assessed as parts of plastics under Chapter sub-heading 3926.90. Later, they filed a refund claim seeking the item to be parts of textile machinery classifiable under chapter sub-heading 8448.20. The Asstt. Collector in the Order-in-Original noticed that they had not proved convincingly that the items are parts of machines classifiable under Heading 8445 of CTA. He also noted that they had indicated in the Bill of Entry that the imported goods are of plastic and hence, upheld the classification done in the Bill of Entry. Before the Commissioner (Appeals), they produced the evidence to show that the item thread guide was made of “ceramics” and not plastics and hence, the item cannot be classified under Chapter 39 and since, it was a part of textile machinery, it should be classified under the respective heading under Chapter 84.

2. After due scrutiny of the material on record, the Commissioner accepted their contention that the item is made of ceramics. However, on examination of the Note (1)(c) of Section XVI (which pertains to both the Chapters 84 & 85), he noticed that it excludes “Bobbins, spools, cops, cones, reels or similar supports, of any material (for example, Chapters 39, 40, 44 or 48 or Sec. XV). He noted that thread guides can be considered as a support for yarns and threads and, therefore, held it to be excluded from the scope of Section XVI. He noticed the Harmonised Tariff which includes thread guides for textile machinery under Heading 69.09 and Chapter 69 covers ceramic products. He has noted that it is the case of the appellant that the impugned thread guides were made of ceramic. In that view of the fact, he held that there is no room for doubt that the impugned thread guides made of ceramic and used for textile machinery, were correctly classifiable under Heading 69.09 (6909.90) with rate of duty at 85%. He has clearly noted that although the rate of duty was collected under sub-heading 3926.90, but CVD was paid by the appellant at 30% under Heading 3926.90, whereas CVD was payable at 35% under sub-heading 6909.90. He has noted that at the appeal stage, no action can be taken for recovery of the said higher CVD. In view of determining the correct classification of the goods, he directed the Custom House to classify thread guides made of ceramics correctly in future.

3. Ld. Counsel Shri R. Raghavan contests this finding and submits that the appellate Commissioner was not right in reclassifying their product without notice to the party when the classification adopted in the Bill of Entry has not been challenged by the Revenue. He submits that the Bombay Bench in the case of Brooke Bond Lipton India Ltd. v. CCE, Mumbai - 2000(11)LCX0236 Eq 2001 (127) ELT 0569 (Tri.-Mum.) has held that the classification proposed by the department before the Commissioner (Appeals) not the one proposed in the corrigendum to notice replacing the heading and as such the order is not maintainable. He submits that the item is required to be treated only as parts of textile machinery for classification under chapter 84 and its exclusion in the light of Note (1)(c) of Section XVI. He also points out that the Heading 69.09 refers to ceramic wares for laboratory, chemical or other technical uses and therefore, that heading is not proper.

4. Ld. DR points out that there is no infirmity in the order. He produced a copy of page 1005 of HSN Explanatory Notes under Chapter 69.09, which clearly lays down as under :-

“Section XIII

II - 69.09,

The heading covers in particular :

(i) Laboratory wares (e.g., for research or industrial use) such as crucibles and crucible lids, evaporating dishes, combustion boats, cupels; mortars and pestles; spoons for acids, spatulas; supports for filters and catalysts; filter plates, tubes, candles, cones, funnels, etc.; water-baths; beakers, graduated vessels (other than graduated kitchen measures); laboratory dishes, mercury troughs; small tubes (e.g., combustion tubes, including analysis tubes for estimation of carbon, sulphur, etc.).

(2) Ceramic wares for other technical uses, such as pumps, valves; retorts, vats, chemical baths and other static containers with single or double walls (e.g. for electroplating, acid storage); taps for acids; coils, fractionating or distillation coils and columns. Raschig rings for petroleum fractionating apparatus; grinding apparatus and balls, etc., for grinding mills, thread guides for textile machinery and dies for extruding man-made textiles; plates, sticks, tips and the like, for tools.

(3) Containers of the kinds used for the commercial transport or packing of goods, e.g., large containers, carboys, etc., for the transport of acids and other chemical products; flagons, jars and pots, for foodstuffs (jam, condiments, meat pastes, liqueurs, etc.), for pharmaceutical products or cosmetics (pomades, ointments, creams, etc.), for inks, etc.

(4) Troughs, tubs and similar containers of the type used in agriculture.

The heading excludes :

(a) Articles of Heading 68.04.

(b) Retorts, crucibles, muttles, cupels and other similar articles of refractory materials (Heading 69.03).

(d) General purpose jars and containers for laboratories and display jars for pharmacies, confectioners, etc. (Heading 69.14).

(e) Articles of cermets (Headings 81.13).

(f) Electrical apparatus (switches, junction boxes, fuses, etc.) of Headings 85.33 to 85.38, and electrical insulators, insulating fittings etc. of Headings 85.46 or 85.47.”

5. In the light of above note, thread guides for textile machinery are required to be considered as ceramics wares for other technical uses. He submits that it clearly falls under the said heading. It is his further submission that change of classification suggested by the Commissioner (Appeals) has not prejudiced the appellant inasmuch as he has clearly noted that no action can be taken for recovery of the said higher CVD. Therefore, there cannot be a grievance on the part of the appellant in Commissioner to have suggested a correct classification to the Custom House for future purpose without prejudicing the cause of the appellants. He, therefore, submits that the citation referred to is not applicable as in that citation the department had sought to change the classification at the appellate stage and not shown in the corrigendum to enable the importer to contest the case. He submits that in the present case only a suggestion has been given to Custom House for adopting a correct classification for future purpose in the light of the details of the product disclosed by the appellant at the appeal stage and in the light of tariff note and HSN notes. He relies on the judgment of Calcutta Bench rendered in the case of Kumar Traders v. CCE, Calcutta - 2001(02)LCX0107 Eq 2001 (129) ELT 0741 (T), which relies on the Apex Court judgment rendered in Ranadey Micronutrients v. CCE, 1996(09)LCX0009 Eq 1996 (087) ELT 0019 (S.C.) and the Bench has laid down that Revenue authority has powers to re-classify the goods having regard to the changed circumstances in terms of Rule 173B of Central Excise Rules.

6. On a careful consideration of the submissions, we notice that the Commissioner has not erred in suggesting a correct classification for the product and it is only in the nature of a suggestion to the Custom House for future corrective action. He has done so in the light of true facts disclosed by the appellants, wherein the nature of the product being ceramics before him. He has noted that the classification of the product thread guides is required to be done under Chapter sub-heading 6909.90 in the light of tariff and HSN notes which clearly requires the item to be classified as ceramics wares for other technical uses. In view of said extract supra, the item thread guides for textile machinery falls within chapter heading 69.09. The Commissioner has also noticed that Note (1)(c) to Section XVI excludes the item from Chapters 84 and 85. Thus, the appellant’s claim as part of textile machinery has been rejected, which we are required, to confirm and we do so. There is no merit in the appeal and hence, it is rejected.

Equivalent 2003 (156) ELT 372 (Tri. - Chennai)