2006(03)LCX0187

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, SOUTHERN REGIONAL BENCH, CHENNAI

P.G. Chacko, Member (Judicial) and P. Karthikeyan, Member (Technical)

Collector of Customs, Kochin

Versus

Western India Plywood Ltd.

Final Order No. 175/2006 decided on 01.03.2006 in Appeal No. C/725/94/MAS

Advocated By -

R. Bhagya Devi, SDR For the Appellant
Nisha Bineesh, Adv.For the Respondent

P. Karthikeyan, Member (Technical)

1. This is an appeal filed by the revenue against the order in appeal No. 117/94 dt. 27th July, 1994 passed by the Commissioner of Customs (Appeals), Cochin.

Brief facts of the case are as follows:

Western India Plywood Limited (hereinafter referred to also as "WIPL", importer or assessee) imported a set of machinery called defibrator pulping system (DPS) vide bill of entry No. 244 dated 27th October, 1992 and the same was classified under Heading 8439.10 of the Customs Tariff Act. Subsequently the department issued a less charge demand on the ground that some of the machines comprising the system were classifiable under different headings carrying higher rates of duty. The assistant collector of customs decided that motor vibrator with actuators and sealing water system with pump, motor and controls were items having general use and therefore classifiable under CSH 8479.89. They were decided to be machines having individual functions independent of machines in other headings of CSH 8479.89. A short levy of Rs. 8,95,289 was demanded from the assessee accordingly.' On appeal, the collector (appeals) decided that motor vibrator with actuators and the sealing water system were integral parts of the DPS. He decided that the classification of these items initially made in the bill of entry was correct. On appeal by the Collector of Customs, Cochin, the Delhi Bench of this Tribunal decided vide its final order No. 3032/ 99 dated 10th November, 1999 that motor vibrator with actuators was classifiable under CSH 84.79 as a machine having individual functions not specified or included elsewhere in Chapter 84. The Tribunal also decided that sealing water system had been correctly classified in the bill of entry. On appeal by the assessee against the order of the Tribunal, the Hon'ble Supreme Court remanded the case for decision in accordance with law and laid down guidelines for such decision in remand. The Apex Court observed that the tribunal had classified motor vibrator with actuator under residuary Heading 8479.89 and that it was well settled that application of the residuary tariff entry must be made with good deal of caution as it was attracted only when no other provision expressly or by necessary implication applied to the goods in question. In several cases a single tariff item referred to a large number of goods of different types as each item could not be encapsulated in comprehensive titles. The Apex Court further observed that the subject item was classified by the Tribunal under Heading 84.79 solely on the basis of Clause 5 of the explanatory notes (Sl.No. 5 of the examples under Item B (I) of notes under Chapter Heading 84.79) to the HSN which read as follows:

5. Vibrator motor consisting of an electric motor with eccentric discs fitted to the protruding ends of the shaft, generating radial vibrations which are trasmitted to the apparatus or appliance (chutes. bins. hoppers. conveyors. compacting appliances. etc) to which the vibrator motor is fixed.

The court went on to observe that Note 2(b) to Section XVI laid down that in the absence of a specific heading, a part suitable for a particular machine was classifiable under heading applicable to that machine. Further according to note 7 to Chapter 84 classified "machines" according to their functions. Where a function was relevant for classification and where a machine was capable of performing two or more complementary or alternative functions, they had to be classified according to their principal purpose. In the subject case, the motor vibrator with actuator regulated the flow of wood-chips into screw feeder at a pre-determined rate and. Therefore, it was not a prime-mover only, as held by the Tribunal. As per HSN, items falling under Heading 84.25 to 84.78 would cover machines which were classifiable by reference to the field of industry in which they were used, regardless of their particular functions. The Tribunal had not considered this explanation while passing the order. Finally, the Apex Court made the following observation:

As stated above, in the matter of classification, unless the department is in a position to establish that the goods in question can by no conceivable process of reasoning be brought under CSH 8439.91, resort cannot be had to the residuary Heading 8479.89.


2. The present appeal is accordingly taken up for decision. Smt. R. Bhagya Devi, ld. SDR appeared for the revenue and Smt. Nisha Bineesh, ld. Counsel appeared for the respondents. Ld. SDR has reiterated the arguments contained in the impugned order that the subject item was classifiable under Chapter Heading 84.79 as it was mentioned in the HSN notes to Section XVI specifically as an example of machinery of general use. Ld. Counsel for the respondents argued that the item was an integral part of DPS. Parts of pulp making machinery are covered under Heading 8439.91 which reads as follows:

8439.91 - Parts of machinery for making pulp of fibrous cellulosic material.

The complement of machines imported were undisputedly machinery for making wood pulp from wood chips. Defibrator is the main component of DPS. It converts wood chips into pulp. The MVA feeds wood chips into a chute and from there to the screw feeder of the defibrator when they are converted into pulp. In the normal course, the wood chips are fed into screw feeder by gravity. However, when there is any change in the rated flow of chips, the MVA will take over and ensure that the flow is maintained at the pre-determined desired rate. The appellants had all along argued that motor vibrator with actuator is an integral part of the machinery for making pulp of fibrous cellulosic material. They are undisputedly used to control the level of the wood chips in the chute from where the chips are continuously fed into screw feeder. Motor vibrator with actuator cannot function independently. Therefore, it is not a machine with individual function to be classified under Heading 84.79. From this it is seen that motor vibrator with actuator is designed to work in conjunction with defibrator and is therefore essential for the proper functioning of the defibrator. It is so, because, the defbirator cannot function without the wood chips being fed at a fixed rate.


3. As per the write-up given by the assessee, the subject goods and their functions are described as follows:

Motor Vibrators with Actuators

The vibrators ER 620 Dynapac consist of totally enclosed splash proof electric motors with adjustable eccentrics mounted on the ends of the rotor shaft. These are designed for operation on 50 HZ 3 Phase 380/415 V AC. The rating is 0.6 KW. The rated speed will be around 3000 RPM. These vibrators are made to work automatically with the help of actuators which sense the level of wooden chips in the chute on which these are mounted. The Omron actuator is a combination of sensors and a control unit model S.3.S.

One of the grounds of appeal is that the item does not figure in the literature supplied by the importer. It is seen that the literature supplied is not of the particular model defibrator type L42 that had been imported for which the MVA of the preceding description forms a part. Literature talks of the technology of the process and broadly of the machinery and not about the particular model of the machine mentioned in the invoice. Another ground is that MVA is specifically described as an item of general use having individual function in the HSN explanatory notes, from a scrutiny of the functions of MVA it is obvious that MVA is not just a prime mover referred to in the HSN notes of Chapter 84 as observed by the Honourable Supreme Court. It is apparent that the subject vibrator motor is different from the generality of such machines sought to be covered by the illustration in HSN. As regards another ground that the item had figured along with the spares and that the same had been invoiced separately from the defibrator, it is seen that several other items similarly invoiced had been classified under the same heading as defibrator in the bill of entry and the classification confirmed later by the original authority. Moreover, the sealing water system, another such item was classified by the tribunal as part of defibrator in CSH 8439.91 in its initial order rejecting revenue's appeal which the revenue has not challenged.

4. The MVA is mounted on the chute and the defibrator can function only in conjunction with the MVA. In view of the principal function of the MVA, as per Chapter Note 7 of Chapter 84, the same is rightly classifiable as part of DPS falling under CSH 8439.91 i.e., in the same heading as machinery, DPS. Therefore, this item gets classified under 8439.91.

Accordingly, we dismiss the department's appeal.

(Operative portion of the order pronounced in open court on 1st March, 2006)

Equivalent 2006 (109) ECC 0439

Equivalent 2006 (135) ECR 0439 (Tri.-Chennai)

Equivalent 2006 (199) ELT 0495 (Tri. - Chennai)