1986(04)LCX0025
BEFORE THE CEGAT, SPECIAL BENCH B-2, NEW DELHI
S/Shri M. Gauri Shankar Murthy, Member (J) and K.L. Rekhi, Member (T)
COLLECTOR OF CUSTOMS, MADRAS
Versus
BALLARPUR INDUSTRIES LTD., NEW DELHI
Order No. 234/86-B.2, dated 10-4-1986
Advocated By : Shri J. Gopinath, SDR, for the Appellant.
Shri A.N. Haksar with Smt. Indu Malhotra, Advocates, for the Respondents.
[Order per : K.L. Rekhi, Member (T)]. - The appellants imported Granite Press Rolls. In dispute in this case is their classification under the Customs Tariff Act, 1975, as it existed prior to its amendment on 28-2-1986. The Collector (Appeals) allowed the appeal of the respondents and ordered classification of the goods under heading 84.31 (Machinery for making or finishing cellulosic pulp, paper or paper board). Through this appeal, the Department seeks to have their original classification restored at the higher rate of duty under heading 68.01/16 (Articles of stone etc.).
2. A word about the nature and functions of the goods would be helpful in understanding the issues involved. Granite Press Rolls, as their name indicates, are made of granite which is a natural stone. A mild steel shaft runs through the centre of the Roll. The shaft is held in position by means of mild steel end plates. The Roll is a component part of paper finishing machinery. Its function is to give final finish or polish to paper.
3. We have heard both sides. The respondents have no quarrel with the department’s proposition that by virtue of Note 2 to Section XVI and Note 1(a) to Chapter 84 of the CTA, 1975, articles of stone and other mineral products are excluded from the scope of Chapter 84. In this connection, both sides cite the ratio of the Larger Bench judgment of this Tribunal in the case of M/s. Saurashtra Chemicals 1976(12)LCX0004 Eq [1986(023) ELT 283] in which carbon seals (parts of turbosets and compressors) were held to fall under Chapter 68 and not under Chapter 84. The respondents, however, distinguish their case saying that the goods involved in the Saurashtra Chemicals case were made of pure carbon or graphite while their Granite Press Roll is a composite product made of stone and steel. Relying on the Supreme Court judgment in the case of M/s. Geep Flash Light Industries Ltd. [1985 (022) ELT 3], wherein it was held that articles of plastic falling under’ item 15A(2) of the old Central Excise Tariff (pre 28-2-1986) should be made wholly of plastic, the respondents plead that their Press Roll, not being an article made wholly of stone, could not fall in Chapter 68. Since it is not in dispute, they argue, that Granite Press Roll is a part of paper making/finishing machinery, heading 84.31 urged by them was specific for the goods. Interpretative Rule 5(a) of the Customs Tariff Act, 1975 directed assessment under the most specific heading. As such, there was no need to go to the later Rule 3(b) to detrmine whether stone or steel provided essential character to the Rolls and to decide classification on that basis as sought to be done by the department.
4.We have carefully considered the rival submissions. We observe that heading 84.31 is specific for paper making/finishing machinery but not for parts of such machinery. The respondents have not imported paper making/finishing machinery but only a part of such machinery. There is no immutable rule in the Customs Tariff that all parts of a machine must be assessed under the heading for that machine. On the contrary, statutory Notes 1 and 2 in Section XVI, Note 1 in Chapter 84 and Note 1 in Chapter 85, which have an over-riding effect over the headings themselves, lay down in general the order of priority for classification of parts in the following sequence :
(1) Parts made of certain materials like mineral products, glass, ceramics, plastics etc. and parts of general use made of base metals are to be classified in the respective material composition heading.
(2) Subject to (1) above, parts having a specific heading for themselves in Chapters 84 and 85 are to be classified under that heading.
(3) Other parts, if suitable for use solely or principally with a particular kind of machine, are to be classified within the heading of that machine.
(4) All other parts are to be classified in heading No. 84.65 or 85.28.
5. The respondents are canvassing tor the course at (3) above. But that is permissible only if the prior options at (1) and (2) above are not available. No heading which is specific for Granite Press Rolls, or for that matter for parts of paper making/finishing machinery, has been shown to exist in the Tariff. The course at (2) above is, therefore, not available. The respondents argue that the course at (1) is also not available because the goods are not made of stone alone but are a composite product of stone and steel. We find that the Rules for the interpretation of the Customs Tariff Schedule, which are statutory, do not permit exclusion of the course at (1) above merely on that ground. We reproduce below the relevant Rules :
“2(a) x x x x x x x
(b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consistinn wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles contained in rule 3.
6. When for any reason, goods are, prima facie, classifiable under two or more Headings, classification shall be effected as follows :
(a) The Heading which provides the most specific description shall be preferred to Headings providing a more general description.
(b) Mixtures and composite goods which consist of different materials or are made up of different components and which cannot be classified by reference to (a) shall be classified as if they consisted of the material or component which gives the goods their essential character, in so far as this criterion is applicable.
(c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the Heading which occurs latest among those which equally merit consideration.
7. As already stated in the preceding paragraph, there is no specific description heading for Granite Press Rolls or even for parts of paper making/finishing machinery in general. Rule 3(a), therefore, does not apply. The next course is to determine classification in terms of Rule 3(b) read with Rule 2(b). Now, in the Granite Press Roll, the functional part is the roll made out of granite stone. It is this part which imparts final finish to paper. The centre shaft and end plates only provide support to, the roll and enable its fitment in the paper finishing machinery. The very name of the article “Granite Press Roll” is also suggestive of the fact that it is the stone part which is the major and the important component. We have, therefore, no hesitation in saying that it is the stone component which gives the goods their essential character. As such, applying Rules 2(b) and 3(b), the goods fall for classification in Chapter 68 and by virtue of Note 1(a) to Chapter 84 they stand excluded from that Chapter. It may appear odd that an article which is indisputably a machinery part should have to be classified as an article of stone but that is the deliberate scheme of the Customs Tariff Act with its elaborate regime of Interpretative Rules, Section Notes and Chapter Notes which, the respondents also admit, are statutory. The respondents, reliance on the Supreme Court judgment in Jeep Flash Light’s case is misplaced because that case related to classification of goods under the old Central Excise Tariff which was structured totally differently and which had no interpretative rules or statutory notes for classification of composite articles.
8. In the consequence, we set aside the impugned order, restore the classification made by the Assistant Collector, under heading 68.01/16 of the Customs Tariff and allow this appeal.
Equivalent 1986 (25) ELT 206 (Tribunal)