L.M. Van Moppes Diamond Tools India Ltd., Madras vs Collector Of Customs, Madras>1986(02)LCX0033

1986(02)LCX0033

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

S/Shri G. Sankaran, Vice-President; K.L. Rekhi, Member (T) and M. Santhanam, Member (J)

L.M. VAN MOPPES DIAMOND TOOLS INDIA LTD., MADRAS

Versus

COLLECTOR OF CUSTOMS, MADRAS

Order Nos. 100 to 106/86-D, dated 26-2-1986

Advocated By : Shri T. Duleep Singh, Advocate and Shri G. Swaminathan, for the Appellants.

Shri Vineet Ohri, SDR, for the Respondent.

[Order per : G. Sankaran, Member (T)].-The captioned seven appeals are transferred (from the Central Government) proceedings within the meaning of Section 131B of the Customs Act, 1962 and are being disposed of as if they were appeals filed before this Tribunal.

2. All the appeals involve the same issue and are being, therefore, disposed of by this common order.

3. The appellant imported, in several consignments goods described as “diamond compax”. According to the manufacturer’s literature produced before the lower authorities, the goods are composed of individual crystals of man-made diamond bonded to a tungsten carbide substrate. It appears that the ‘’compax" tool blanks thus obtained are further fabricated by brazing their carbide portion to steel tool blanks or “indexable (?)” types of inserts. The shapping of the blank to the desired configuration is done with diamond wheels and a rigid grinding machine.

4. In a few of the cases, the proceedings were initiated by demand notices issued by the authorities. In others, the appellant filed refund claims. However, the basic issue in all the cases remains the same.

5. In all the cases, the Assistant Collector, after due process, held that the correct classification was under Heading 71.12/15 of the Import Tariff Schedule. The Appellate Collector, on the other hand, held that the correct Heading was 68.01/16 (1) but rejected the appeals before him since there was no difference in the rate of duty under that heading and 71.12/15 and, as such, no relief was due.

6. In the appeal memoranda, it is contended that the goods are not jewellery or other items falling under Heading 71.12/15. The Appellate Collector has not given any reasons in support of his finding in favour of Heading 68.01/16 (1). The goods being polycrystalline agglomerate of man-made diamond which are only compacted synthetic diamond powder correctly fall under Heading 71.04.

7. We have heard Shri T. Duleep Singh, Advocate assisted by Shri G. Swaminathan, Commercial Officer of the appellant company, for the appellant and Shri Vineet Ohri, Sr. D.R. for the respondent.

8. The Bench asked if the manufacturer’s literature about the imported goods were available. Shri Duleep Singh said none was available.

9. The orders of the lower authorities contain a description of the goods, as gathered from the manufacturers’ literature provided before them, We have reproduced the description in the earlier part of this order. From it, it can be seen that the goods are not just synthetic diamond powder : the powder has been compacted on to a tungsten carbide substrate. The resultant article is, in fact, described as (diamond dressing tool) blanks for tool tips. It has thus lost the character of being merely synthetic diamond powder. Heading 71.04 reads “Dust and powder of natural or synthetic precious or semi-precious stones”. This heading, therefore, does not seem appropriate.

10.The Assistant Collector had classified the goods under Heading 71.12/15 which reads as follows :

“Jewellery, goldsmiths’ and silversmiths’ wares and other articles, of precious metal or rolled precious metal, and parts thereof; articles consisting of, or incorporating, pearls, precious or semi-precious stones (natural, synthetic or reconstructed).

Evidently, the imported goods not being jewellery or goldsmiths’ and silversmiths’ wares or other articles of precious metal or rolled precious metal and parts thereof, their classification has to be considered under the description :

“articles consisting of, or incorporating, pearls, precious or semi-precious stones, (natural, synthetic or reconstructed)”.

The subject goods are undoubtedly articles incorporating synthetic diamond in the form of powder on tungsten carbide substrate. Prima facie, therefore, the description seems to be apt to cover the goods. But the learned counsel for the appellant contends that Heading 71.12/15 would cover only finished articles and would not cover things which are yet to be worked upon. He adds that the imported goods constitute raw material to be fabricated into tool tips. We are unable to accept this contention. There is nothing in the extracted portion of the heading to indicate that only finished articles requiring no further fabrication are covered by it.

Note 7 (a) to Chapter 71 provides that the expression “Articles consisting of, or incorporating pearls, precious or semi-precious stones (natural, synthetic or reconstructed)” does not cover articles containing precious metal or rolled precious metal (other than as minor constituents). The present goods do not contain precious metal or rolled precious metal and are not, therefore, hit by the aforesaid exclusion.

11. Note 2 (k) to Chapter 71 reads as follows :-

This Chapter does not cover :

“abrasive goods falling within Chapter 68 or 82, containing dust or powder of precious or semi-precious stones (natural or synthetic) : goods of Chapter 82 with a working part of precious or semi-precious stones (natural, synthetic or reconstructed) on a support of base metal; machinery, mechanical appliances and electrical goods, and parts thereof, falling within Section XVI, not being such articles wholly of precious or semi-precious stones (natural, synthetic or reconstructed).”

We have, therefore, to consider whether the subject goods fall under Chapter 68 or 82. If they do, they would go out of the purview of the Chapter 71 because of the above exclusion clause. Of the two, Chapter 82 can straightaway be ruled out for, among other things, the requirement of “a support of base metal” is not satisfied here. (Tungsten carbide is not a base metal). As regards Chapter 68, it has to be noted that the learned counsel for the appellant contends, in the event of Heading 71.04 or 71.02 not being upheld, Heading 68.01/16 (b) as an alternative classification on the basis that the function of the imported goods is to sharpen the grinding stone. It is the appellant’s grievance that the Appellate Collector classified the goods under Heading 68.01/16(1) without, however, assigning any reasons therefor.

12. Now, Heading 68.01/16 reads as follows : -

“Articles of natural or artificial stones, of agglomerated natural or artificial abrasives, of plastering material, of cement, of concrete, of asbestos, of asbestos-cement or cellulose fibre cement, or of mica; articles of vegetable materials agglomerated with mineral binders; mineral wools; expanded mineral materials; articles of other mineral substances, not elsewhere specified or included :

(1) Not elsewhere specified

(2) Grinding stones, grinding wheels and the like of natural stone, of agglomerated natural or artificial abrasives, and segments or other finished parts of such stones and wheels but excluding band polishing stones, whetstones, oil stones, and hones."

The Appellant’s claim is under sub-heading (2). The imported goods have not been shown before us to be of the nature of grinding stone, grinding wheels or segments or other finished parts of such stones and wheels. Sub-heading (2) may, therefore, be ruled out. The Appellate Collector has not, as pointed out by the appellant, given any reason in support of his conclusion that the goods fell under sub-heading (1). Nor does a plain reading of the heading as a whole, leaving out sub-heading (1), lead to the conclusion that the goods fell under sub-heading (1).

13. The Sr. D.R. contends that by application of note 1 to Chapter 82, the present goods would get excluded from that Chapter. The relevant portion of the said note reads :

“......, this Chapter covers only articles with a blade, working edge, working surface or other working part of :

(a) base metal;

(b) metal carbides;

(d) abrasive materials on a support of base metal, provided that the articles have cutting teeth, flutes, grooves, or the like, of base metal, which retain their identity and function after the application of the abrasive."

The substance which imparts the property of cutting to the present goods is synthetic diamond powder. But it is on a support (or substrate) of tungsten carbide, not of base metal. Nor it is made of base metal or of metal carbide. Thus none of the conditions is satisfied and the goods, therefore, would not fall within Chapter 82. This is quite apart from the consideration that the imported goods, on the appellant’s own admission, need to be further fabricated to make it functional. The above view is reinforced by a reference to note 2 (k) to Chapter 71 in terms of which the Chapter does not cover goods of Chapter 82 with a working part of precious or semi-precious stones (natural, synthetic or reconstructed) on a support of base metal. We have seen the goods do not fit in with the specification. They do not, therefore, go into the purview of Chapter 82.

14. We have also considered whether the imported goods would fall under Heading 71.02. Industrial diamonds fall under sub-heading 3 provided they are “unworked, cut or otherwise worked, but not mounted, set or strung (except ungraded stones temporarily strung for convenience of transport)”. Since the diamond powder has been agglomerated onto a tungsten carbide substrate, the above sub-heading is also to be ruled out.

15. No arguments have been advanced before us whether the subject goods qualify or not for the description :

“machinery, mechanical appliances, ...... and parts thereof, falling within Section XVI, not being such articles wholly of precious or semi-precious stones (natural, synthetic or reconstructed)”.

We are not, therefore, going into the question whether the exclusion clause pertaining to such goods [see note 2(k) to Chapter 71] has any application to the present goods.

16. Since we have found that the goods could be classified with the aid of headings, sub-headings, section notes and chapter notes, there is no necessity to turn to the Rules of Interpretation of the Tariff Schedule.

17. The result is that the goods fall under Heading 71.12/15. The classification arrived at by the Appellate Collector is set aside and the one arrived at by the Assistant Collector is confirmed. The appeals are dismissed.

Equivalent 1986 (24) ELT 623 (Tribunal)