New Haven Steel Ball Corpn. Ltd. vs Collector Of Customs>1991(04)LCX0050

1991(04)LCX0050

BEFORE THE CEGAT, SPECIAL BENCH B2, NEW DELHI

S/Shri Harish Chander, Member (J) and P.C. Jain, Member (T)

NEW HAVEN STEEL BALL CORPN. LTD.

Versus

COLLECTOR OF CUSTOMS

Order No. C/118/91-B2, dated 19-4-1991 in Appeal No. C/1170/84-B2

CASE CITED

PUREWALL & ASSOCIATES LTD. v. COLLECTOR - 1983(10)LCX0022 Eq 1984 (015) ELT 0490 (TRIBUNAL) [PARAS 3, 8, 10]

Advocated By : Shri R. Parthasarthy, Advocate, for the Appellants.

Shri M.K. Sohal, JDR, for the Respondent.

[Order per : P.C. Jain, Member (T)]. - Brief facts of the case are as follows :

1.1. The appellants imported a consignment of 15 sets of flashing plates size 30" for Koehlar machines and 2 sets of flashing plates for Koehlar 36" machines. The appellants claimed assessment of the goods under CTA Tariff Heading No. 84.45/48 which attracts lower rate of duty and countervailing duty under T.I. 68 of the then Central Excise Tariff. The Department on the other hand has assessed the goods by the impugned order under CTA Tariff Heading No. 82.05 and for the purpose of countervailing duty under CET Item No. 51A.

1.2. The appellants also claimed the import of the goods under OGL (Appendix 10) of 1983-84 ITC Policy as permissible spares.

1.3. The function of the machine has been described by the appellants in their appeal memo as follows :

(a) The steel balls are first cold forged on automatic machine.

(b) The said forged balls are then transferred to the ball grinding machine so that they pass between two grooves of flashing plates which rotate under heavy pressure to precision grind the steel balls.

The machine is Koehlar Ball grinding machine. The impugned goods are grooved with certain dimensions of grooves which are smallest dimension and would produce steel balls of the smallest size. When fitted to the machine one of the flashing plate machine remains stationary while the other flashing plate rotates thereby the pieces of steel wire not only acquire round shape but they also become of smooth surface. The function of these flash plates is shaping and smoothening which is performed in a single operation wherein cut pieces of steel wire are introduced at one end of the machine while the final finished steel balls which require no other process emerge at the exit end. This machine can be fitted with different flashing plates with different dimensions of grooves which will produce steel balls of varying dimensions. However, for producing the steel ball of a particular size or diameter steel plates of particular dimensional grooves can be used. As and when the grooves get worn out the flashing plates are re-grooved with larger dimensions so that they can produce the steel balls of larger dimensions than those produced by the same flashing plates with earlier small grooves. Similarly for producing steel balls of different dimensions the flashing plates have to be replaced and nothing else is required to be done. Thus although the machines can work without fitment of the flashing plates the same does not to manufacturing function. Similarly the machine cannot take flashing plates of different dimensions/overall size and machine which takes flashing plates of 30" size cannot take flashing plates of overall size of 36" and another machine manufactured to accommodate that size of flashing plates is required."

2. The Department has considered these plates as interchangeable tools covered by Tariff Heading CTA 82.05 on the ground that the plates fitted in Koehlar machines are to perform the functions of grinding, shaping and smoothening operations of steel balls upto accurate dimensions within permissible tolerance limits. Since the machine can take, according to the Adjudicating authority, different plates with different sizes of grooves for the purpose of a specific job of grinding, shaping and smoothening different types of steel balls; the plates are interchangeable tools for machine tools. The Adjudicating authority has not acceded to the plea of the appellants in construing the Tariff Heading CTA 82.05 to the effect that the interchangeable tools should be interchangeable between different types of machines viz. hand tools, machine tools or power operated hand tools.

2.1 The Adjudicating authority, on the other hand, contends that interchangeability in the expression interchangeable tools refers to the versatility of a machine in which tools of different types are replaced i.e. one tool may do a specific job say of turning; it may be placed by another tool say a drilling tool on the same machine. Such types of tools capable of being taken by a machine tool etc., are known as interchangeable tools.

3. The assessees learned Advocate has relied on a decision of the Tribunal in his support in the case of Purewall & Associates Ltd. v. C.C; Bombay reported in 1983(10)LCX0022 Eq 1984 (015) ELT 0490 (Tri.) = 1983 ECR 2173D (CEGAT Bombay). In order to appreciate the contention of the learned Advocate for the assessee we reproduce below para 6 of the said Tribunals judgment in Purewalls case mentioned supra :-

6. We have carefully considered the matter. We have also seen the samples of the subject die sets. We agree with the departments representative that Heading 82.05 is not confined to hand tools only as it specifically includes interchangeable tools for machine tools also. However, we find force in the other argument of the appellants which relates to the question whether the subject die sets are interchangeable or not. When the Tariff heading says interchangeable tools, it means that the tools should be interchangeable and not that the machine to which they are fitted should be capable of doing multiple jobs. According to the definition appearing in the ISO Guide interchangeability means the suitability of a product to be used in place of another product to fulfil the relevant requirements. When the Department admits that one particular die set can manufacture one particular watch part only, that it cannot do any other job and that no other tool can take its place and do the same job, we fail to understand how such a die set could be classified as an interchangeable tool. Interchangeability cannot mean as the learned Departments Representative would like us to believe, that when one die set wears out, another die set of the same type should replace it. Such replacement function is inherent in all standard machine parts and that is the basis on which the concept of spare parts is built. Then why the additional condition or interchangeability? We are satisfied that due meaning has to be given to this additional condition put in the Tariff heading. In our view, interchangeable tools are those which satisfy the definition of interchangeability as given in the ISO Guide. It is not in doubt that the subject sets are not interchangeable tools in that sense.

4. So far as the ITC aspect is concerned, the learned Advocate for the assessee has conceded in all fairness that it is a tool inasmuch as it performs the function of grinding, shaping and smoothening operations of steel balls and in strict sense it cannot be called a spare of Koehlar machine. He, however, states that the appellants are the actual users and the redemption fine imposed on confiscation of the goods is too harsh.

5. Learned SDR, on the other hand, reiterates the findings of the adjudicating authority in the impugned order. He also states that while fixing the redemption fine the adjudicating authority has already taken into account the aspect that the appellants are the actual users.

6. Description of Tariff Heading 82.05 in CTA 1975 is reproduced below :-

82.05 - Interchangeable tools for hand tools, for machine tools or for power-operated hand tools (for example, for pressing, stamping, drilling, tapping, threading, boring, broaching, milling, cutting, turning, dressing, morticing or screw driving) including dies for wire drawing, extrusion dies for metal, and rock drilling bits;

(i) Not elsewhere specified

(ii) Rock drilling bits."

Similarly, description of Tariff Heading 84.45/48 under which the appellants claim classification is reproduced below :-

84.45/48 - Machine-tools for working metal or metal carbides, stone, ceramics, concretes, asbestos-cement and like mineral materials or for working glass in the cold, for working wood, cork, pone, ebonite (vulcanite), hard artificial plastic materials or other hard carving materials, other than machines falling within Heading No. 84.49 or 84.59; accessories and parts suitable for use solely or principally with the above machine-tools, including work and tool-holders, self-opening die heads, dividing heads and other appliances for machine-tools; tool holders for any type of tool or machine-tools for working in the hand.

Note 1(ij) of Section XIV excludes articles falling within Chapter 82 or 83 from the provisions of Section XIV pertaining to machinery and mechanical appliances; electrical equipment; parts thereof. In other words, the implication of this Note is that in order to classify the goods under consideration under Tariff Heading 84.45/48 the application of Tariff Heading 82.05 as contended by the department, would first have to be eliminated.

6.1. Tariff Heading 82.05 is modelled on the lines of Heading of Heading 82.05 of the CCCN, Explanatory Notes to the said Heading, inter alia, states as follows :-

Whereas (apart from a few exceptions such machine saw blades) the preceding headings of this Chapter apply in the main to hand tools ready for use as they stand or after affixing handles, the present heading covers an important group of tools which are unsuitable for use independently, but are designed to be fitted, as the case may be, into:

(A) hand tools, whether or not mechanical (e.g. breast drills, braces and die-stocks),

(B) machine-tools, of Headings 84.45, 84.46 and 84.47, or falling within Heading 84.59 by reason of Note 5 to Chapter 84,

for pressing, stamping, threading, tapping, drilling, boring, reaming, broaching, milling, gear-cutting, turning, cutting, morticing, drawing etc., metals, metal carbides, wood, stone, ebonite, certain plastics or other hard materials, or for screw driving. [Emphasis supplied in the Explanatory Notes].

While it is well-settled that Explanatory Notes to the CCCN are not statutory and are not binding, yet it is well known and also well-settled that they have a great persuasive value particularly in construing headings of Customs Tariff which are modelled closely on the lines of description given in the CCCN. We find that Customs Tariff Heading 82.05 is identical to description in Heading 82.05 of Chapter 82 CCCN. By the emphasis supplied on the kind of tools which are unsuitable for use independently, but are designed to be fitted, as the case may be, into hand tools, machine tools or power-operated hand tools, a meaning has intrisically been provided to the expression interchangeable tools. The expression would not mean as has been contended by the appellants that interchangeable tools under Tariff Heading 82.05 would mean tools which are interchangeable between the various types of machines, hand-tools, machine tools or power-operated hand tools. Had that been the intention, the description of Tariff Heading would have been somewhat to the effect :-

Tools interchangeable among hand-tools, machine tools or power operated hand tools.

The description as it is provided is a group entry of three different types of tools i.e. they are (1) interchangeable tools for hand tools, (2) interchangeable tools for machine tools, (3) interchangeable tools for power-operated hand tools. Interchangeability of the tools, therefore, has to be with reference to a particular machine and not that the tool itself should be capable of performing different types of jobs. The term interchangeability in the International Organisation for Standardisation (ISO) Guide II appears to be a general purpose definition of the term interchangeable. The definition of ISO Guide II appears to be relevant in a different context e.g. when we say that this tractor part is interchangeable with a transport vehicle, we mean that the function which that particular part can perform in a tractor, the same function can be performed by that transport in a transport vehicle and it is in that context that it can be said that that part is suitable to fulfil the requirement of both a tractor and transport vehicle and therefore, it is an interchangeable part between a tractor and a transport vehicle but this general meaning of the term interchangeability is not apparently applicable to the expression interchangeable tools in the Heading 82.05 as discussed above. The guidance is clear about the meaning of that expression from the Explanatory Notes to CCCN already reproduced.

7. In the instant case, there is no doubt that the flashing plates of different grooves under consideration here are interchangeable with reference to Koehlar machines on which such flashing plates are required to be fitted.

8. Since Explanatory Notes to CCCN have not been brought to the notice of the Tribunal in Purewalls case, mentioned supra, we feel that that case has no precedent value if new facts come to light. We also feel that the Tribunal in that case appears to have been unimpressed with the D.Rs following reasoning :

Interchangeable means that one die wears out, another die of the same type replaces it. In that sense the subject die sets were interchangeable tools............"

9. The emphasis in Revenues plea in Purewalls case regarding interchangeability was when the tool (die in that case) worne out, it was replaced or interchanged. Equating interchangeability with replacement on wearing out of the tool was at once an incorrect emphasis. The meaning sought to be given now by the adjudicating authority to interchangeable tools is on a sounder footing that what was urged by the learned D.R. before the Tribunal in Purewalls case. We are, therefore, of the view that the flashing plates in the instant case are classifiable under Tariff Heading 82.05.

10. As regards the ITC angle, keeping in view the value of the goods and the fact that the appellants are actual users as also the fact that there was apparently a judgment of the Tribunal regarding interpretation of the expression interchangeable tools in Purewalls case and in an earlier order of the Appellate Collector referred to in the impugned order, it would be a fit case for reducing the redemption fine substantially. We, therefore, having regard to the overall facts and circumstances reduce the fine to Rs. 15,000/- (Rupees fifteen thousand only) from Rs. 45,000/- (Rupees forty-five thousand only).

11. As regards the countervailing duty the scope of Item 51A CET under which the department seeks to assess is more or less pari materia Tariff Heading 82.05 CTA 1975. Accordingly, the countervailing duty would be chargeable under Tariff Item 51A CET.

12. In sum, the appeal is rejected subject to reduction in the redemption fine, as ordered above.

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Equivalent 1991 (56) ELT 761 (Tribunal)