1988(06)LCX0059

BEFORE THE CEGAT, SPECIAL BENCH ‘B2’, NEW DELHI

S/Shri Harish Chander, Member (J), I.J. Rao, Member (T) and K. Prakash Anand, Member (T)

FOOD SPECIALITIES LTD.

Versus

COLLECTOR OF CUSTOMS, BOMBAY

Order No. 392/1988-B2, dated 2-6-1988 in Appeal No. C/358/87-B2

Advocated By: Shri V. Lakshmikumaran, Advocate, for the Appellants.

Shri J. Gopinath, S.D.R., for the Respondent.

[Order per : Harish Chander, Member (J)]. - M/s. Food Specialities Ltd., New Delhi had imported a consignment of one Double Drum Roller Drier complete and claimed assessment of the same under Chapter Heading 8419.39 @ 50% + 25% + 15%. The consignment was imported vide Bill of Entry No. 2188/1 of 6-10-1986. As per catalogue/literature of the machine produced by the appellants the use of the machine in dispute was not limited to the mere evaporation of water or solvents from given products but also in the case of certain nutritious substance a ready cooking effect by which instant properties were obtained. Further as per Catalogue/Literature the goods in question, i.e. Double Drum Dryers were used by food and drinking industries. The appellants were manufacturer of ‘Lactogen’ infant food and cereal products. The machine besides drying was used in processing food, milk, butter-milk, baby food, tomatoes, bananas, etc. The Assistant Collector had assessed the same under Chapter Heading 8419.81 at the rate of 70% + 40% + 15%. Being aggrieved from the order passed by the Assistant Collector of appellants had filed an appeal to the Collector of Customs (Appeals). The learned Collector of Customs (Appeals) observed that the machine had to be classified in view of its principal purpose as per Chapter Note 7 to Chapter 84. He observed that the literature on the machine clearly stated that the use of the machine was not limited merely to evaporation of water or solvent from a given product. He stated that the process of drying was not an end in itself but had been employed for production of instant food. He was of the view that the function of the machine was principally to produce instant foods and this machine could also be used in other industries where mere drying was necessary. He had confirmed the findings of the Assistant Collector and had rejected the appeal. Being aggrieved from the aforesaid order the appellants have come in appeal before the Tribunal.

2. Shri V. Lakshmikumaran, the learned advocate has appeared on behalf of the appellants. He has reiterated the facts and argued that the revenue authorities had wrongly classified the machine under Chapter Heading 8419.81. He states that the correct classification would be under 8419.39. He has referred to the CCCN Page 1176 where the Rotary Dryers have been defined as those consisting of revolving cylinders or drums which may be heated internally or externally. They are used in various industries (Paper making, preparation of potato flakes etc.) He has also referred to the order-in-original and order-in-appeal. He has stated that Chapter 8419 relates to Machinery, plant or laboratory equipment, whether or not electrically heated, for the treatment of materials by a process involving a change of temperature, such as heating, cooking, drying...and Heading 8419.39 relates to Dryers (Others). Shri Lakshmikumaran has referred to Note 7 to Chapter 84 which states that “A machine which is used for more than one purposes is, for the purpose of classification, to be treated as if its principal purpose were its sole purpose.” He has stated that the goods imported by the appellants may be assessed under heading 8419.39 as the machine is for drying. He has pleaded for the acceptance of the appeal.

3. Shri J. Gopinath, the learned S.D.R. who has appeared on behalf of the respondents states that the goods were correctly assessed by the revenue authorities under Chapter Heading 8419.81. He has also referred to the interpretative notes. He has referred to the description given in the Bill of Entry i.e. One Double Drum Roller Drier complete. He has also referred to the Catalogue which appears on pages 11 and 13 of the paper book. Shri Gopinath has stated that a simple perusal of the Catalogue will show that the products which can be processed on this type are milk, whey, butter-milk, various kinds of glue, paints, baby foods, tomatoes, bananas, etc. Shri Gopinath stated that it has to be seen whether drying is the main function or cooking is the main function. He has pleaded for the dismissal of the appeal.

4. Shri V. Lakshmikumaran, the learned advocate in reply states that pre-cooked food is put in the dryer. He has pleaded for the acceptance of the appeal.

5. We have heard both the sides and have gone through the facts and circumstances of the case. We have perused the Catalogue. It is a settled law that the goods imported will fall under the heading which is more specific. As per catalogue the use of Gouda-dryer is not limited to the mere evaporation of water or solvents from a given product. In the case of certain nutritious substances, there is, apart from the drying, also a ready-cooking effect by which remarkable instant properties are obtained. The machine imported in the present case is capable of processing milk, whey, butter milk, various kinds of glue, paints, baby foods, tomatoes, bananas, etc. Heading 8419.81 pertains to machinery plant and equipment: for making hot drinks or for cooking or heating food whereas Heading 8419.39 relates to dryers. Others the arguments of the learned advocate do not help him. The goods imported are covered under Heading 8419.81. Accordingly we confirm the findings of the lower authorities. There is no merit in the appeal. The appeal is dismissed.

6. [Order per : Shri I.J. Rao, Member (T)]. -I am not able to agree with my learned Judicial Brother’s order. I record my own order below.

The question for consideration is whether the Double Drum Roller Dryer imported by the appellants is classifiable under Heading 8419.81 - “For making hot drinks or for cooking or heating food” as decided by the lower authorities or under Heading 8419.39 -"Others (dryers)" as claimed by the appellant. The technical literature produced by the appellants before the lower authorities as also before us specifically describes the machine in question as ‘Double Drum Dryer’. It is also stated that such Double Drum Dryer is the type most widely in use. The literature filed before the Bench specifically mentioned that the products which the machine can process are milk, whey, butter milk, various kinds of glue, paints, baby foods, tomatoes, bananas,etc. Thus, the imported machine is a versatile machine used primarily for the purpose of drying the product. Depending upon the input, the machine will dry the products in question. In any case this machine is not exclusively made for making hot drinks, for cooking or for heating foods, as decided by lower authorities. Further, the extract from the book. The Chemistry and Technology of CEREALS AS FOOD AND FEED’- Samuel A. Matz, Ph.d. The A VI publishing Company, INC., describes the very same article in detail. This book at page 467 specifically mentions that cooking of the food takes place elsewhere and the cooked food is pumped between two drums which dry the product in a thin sheet as they rotate. The sheets are removed from the rolls by knife blades and conveyed to a flaking machine. This machine is equally a drying machine and a cooking machine for the food. Thus, the classification decided by the lower authorities classifying this machine as cooking machine is incorrect. As mentioned earlier, this machine is a versatile drying machine which can dry not only food products but also products like glue, paints, etc.

7. I had occasion to go through the Explanatory Notes to Harmonised Commodity Description and Coding System concerning Heading 8419, particularly page 1176 which describes the type of dryers covered under drying plants. Para D of the said page specifically refers to Rotary Dryers, which is reproduced below:-

“(D) Rotary dryers. These consist of revolving cylinders or drums which may be heated internally or externally. They are used in various industries (paper making, preparation of potato flakes, etc.”.

Thus, even the explanatory notes cover rotary dryers of this nature under the reference of dryers nor as cooking machines or machines for making hot drinks etc. Though the explanatory notes will not have a legal force, they interpret the Schedule to the Customs Tariff Act, and have much persuasive value. Further Heading 8419 as also the sub-heading under the said Heading 8419 are identically worded as in HSN. Accordingly, it appears that the correct classification of this machine is as a dryer under Heading 8419.39. During the course of the arguments, Shri V. Lakshmikumaran, learned Counsel for the appellants drew our particular attention to Chapter Note 7 to Chapter 84 which reads as under: -

“A machine which is used for more than one purpose is for the purposes of classification, to be treated as if its principal purpose were its sole purpose.”

This point made by the learned Counsel is well taken. If there is any doubt as to whether, though the principal function of this machine is drying, it may aid the cooking of the food either directly or indirectly, such a doubt is cleared by the Chapter Note. One thing which is not in dispute is that the principal purpose of this machine is drying. Once this position is accepted, then according to the Chapter Note 7, the machine was to be treated as if the principal purpose were the sole purpose. Therefore, I hold that the machine is classifiable rightly under Heading 84.39 and not under Heading 8419.81 as decided by the lower authorities. I therefore allow the appeal with consequential relief.

8. [Order per : Shri K.P. Anand, Member (T)]. - For the reasons stated in the order of Shri I.J. Rao, I agree with him.

Accordingly, I allow the appeal.

FINAL ORDER

In accordance with the views of the majority, the appeal is allowed.

Equivalent 1988 (37) ELT 415 (Tribunal)