1984(03)LCX0008

BEFORE THE CEGAT, SPECIAL BENCH ‘B’, NEW DELHI

Shri B.B. Gujral, Vice President; Shri S.D. Jha, Member (J) and Shri A.J.F. D’Souza, Member (T)

NATIONAL NEWSPRINT & PAPER MILLS, BOMBAY

Versus

COLLECTOR OF CUSTOMS, BOMBAY

Order No. 209/84-B, dated 1-3-1984

Advocated By :  Shri D.N. Kohli, for the Appellants.

Shri K.V. Kunhi Krishnan, J.D.R., for the Respondent.

[Order per: A.J.F. D’Souza, Member (Technical]. - This appeal arises out of Order-in-Appeal No. S/49-722/79 (R), dated 17-8-1979 against which a Revision Application was filed to the Government of India and was transferred to the Tribunal for disposal in terms of Section 131B (2) of the Customs Act, 1962.

2. Goods pertaining to this appeal are one case of Electric Valve Actuator with rotating spindle, imported under Bill of Entry Cash No. 2023-D, dated 15-11-1976 and described as One case Instrumentation Spares. As against the assessment under Heading 93.28(1) CTA 1975, the importers claimed re-assessment under 90.28(2) and also claimed refund of customs duty as well as additional duty.

3. When the case came up for hearing, it was observed that the records were incomplete and a new plea was being raised. By an interim Order No. B-1074/83 issued on 9-12-1983 this Bench permitted amendment of the appeal and directed production by the appellants of a copy of their appeal memorandum to the Appellate Collector and such further evidence to show that they had in fact claimed assessment under the alternative heading 90.24 (1) in respect of the goods involved in this appeal. They have rectified the appeal and also filed copies of their appeal dated 8-7-1977 and the first order of the Appellate Collector dated 23-2-1978; the Order-in-Appeal dated 1-9-1979; the Revision Application dated 11-2-1980; and the Order-in-Original dated 12-4-1977.

4. From the records, it is seen that the Assistant Collector held that the additional duty was correctly leviable and also that the original assessment under Heading 90.28 (1) was in order. The appeal against this order was rejected by the Appellate Collector by order dated 23-2-1978, stating that the appellants were asked to produce documentary evidence, such as catalogue etc., to support their claim for assessment under Item 90.24 (1) which they failed to do and the claim was unsubstantiated. The Government of India ordered a de novo consideration of the appeal in its revision Order No. 377/79. The resulting Order-in-Appeal, which is in issue before us, held that the Actuator is an electric motor with gearing devices etc. The motor falls under Item 85.01 and motors designed for use in circuits of 400 volts or above and other motors of rated output 1.5 K.W. or above, fall under sub-item (2), which covers the goods under appeal; and the question of assessing them under any other heading, such as 90.24 (1), is ruled out in view of Rule 3(a) of the Interpretative Rules. The Appellate Collector held that the original assessment under 90.28 (l)was not sustainable but items 85.01 (2) and 90.28 (1) carry the same rate of duty, viz. 60%+15%. so no refund is due and the appeal was accordingly rejected as untenable.

5. In their Revision Application dated 11-2-1980, it was contended that the Valve Actuator basically consists of gearing with output shaft or intermediate shafts hand wheels, electric switching device, position transmitter etc. It is an integral part of feed water control but the actuator itself requires motive force to rotate its spindle. This motive force can be obtained by the hand wheel provided in the actuator; but for remote operation of the control valve, the actuator is provided with an electric motor or air motor, depending upon the type of control system. Control valve can be operated by actuator with the hand wheel but electric motor above cannot operate the control valve without the actuator. This electric motor is only an auxiliary part of the valve actuator and in the appellant’s existing control system, it is an integral part of the valve actuator. The name electric valve actuator is given to it, as it receives its motive force from electric motor. The same actuator will be called air valve actuator if it is provided with air motor instead of electric motor. Since it is clear that the motor is only an auxiliary part, the valve actuator cannot be considered as an electric motor as mentioned in the impugned order. The catalogue of the Siemens Electric Valve Actuators of 2-4 or 10 Kgm Torque, type V-7 was enclosed.

6. Shri Kohli contended that the Appellate Collector erred in applying Rule 3 and in holding that the actuator is a motor. The invoice shows it as an ò Electric Valve Actuator with rotating spindle 4 rpm 10 KMP with position potentiometer 100 Ohm voltage 220/380 V, 50 Hz Cat. No M 76342-F 52X7-E 103-Z." The Appellate Collector was misled by page 5 of the catalogue, which showed the various components like" “1. Motor 2. gear unit 3. Hand wheel and 4. Switching and Signalling Unit”. However, on p. 8 of this catalogue, the Basic design : “Rotary actuator with three-phase motor, 220/380 V, 50 Hz, equipped with 3 PTC sensors” was given and the weight with motor was 53 Kgs. and without motor was 50 Kgs. The motor, weighing only 3 Kgs., was a minor part of the actuator and was optional as operation could be by hand or by air pressure. He, therefore, urged that the goods be ordered to be classified under heading 90.24(1) or 85.01(1) if treated as a motor; and not 90.28(1) or 85.01(2) as held by Collector of Customs (Appeals).

7. The learned D.R., on the other hand, stated that the actuator was assessed as “automatic controlling instruments NOS ”under Heading 90.28(1). The appellants have given up the claim for 90.28(2) as “electrical measuring, checking instruments etc.” and are claiming 90.24(1) as “instruments for automatically controlling flow of liquids” (other than electrical) or in the alternative as “electrical motors NOS” under 85.01(1). The Appellate Collector ruled 85.01(2), as electrical motors of above 400 V, was applicable. The D.R. contended that the actuator has an independent function and has an in built motor. It only actuates and does not control flow, which is actually done by a separate valve to which the actuator can be fitted and the valve is not part of the present appeal. According to Note 2 to Section XVI, all parts having independent functions are to be assessed on merits. Motors are to be assessed with the appliance, even if separately packed, by virtue of Note 4. Here it is not so packed. In the Explanatory Notes to BTN, an action device is an appliance to be classified in its own appropriate heading. Applying this principle, the actuator comes under Heading 84.59 (1) i.e. “machines and mechanical appliances having individual functions, not falling under any heading of Chapter 84, not elsewhere specified”; but the rate of duty is the same as assessed. Heading 90.24 (1) is not tenable as electrically operated appliances are not covered. Their electrical counterparts however come under 90.28 (4). Since the appliance does not control flow, this is not applicable and only Heading 84.59 (1) is the correct heading, according to him.

8. The question to be decided is which precise Heading and sub-heading, among the various ones urged by the Appellants and applied or invoked by the authorities, is applicable to the Electric Valve Actuator. For the reasons advanced by both sides during arguments, we agree that classification of the goods as a motor under Heading 85 would not be correct. From the write-up and the catalogue it is seen that the actuator is an integral part of the feed water control. As such it is not an instrument for automatically controlling flow of liquids and, whether treated as electrically operated or not, neither Heading 94.28 nor 94.24 would be appropriate. There is considerable force in the argument of the learned D.R. that the actuator has an independent function. This is borne out by the fact that it can be operated by the hand-wheel or by an electric motor or by an air motor. Applying Notes 2 and 4 to Section XVI and the Explanatory Note regarding classification of an action device under its own appropriate Heading, the most appropriate classification of this appliance, in our opinion, is Heading 84.59(1). Since the rate of duty here is identical to that at which the goods were originally assessed, it makes no difference as regards the amount of duty paid and, therefore, no refund of duty is involved and no relief would be due to the appellants.

9. In the circumstances, subject to our finding regarding the incorrect classification by the lower authorities, we reject this appeal.

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Equivalent 1985 (19) ELT 221 (Tribunal)