1989(07)LCX0006

BEFORE THE CEGAT, SPECIAL BENCH ‘Bl’, NEW DELHI

S/Shri V.P. Gulati, Member (T), S.L. Peeran, Member (J) and Ms. S.V. Maruthi, Member (J)

COLLECTOR OF C. EX.

Versus

DOWELL’S ELEKTRO WORKS

Order No. 121/89-B1, dated 29-7-1989 in Appeal No. 662/89 with Misc. 117/89-B1

Cases Quoted

ADVANI OERLIKON LTD. v. UNION OF INDIA - 1981 (008) ELT 0032 (BOM.) [PARAS 10 & 12]

ELSON MACHINES (P) LTD. v. COLLECTOR OF CUSTOMS - 1988 (38) ELT 571 [PARA 10]

UNION OF INDIA & OTHERS v. GUJARAT WOOLLEN FELT MILLS - AIR 1977 SC 1548...... [PARA 13]

Advocated By : Shri V.M. Doiphode, SDR, for the Appellants.

S/Shri K. Parsurampuria, Advocate and R.C. Sethi, Consultant, for the Respondents.

[Order per : S.L. Peeran, Member (00J)]. - The appellant Collector of Central Excise, Bombay-II has challenged in this appeal the correctness and validity of the order passed by the Collector of Central Excise (Appeals), Bombay in SKM 203/B-II-413/88 which has arisen from the order in original No. V(68)Cell 302/85/3800, dated 3-5-1988 passed by the Assistant Collector, Division VII, Bombay II. The appellant has sought the restoration of the order-in-original by setting aside the impugned order in appeal passed by the Collector of Central Excise (Appeals), Bombay.

2. The brief facts of the case are that the respondents namely, M/s. Dowells Elektro Works, Bombay hereinafter to be referred to as Respondents are manufacturers of Cable Terminals and Sockets, Wire pins, In-line connectors, Ferrules and Snap-on terminals (hereinafter referred to as products). The respondents had filed the classification list classifying the above products under Chapter sub-heading No. 8548.00 of the Schedule to Central Excise Tariff Act, 1985 with duty @ 15% ad valorem. That according to the appellants, the main purpose of these products was to make connections to electrical circuits depending on voltage not exceeding 1000 volts and that they are correctly classifiable under Chapter sub-heading No. 8536.90 of Schedule to Central Excise Tariff Act, 1985 and would attract duty at 20% ad valorem. A show cause notice was issued and after adjudication of the case, the Assistant Collector classified the said products under Chapter sub-heading No. 8536.90 attracting duty at 20% ad valorem by relying upon the HSN Explanatory Note under Chapter Heading No. 85.36. The appellant has further submitted that the respondent did not raise serious objection regarding the classification of the products under sub-heading 8536.90 but, however, they pleaded for concessional rate of duty @ 15% ad valorem under Notification No. 160/86, dated 1-3-1986 (as amended), which has been allowed by the Collector (Appeals) by virtue of impugned order and they are enjoying the concessional rate of duty @ 15% ad valorem. The Collector granted the said concessional rate of duty @ 15% ad valorem on the ground that the said products of the assessee do not fall under Serial No. (i) or (ii) of Entry No. 13 of the Notification No. 160/83, dated 1-3-1986. Being aggrieved with the said concessional rategranted by the Collector (Appeals), the appellant has sought for restoration of the order of the Assistant Collector classifying the said products under Chapter sub- heading 8536.90 attracting duty @ 20% ad valorem. The main contentions of the appellant in the appeal memo is that the description of plugs and sockets (including those for connecting two movable leads) under HSN sub-heading No. 8536.90 are -

“A plug may have one or more pins or side contacts with metal corresponding holes or contacts in the socket. The products are having hallows used as connectors and are nothing but the sockets. It is immaterial whether they are bare or insulated.”

3. The appellants have strongly relied upon the definition of socket as found in Chambers 20th Century Dictionary, which describes socket as under -

“Socket - A hollow into which something is inserted.”

As per the Concise Oxford Dictionary, Socket is defined as under -

 “Socket - Natural or artificial hollow for something to fit into or stand firm or receive in.”

4. Thus the appellants main contentions as put forth by their Departmental Representative, Sh. V.M. Doiphode, is based on the dictionary meaning of Socket and comparison drawn by them with the products manufactured by the respondent. On the description of the products, the definition of socket as appearing in dictionary fits in and as such the products are sockets used as electrical equipment covered by sub-item (i) of Notification No. 160/86, dated 1-3-1986 (as amended) which reads as under -

“Switches, plugs, sockets - All kinds.”

5. Sh. Doiphode argued that the products are admittedly electrical equipments and that they are hallow to receive something in affording electrical connections. He further submitted that’t is immaterial as to whether these hallow equipments were fitted permanently or otherwise. It is sufficient to classify them as sockets so long as they are hallow to receive something and hence would be covered by sub-item (1) of Serial No. 13 of Notification No. 160/86, dated 1-3-1986 as it covers all types of sockets falling under sub-heading No. 8536.90 of Schedule to Central Excise Tariff Act, 1985.

6. Sh. Kamal Parsurampuria, Counsel appearing for the respondent, supported the impugned order and argued before us to consider all the points urged by them before the Collector (A) vide the Memo of appeal as submitted in Paper book. The Counsel vehemently argued that the Tribunal shall not rely upon the Dictionary meaning of the term socket but shall proceed to see the technical meaning appearing in Technical Dictionary published by Oxford & IBH Publishing Co. of which extract he had produced and which reads at page 92 as follows -

“Socket - The receptacle into which the threaded portion of an incandescent lamp or plug is fitted. A term which often means in electrical practice, a portable receptacle.”

Definition of Receptacle is as under -

“Receptacle - A porcelain, fibre, or composition device into which a lamp may be screwed or an attachment plug pushed, and which is fastened in place with screws. A wall socket for an incandescent electric lamp.”

7. The respondents Counsel strongly relied upon the common usage and term used in trade practice and submitted that the real meaning and function of the product has to be taken or understood in the trade parlance keeping with the technical term and meaning. He further submitted that the I.S.I. specification clearly distinguished the terms sockets and Cable Terminals which are what the products manufactured by the respondents are covered by ISI Specification in IS-8309 : 1976 as against conventional sockets in particular falling under sub-heading 8436.90 which are used in electrical circuits and separately covered by IS specification No. 1293 : 1967. The description in IS-8309 : 1976 is as under -

“Terminal end - A connecting device of an appropriate thermocouple material, with a barrel accommodating the conductor of a thermocouple extension cable.”

The description of IS specification No. 1293 :1967 is as under -

“Plug - A device carrying three metallic contacts in the form of pins intended for engagement with corresponding socket contacts and arranged for attachment to a flexible cord or cable.

Socket outlet - A device carrying three metallic contacts designed for engagement with corresponding plug pins and arranged for connection to fixed wiring.

Shuttered Socket-outlet - A socket outlet having provision for screening its line and neutral socket contacts automatically with a shutter when they are not in engagement with the corresponding plug pins.

Socket contact - Metallic contacts in the socket outlet which engage with the pins of the plug."

The learned Counsel further relied on the Explanatory Notes issued by Customs Cooperation Counsel which reads as follows -

“Other connectors, terminal, terminal strips etc - These include small squares of insulating material fitted with electrical connectors (dominoes) terminals which are metal parts intended for the reception of conductors and small metal parts designed to be fitted on the end of electrical wiring to facilitate electrical connection (spare terminals, crocodile clips etc).

Terminal strips consist of strips of insulating material fitted with a number of metal terminals or connectors to which electrical wiring can be fixed. The heading also covers tag strips or panels; these consist of a number of metal tags set in insulating material so that electrical wires can be solders to them. Tag strips are used in radio or other electrical apparatus."

8. The respondent’s Counsel heavily relied on the real usage of the products as understood in technical sense that the products are not sockets and that they are also not electrical equipment but parts of an electrical equipment. He submitted that their products are cable terminals as understood and orders placed accordingly by their customers as per specifications. In order to prove their point, the learned Counsel has placed before us the products fixed on a board and urged us to take on record for scrutiny. The same has been seen and marked by the Bench with the consent of both sides.

9. The respondents further submitted that all other manufacturers are getting the exemption and are paying duty @ 15% ad valorem and accordingly they are also entitled for the exemption as the products do not come within the definition of sockets as they are not sockets but only Cable Terminals. They further submitted that socket is a make and break connection not requiring any fastner or mechanical aid for making or breaking the electrical connection. Further socket is required to have insulating material for preventing earthing of the conductivity of the material if it is a single point socket and in case of two or more points sockets, base insulating is necessarily required for insulating live terminals from each other and for earth. The respondents counsel further explained that even as per Harmonized Commodity and Coding System, plugs, sockets and other contacts for connecting the movable lead or apparatus are classified distantly from other connectors and terminal ends of the type manufactured by respondents. The products manufactured by the respondents are in-line connectors, ferrules and pins which are in the nature of processed tubular fits and plates and in any event cannot be termed as socket or plugs attracting duty at 20% under sub-heading 8536.90. Even if they are classified under sub-heading 8536.90, they are still entitled to avail of concessional rate of duty at 15% ad valorem in terms of Notification No. 160/86, dated 1-3-1986 as amended as their products are not sockets, as they cannot be so classified. That in any event, In-line connectors, ferrules or wire pins, there is no dispute with regard to eligibility of concessional rate of duty as provided under Notification No. 160/86.

10. Sh. Kamal Parsurampuria further argued that the Department has been approving the classification for long and that they are not Justified in reclassifying and that the action of the Assistant Collector is not sustainable in law and relifd upon the ratio in the case to M/s.Advani Oerlikon Ltd. v. Union of India as reported in -1981 (008) ELT 0423 (Bombay). In reply Shri Doiphode submitted that the Assistant Collector is justified in reclassifying the goods and that there is no infirmity or illegality in doing so. The Department is justified in revising the classification even after granting earlier approval and that the earlier approval do not cause estoppel and he relied upon the judgment in the case of M/s. Elson Machines (P) Ltd. v. Collector of Customs [1988 (38) ELT 571 para 8].

11. We have heard both the sides and have carefully gone through the various contentions of both the sides. We have carefully gone through the impugned order and the order of the Assistant Collector. The main question that arises for consideration is as to whether the products manufactured by the respondents can be considered as socket in view of the definition given in the Concise Oxford Dictionary and Chamber’s 20th Century Dictionary as heavily relied upon by the appellants and also on the basis of the word ‘socket’ affixed as label to the product and used by the respondent or to go by the trade usage and meaning as well as according to the Scientific meaning and references made in ISI specifications, Customs, Cooperation Council and as per the distinguishing features between cable terminal and socket as contended by the respondent. The next question is if the products do not come within the ambit of the word ‘socket’ than, are the respondents entitled to the benefit of Notification No. 160/86 as amended.

Notification No. 160/86 as amended reads a hereunder (relevant portion only stated below) :

12. In the case of Advani Oerlikon Ltd. & Another v. Union of India & Others [1981 (8) ELT 432 (Bombay)] of the Bombay High Court, it has been held in para 13 as under -

“Mr. Mehta urged the burden of proof even if it was on the Department was duly discharged by the Department inasmuch as the findings were based on standard text books and that the fact that the books were merely company in its affidavit in rejoinder. Mr. Mehta relied on the decision of the Supreme Court in Union of India and Another v. Delhi Cloth and General Mills Co. Ltd. [ 1977 ELT J199 ; AIR 1963 SC 791] and on the decision of the Delhi High Court in Porrits and Spencer (Asia) Ltd. v. Union of India and Another [1980 ELT 679] where it was respectively held that the opinions of the Indian Standards Institute as expressed in the glossary of textile terms must be preferred to the opinions of authors and technical exports. It is difficult to see how those decisions can be of assistance to the respondents before me in view of the fact that neither the Superintendent nor the Appellate Collector nor the Revisional authority has relied on any opinion of the Indian Standards Institute. I do not see the implied admission alluded to by Mr. Mehta. It is futile to say that the books relied on by the Department are mere standard text books. They are not any the less what they actually are namely, highly technical books containing a wealth of technical information meant for technical people. It is reliance on such material by authorities that has consistently been frowned upon and condemned by the Supreme Court.”

Further at para 14 of the same judgment, it is observed as under -

“Mr. Mehta adverted to the Dictionary meaning of ”weld" meaning ‘to units’ or fuse as piece of metal by hammering, compressing after reducing to soft or pasty by heat and sometimes with addition of fusible material like or unlike the pieces to be united. Relying on this dictionary meaning, Mr. Mehta urged that flux coating is not the criterion to determine whether CCMS wires are welding electrodes or not. By relying on dictionary meaning, Mr. Mehta fails into the same error which the authorities fell into and which in turn, he invites me to do. I must decline to succumb to the temptation that Mr. Mehta lays before me."

Again at para 6, it is stated as follows -

“From the order passed by the Superintendent it is clear that he has relied on his personal observations in factories in Bombay and to see the end use of CCMS wires or cuts. The appellate order discloses reliance on the end use of the product, reference to technical books and dictionary meaning. The revisional order discloses its reliance on the end use of the product. It is on such considerations that the Superintendent, the Appellate Collector and the Revisional authority held that the company’s product viz. CCMS wires was attracted to excise duty under Tariff Item 50. However, what these authorities have palpably overlooked is that these considerations on which they have passed their impugned orders are the very considerations which the Supreme Court has repeatedly deprecated being taken into account to ascertain whether a particular commodity is attracted to excise duty or not. To illustrate in Commissioner of Sales-tax, MadhyaPradesh v. M/s.JaswantSingh Charan Singh - AIR 1967 SC 1454, the Supreme Court observed -

“Now, there can be no dispute that while coal is technically understood as a mineral product, charcoal is manufactured by human agency from products like wood and other things. But it is now well settled that while interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached te them by those dealing in them, that is to say, to their commercial sense”.

In Union of India v. Gujarat Woollen Felt Mills -1977 (001) ELT J 24 - AIR 1977 SC 1548, the question was whether non-woven felts could be treated as woollen fabrics within the meaning of Entry 21 of the Schedule to the Act. It was held by the Supreme Court that resort should be had to the scientific or the technical meanings but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense. In Dunlop India Ltd. v. Union of India - AIR 1977 SC 597, it was held by the Supreme Court that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in usual course, that technical and scientific tests offer guidance only within limits and that once the article are in circulation and come to be described and known in common parlance then there is no difficulty for statutory classification under a particular entry. At para 31 of the report it was observed as under -

“It is well established that in interpreting the meaning of words in a taxing statute, the adoption of a particular word by the Trade and its popular meaning should commend itself to the authority.”

At para 42 of the report appear the following observations -

“We are clearly of opinion that in the state of the evidence before the revisional authority no reasonable person could come to the conclusion that VP Latex would not come under rubber raw. The basis of the reason with regard to the enduse of the article is absolutely irrelevant in the context of the entry where there is no reference to the use or adoption of the article.”

Pausing here for a moment, it may be observed that Tariff Item 50 makes no reference to the end use in contra-distinction to certain other items, to wit, Items 51 and 54, where the end use of the articles covered by these items is mentioned. This is another indication as to the irrelevancy of considering the end use of the company’s product as done by the Superintendent and by the appellate authority. Reliance by the authority on dictionary meanings have been deplored by the Supreme Court in Sales-tax Commissioner, U.P. v. S.N. Bros. - AIR 1973 SC 78, where it was observed as under -

“In our opinion the Random House Dictionary cannot serve as a safe guide in construing the words used in the list of the notification in question for the purpose of deciding whether or not the words used in entries Nos. 10 and 37 cover food colours and syrup essences; indeed this dictionary is apt to be a somewhat delusive guide in understanding the meanings of the words and expressions with which we are concerned in the context in which they are used. This dictionary gives all the different shades of meanings attributable to the words referred but that hardly helpful in solving the problems raised in the present controversy. The words dyes and colours used in entry No. 10 and words scents and perfumes used in entry No. 37 have to be construed in their own context and in the sense, as ordinarily understood and attributed to these words by people usually conversant with and dealing in such goods. Similarly, the words food colours and syrup essences which are descritive of the class of goods the sales of which are to be taxed under the Act have to be construed in the sense in which they are popularly understood by those who deal in them and who purchase and use them.

These are but a few illustrations (the list is endless) to show the continued depreciation by the Supreme Court in authorities resorting to personal observations (pertaining to subjects of which they are obviously not and are not even expected to be experts) technical books, dictionary meanings and the end use of articles sought to be made liable to excise duty."

13. In the case of Union of India & Others v. Gujarat Woollen Felt Mills [AIR 1977 SC 1548], the Supreme Court has observed that “resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them that is to say to their commercial sense”. It follows from the reading of the above observations that we have to restrict ourselves to the meaning attached to them by those dealing in them that is to say to their commercial sense. In view of these rulings, the contention of the appellants that we have to read the meaning of the products as sockets as defined in 20th Century Chambers Dictionary and Concise Oxford Dictionary has to be rejected, but, however, we have to examine as to whether the products manufactured by the respondents is socket or cable terminal as urged by them. The respondents have emphatically denied that the cable terminals are sockets and has taken pains to distinguish its uses and implications by drawing our attention to the ISI specification and the product referred to by their customers. The customers have all along been describing the product as cable terminal and referring to the ISI specification IS-8309 : 1976. The customers of the respondents have been able to clearly distinguish between sockets, which go alongwith switches campholders and junction boxes. The sub-heading 8536.90 covers these products which are for voltage nor exceeding 1000 volts. The products manufactured by the respondents namely terminal end/socket, wire pins, ferrules In-line connectors or shop on terminals, are completely different and are not designed according to voltage, as rightly contended by the respondents. Their usage is for various purposes e.g. in transformers, switchgears, railways, electricity boards, rectifiers, small electrical instruments. The products of the respondents are easily distinguishable. They cannot be taken as electrical equipments or apparatus. As rightly contended by the respondents, Counsel, they are part of the equipment which are quite small in size. The sockets generally mean a complete product itself and not a part of an equipment. The Customs authorities are able to easily distinguish sockets from terminal ends, which the respondents are contending by virtue of its various uses, sizes and functioning. The appellants attempt to bring the product cable terminal end a part of an electrical equipment as electrical equipment on the basis of dictionary meaning cannot be accepted as there is a vast distinction drawn from the popular meaning or the meaning attached to them by those dealing in them that is to say to their commercial sense.

14. In view of the foregoing discussion, the contention of the appellants to classify the product cable terminal end as socket on the basis of dictionary meaning fails and cannot be accepted and therefore, the appeal is liable for dismissal.

15. The other question of considering as to whether the Assistant Collector is right in reclassifying it or not does not arise as the appellants have not challenged the classification to 8536.90 but however, they are only claiming concessional rate of duty @ 15% ad valorem which has been granted to them in the impugned order. The respondents are entitled to avail the concessional rate of duty @ 15% ad valorem. The respondents have given assurance to reimburse the extra 5% collected from the customers and hence the question of unjust enrichment as contended by appellants does not arise.

The appeal is dismissed and the order of the Collector (Appeals) Bombay is upheld.

16. [Per : V.P. Gulati, Member (T)]. - 1 agree with the conclusions of brother Shri S.L. Peeran. I would like to add that the issue has to be examined in the context of Tariff Entry 8536 which for convenience of reference is set out as under :

The products manufactured by the appellants appear to have been marked under description Cable Lug Sockets, Cable Terminal Ends, Wire Pins, In-line connectors, Snap connectors, Weak Back ferrules. The plea of the Revenue is that these products answer to the description of Plugs and Sockets and for that purpose they have relied on the definition of the same given in the harmonised system of nomenclature (HSN), international nomenclature, as set out under Tariff Heading 8536.90. The definition of the two items as given in the HSN has not been adopted in the Central Excise Tariff and there is no such definition given under Chapter 85 of CET. In the absence of the definition given, no case has been made out as to how the condition as given in the HSN can be adopted for the purpose of Central Excise Tariff. It is well-settled that the definition given in CCCN or HSN cannot be pressed into service for interpreting the entries in the Central Excise Tariff or Customs Tariff. In the absence of this definition in the Central Excise Tariff we have to resort to as to what is understood by the term Socket or Plug in the trade parlance by those who deal with the same and use the same. It is observed that the case of the Revenue has been made out on apart from the definition contained in HSN, on the Dictionary meaning of the term Socket which as stated in the ground of appeal is shown as hollow into which something is inserted. It does not follow anything used in the electrical circuit, with a hollow can be considered as a socket and also anything in the nature of a pin which fits in a hollow as a plug. No evidence has been brought on record by the Revenue that the items in question are known as plugs or sockets in the trade parlance. It is again settled law that Dictionary meaning cannot be taken to be the governing interpretation, of the Tariff when trade parlance test is available. The goods are used in the electrical circuits, and it has not been shown in respect of the products in question whether the products are considered in the trade as apparatus for switching or for making connections in electrical circuit and are of the nature as given by way of example in the Tariff Heading 85.36. In view of this I hold that the appellants’ products cannot be considered as plug and sockets and therefore these do not fall in the excluded category of items are mentioned  in  sub-item (i)  of  Serial No.  13 of  Notification  No.  160/86,  dated     1-3-1986 for the purpose of benefit of Notification under that heading.

Equivalent 1990 (045) ELT 0096 (Tribunal)