1993(03)LCX0072

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

S/Shri S.L. Peeran, Member (J) and S.D. Mohile, Member (T)

SOUTHERN PETROCHEM. INDUS. CORPN. LTD.

Versus

COLLR. OF CUS., MADRAS

Order No. C/138/93-D, dated 31-3-1993 in Appeal No. C/2043/90-D

CASE CITED

Haryana Distillery v. Collector — 1992(06)LCX0043 Eq 1992 (062) ELT 0773 (Tribunal)                                [Paras 6, 10]

Advocated By : None, for the Appellants.

Shri J.N. Nair, DR, for the Respondents.

[Order per : S.L. Peeran, Member (J)]. - The appellants have challenged the correctness of the order-in-appeal dated 9-3-1990 passed by the learned Collector of Customs and Central Excise (Appeals) Madras.

2. The appellants had imported the following items -

(1) Shaft sleeves

(2) Seal rings of silicon

(3) Carbide; and

(4) Bellows of viton.

The lower authorities classified shaft sleeves under Heading 8483.10 and the seal rings and bellows under Heading 9806 read with Notification No. 68/87-Cus. All items were assessed to duty at the rate of 100% plus 45% plus C.V. 20/15%. The appellants filed refund claim on the ground that sleeves were assessable at 60% plus 45% plus CV duty 20% as per Tariff Heading 8483.10 indicated on the bill of entry and other parts were assessable at concessional rate at 45% plus 45% plus C.V. nil under Notification No. 69/87-Cus. The Collector (Appeals) rejected it on the ground that Notification 69/87-Cus. is not applicable to seal rings made of silicon carbide and shaft sleeves made of carbon, as both fall under Heading 68 and both were excluded from the scope of the said notification. The learned Collector (Appeals) has held that -

(i) Shaft sleeves are made of carbon and fall under Chapter 68. As parts of machinery falling under Heading 8483.10, they are excluded from the scope of Heading 98.06 in terms of Chapter Note 7(d) to Chapter 98 read with Notification No. 132/87-Cus. and that they are also not assessable under Chapter 84 in terms of Chapter Note 1(a) of that chapter and hence upheld the classification under Heading 6815.10.

(2) Seal rings - Material for manufacture is silicon carbide. The Collector (Appeals) has held it to be classifiable under Heading 8413.91/9806.00. He has held that being articles made of silicon carbide falling under Heading 6815.99, they are excluded from the scope of Notification No. 69/87-Cus. in terms of proviso (xii) contained therein.

(3) Bellows made of viton - The Collector (Appeals) has referred to the Condensed Chemical Dictionary Ninth Edition revised by Gesener and G. Hawkers for the term ‘viton’, which states that ‘viton’ is a trade mark for a series of fluoro-elastimers based on the copolymer of vinglidene fluoride and hexa fluoropropylene. Hence, the Collector (Appeals) has held that as plastic part of mechanical seal assembly of process pump, they are appropriately classifiable under Heading 8413.91/9806.00. He has held that since these are not supports of plastic as envisaged in the exclusion (v) appended to Notification 69/87-Cus., the benefit of the said notification is available to them.

3. The appellants are aggrieved only with regard to the denial of benefit to shaft sleeves and seal rings. The appellants contend that granting that sleeves are classifiable under sub-heading 6815.10 of Customs Tariff, then the learned Collector should have ordered appropriate relief under Heading 6807.00 of the CET for purposes of additional duty of customs which is assessable at 15% ad valorem vide Notification No. 132/88-C.E., dated 15-3-1988 and hence excess duty requires to be refunded.

4. As regards item seal rings, they contend that it will not fall under Heading 6815.99 as Chapter 68 refers only to specific articles and Heading 6815.99 is applicable only if it is not classifiable under any other heading. They contend that Collector (Appeals) having classified it under Heading 8413.91 cannot classify for the purposes of exemption notification under Heading 8415.99. They further contend that the exclusion under Notification No. 69/87-Cus. speaks of ‘other articles specified in Chapter 68’ and it does not refer to the non-specified articles under Chapter 68. They contend that sub-heading 6815.99 refers to ‘articles of stone or of other mineral substances, not elsewhere specified or included others’. Therefore, they state that it is a residuary item and Notification No. 69/87-Cus. speaks of specified items under Chapter 68 and hence, the residuary item is not included in the exclusion. They state that silicon carbide has already passed the stage of mineral substance as it has become chemical compound and articles made of the compound cannot fall under articles of mineral substances. They further state that Collector (Appeals) having classified the item under Heading 8413.91 and 9806.00, it would not be correct to reclassify under Heading 6815.99 for the purpose of Notification No. 69/87-Cus. They contend that items under Heading 6815.99 cannot fall under Heading 9806 and hence the exclusion from Notification 69/87-Cus. is incorrect.

5. When the case came up for hearing, the appellants have sent in their written submissions and have requested the case to be decided on merits. In their written submissions, they contend that under Notification No. 132/88-C.E., dated 15-3-1988, the additional duty of customs is leviable at 15% ad valorem only even if the goods were classified under Heading 6815.99. They further contend that silicon carbide is not a mineral substance but a chemical obtained by chemical process and hence it should be classifiable under specific Heading 2849.20 and they rely on Note 2 to Heading 28.49 of the Harmonised System of Nomenclature. They further state that Items (iii) to (xiv) of the proviso to Notification No. 69/87-Cus. as amended by Notification No. 52/88-Cus., dated 1-3-1988 is redundant as the article mentioned in these items are all excluded from Chapter 84, 85, 86, 89 or 90 by nature of the various chapter notifications. They further state that by amending the proviso to the Notification No. 52/88-Cus. confusion had been created as the goods were not already ineligible for exemption under Notification No. 69/87-Cus. as they will not fall under Heading 98.06 and therefore, the Govt. had deleted all these items by Notification No. 258/88-Cus., dated 21-9-1988 and the benefit of Notification No. 69/87 Cus. cannot be denied to them.

6. Shri J.N. Nair, learned DR reiterating the finding of the learned Collector, contended that the appellants had raised new grounds in the appeal and in the written submissions, which cannot be allowed and in this context relied on the ruling of this Bench in the case of Haryana Distillery v. Collector of Customs as reported in 1992 (062) ELT 773. He contended that the appellants had not raised the dispute regarding CV duty and additional duty but had challenged only the basic duty imposed at 100% and therefore, the claims now made are not maintainable. He contended that the appellants’ plea of classification under Heading 6807 of CET at the rate of 15% ad valorem read with Notification No. 132/88-C.E., dated 15-3-1988 had not been raised earlier.

7. He submitted that ‘Shaft sleeves’ are classifiable under Heading 68 and hence they are excluded from Notification No. 69/87. The appellants had not raised the dispute regarding ‘bellows’. Shaft sleeves are made of carbon and that they are excluded from Note 1(a) of Chapter 84 and hence these are classifiable under Heading 6815.10 for basic duty and under Heading 6807 under CET for CV duty is a correct classification. But the appellants having not raised the benefit available for CV duty under Heading 6807, they cannot be permitted to raise the same now and the benefit cannot be extended to them.

8. As regards ‘seal rings’, Shri Nair submitted that they are made of silicon carbide. Their classification under Heading 8413.91/9806 is correct. Being articles, their classification under Heading 6815.99 is correct and as they are excluded from the scope of Notification No. 69/87 in terms of proviso (xii) therein and hence, the rejection done by the learned Collector is justified.

9. We have carefully considered the submissions made by the learned DR, written submissions filed by the appellants and the orders of the lower authorities. As can be seen from the facts narrated above, the appellants have not raised any dispute pertaining to ‘Bellows made of viton and have accepted the order of the learned Collector (Appeals).

10. As regards the item ‘Shaft sleeves,’ they have also not challenged the reclassification of the item under Heading 6815.10 of Customs Tariff Act 1975, arrived at by the Collector (Appeals). But having accepted the same, they have put forth their claim for the benefit of the Notification No. 132/88-C.E., dated 15-3-1988, which provides benefit in respect of additional duty of customs. In the written submissions also, they are not contending about the item being classified under Heading 8483.10 as earlier claimed by them. Although the Asstt. Collector had classified this item under sub-heading 8483.10 but for the purpose of Notification No. 69/87, had held it to be classifiable under Heading 68. However, the learned Collector (Appeals) has held it to be classifiable under sub-heading 6815.10 and that the item is not covered under Heading 8483.10 in view of specific exclusion from the scope of Heading 9806 in terms of Note 7(d) of Chapter 98 read with Notification No. 132/87. As the appellants have not challenged this finding, we are not going to examine its correctness or otherwise and we uphold the same. As regards their contention that benefit of Notification No. 132/88-C.E., dated 15-3-1988 is available to them by virtue of its classification under Chapter Heading 68, it is observed that the appellants had not raised their claim for refund of additional duty and CV duty but had claimed for refund of excess basic duty paid by them. They have also not raised their claim before the Collector (Appeals). It is now well settled that the refund claim cannot be enlarged before the Appellate Forum after the expiry of statutory period under Section 27 of the Customs Act [Haryana Distilleries v. Collector of Customs (supra)]. Therefore, we have to reject the claim of the appellants for refund of additional duty and CV duty as available under Notification No. 132/88-C.E. as being as fresh claim, which is inadmissible in law, as having been made beyond the prescribed time limit under Section 27 of the Act. As regards seal rings, the lower authorities have invoked proviso (xii) of Notification No. 69/87-Cus. to deny the benefit of the exemption. Proviso (xii) reads “Mill stones’ grind stones or other articles specified in Chapter 68”.

11. The appellants’ contention is that the item has been held to be part of machinery falling under Chapter Heading 8413.91/9806, the benefit of the said notification cannot be denied by re-classification under Chapter Heading 68 for the purpose of the notification. Shri Nair has contended that the proviso has made the said distinction and if it is not so considered, then the proviso would become redundant and the only way to harmonise it is to read it in that way alone and further he relied on the well laid down proposition of the interpretation of notification inasmuch as that it has to be strictly construed and there is no scope for intendment in fiscal statutes. The appellants in their submissions have also raised a new claim under Chapter Heading 2849.20 on the ground that silicon carbide is not a mineral substance but a chemical obtained by chemical process. It is observed that we are not concerned with the classification of silicon carbide as such but with an item seal ring which is an article made of silicon carbide, carbide sleeves and bellows, as can be noticed from the order-in-original. Therefore, the claim for classification under Chapter Heading 28 made by the appellants in the write up, has to be rejected outright. The only question which remains to be answered is as to whether the item falls in the proviso (xii) of the Notification No. 69/87-Cus. Proviso (xii) of the said notification reads ‘mill stones, grind stone or other articles of Chapter 68. The article is a seal ring and not mill stone, grind stone but the lower authorities have considered them as falling under sub-heading 6815.99 as ‘Other’ of Heading 68.15 which reads ‘Articles of stone or of other mineral substances (including articles of peat), not elsewhere specified or included. The item is not exclusively made of stone or other mineral substances. Even if so, it will not fall under this sub-heading, if it is specified elsewhere. Since it has been considered as a part of pump falling under sub-heading 8413.91 and consequently classified under Heading 9806 by the Revenue, therefore, for the purpose of Notification No. 69/87, it does not fall under the proviso (xii). The Revenue has not shown that it falls under the proviso (xii). There is lot of force in the contention of the appellants that it is excluded from the residuary item of Heading 6815.99 as it is specifically included in Heading 8413.91. As pointed out, sub-heading 6815 itself states that the heading covers those items which are not elsewhere specified and included. As the lower authorities have held to be specifically falling under sub-heading 8413.91, it is excluded from the proviso (xii) of the Notification No. 69/87-Cus. Moreover, Note 2(b) of Section XVI specifically provides that parts suitable for use solely or principally with a particular kind of machine, are to be classified with machine of that kind. Exclusion Note 1(a) of Chapter 84 specifically refers to ‘Mill stones, grind stones or other articles of Chapter 68. As seal rings being a specific part of pumps, they are excluded from sub-heading referring to mill stones, grind stones or other articles of Chapter 68 which is referred in exclusion Note 1(a) of Chapter 84 under proviso (xii) of the notification. Therefore, the lower authorities were not justified in denying the benefit of Notification No. 69/87-Cus. The appellants are entitled for the benefit of the said notification and hence the claim in respect of this item ‘seal rings’ is allowed. In the result, the appellants succeed partly in this appeal.

I agree with the learned Brother as regards the decision in respect of ‘seal rings’ (made of silicon carbide) for the additional reason that as silicon carbide is specifically covered under Heading 2849.20 as inorganic chemicals, articles made thereof may not be covered by Chapter 68 dealing, inter alia, with materials similar to those of stone, plaster, cement, asbestos or Mica. This argument in their written submission is also not hit by CEGAT decision in Haryana Distillery v. CC - reported in 1992 (062) ELT 773 as it is only in amplification of their earlier ground and does not enlarge the scope of their earlier claim.

Equivalent 1994 (69) ELT 710 (Tribunal)