Elpro International Ltd., Bombay vs Collector of Customs, Bombay>1982(12)LCX0009

1982(12)LCX0009

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

S/Shri S. Venkatesan, Sr. Vice-President, G. Sankaran, Member (T) and S.D. Jha, Member (J)

ELPRO INTERNATIONAL LTD., BOMBAY

Versus

COLLECTOR OF CUSTOMS, BOMBAY

Appeal No. CD(SB)(T) A. No. 297/80 (B), decided on 31-12-1982

Advocated By : S/Shri S.D. Bhatt, G.T. Jiandani, employees of the appellant, for the Appellants.

Shri N.V. Raghavan Iyer, SDR, for the Respondent.

[Order per : S. Venkatesan, Sr. V.P.]. - This is a Revision Application filed before the Central Government by the Appellant (Company) under Section 131 of the Customs Act, 1962 which stands transferred, under the provisions of Section 131B ibid. to the Appellate Tribunal. The Revision application is to be disposed of by the Tribunal as if it were an appeal filed before it.

2.The goods which are the subject-matter of these proceedings are “shells” which are claimed to be a part of lightning arresters with a rating of 400 KV. These have been classified under sub-heading (1) of Heading No. 85.18/27 of the Customs Tariff Schedule. The appellants are claiming their classification under sub-heading (3) of the same heading. The Appellate Collector of Customs had rejected the above contention on the ground the “insulators” are separate from “apparatus for the protection of electric circuits”. He had held that such apparatus (including parts thereof), which falls within sub-heading (3), did not include insulating fittings, as these are not treated as at par with other parts of electrical apparatus. Therefore, according to him, such insulating fittings would be classifiable under sub-heading (1), namely, “not elsewhere specified” as has been done.

3. In the appeal and at the personal hearing, the appellants have stressed that these electrical goods are specially designed and manufactured for use as components of 400 KV Extra High Voltage lightning arrester, and are an integral part (as distinguished from “fitting”) of a lightning arrester. Therefore according to them, the goods should be regarded as parts of apparatus for the protection of electrical circuits, and should be assessed under sub-heading (3).

4. At the personal hearing, the representative of the appellants, without objection being raised by the Departmental Representatives, filed certain photographs showing how these shells would be assembled in a complete lightning arrester. According to them, the lightning arrester consists of a series of “gaps”, through which the lightning would pass. It is the function of the shells to hold these “gaps” in their respective positions, so that the lightning flash can pass successively through the gaps and be passed on to the earth without harming the equipment which it is meant to protect. He stated that the shells are made of a material known as cordierite, which is generally described as a refractory electrically insulating ceramic material of high thermal shock resistance. He stressed that the function of the shells was not only to provide insulation against electricity but it also had a heat resisting property which is necessary when dealing with the very high voltages of lightning flashes.

5. In support of his contention that the “shells” were “parts” and not “fittings”, the appellants’ representative quoted the definition of “Part” appearing in paragraph 2 of the Import Trade Control Policy for 1981-82.

6. On behalf of the Department, Shri Raghavan Iyer pointed out that the appellants had to rely on the ITC policy in support of their contention that the goods were parts of apparatus for the protection of electrical circuits, and that, by implication, this was an admission that their proposition did not find support in the wording of the Customs Tariff, which was separate from and independent of the ITC Policy. However, he did not contest that the article could be called a part of lightning arrester. However, according to him, a part of lightning arrester, if it was also in the nature of an insulator, would have to be classified as an “insulator” and not as a part of a lightning arrestor. In this connection, he referred to Section Note 2 to Section XVI of the Customs Tariff Schedule. He pointed out that, in accordance with this note, parts of “machines” falling within this Section, if described in any Heading, are in all cases to be classified in their respective headings, in preference to classification along with the “machine” of which they form a part. The same rules, according to him, would apply in regard to classification as between sub-headings of a Heading. Since “insulators of any material” are mentioned separately from “apparatus for the protection of electrical circuits”, in the main Heading No. 85.18/27, and they do not figure in sub-heading (3) under that Heading, they were rightly classified under sub-heading (1) ibid., namely, “not elsewhere specified”. The assessment made by the Department and upheld by the Appellate Collector was, therefore, correct.

7. Shri Iyer also mentioned that the Government of India, as the revisional authority under Section 131 of the Customs Act, had issued Show Cause Notices proposing revision of certain orders in appeal directing assessment of such goods under sub-heading (3) of the above mentioned heading. He could not, however, say what had happened subsequently in those cases.

8. The Tribunal finds that the subject goods are clearly for use in the assembly of high voltage lightning arresters. Even the Departmental Representative had not contested that they could be called parts of a lightning arrester. Therefore, if there were no other conflicting considerations, they might be classified on merits as parts of “electrical apparatus ......... for the protection of electrical circuits..........”, which fall under sub-heading (3) of Heading No. 85.18/27.

9. However, the same main Heading also separately mentions “insulators of any material”. It is, therefore, clear that for the purposes of this Heading, and, therefore, of its sub-headings also, insulators are to be regarded as distinct from apparatus for the protection of electrical circuits. While a lightning arrester could be called an “apparatus for the protection of electrical circuits”, it is common ground that these shells are not in themselves complete lightning arresters, and can at best be regarded as parts thereof. The expression “insulators of any material” is clearly applicable to them. The question under consideration is which of these two alternative descriptions could be taken to have precedence, having regard to the wording of the relevant headings and sub-headings of the Customs Tariff and the various directions or guidelines relating to their interpretation. In this connection the Tribunal observes that in accordance with Interpretative Rule 1, which is a part of the Customs Tariff Schedule, the classification of goods within a Heading shall be determined by applying as between sub-headings the like rules as are applicable between Headings.

10. The facts that the shells are made from a special ceramic material or that they also have a heat resisting property, do not make any material difference, since there is no doubt that the basic function of the goods is their property of insulation against electricity.

11. The Tribunal finds that parts (a) & (b) of Note 2 to Section XVI of the Customs Tariff, which includes Chapter 85, are clearly applicable to this case. An article which is specifically described in the main Heading 85.18/27 separately from “insulators of any material”, would properly be regarded as being classified in accordance with that description. However, a part of such an article would be subject to the operation of part (a) of the above-mentioned note, according to which where such a part is separately described by itself, it is to be classified in accordance with that description. In the present case, “insulators of any material” are separately and specifically mentioned in Heading No. 85.18/27. There is no doubt that this description is applicable to the goods under consideration. Accordingly, it is this description which would be applicable for purposes of their classification, in preference to their being considered as a part of an article which might be mentioned by specific description in the same Heading. The Tribunal observes that sub-headings (2) & (3) of Heading 85.18/27 can be clearly related to parts of the description in the main Heading, other than “insulators of any materials”. Accordingly, insulators would fall under sub-heading (1) of this heading as “not elsewhere specified”. The goods under consideration, being “insulators”, would therefore fall under sub-heading (1) in preference to sub-heading (3).

12. Shri Iyer drew the Tribunal’s attention to a passage in the Explanatory Notes to the Customs Co-operation Council Nomenclature (pp. 1156 to 1159 in Volume III) in support of his contention that the subject goods were appropriately classifiable as “Insulators of any materials”. The Tribunal observes that these Explanatory Notes, although not a part of the Customs Tariff Schedule, have considerable persuasive value in the interpretation of the Nomenclature and of any Tariff based on it. In view, however, of the conclusion reached above, with reference to the wording of the entries in the Customs Tariff Schedule itself, it is not necessary to rely on the Explanatory Notes.

13. In the result, the Tribunal holds that the Appellate Collector’s finding that the goods were rightly classifiable under sub-heading (1) of Heading No. 85.18/27 of the Customs Tariff was correct. The revision application is accordingly rejected.

Equivalent 1983 (14) ELT 1794 (CEGAT)