2000(11)LCX0011

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri P.S. Bajaj, Member (J) and K.K. Bhatia, Member (T)

LUMAN METAL INDUSTRIES

Versus

COLLECTOR OF C. EX., NEW DELHI

Final Order No. 1899/2000-B, dated 22-11-2000 in Appeal No. E/1251/94-B

Cases Quoted

A.P. Industrial Components Ltd. v. Collector — 1993(07)LCX0046 Eq 1993 (068) ELT 0357 (Tribunal)
 — Distinghished........................................................................................................ [Para 8]

ARW Filter Pvt. Ltd. v. Commissioner — 1998(04)LCX0057 Eq 1998 (104) ELT 0083 (Tribunal) — Referred....... [Para 8]

Dunlop India Ltd. v. U.O.I. — 1975(10)LCX0016 Eq 1983 (013) ELT 1566 (S.C.) — Relied on................. [Paras 7, 8, 10]

Advocated By :   Shri Naveen Muulick, Advocate, for the Appellant.

Shri Sheo Narayan Singh, SDR, for the Respondents.

[Order per : P.S. Bajaj, Member (J)]. - This appeal has been filed by the appellants against the order in appeal dated 28-2-1994 passed by the Collector (Appeals) vide which he had affirmed the order in original dated 30-9-1993 of the Assistant Collector classifying their product (air cleaner assembly/oil bath assembly) under Heading 84.09 by rejecting their classification under Heading 84.21 of the CETA.

2. The facts giving rise to this appeal may briefly be stated as under :

3. The appellants are engaged in the manufacture of air cleaner assembly/oil bath assembly and its parts. They initially due to some misunderstanding classified their product as parts of IC Engine falling under Heading 84.09 of the CETA. However, after knowing that their product was an independent product classifiable under Heading 84.21 of the CETA, they accordingly filed their classification list w.e.f. 28-2-1993 but the Assistant Collector did not accept the same on the ground that their product was part of IC Engine of the motor vehicles and as such was classifiable under Heading 84.09 and not 84.21 of the CETA, as claimed by them. This order in original of the Assistant Collector dated 30-9-1993 was then challenged by the appellants in appeal before the Collector (Appeals) who through the impugned order in appeal, affirmed the same and dismissed their appeal.

4. In order to determine the correct classification of the product in question i.e. air cleaner assembly/oil bath assembly manufactured by the appellants, it would be convenient to set out Heading 84.09 (under which the classification has been claimed by the Revenue) and Heading 84.21 of the CETA (under which appellants want classification)

Heading 84.09 reads as :

Heading 84.21 reads as under :-

5. The product produced by the appellants is admittedly air cleaner/oil bath assembly. The plea taken up by the Revenue is that since this apparatus is meant for use with the IC Engines of the motor vehicles, it stands covered by Heading 84.09 whereas the plea taken up by the appellants is that the apparatus being an independent one and separately specified under Heading 84.21 of the CETA, is classifiable under this Heading only and that the end use of the item is irrelevant for deciding its classification.

6. Note 2(a) of Section XVI appended to Chapter 84 of the CETA lays down the rules to be followed for determining the classification of the parts which are goods included in any of the Headings of Chapter 84 or 85. Clause (a) of this Note reads as under :-

“2(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.”

Apparently, the product in question which is an air cleaner assembly/oil bath assembly, is a purifying apparatus for liquid/gases, falls within the ambit of Heading 84.21 of the CETA. The Entry in this Heading also can be said to be aligned to the HSN Explanatory Notes. The perusal of HSN Notes on Heading 84.21 shows that this heading also includes the product in question being purifying apparatus for liquid/gases. These Notes have got pursuasive value and have to be given due weight for determining the classification of any product especially when any Entry in these Notes is fully aligned to the corresponding Tariff Entry in the Schedule of the CETA. Even otherwise, by applying the classification rule as embodied in Note 2(a) of Section XVI of Chapter 84, the product in question merits classification under Heading 84.21 of the CETA.

7. The stand of the Revenue that since the product in question is suitable for use solely or principally with the IC Engine of the Vehicle, deserves classification under Heading 84.09 is wholly misplaced and misconceived. The appellants are not manufacturer of the IC Engines, but only of the product in question and they are clearing the product as such and not as part of the IC Engine. Moreover, it is well settled that when there is no reference to the use or adaptation of the article, the basis of end use for classification under the Tariff Entry is absolutely irrelevant. In this context reference may be made to the observations of the Apex Court to this effect in M/s. Dunlop India Ltd. & Madras Rubber Factory v. UOI - 1975(10)LCX0016 Eq 1983 (013) ELT 1566 (S.C.). Therefore, the fact that the product in question is used principally with the IC Engine for purifying the gases is irrelevant and cannot be made the basis for taking away its classification out of the purview of Heading 84.21 of the CETA.

8. The argument of the learned SDR that filtering or purifying apparatus mentioned in Heading 84.21 of the CETA relate to the water filtering on purifying machinery only cannot be accepted for want of any specific reference in that regard in this heading. The ratio of the law laid down in A.P. Industrial Components Ltd. v. CCE, 1993 (068) ELT 357 referred by the learned SDR, is not attracted to the facts of the present case. In that case, the classification of the product involved was Acqua Guard water filter-cum-purifier and it was ruled that the same was classifiable under Heading 86.21 of the CETA having been made to make water safe and acceptable for drinking by human beings. But here the product in question is apparatus for filtering or purifying liquid or gases and finds specific mention in Heading 84.21 of the CETA. By applying the rule of interpretation laid down in Note 2(a) of Section XVI ibid, the product in question merits classification under Heading 84.21 of the CETA. In this context reference may also be made to the ratio of the law laid down by the Tribunal in ARW Filter Pvt. Ltd. v. CCE, Pune, 1998 (104) ELT 83. In that case the classification of the product involved was filters meant for air and liquids used for different machineries such as IC Engines, textile etc. falling under Heading 84.79 of the CETA. The Tribunal by adopting the rule of interpretation emobodied in Note 2(a) of Section XVI ibid, held as under :

“Where any parts are specifically mentioned in any tariff heading, they are to be classified in the said tariff heading except the excluded tariff headings mentioned in Note 2(a).”

Even the Apex Court in Dunlop India Ltd. v. Madras Rubber Factory (supra) has observed that :

“Where an article is by all standards classifiable under a specific item in the tariff schedule, it would be against the very principal of classification to deny it the parentage and consign its residuary item.”

Therefore, the specific Entry in Heading 84.21 of the CETA regarding the product in question, has to be given edge over the general Entry in Heading 84.09 of the CETA.

9. In the light of the discussion made above, the view taken by the Collector (Appeals) for classifying the product in question under Heading 84.09 that since it is solely or principally used with IC Engine by ignoring the rule of classification laid down in Note 2(a) of Section XVI of the CETA and the well settled principal of law regarding the classification of the product referred above, cannot be endorsed and must be held to be erroneous in law. Therefore, his impugned order confirming the order in original of the Assistant Collector cannot be sustained and deserves to be set aside. The product in question merits classification under Heading 84.21 of the CETA.

10. No doubt, initially the appellants themselves classified their product under Heading 84.09 of the CETA but they sought the fresh classification when they realised that their product was an independent product classifiable under Heading 84.21 of the CETA. The modified classification they sought by filling fresh classification list w.e.f. 28-2-1993. No estoppel against them can be pleaded by the Revenue as it is well settled that the principle of estoppel is not applicable against the party in taxation matters, as observed by the Apex Court in Dunlop India Ltd. & Madras Rubber Factory (supra). In that case, the Apex Court was pleased to rule as under :

“Since there is no estoppel in law against the party in taxation matters, therefore, much significance should not be attached to the fact that the appellants themselves treated the imported V.P. Latex under I.T.C. Item No. 87 because they may have given the classification under some misapprehension or in accordance with the wishes of the authorities.”

11. In the light of what has been discussed above, the impugned order of the Collector (Appeals) is set aside and appeal of the appellants is accepted with consequential relief, if any, permissible under the law to them.

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Equivalent 2001 (130) ELT 338 (Tri. - Del.)

Equivalent 2001 (043) RLT 0172