1991(02)LCX0092
BEFORE THE CEGAT, SPECIAL BENCH C, NEW DELHI
S/Shri G. Sankaran, President, S.L. Peeran, Member (J) and N. K. Bajpai, Member (T)
VOLTAS LIMITED
Versus
COLLECTOR OF CUSTOMS
Order No. 171/9l-C, dated 18-2-1991 in C/Appeal No. 2545/89-C
Advocated By : Shri Sanjay Grover, Advocate, for the Appellants.
Shri M. Jayaraman, SDR, for the Respondent.
[Order per: G. Sankaran, President]. - The appellants imported a consignment of Duramatic Tyres described in the covering bill of entry as :
Watts Duramatic Tyres - (Solid Tyres - other than Pneumatic Tyres)
and in the covering invoice as solid industrial tyres. The consignment was warehoused and under cover of bill of entry for home consumption (Cash No. 1191 dated 15-4-1988), the goods were classified, and assessed to customs duty, under Heading No. 4012.90 of the First Schedule to the Customs Tariff Act (hereinafter, the Schedule, for short). Thereafter, the appellants claimed refund of a portion of the duty contending that the tyres could be used only in fork lift trucks and were not interchangeable for motor vehicles and that they were classifiable under Chapter 98 of the Schedule, sub-heading 9806 read with sub-heading 8427.90 and eligible for the benefit of Customs Notification No. 60/87, dated 1-3-1987. The Assistant Collector dismissed the claim on the ground that solid tyres were specified in Heading 4012.90 and that, therefore, the original assessment was in order. The appeal against this order did not meet with success. In the impugned order, the Collector (Appeals) relied on statutory Section Note 1(a) to Section XVI of the Schedule and observed :-
As per the Note 1(a) of Section XVI articles of the kind used in machinery, of rubber, vulcanised other than hard rubber, are excluded from the purview of Section XVI. In other words, tyres even if parts of fork lift will be out of purview of Section XVI and so could not be classified under 8427.90 because it is an article of rubber.
2. We have heard Shri Sanjay Grover, Advocate, for the appellants and Shri M. Jayaraman, Sr. DR, for the respondent-Collector.
3. The manufacturers leaflet Watts Industrial Tyres describes Watts Solids (tyres) thus :-
The most modern concept in Solid tyre design, tough yet resilient it is available in Standard Plain type, Cushion type, or low rolling resistance construction. The latest addition is the ULTRARIDE Solid tyre manufactured with a two compound construction, it has a special shock absorbent rubber in the base with a high cut resistant long life tread rubber. This tyre has an increase in deflection, reduces bounce and absorbs shock which increases driver comfort and reduces truck maintenance.
The appellants contention right from the beginning has been that these tyres could be used only in forklift trucks and are not interchangeable for use with motor vehicles. This has not been disputed or rebutted by the Revenue. The description of the goods as industrial tyres in the manufacturers leaflet also goes to support the contention that the subject tyres are not for use in motor vehicles. In fact, the learned DR has fairly stated that there is no dispute that the subject tyres are designed for forklift trucks and that it is not the Departments case that they are interchangeable for use in motor vehicles. Now, Heading 40.12 of the Schedule reads thus :-
40.12 Retreaded or used pneumatic tyres of rubber; Solid or cushion tyres, interchangeable tyre treads and tyre flaps, of rubber
In the normal course, solid tyres which the subject goods are would fall under sub-heading 4012.90. In our opinion, there is a good deal of force in the appellants contention that the Collector (Appeals)s reliance on Section Note 1(a) to Section XVI of the Schedule is misplaced. The said note reads thus :-
1. This Section does not cover :
(a) Transmission or conveyor belts or belting, of plastics of Chapter 39, or of vulcanised rubber (heading No. 40.10); or other articles of a kind used in machinery or mechanical or electrical appliances or for other technical uses, of vulcanised rubber other than hard rubber (heading No. 42.04);"
Evidently, the goods are excluded from Section XVI which covers inter alia forklift trucks (Heading 84.27). So, solid tyres, even if they are parts of forklift trucks, would not fall within Section XVI. But this would not mean that such tyres would not fall within Section XXI - no statutory note which would serve to exclude the goods from the said Section has been pointed out to us. Heading 98.06 (falling within Section XXI) reads thus :-
98.06 9806.00 Parts of machinery equipments, appliances, instruments and articles of Chapters 84, 85, 86, 89 and 90".
And, Chapter Note 1 to Chapter 98 reads thus :-
1. This Chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein, even though they may be covered by a more specific heading elsewhere in this Schedule
By virtue of the above note, the subject solid tyres do qualify for classification under Heading 98.06 though, in the normal course, they would fall under Heading 40.12 because that heading specifies solid tyres.
4. But the learned DRs contention is that Chapter 98 is unique to the Indian Customs Tariff Schedule covering as it does omnibus entries for project imports, laboratory chemicals, passengers and crews baggage etc. Chapter Note 1 must, therefore, be read in context. So read, the subject solid tyres would fall under 40.12 being specified therein. We do not agree. In our considered opinion, the result of a harmonious reading of the various headings, and Section and Chapter notes can only lead to the classification of the subject goods under Heading 98.06.
5. In any view of the matter, as rightly pointed out by the learned Counsel for the appellants, even if it is considered that the goods are prima facie classifiable under Heading 40.12 and 98.06, both headings being equally deserving of consideration, the later heading is to be preferred by virtue of sub-rule (c) of Rule 3 for the interpretation of the Schedule which reads :-
3. When by application of rule 2(b) or for any other 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. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which classified as if they consisted of the material or component which gives them their essential character, insofar 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 last in numerical order among those which equally merit consideration."
6. We set aside the impugned order and allow the appeal with consequential relief to the appellants.
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Equivalent 1991 (56) ELT 569 (Tribunal)