2001(01)LCX0264

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri Lajja Ram, Member (T) and P.S. Bajaj, Member (J)

MUKAND ENGG. WORKS

Versus

COMMISSIONER OF CENTRAL EXCISE, RAJKOT

Final Order No. 48/2001-B, dated 31-1-2001 in Appeal No. E/255/95-B

CASES CITED

ARW Filters v. Commissioner — 1998(04)LCX0057 Eq 1998 (104) ELT 0083 (Tribunal) — Relied on.................... [Para 9]

Babu Textile Industries v. Commissioner — 1999(07)LCX0277 Eq 1999 (113) ELT 0489 (Tribunal) — Relied on [Para 12]

Commissioner v. Venkatachalapathy Industries — 1998(08)LCX0032 Eq 1999 (106) ELT 0176 (Tribunal) — Relied on [Para 12]

Dunlop India Ltd. v. U.O.I. — 1975(10)LCX0016 Eq 1983 (013) ELT 1566 (S.C.) — Relied on............... [Paras 8, 12, 13]

Enarco Ltd. v. Commissioner — 1996(06)LCX0076 Eq 1997 (090) ELT 0104 (Tribunal) — Distinguished.. [Paras 5, 12]

Process Rubber Industries v. Commissioner — 1998(03)LCX0101 Eq 1998 (101) ELT 0109 (Tribunal) — Distinguished               [Paras 5, 12]

Advocated By :   Shri Jatinder Singh, Advocate, for the Appellant.

Shri Narayan Singh, SDR, for the Respondent.

[Order per : P.S. Bajaj, Member (J)]. - This appeal has been filed by the appellants against the order-in-appeal dated 25-11-1994 passed by the Collector (Appeals) vide which he had affirmed the order-in-original dated 7-12-1993 of the Assistant Collector, regarding the classification of the product in question (pulleys) and confirmed the duty on them.

2. The appellants are engaged in the manufacture of Jockey Pulleys KCI Brand. They filed their fresh classification lists Nos. 3/77/88 w.e.f. 7-3-1988 and 1/88-99 w.e.f. 5-4-1988 for these products claiming classification under Heading 84.48 of the CETA by describing to be parts and accessories suitable for use solely or principally with the machines meant for preparing textile fabrics. Those lists were approved only provisionally by the Assistant Collector as according to the Excise Department the products were classifiable under sub-heading 84.83 of the CETA which attracted higher rate of duty than the one leviable under sub-heading 84.48. Thereafter, two show cause notices were issued to the appellants one dated 30-9-1988 and another dated 11-1-1989 for payment of the differential duty amounts mentioned therein as products were found to be classifiable under sub-heading 84.83 of the CETA. They, however, contested the correctness of those notices on the ground that their products were classifiable only under sub-heading 84.48 of the CETA being parts suitable for use solely and principally with the machines meant for preparing textile fabrics. They also averred that during the course of provisional assessment no demand could be raised from them and that there was no ground for the modification of their earlier approved classification lists under sub-heading 84.48 of the CETA, without sufficient cause or reason. The Assistant Collector, however, did not agree with their contention and approved their classification list only under sub-heading 84.83 of the differential duty amounts indicated in both the show cause notices through the order-in-original dated 7-12-1993. His order had been affirmed in appeal by the Collector (Appeals) through the impugned order. The appellants have come up in appeal before the Tribunal.

3. We have heard both the sides and gone through the record.

4. The issue relates to the classification of the products in question (Jockey pulleys KCI Brand) as the appellants have claimed classification under sub-heading 84.48 of the CETA, while the Revenue wants under sub-heading 84.83 of the CETA. Therefore, it would be beneficial to extract both these sub-headings of Chapter 84 :-

“Chapter 84 :

84.48  Auxiliary machinery for use with machines of Heading Nos. 84.44, 84.45, 84.46 or 84.47 (for example, dobbies, jacquards, automatic stop motions, shuttle changing mechanisms); parts and accessories suitable for use, solely or principally with the machines of this heading or of Heading Nos. 84.44, 84.45, 84.46 or 84.47 (for example, spindles and spindle flyers, card clothing, combs, extruding nipples, shuttles, healds and heald-frames, hosiery needles).

84.83  Transmission shafts (including cam shafts and crank shafts) and cranks; bearing housing and plain shafts bearings; gear is and gearing; ball or roller screws; gear boxes and other speed changers, including pulley blocks; clutches and shaft couplings (including universal joints)”

5. The learned Counsel has contended that since the products of the appellants are parts and accessories suitable for use solely or principally with the machines meant for preparing textile fabrics, they deserve to be classified only under sub-heading 84.48 of the CETA by applying the Rule of Interpretation embodied in Note 2(b) of Section XVI of Chapter 84. He has also referred to the HSN and the Explanatory Notes thereunder, on this sub-heading to corroborate his contention. Two cases of the Tribunal has also been relied upon by him which are, Process Rubber Industries v. C.C.E. - 1998 (101) ELT 109 and Enarco Ltd. v. C.C.E. - 1997 (090) ELT 104.

6. However, on the other hand, the learned SDR while refuting this contention of the Counsel has argued that the products in question find specific mention in sub-heading 84.83 of the CETA and as such have to be classified only under this sub-heading in terms of the Rule of Interpretation contained in Note 2(A) of Section XVI of Chapter 84. The specific entry according to the learned SDR, has to prevail over the general entry for determining the classification of the products. The end use of the products in question has not to be taken into consideration specially when there is no reference to the end use for excluding the products from the specific entry of sub-heading 84.83 of the CETA.

7. Regarding the nature of the product of the appellants there is no dispute that they are manufacturing tension pulleys which stand specifically mentioned under sub-heading 84.83 of the CETA. This sub-heading as per the Explanatory Notes on the Harmonised Commodity Description and Coding System Vol. III covers all types of pulleys. According to these Explanatory Notes pulleys consist of wheels, sometimes with a grooved rim, which transmit rotary movement from one to another by means of an endless belt or rope revolving in contract between them. The heading also covers simple pulleys, drums (wide pulleys), conical pulleys, stepped pulleys etc. The group also covers pulley blocks for hoists, etc. and free pulleys which do not transmit any power themselves but simply act as a guide or furning post for a transmission rope or cable.

8. Note 2 which consists of two Clauses i.e. (a) and (b) of Section XVI of Chapter 84 lays down the rule to be followed for determining the classification of the parts which are goods classifiable under Chapters 84 and 85. It runs as under :-

The wording of Clause (a) is quite clear and unambiguous and leads to an irresistible conclusion that all parts which are goods and fall in any of the Headings of 84 or 85 have to be classified in their respective headings.

Similarly, the bare perusal of Clause (b) of this Note 2 on which much reliance has been placed by the Counsel shows that it would come into operation only where the parts cannot be classified in their respective headings. This clause starts with the expression “other parts” i.e. parts which cannot be classified in their respective headings as per Clause (a), but are suitable for use solely or principally with a particular kind of machine or with a number of machines, are to be classifiable with the machine of that kind. In the instant case, the products in question (pulleys) which are said to be parts of textile machinery, find specific mention under sub-heading 84.83 of the CETA, and as such merit classification under that sub-heading in terms of Clause (a). Therefore, the provisions of Clause (b) cannot be invoked at all. Here the observations of the Apex Court in Dunlop India Ltd. & Madras Rubber Factory v. U.O.I. - 1975(10)LCX0016 Eq 1983 (013) ELT 1566 (S.C.) can be read with advantage. Regarding the classification of specific item in the Tariff Schedule the Apex Court in that case, had observed as under :-

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

In that very case, the Apex Court had also not approved the concept of classification of the goods on the basis of end-use and observed as under :-

“When there is no reference to the use or adoptation of the article the basis of end-use for classification under Tariff Entry is absolutely irrelevant.”

9. The above said Rule of Interpretation embodied in Note 2, Clause (a) had been also applied by the Tribunal earlier in ARW Filters v. C.C.E., Pune - 1998 (104) ELT 83. In that case classification of filters meant for air and liquids used for different machineries was involved and it was observed 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).”

10. No doubt under sub-heading 84.48 of the CETA there is a reference to the parts and accessories suitable for use solely or principally with machines but it would cover only those parts and accessories which as per Clause (a) of Note 2 of Section XVI referred to above, cannot be classified in their respective headings. In respect of those parts, the Rule of Interpretation contained in Clause (b) of Note 2 would be attracted and they would be classifiable with their respective machines under appropriate sub-headings of the CETA. If those parts are found to be parts of machinery covered by sub-heading 84.48 of the CETA, then they would merit classification under this sub-heading. This sub-heading cannot be interpreted to cover all parts and accessories of the machines even if covered by different sub-headings of the CETA, otherwise the Rule of Interpretation embodied in Clause (a) of Note 2 of Section XVI of Chapter 84 and the specific entries regarding the parts in various sub-heading of the Tariff would become redundant and irrelevant. Harmonious interpretation of the various sub-headings of the Tariff has to be made so that no sub-heading is rendered redundant in its use and applicability to the goods. One sub-heading cannot be permitted to eclipse the other.

11. The Explanatory Notes under the HSN on sub-heading 84.48 to which reference has been made by the Counsel also do not in any manner help the appellants in seeking classification of their products under this sub-heading. In those Explanatory Notes the details of the parts of the machineries have been given. These notes do not at all contain any reference to the effect that Rule of Interpretation contained in Clause (a) of Note 2 of Section XVI of Chapter 84 would not be attracted in the matter of classification of the parts and accessories of the machines or that the parts specified in sub-heading 84.83 of the CETA would not still be classifiable under that sub-heading, but only sub-heading 84.48 when they are suitable for use solely or principally with the machines.

12. Therefore, in the light of discussion made above, we are unable to persuade ourselves to accept the contention of the Counsel that the products (tension pulleys) in question of the appellants merit classification under sub-heading 84.48 of the CETA, rather we must hold that the products, have been rightly classified by the authorities below under sub-heading 84.83 of the CETA. This very view had already been taken regarding this very product (pulleys) by the Tribunal in C.C.E., Coimbatore v. Venkatachalapathy Industries - 1999 (106) ELT 176 and Babu Textile Industries v. C.C.E. - 1999 (113) ELT 489. In both these cases the classification of pulleys on the ground of being parts of textile machinery/powerlooms, was claimed under sub-heading 84.48, but it was held that these were classifiable not under sub-heading 84.48, but under sub-heading 84.83 of the CETA by applying the Rule of Interpretation laid down in Note 2(a) and Note 2(b) of Section XVI of the Chapter 84 and the ratio of the law laid down by the Apex Court in M/s. Dunlop India Ltd. and Madras Rubber Factory, (supra). The ratio of the law laid down in Enarco Ltd. & Process Rubber Industries Ltd., (supra) relied upon by the Counsel, is not at all attracted to the present case as the facts and circumstances of both those cases were quite distinct and the products involved were also different than the one in the present case.

13. The argument of the learned Counsel that after having once accepted the classification of the product in question under sub-heading 84.48 of the CETA by the Excise Department, the same could not be changed without assigning sufficient cause, also cannot hold the field in face of the well settled principle that there exists no estoppel in taxation matters, as observed by the Apex Court in Dunlop India Ltd. and Madras Rubber Factory, supra. Moreover, the Excise Department was within its right to rectify its error, if any, committed earlier inadvertantly or otherwise under mistaken belief of law. The appellants were required to file the fresh classification list regarding their products after passing the Budget of the year 1988 and they accordingly filed the fresh classification list in question w.e.f. 2-3-1988 and on the basis of that list after hearing them, the classification of their products had been made under sub-heading 84.83 of the CETA. Even otherwise, initially their classification list was approved only provisionally under sub-heading 84.48 of the CETA and as such the Assistant Collector was not legally debarred from changing the classification to sub-heading 84.83 of the CETA on the filing of fresh classification list by the appellants under the law.

14. Similarly, the contention of the Counsel that under the erstwhile tariff the products (pulleys) of the appellants were classified under T.I. 68 as textile machinery parts is also not of much consequence. That tariff has been admittedly replaced by the new tariff wherein the product in question had been made specifically classifiable under sub-heading 84.83 of the CETA. Therefore, under the new Tariff the product cannot be classified as textile machinery parts under sub-heading 84.48 of the CETA, as discussed above.

15. Still another argument of the Counsel that when the approval of the classification was provisional demand for payment of duty could not be legally raised and as such the same deserves to be set aside, is also wholly misconceived. On getting intimation regarding the provisional approval of their classification list under sub-heading 84.48 of the CETA which attracted less rate of duty, the appellants cleared the goods and when the classification matter was decided by the Assistant Collector against them by classifying their products under sub-heading 84.83 of the Tariff, the demand-cum-show cause notices in question were issued to them calling upon them to pay the differential duty amount at the rate of duty under sub-heading 84.83 was higher than the rate under sub-heading 84.48 of the Tariff. Moreover, before confirming the demand, the appellants were heard in detail by affording them full opportunity and no violation of principles of natural justice also can be said to had taken place. No miscarriage of justice can be said to had occurred. Moreover, it is well that settled when justice is pitted against the technicalities of the law/rules, the former has to prevail as the ends of justice can be allowed to be defeated by sticking to the technicalities of the rules and regulations.

16. In the light of the discussion made above, the impugned order of the Collector (Appeals) confirming the classification of the products of the appellants under sub-heading 84.83 of the CETA, as well as the duty demand by endorsing the order-in-original of the Assistant Collector is perfectly valid and is affirmed. Consequently there is no merit in the appeal filed by the appellants and the same is ordered to be dismissed.

Equivalent 2001 (136) ELT 1141 (Tri. - Del.)