Laxmi Vijay Brass & Iron Works vs Collector of Central Excise, Bombay>1995(04)LCX0137

1995(04)LCX0137

IN THE CEGAT, SPECIAL BENCH, `B1’, NEW DELHI

S/Shri K.S. Venkataramani, Member (T), G.A. Brahma Deva, Member (J) and Lajja Ram, Member (T)

LAXMI VIJAY BRASS & IRON WORKS

Versus

COLLECTOR OF C. EX., BOMBAY

Order No. E/179/95-B1, dated 6-4-1995 in Appeal No. E/2987/92-B

Cases Quoted

Collecter v. Bush Boake Allen (India ) Ltd. — 1991(04)LCX0073 Eq 1991 (056) ELT 0793 (Tribunal) [Paras 4, 11]

Shri Vishwakarma (Emery Stones) Inds. P. Ltd. v. Collector — 1992(11)LCX0049 Eq 1993 (065) ELT 0044 (Tribunal) [Paras 4, 11]

Rajadhiraj Industries v. Collector — 1993(10)LCX0057 Eq 1994 (069) ELT 0148 (Tribunal) [Paras 4, 11]

Oswal Agro Mills Ltd. v. Collector — 1993(04)LCX0046 Eq 1993 (066) ELT 0037 (SC) [Paras 6, 8]

Devarsons (P) Ltd. v Collector — 1984(05)LCX0004 Eq 1984 (017) ELT 0135 (Tribunal) [Para 9]

Meteor Satellite Ltd. v. Collector — 1989(11)LCX0066 Eq 1990 (045) ELT 0697 (Tribunal) [Para 10]

Aravali Forgings Ltd. v. Collector — 1993(08)LCX0095 Eq 1994 (070) ELT 0693 (Tribunal) [Para 10]

REPRESENTED BY : Shri D.N. Mehta, Consultant, for the Appellant.

Shri R.K. Kapoor, SDR, for the Respondent.

[Order per : Lajja Ram, Member (T)]. - M/s. Laxmi Vijay Brass & Iron Works have filed the present appeal against the Order-in Appeal dated 14-2-1992 passed by the Collector of Central Excise (Appeals), Bombay.

2. The matter relates to the classification of Oil Expellers and parts of Oil Expellers, and the availment of the small scale exemption. The assessee had sought classification of parts of Oil Expellers under sub-heading 8485.90 of the Schedule to the CETA, 1985 (hereinafter referred to as the `Tariff’), and availed small scale exemption separately for such parts, in addition, to the small scale exemption availed of in respect of Expellers themselves which were classifiable under sub-heading No. 8479.00 of the Tariff. In reply to the show cause notice dated 12-4-1989 issued to them, the assessee had contended that both expellers and parts of expellers were classifiable under Heading No. 84.37 of the Tariff, and were eligible for exemption under Notn. No. 111/88-C.E., dated 1-3-1988. The Asstt. Collector of Central Excise, Vadodara, who adjudicated the matter decided that both expellers and the parts of the expellers were classifiable under sub-heading No. 8479.00. He confirmed the demand for Rs. 29,769/-. In appeal before the Collector of Central Excise (Appeals), Bombay, the appellants raised the issue of time bar, and the matter was remanded by the Collector of Central Excise (Appeals), to the Asstt. Collector of Central Excise for de novo consideration. On re-adjudication the Asstt. Collector of Central Excise, Vadodara observed that the demand had been rightly issued and was not hit by time bar. He confirmed the demand for duty of Rs. 29,769/- aforesaid. On appeal, the Collector of Central Excise, (Appeals) Bombay accepted the appellant’s submission that the show cause notice was hit by time bar. On classification he found the goods correctly classifiable under sub-heading No. 8479.00 of the Tariff, and not eligible for the benefit of exemption under Notn. No. 111/88-C.E., dated 1-3-1988.

3. The matter was posted for hearing on 18-1-1995 when Shri D.N. Mehta, Consultant appeared for the appellant. Shri R.K. Kapoor, the ld. SDR represented the respondent.

4. Sh. D.N. Mehta, the ld. Consultant contended that their product was used in Milling Industry and was correctly classifiable under sub-heading No. 8437.00 and not under sub-heading No. 8479.00. He briefly traced the history of the case and submitted that they were required to pay higher duty while their competitors have been extended the benefit of reduced rate of Central Excise duty. In support of his pleadings, the ld. Consultant, relied upon the following decisions :-

(1) CCE v. Bush Boake Allen (India) Ltd.., reported in 1991(04)LCX0073 Eq 1991 (056) ELT 0793 (T)

(2) Shri Vishwakarma (Emery Stones) Indus. (P) Ltd. v. CCE, reported in 1992(11)LCX0049 Eq 1993 (065) ELT 0044 (T)

(3) Rajadhiraj Industries v. CCE, Indore, reported in 1993(10)LCX0057 Eq 1994 (069) ELT 0148 (T).

5. Sh. R.K. Kapoor, the ld. SDR replied that the goods under consideration were Oil Expellers and parts thereof. They were not the machinery used in the Milling Industry for the purpose of sub-heading No. 8437.00. They were rightly classifiable under sub-heading No. 8479.00, and were not eligible for exemption under Notn. No. 111/88-C.E., dated 1-3-1988. On time bar, the CCE (Appeals) Bombay has already ruled in favour of the appellants. The ld. SDR pleaded for confirmation of the order passed by Collector of Central Excise (Appeals) Bombay.

6. We have carefully considered the matter. It is seen that during the years 1986-87 and 1987-88, the assessee classified their product - Parts of Expellers - under Chapter sub-heading No. 8479.00. For ease of reference Chapter sub-heading No. 8479.00 is extracted below :-

“Machines and machanical appliances having individual functions not specified or included else where in this Chapter.”

With affect from 1-4-1988 they classified their product Expellers under sub-heading 8479.00. aforesaid, but for the parts of the Expellers, the classification was changed from sub-heading Nos. 8479.00 to 8485.90. Heading 84.85 reads as under :-

“84.85. Machinery parts not containing electrical connectors, insulators, coils, contacts or other electrical features not specified or included elsewhere in this Chapter.”

“8485.10. Ships’ propellers and Blades therefor

8485.90. Other"

Under small scale exemption Notn. No. 175/86-C.E., dated 1-3-1986, exemption was provided in favour of specified goods upto the given limit of the aggregate value. If a manufacturer was producing two specified goods as covered by the exemption scheme, then, subject to the conditions as laid down in that Notn., he was eligible for separate exemption in favour of both the specified goods. By changing the classification of the parts from 8479.00 to 8485.90, the assessee sought to avail exemption separately on Expellers, and on the parts of the expellers. Heading No. 84.85 is a residuary heading for machinery parts under Chapter 84. For classification of parts of machines, Note 2 under Section XVI of the Tariff provides as under :-

“Note 2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of Heading Nos. 84.84, 85.44, 85.45, 85.46 or 85.47) are to be classified according to the following rules :-

(a) Parts which are goods included in any of the headings of Chapter 84 or Chapter 85 (other than Heading Nos. 84.85 and 85.48) are in all cases to be classified in their respective headings.

(b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of Heading No. 84.79 or Heading No. 85.43) are to be classified with the machines of that kind. However, parts which are equally suitable for use principally with the goods of Heading Nos. 85.17 and 85.25 to 85.28 are to be classified in Heading No. 85.17.

For classification of machines, Note 7 under Chapter 84 provides that a machine the principal purpose of which is not described in any heading or for which no one purpose is the principal purpose, is to be classified in the Heading No. 84.79. The goods under consideration have been described by the assessee as continuous automatic Oil Expeller. Its capacity is measured in terms of Oil Yield. It has a steam round kittle which requires process steam for cooking at a given pressure. The parts of the Expeller are suitable for use solely with the expeller and therefore have to be classified with the expeller. In the case of M/s. Oswal Agro Mills Ltd. v. CCE, reported in 1993(04)LCX0046 Eq 1993 (066) ELT 0037 (SC) = 1993 AIR SCW 1782, the Hon’ble Supreme Court had observed :-

“to find the appropriate classification, description employed in the Tariff Nomenclature should be appreciated having regard to the terms of the headings read with the relevant provisions or statutory rules of interpretation put up thereon.”

In terms of description employed in the Tariff, read with the Explanatory Notes, there appears to be no ground for taking the parts of Oil Expellers, to the residuary Entry 84.85. The are rightly classifiable with the Oil Expellers and for the purposes of the small scale exemption, if otherwise admissible, both oil expellers and parts thereof, will have to be taken as one `specified goods’.

7. The appellants had sought alternative classification under sub-heading No. 8437.00 which reads as under :-

“8437.00. Machines for cleaning, sorting or grading seed, grain or dried leguminous vegetables; machinery used in the milling industry or for the working of cereals or dried leguminous vegetables, other than farm-type machinery.”

They have pleaded that if their prayer for classification under sub-heading No. 8437.00 is accepted then they will be eligible for exemption under Notn. No. 111/88-C.E., dated 1-3-1988. They have further stated that in that view of the matter, the parts would also be eligible for exemption. The Collector of Central Excise (Appeals) had observed that the machines under sub-heading No. 8437.00 have reference to the process of mixing, preparing grain prior to milling or grinding of flour etc. He had held that the machinery for the Oil crushers would correctly fall under sub-heading No. 8479.00.

8. It is seen that under sub-heading No. 8437.00 the description of the goods, “machinery used in the milling industry”, has been used in association with, “for the working of cereals or dried leguminous vegetables.” The expression “for the working of cereals” is not independent, as without, taking the expression `machinery used’ from the description `machinery used in the Milling Industry’, it conveys no sense. In such a situation the expression “milling” and “Working” both refer to cereals, and the Milling Industry cannot be read as to refer to the Oil Expeller Industry. In ascertaining the scope of the expression “milling industry”, anything which is logically relevant, is admissible. It is also a legitimate rule of construction to construe an expression, with reference to the expression found in immediate connection with them. The two expressions `milling industry’ and `cereals’ have been clubbed together, and they have to be understood to be used in their cognate sense. They take, as it were, their colour from each other, and the meaning of the more general expression `milling industry’ will have to be restricted to a sense analogous to the less general expression `cereals’. The help for the proper interpretation in this regard could also be taken from the doctrine of `Noscitur A Sociis’, and the rules of interpretation that the meaning of the doubtful words may be ascertained by reference to the meaning of the words associated with it [refer SC’s decision in the case Oswal Agro Mills Ltd. v. CCE, reported in 1993(04)LCX0046 Eq 1993 (066) ELT 0037 (SC) = 1993 AIR SCW 1782].

9. We may also take help from the Explanatory Notes to the Customs Co-operation Council Nomenclature (CCCN). The Tribunal in the case of Devarsons (P) Ltd. v. CCE, reported in 1984(05)LCX0004 Eq 1984 (017) ELT 0135 (T) in para 16.2 of their decision have affirmed the applicability of CCCN Explanatory Notes, to the Central Excise Tariff. The relevant extracts from Para 16.2 are given below :-

“16.2 The Customs Cooperation Council Nomenclature (CCCN) is an internationally recognised tariff nomenclature for classification of goods under the Customs Tariff. India has also patterned the 1976 Customs Tariff Schedule essentially on the CCCN. Though the Explanatory Notes to the CCCN have not the legal force, they afford a valuable aid to the interpretation of the terms used in the tariff. It is true that the Central Excise Tariff is not, unlike the Customs Tariff, patterned on the CCCN. However, there are certain items in the Central Excise Tariff which use terminologies identical with or similar to those employed in the CCCN and the Customs Tariff. To the extent relevant therefore, and provided the express words do not connote a contrary or different meaning, the terms employed in the excise tariff items which are analogous to those used in the CCCN or Customs Tariff may, in our opinion, be interpreted with the aid of the CCCN. Explanatory Notes.”

Under Heading No. 84.29 of the CCCN Explanatory Notes, the Milling Industry has been referred to as the Industry for the production of flour meal etc. It has been explained that such machinery is of three main types viz. (1) machinery for mixing, cleaning, grading or preparing grain prior to milling (2) grinding or crushing machinery (3) sorting and separation of flour from sharps or middlings. Heading No. 84.29 also covers other machinery for the treatment of cereals or dried leguminous vegetables. It has been mentioned that this group includes (i) machine for husking cereal or dried leguminous vegetables (ii) rice hulling or polishing machines (iii) machines for splitting dried pieces, lentils or beans (iv) machine for preparing rolled or flaked oats and (v) special milling and grinding machines for milling cereals or dried leguminous vegetables into flour. Under Chapter 11 of the CCCN the products of the milling industry cover the products from the milling of the cereals like wheat and rye, barley, oats, maize and sorghum rice and buckwheat. They include cereal flours, cereal groats and cereal meal, worked cereal grains, germ of cereals, flour of the dried leguminous vegetables or of the fruits, flour and meal of sago and of roots and tubers, flour meal and flakses of potato, malt, starches etc. Under the CCCN, machinery and mechanical appliances for the Oil, soap or edible fat industries fall under Heading No. 84.59, which is worded identically to the Central Excise Tariff Heading No. 84.79.

“CCCN: 84.59 - `Machines and mechanical appliances having individual functions not falling within any other heading of this Chapter.’”

Central Excise Tariff : 84.79 - `Machines and mechanical appliances having individual functions not specified or included elsewhere in this Chapter.’"

Under CCCN, machinery and mechanical appliances for the oil industry includes special grinders, crushers, mills or presses for oil seeds.

10. For the proper classification of the product in question we may also refer to the Harmonised Commodity Description and Coding System (HSN). In the case of Meteor Sattelite Ltd. v. CCE, reported n 1989(11)LCX0066 Eq 1990 (045) ELT 0697 (T), the Tribunal has affirmed that the HSN could be an aid for the classification of items under the Central Excise Tariff Act, 1985. The CETA, 1985 is aligned to the HSN. In this particular case the headings in the Central Excise Tariff are almost identical with these in the HSN. Even when tariff entries are not aligned with HSN Explanatory Notes to the HSN, have persuasive value (refer Tribunal decision in the case of Aravali Forgings Ltd. v. CCE, Jaipur, reported in 1993(08)LCX0095 Eq 1994 (070) ELT 0693 (T). It has been mentioned in the Note (7) under Chapter 84 of the Customs Tariff that a machine the principal purpose of which is not described under any heading or for which no one purpose is the principal purpose is unless the context otherwise requires, to be classified in Heading No. 84.79. Sub-heading No. 8479.20 specifically covers the machinery for the extraction or preparation of animal or fixed vegetable fats, or oils. Sub-heading No. 8479.82 covers mixing, kneading, crushing, grinding, screening, sifting, homogenising, emulsifying or stirring machines.

11. In the case of CCE v. Bush Boake Allen (India) Ltd. reported in 1991(04)LCX0073 Eq 1991 (056) ELT 0793 (T), the point for consideration was the meaning and scope of the words `oil mill and solvent extraction industry’ in the exemption Notification No. 115/75-C.E., dated 30-4-1975. The expression used in sub-heading No. 8437.00 is `machinery used in the milling industry’, and it has been used in association with the machinery `for the working of cereals or dried leguminous vegetables’. Milling is not so wide a term as the mill. According to the dictionary meaning it is the business of grinding grain in a mill, while the expression `mill’ itself has a wide connotation, and is generally associated with anything having a rotary motion. The Tribunal after discussing the matter from different angles, including applicability of the principle of ejusdem generis held that oleo resins and essential oils were not covered by the exemption. In the case of Rajadhiraj Industries v. CCE Indore, reported in 1993(10)LCX0057 Eq 1994 (069) ELT 0148 (T) also the matter related to the interpretation of the expression `oil mill and solvent extraction industry’ in the exemption Notn. No. 115/75-C.E., dated 30-4-1975. In the case of Sh.Vishwakarma (Emery Stones) Industries (P) Ltd. v. CCE reported in 1992(11)LCX0049 Eq 1993 (065) ELT 0044 (T), the matter related to the classification of emery mill stones fitted with cast iron frames. Admittedly, they were parts of the flour mill machines, and these parts were classified with the main machine, not under the residuary Entry 84.85. These citations in no manner determine, the classification of the goods in question under the description `machinery used in the milling industry’. They do not help in the interpretation of the Tariff entry sub-heading No. 84.37 or 84.79. On the other hand they confirm that the parts of the Oil Expeller have to go with the Oil Expeller whose parts they are, and further the oil expeller is not a `machinery used in the milling industry’ for the purpose of classification under sub-heading No. 8437.00.

12. Reference has also been made in the paper book to a number of other decisions. We have generally gone through them and find that they in no way negate the conclusions drawn by us above, and that it cannot be said that Heading No. 84.79 is not specific to the goods under consideration. The appellants have also filed some other documents including Affidavit in support of their case. They refer to Oil Mill Industry, while it is seen from the scheme of the Tariff that Heading No. 84.37 relates to the machinery used in the milling industry, and that the products of the milling industry do not cover the oil. The machinery for the working of the oil seeds, for the working, crushing etc., of the oil seeds correctly fall under Heading No. 84.79. The appellants have also raised a point that in some other places similar machines are being assessed under Heading No. 84.37. Those matters are not before us. The details of those products are also not on record. It will not be proper for us to comment on the assessments with regard to those products which are not the subject matter of the present proceedings.

13. Taking all the relevant considerations into account, we consider that the product oil expeller is not a machinery used in the milling industry, and is not classifiable under sub-heading No. 8437.00 of the Tariff; it is also not eligible for exemption under Notn. No. 111/88-C.E., dated 1-3-88, and that the CCE (Appeals), Bombay has rightly classified them under sub-heading No. 8479.00 of the Tariff.

14. Accordingly the appeal is rejected.

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Equivalent 1995 (78) ELT 325 (Tribunal)