1992(05)LCX0067

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

S/Shri K.S. Venkataramani, Member (T), G.P. Agarwal, Member (J) and S.L. Peeran, Member (J)

BHADRACHALAM PAPER BOARDS LTD.

Versus

COLLECTOR OF CUSTOMS

Final Order No. C/248 & 249/92-D, dated 15-5-1992 in Appeal No. 2685 and 3009/89-D

CASE CITED

Voltas Ltd. v. Collector - 1991(02)LCX0092 Eq 1991 (056) ELT 0569 (Tribunal) ............................................................... [Paras 4, 5]

Advocated By : Shri Chidambaram, Consultant, for the Appellants.

Smt. J.M.S. Sundaram, SDR, for the Respondents.

[Order per : S.L. Peeran, Member (J)]. - The appellants had imported ‘Fly knives’ under Bill of Entry No. D-1284, dated 20-6-1988 and these were assessed under Heading No. 98.06 of Customs Tariff, 1975 as against the claim made by them for assessment under Heading 8208.90 read with Notification No. 59/87. They filed a refund claim. The Asstt. Collector of Customs (Refunds) in his order has rejected the appellants’ claim that fly knives are a complete machinery and requires to be assessed under Heading 8239.10 of Customs Tariff, 1975 as machinery for making pulp. He has recorded the party’s submission that the item is a part of machinery for making pulp and therefore, held that Notification No. 59/87 does not include goods falling under Chapter 82.

2. On appeal, the Collector (Appeals) has held that as per Note 1 to Chapter 98, they are appropriately classifiable under Heading 98.06 although normally, they would be classifiable under Heading 8208.90. These knives are parts of chipper i.e. these parts are necessary to carry out the function of chipping. He has also recorded the importer’s own admission that these knives are parts of chipper and, therefore, he has held that products cannot be classified under Heading 8208.90 as claimed by them.

3. We have heard Shri Chidambaram, learned Consultant for the appellants and Smt. J.M.S. Sundaram, learned DR for the Revenue. Shri Chidambaram stated that the item is not a part of machine but it is a tool. A distinction has to be drawn between the part of a machine and of tool otherwise, Heading 8208 would become otiose. He has contended that there has to be a harmonious construction to be given to the Chapter Notes and the Chapter headings. The items required to be placed in each machine for chipping and therefore, they have to be considered as tools and not as parts of machine. Although the importer admitted at the assessment stage that it is part of machine, but at the Appellate stage, they had stated that it was tool but the Collector (Appeals) had not dealt with this aspect.

4. Smt. Sundaram, pointing out to the Write-up of chipper knives, argued that even as per their own Write-up, the knives are integral parts of chipper and that the knives cannot be used anywhere else nor any other type of knive can be used in the chipper. Therefore, the knives were part of machinery and hence, applying Note 1 to Chapter 98, the assessment made by the lower authorities has to be upheld. She also relied on the ruling rendered by the Tribunal in the case of Voltas Limited v. Collector of Customs [1991 (056) ELT 569].

5. We have carefully considered the submissions made by both the sides and have also perused the order of the lower authorities and the citation relied by the learned DR. The importer has admitted in the first instance before the assessing authority that the item imported is a part of machinery for making pulp. It is now that they are contending that it is to be considered as a tool and not as a part of machinery. This statement is not correct even by their own Write-up on Chipper knives furnished before the lower authorities. The Write-up given by the importer on Chipper knives is reproduced below -

“In the Chipper house section of the pulp mill, 2 chippers are installed each of capacity 20 MT/hr of bamboo or wood. These chippers have been designed and supplied for specific output parameters by M/s. Pellmann Maschinenfabrik, West Germany. The chippers are installed for cutting the bamboo and wood obtained from forests in the form of logs into fine small pieces called chips of about 1" size. The logs are fed through conveyor belts into the chip pers. The actual function in the chipper is done by means of 4 rotating fly knives fixed on a rotor and a stationery dead knife. The knives are fixed in the chipper by means of fixing bolts with the help of knife wear and cover plates.

The dimensions, the hardness and depth of the cutting zone, the material used for making the knives are determined by the application parameters and the type of raw material - type of wood. M/s. Pallmann have designed these parameters for knives used by us considering these parameters.

Knives used by us are guaranteed for a performance of about 106 MT of chipping between 2 successive regrinding. Each knife can be reground till the entire span of the cutting zone is used.

Knives are the essential parts of the chipper which has a useful life, after which they have to be replaced, they are specifically made to our drawings El-002-01 and El-001 in specified grades of alloy steel. These knives cannot be used anywhere else nor can any other type of knife be used in our chippers. (Underlined by us)

The chips are chemically treated to give pulp of the desired property from which paper is made."

Therefore, a clear reading of this write-up discloses that the item cannot be considered independently as a complete machinery or as a tool, as contended by them. The knives are essential parts of chipper and are specially made for the purpose of machinery for chipper and it is not an independent tool for general purpose. Note 1 of Chapter 98 states that the 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 the schedule of the Tariff. Therefore, the contention of the importer has to be rejected. The ratio rendered in the case of Voltas Ltd. relied by the Revenue is also fully applicable to the facts of this case. It also answers the point raised by the learned Consultant. Applying the ratio of the said ruling, the contentions of the appellants have to be rejected and as a consequence, the appeals are dismissed.

Equivalent 1993 (64) ELT 137 (Tribunal)