1992(05)LCX0029

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

 S/Shri Harish Chander, President and P.K. Kapoor, Member (T)

PORRITS & SPENCER (ASIA) LTD.

Versus

COLLECTOR OF CUSTOMS

Final Order No. C/202/92-D, dated 8-5-1992 in appeal No. C/2105/89-D

Cases Quoted

DUNLOP INDIA LTD. v. U.O.I - 1983 (13) E.L.T 1566 (S.C.)                                                     .(PARAS 2, 7]

SAURASHTRA CHEMICALS  v. COLLECTOR - 1985(08)LCX0017 Eq 1986 (023) ELT 0283 (TRIBUNAL)         [PARAS 3, 6]

Advocated By: Shri K.R. Mehta, Consultant, for the Appellants.

Shri J.N. Nair, JDR, for the Respondent.

[Order per: P.K. Kapoor, Member (T)]. - This is an appeal against the order passed by Collector of Customs (Appeals) Bombay. Briefly stated the facts of the case are that the appellants imported improved heavy Texplooms. along with grippers and bobbins for being used for the. production of felts for paper making machines.,They claimed assessment of bobbins as parts of the loom system under sub-heading 8446.29 read with Notification No. 59/87 dated 1-3-1987. However, the Customs authorities held that the bobbins were assessable under the Heading 9806.00. The appellants filed refund claim on the ground that the bobbins should have also been assessed along with the looms under Heading 8446.29. The Assistant Collector, however, rejected their application for refund. The appeal filed by the appellants against the order passed by the Assistant Collector was also rejected by the Collector (Appeals) on the grounds that in terms of Note 1(c) to Section XVI goods Such as bobbins and other similar items fell outside the ambit of Section XVI. For this reason and also on the ground that bobbins in question being identifiable parts of looms falling under Chapter 84 were appropriately classifiable under Heading 9806.00 in terms of Note 1 to Chapter 98.

2. On behalf of the appellant, the learned consultant Shri K.R. Mehta appeared before us. He stated that the Collector (Appeals) had erred in holding that parts of machinery specified in Chapters 84 and 85 were assessable under Chapter 98 in term of Note 1 to Chapter 98 since this interpretation had the effect of over-ruling Note 2 to Section XVI of the Customs Tariff. He contended that the view held by the Collector was opposed to the rule of harmonious construction of statutes and had the effect of rendering the sub-headings in Chapter 84 relating to parts of machinery redundant. Shri Mehta added that classification of the subject goods under the residuary Heading 98.06 in preference to the specific Heading under Chapter 84 was contrary to provisions of Rule 3 of the Interpretative Rules and the principles laid down by the Supreme Court in the case of Dunlop India Ltd. v. Union of India - reported in 1975(10)LCX0016 Eq 1983 (013) ELT 1566. He referred to Note 1 to Chapter 98 which provides that the chapter applies to all goods which satisfy the conditions prescribed therein and contended that the disputed bobbins could not be classified under sub-heading 98.06 in which unlike the other sub-headings of Chapter 98 no conditions had been prescribed. He argued that the Collector (Appeals) had contradicted himself since he had stated that in terms of Note 1(c) to Section XVI, the imported bobbins had to be placed outside the ambit of Section XVI and at the same by treating the disputed goods as identifiable parts of looms falling under Chapter 84, he had held that they were classifiable under Heading 98.06 in terms of Note 1 to Chapter 98. Shri Mehta produced photographs taken inside the appellants factory showing the Texolooms and the disputed large sized bobbins of aluminium being used for feeding the warp yarn onto the loom instead of the conventional beam.

3. On behalf of the Revenue, the learned JDR Shri J.N. Nair, stated that Note 2 to Section XVI of the Tariff on which the appellants had placed reliance in support of their claim for assessment of the disputed bobbins under Chapter 84 as parts of looms had no relevance since in terms of Note 1(c) items such as bobbins were excluded from the purview of Section XVI. He contended that there was no infirmity in the finding of the Collector (Appeals) that the bobbins in question were classifiable under sub-heading 98.01 since Note 1 to Chapter 98 clearly provided that Chapter 98 has to be taken to all goods which satisfied the conditions therein, even when they were covered by a more specific heading elsewhere in the Schedule. He also placed reliance on the decision in the case of Saurashtra Chemicals Poibander v. Collector of Customs ‘ reported in 1986 (023) ELT 283.

4. We have examined the records of the case and considered the submissions made on behalf of both sides. The only point that arises for consideration is whether the bobbins imported for use along with Texo Looms’ meant for weaving wide felts were classifiable as parts of looms under Customs Tariff Heading 8446.29 as claimed by the appellant or under Heading 9806.00 as held by the lower authorities.

5. Since both sides have based their claims on the relevant Section/Chapter Notes in the Customs Tariff, before proceeding with the examination of rival contentions, we consider it desirable to reproduce the relevant Notes to Section XVI and Chapter 98 and also the relevant Headings of the Schedule to the Customs Tariff Act. Section XVI.,

Notes

1. This section does not cover:

(a) .......................

(b) .......................

(c) Bobbins, spools, cops, cones, reels or similar supports, of any material (for example Chapter 39,40,44 or 48 or Section XV)

(d) .......................

(e) .......................

(f) ....................... etc.

2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines (not being parts of the articles of Heading No. 84.84,85.44,85.45,85.46 or 85.47) are to be classified according to the following rules:

(a) Parts which goods included in any of the headings of the Chapter 84 or 85 (Other than heading Nos. 84.85 or 85.48) are in all cases to be classified in their respective headings:

(b) .................

(c) .................

Chapter 98

Notes:

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. ‘

6. As observed by the Tribunal in the case at Saurashtra Chemicals, Porbander v. Collector of Customs, Bombay, reported in 1986 (023) ELT 283, the relevant headings in the Customs Tariff have to be interpreted and applied in the light of Section Notes and Chapter Notes which being statutory are binding like the headings and have an overriding force. The appellants case is that the disputed bobbin being an integral component of the special Texo loom system was classifiable under, Heading 8446.29 in terms of Note 2 to Section XVI. It is also the appellants case that for the classification of the bobbins in question, Heading 8446,29 being specific for parts be preferred to the general Heading 98.06. We are, however, unable to agree with appellants since Note 2 to Section XVI of the Customs Tariff Act, which regulates the classification of machinery parts has to be read along with Note 1 which-provides that Section XVI does not cover “Bobbins, spools, cops, cones, reels or similar supports of any material (for example Chapter 39,40,44 or 48 or Section XV)”. The disputed goods are admittedly “bobbins” from which warp ends are fed into the loom.. Hence, we do not find any infirmity in the finding of the Collector (Appeals) that the ‘bobbins in question were excluded from the purview of Section XVI.

7. On a plain reading of Note 1 to Chapter 98, it follows that parts of machinery, equipments, appliances, instruments and articles of Chapters 84,85,86,89 and 90 even when covered by a more specific heading elsewhere in the Schedule were to be classified under Heading 98.06. Since the legislature in their wisdom had chosen to provide that parts of machinery, equipments, appliances, instruments and articles of Chapters 84, 85, 86, 89 and 90 even when covered by more specific headings of the Schedule would be classifiable,under Heading 98.06, we do not find any force in the appellants contention that in terms of interpretative Rule 3(a) and the principles laid down in the decision of the Supreme Court in the case of Dunlop India Ltd. v. Union of India (supra), parts of machinery falling under Chapter 84 were to be classified under the relevant heading of that Chapter in preference to Heading 98.06. Hence, in our view even if the disputed ‘bobbins’ were not excluded from the scope of Section XVI in terms of the statutory provision-in Note 1(c) to Chapter XVI they would have been classifiable under Heading 98.06.

8. The learned consultant Shri K.R. Mehta had contended that the Collector (Appeals) had contradicted himself by observing that in terms of Note 1(c) to Section XVI the disputed bobbins could not be deemed as parts covered by Chapter 84 and simultaneously holding that the disputed goods being identifiable parts of looms falling under Chapter 84 were classifiable under Heading 98.06. We have given our earnest consideration to the point made by the learned consultant but we are not inclined to agree with him. In this regard, it is seen that even though in terms of Note 1(c) to Section XVI ‘bobbins’ were to be excluded from the purview of that section, they were admittedly parts of the imported Texolooms which were classifiable under Heading 8446.29. From a plain reading of Note 1 to Chapter 98 and Heading 98.06, it follows that parts of machinery falling under the specified headings even when covered by any other heading of the tariff would be classifiable under Heading 98.06. For this reason, in our view the goods answered the description of Heading 98.06 and were, therefore, correctly held as classifiable under that heading.

9. Referring to Note 1 to Chapter 98, the learned consultant had contended that classification of the disputed goods under sub-heading 98.06 which did not prescribe any conditions was ruled out since Chapter 98 covered only goods which satisfied the conditions prescribed therein. In this regard, it is seen that the Rule 1 of the Rules for the interpretation of the Tariff Schedule provides that for legal purposes, classification has to be determined according to the terms of the headings and any relative Section or Chapter Notes. Hence, if the description in any sub-heading of Chapter 98 is not further qualified by any condition, then the classification of any goods under that heading will have to be determined only on the basis of the terms of that heading. We, therefore, do not find any merit in the point made by the appellants.

10. In view of the above discussion, the appeal fails and is rejected.

Equivalent 1992 (62) ELT 184 (Tribunal)