Philips India Ltd. vs Collector of Central Excise, Pune>1995(11)LCX0060

1995(11)LCX0060

IN THE CEGAT, PRINCIPAL BENCH `B’, NEW DELHI

S/Shri T.P. Nambiar, Member (J) and G.R. Sharma, Member (T)

PHILIPS INDIA LTD.

Versus

COLLECTOR OF CENTRAL EXCISE, PUNE

Order Nos. E/438-440/95-B1, dated 9-11-1995 in Appeal Nos. E/744, 751 & 774/94-B

Cases Quoted

Collector v. Jayashree Insulators — 1994 (74) E.L.T 306 [Para 10]

Collector v. Blue Star Ltd. — 1990 (050) ELT 186 [Paras 10, 14]

Escorts Ltd. v. Collector — 1990 (047) ELT 68 [Para 10]

Naffar Chandra Jute Mills Ltd. v. Assistant Collector — 1993 (066) ELT 574 [Para 10, 12]

Novopan India Ltd. v. Collector — 1994(09)LCX0128 Eq 1994 (073) ELT 0769 (SC) [Paras 12, 19]

Rajasthan Spg. & Wvg. Mills Ltd. v. Collector — 1995 (077) ELT 474 [Para 12]

Sri Baidyanath Ayurved Bhavan Ltd. v. Collector — 1995 (010) RLT 327 [Para 12]

Collector v. Fusebase Eltoto Ltd. — 1993 (067) ELT 30 [Paras 12, 17]

Twenty First Century Printers v. Collector —1995 (056) ECR 117 [Para 15]

Andhra Patrika v. Collector —1983(05)LCX0024 Eq 1983 (013) ELT 1103 [Para 16]

ITC Bhadachalam Paper Boards Ltd. v. Collector — 1994(04)LCX0034 Eq 1994 (071) ELT 0334 (SC) [Para 18]

Advocated By : Shri A. Hidayatullah, Sr. Advocate with Shri Vikram Nankani, Advocate & Others, for the Appellants.

Shri K.K. Jha, SDR, for the Respondent.

[Order per : T.P. Nambiar, Member (J)]. - These three appeals are presented by the above-captioned appellants against a common order passed by the Collector of Central Excise & Customs (Appeals), Pune in order No. P 338/93 dated 31-12-1993. In terms of that order, he dismissed the appeals filed by the appellants against the orders passed by the Assistant Collector of Central Excise, Pune denying them the benefit of Notification 57/93, dated 28-2-1993.

2. The facts of this case are that the appellants before us are engaged in the manufacture of consumer electrical products like radio, stereo recorder, cassette recorder and parts thereof falling under Chapters 8527.00, 8529.00, etc. of the Central Excise Tariff. The radio sets manufactured by the appellants are having in-built facility like sound recording and reproducing appliances. The appellants classified their goods under Chapter 8527.00 and claimed benefit of Notification 57/93, dated 28-2-1993 which allows concessional rate of duty to radio sets including transistor sets at 10% ad valorem. However, the ld. Assistant Collector denied this concessional rate of duty on the ground that the goods manufactured by them were not radio sets/transistor sets in view of the fact that they were also having facilities of sounding and reproducing the same. Their classification lists, however, approved under Chapter 8527.00, but they were denied the benefit of abovesaid notification.

3. Against that order, they approached the Collector (Appeals) which resulted in the impugned order. The Collector (Appeals) held that the notification mentions transistor sets and radio sets. He held that the description given in the tariff is not material and irrespective of that description, the description in the notification alone has to be taken into consideration. He therefore, held that in common parlance as well as in the trade people do not consider radio sets and radio cassette records or stereo is radio records as one and the same. He held that radio sets and transistor sets are well-recognised trade terms which do not have sound recording or sound reproducing facility and, exemption, cannot be extended to these radio sets or transistor sets. He, therefore dismissed the appeal.

4. Ld. Advocate, Sh. Hidayatullah alongwith Sh. Vikram Nankani appeared for the appellants and the Ld. S.D.R., Shri K.K. Jha appeared for the respondent in these appeals.

5. Ld. Advocate, Sh. Hidayatullah, contended before us that the question involved in this case is whether the product of the appellants namely, radio sets, which have the facility of sound recording and sound reproducing are covered by Serial No. 10A of the exemption notification which is as follows :

“Radio sets including transistor sets.”

6. In this connection, Sh. Hidayatullah, Ld. Advocate brought to our notice the entry in tariff item 85.20 and 8527.00 which reads as follows :

Receptive apparatus for radio telephonic, radio telegraphy or radio broadcasting whether or not combined in the same housing with sound recording or reproducing apparatus or a clock"

7. In this connection, it was contended before us that the radio sets manufactured by the appellants are meant for receiving the radio broadcast programmes and for that reason only they should be considered as radio sets. The mere fact that it has got an apparatus attached to it for sound recording and sound reproducing is of no consequence. He therefore, contended that the presence of the apparatus for sound recording and sound reproducing will not take it out from the purview of radio sets or transistor sets. He, therefore, contended that when the tariff entry itself mentions it as receptive apparatus for radio broadcasting whether or not combined in the same housing with sound recording or sound reproducing apparatus or clock, the same parameters should be applied to the exemption notification also. The exemption notification instead of mentioning the above details has simply mentioned as “radio sets including transistor sets” in clause A of Serial No. 10. In clause B at Serial No. 10, it mentions as ‘all other goods". He pointed out that clause B attracts all the apparatus for radio telephony and radio telegraphy.

8. In this connection our attention was drawn to the HSN classification wherein under 8527, the following entries are made :

‘Other radio-broadcast receivers, including apparatus capable of receiving also radio-telephony or radio-telegraphy."

9. He pointed out that in clause B domestic radio receivers of all kinds are included in sound recording or reproducing apparatus or a clock. On the same analogy, it was his contention that merely because these radio sets were fixed with sound recording or reproducing apparatus they will not be taken out of the purview of the exemption notification.

10. In support of his contention, he relied upon the following decisions :

1. 1994(09)LCX0083 Eq 1994 (074) ELT 0306 (Tribunal) - Collector of Customs, Calcutta v. Jayashree Insulators;

2. 1990(03)LCX0047 Eq 1990 (050) ELT 0186 (Tribunal) - Collector of Customs v. Blue Star Ltd.

3. 1995 (056) ECR 0117 (Tribunal) - Twenty First Century Printers v. Collector of Customs, Bombay;

4. 1990 (047) ELT 68 - Escorts Ltd. v. Collector of Customs; and

5. 1993 (066) ELT 574 - Neffar Chandra Jute Mills Ltd. v. Assistant Collector of Central Excise.

11. Relying on the abovesaid decisions, the Ld. Sr. Advocate contended before us that merely because the goods, in question, can perform the function of sound recording or reproducing it will not cease to be a radio set including a transistor set. In this connection, he pointed out that basic function of the goods produced by the appellants is to receive the signals, but there is also another system attached to it which is only incidental. In this view of the matter, he contended that the appellants are entitled for the benefit of the notification.

12. Replying [to] the above contentions, Shri K.K. Jha, Ld. S.D.R. contended before us that the wording of the notification at Sl. No. 10A is very clear and extends the concessional rate of 10% to radio sets including transistor sets. He, therefore, contended that the use of the word `including transistor sets’ is very relevant as this entry does not cover all radio broadcasting apparatus. He, further, pointed out that the description given in the Tariff Entry 8527 is not applicable in the present case while interpretating the exemption notification. The meaning given to the tariff entry is not relevant while interpretating exemption notification. It was his contention that the ligislature has chosen to give different description under the notification rather than the description given to it in the tariff. Thus it was his contention that a tariff entry refers to radio broadcasting apparatus clock or not combined in the same housing with sound recording or reproducing facility or a clock whereas the wording used in the notification is “radio sets including transistor sets”. Hence, it was his contention that they are used differently in the tariff heading as well as in the notification. He, further, pointed out that in trade parlance, the people who are in trade do not consider radio sets or radio cassette records or stereo radio records as one of the same. The wording used in the notification is unambiguous and therefore, the wording used therein cannot be extended to the goods of the appellants. He, further, pointed out that the wording in the notification cannot be enlarged and its scope is restricted only to the wording used therein which is to be read as it is, and cannot be supplemented. He, further, pointed out that in such cases, the best test to be applied is as to how it is known in common trade parlance. If that basis is applied, he contended that the goods manufactured by the appellants do not come within the meaning of “radio sets including transistor sets” in view of the fact that they are attached with sound recording or reproducing apparatus. Hence, he justified the orders passed by the lower authorities. In support of his contentions, he relied upon the following decisions :

1. 1994(09)LCX0128 Eq 1994 (073) ELT 0769 (SC) = 1994 (004) RLT 323-Novopan India Ltd., Hyderabad v. Collector of Central Excise & Customs, Hyderabad;

2. 1995 (077) ELT 474 - Rajasthan Spg. & Wvg. Mills Ltd. v. Collector of Central Excise, Jaipur;

3. 1993 (010) RLT 327 - Sri Baidyanath Ayurved Bhavan Ltd. v. Collector of Central Excise, Nagpur & Another; and

4. 1993 (067) ELT 30 - Collector of Central Excise v. Fusebase Eltoto Ltd.

In a [rejoinder], the ld. Advocate contended that even if the common trade parlance meaning is taken, still the same does not help the respondents in any way. He, further, submitted that principle adopted for classification under tariff heading is clearly applicable for the purpose of notification. In this connection, he drew our attention to the decision of the Calcutta High Court reported in 1993(03)LCX0058 Eq 1993 (066) ELT 0574 (supra).

13. We have considered the submissions of both sides. The point that arises for determination is whether the benefit of Notification No. 57/93 can be extended to the goods manufactured by the appellants is this case. In this regard, it is now seen that the classification of the goods under 8527 is not at all in dispute in this case. The department had already classified the goods under 8527 and the goods of the appellants clearly answer the description in the abovesaid chapter, but for deciding whether the appellants are entitled for the benefit of notification, it is to be seen whether the goods of the appellants answer the description given in Sl. No. 10 of the exemption Notification 56/93-C.E., dated 28-2-1993. Serail No. 10A mentions the description as follows :

“Radio sets including transistor sets”.

14. There is no doubt that the goods manufactured by the appellants is for the purpose of reception of radio broadcasting. But, at the same time, it is fitted with the equipment which will record sound and is fitted with mechanism of reproducing the same. The question is, merely because of the fact that it is fitted with sound recording or reproducing apparatus can it be taken away from the purview of the Notification 56/93, dated 28-2-1993. In order to appreciate this contention, what is necessary to be seen is whether the goods manufactured by the appellants is capable of being used as receptive apparatus for radio broadcasting. As far as this point is concerned, it is admitted fact that the goods manufactured by the appellants, have capacity of reception of the radio broadcasting. Therefore, when the goods manufactured by the appellants are capable of receiving the broadcasting as per the entry at Sl. No. 10A of the notification, the same cannot be taken out or its purview merely because it was also fitted with a sound recording or reproducing apparatus. In the decision reported in 1990 (50) 180 (supra), which was relied upon by the ld. Advocate for the appellants the Tribunal held as follows :

“The machine imported by the respondents is capable of testing upto 250 kgs. The machine is basically devised to carry out the Vickers hardness test of steels & metals”.

15. In that view of the matter, the Tribunal gave the benefit of exemption notification in that case. Applying the above principles to the facts of this case, it is clear that the goods manufactured by the appellants are capable of receiving the broadcasts and merely because it is attached with the system of sound recording and reproducing, it cannot be taken out of the purview of “radio sets including transistor sets” within the meaning of above notification. The main function of the radio sets, i.e. receiving the broadcasting, is fulfilled by the goods manufactured by the appellants in this case. Hence, the mere fact that it is also attached with the sound reproducing system, will not take it away from the expression `radio sets’. The same principle was followed by the Tribunal in a decision reported in 1995 (056) ECR 117. In that particular case at para 22, the Tribunal held as follows :

The benefit cannot be denied due to the addition of DCP Platen Cutter/Creaser in view of several judgments of Tribunal which have taken the consistent view that the exemption to a machine based on a specific use or function is not to be denied on the ground that a machine is capable of other use or function also".

16. So also in the decision reported in 1983(05)LCX0024 Eq 1983 (013) ELT 1103, the Tribunal held that Notification 11/77-Cus. does not state that the automatic film processor covered therein should be exclusively for film processing only and, therefore, the imported machine which is automatic film processor and in addition, film processinig machine can also perform other function of better processing which is exempted under the said notification as automatic film processor. On the same analogy, it is seen that since the goods, in question, can receive the broadcasting, the mere fact that it has got an additional equipment attached to it with sound recording or reproducing apparatus will not take it away from the ambit of Serail No. 10A of the notification as “radio sets including transistor sets.”

17. The decision relied upon by the ld. D.R. in the case of Collector of Central Excise v. Fusebase Eltoto Ltd. (supra) is not applicable to the facts of this case. In that particular case, at para 8, their lordship held as follows :

“We agree with the contention of the ld. counsel for the respondent that the Projector Vision - Projection television sets are capable of receiving television broadcasts as is being done by any other broadcast television receiver set but at the same time are not the same. An ordinary television set has a fixed image in the mind of the consumer in this country. One never visualises a television set having a Projection-Unit and a head-screen mounted at a long distance. A television set - in the imagination of the consumer - is a compact set with inbuilt screen which adores the drawing room and bed room. A television set in the market costs about Rs. 15,000/- to Rs. 25,000/- whereas the respondents product costs between Rs. 1,20,000/- to Rs. 1,50,000/-. We, therefore, agree with the view taken by the Assistant Collector and the Collector.’

18. In that particular case, the projector machine and projection television sets are not one and the same in view of the fact that an ordinary television set has a fixed image in the mind of the consumer and the projection unit and a head-screen mounted at a long distance as in the case of projection television will not cover a television set. Further, the value of this television set as well as projection set, as held by their lordship, is at variance. The value of television set is about Rs. 15,000/- to Rs. 25,000/- whereas that of the projector machine is between Rs. 1.20 lakh to Rs. 1.50 lakh. Therefore, the common parlance test was applied on the facts of that particular case which is not applicable to the facts in this particular case. Even if the common parlance test is applied in this case, it can never be said that the goods of the appellants, is not radio set. It still remains to be a radio set, in spite of the fact that it has got an additional apparatus which will record the sound or reproduce the same. So also the decision relied upon by the ld. D.R. in ITC Bhadrachalam Paper Boards Ltd. v. Collector - 1994 (071) ELT 334 is not applicable to the facts of this case. In that particular decision, it is held that it is not permissible to enlarge the scope of the notification. Those principles are settled. But here, by holding that the goods manufactured by the appellants are radio sets in view of the fact that they are capable of receiving the radio broadcasting, will not enlarge the scope of the notificaiton.

19. The ld. S.D.R. also relied upon the decision reported in 1993(07)LCX0082 Eq 1994 (074) ELT 0323 (supra) wherein it was held by the Hon’ble Supreme Court that the expert opinion on the facts filed by the experts is of no evidentiary value as it is not supported by any technical literature or authority. It was also held that an exemption notification is to be construed strictly and the person claiming exemption must establish his claim. Applying the above-said principle, it is seen that even the department did not dispute that the goods manufactured by the appellants are capable of receiving the broadcast. This itself goes to show that it is a radio-set in the ordinary sense as understood in trade parlance and the appellants have established the same. The mere fact that it is also fitted with some other sound recording or reproducing system, will not take it away from the ambit of the notification. In this connection, it is also relevant to look into HSN which was relied upon by the ld. Advocate. Even in the HSN, it is seen that under Chapter 85.27, Clause A covers radio television or radio telegraphy in Clause B, domestic radio receivers of all kinds which include whether or not combined in the same housing of sound recording or reproducing apparatus or clock is included. On the same analogy, the goods fall within the purview of Sl. No. 10A, of the Notification No. 57/93, dated 28-2-1993. In that view of the matter, on an interpretation of the notification, goods of the appellants come within the purview of Sl. No. 10A of the exemption notification. Further, the ld. Counsel also produced the literature pertaining to the appellants’ goods which also justifies the claim of the appellants that these goods are known in Trade Parlance as radio sets. In that view of the matter, the appellants are entitled for the benefit of the abovesaid notification. Hence, the appeals are, accordingly, allowed with consequential benefits to the appellants.

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Equivalent 1996 (81) ELT 375 (Tribunal)