Collector of Customs vs Andhra Pradesh Paper Mills Ltd.>1993(07)LCX0057

1993(07)LCX0057

BEFORE THE CEGAT, SPECIAL BENCH ‘B2’, NEW DELHI

S/Shri P.C. Jain, Member (T) and S.L. Peeran, Member (J)

COLLECTOR OF CUSTOMS

Versus

ANDHRA PRADESH PAPER MILLS LTD.

Order No. C/82/93-B2, dated 26-7-1993 in Appeal No. C/305/92-B2 and C/Cross/354/92-B2

CASE CITED

Jain Engineering Company — 1987(09)LCX0020 Eq 1987 (032) ELT 0003 (SC)....................................... [Paras 1.3, 2, 3, 4.2]

Advocated By : Shri B.K. Singh, SDR, for the Appellant.

Shri R. Sasidharan, Advocate, for the Respondent.

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

1.1 Respondents herein imported one No. 10 MW Turbo Alternator (Generating set) under Lido-German Rupee Plan. The respondents claimed the goods as turbo alternators under Heading 8501.64 CTA with benefit of notification 156/86-Cus. They had also imported technical drawings.

1.2 Original authority, namely Assistant Collector of Customs, denied the respondents herein the benefit of Notification 156/86 on the grounds that it gives benefits of exemption to “Turbo alternators and parts thereof” falling under Heading 85.01 or 85.03 of the CTA 1975. He, however, found that. the imported goods, admittedly, are alternator with a turbine (prime mover). The goods are, therefore, a complete ‘generating set’ which falls under 85.02. Since the imported goods do not fall under Tariff Heading 85.01 or 85.03, as stipulated in Notification 156/86, these cannot be extended the benefit of the said notification. In respect of technical drawings, the assessment was ordered under Heading 4911.99.

1.3 The respondents herein thereafter filed appeal before the Collector of Customs (Appeals). He extended the benefit of Notification 156/86 to turbo-alternators, holding that the notification grants a specific exemption to those goods. Tariff Heading in the notification does not have the effect of depriving the benefit of exemption on turbo-alternators. For the latter proposition he relied on Supreme Court’s decision in Jain Engineering Co.’s case reported in 1987 (032) ELT 3. For technical drawings and manuals the Collector (Appeals) did not accept the respondent’s plea that these are assessable under Tariff Heading 49.01 or 49.06. He upheld the classification under Tariff Heading 49.11 ordered by the original authority.

1.4 Hence the appeal by the Revenue on the question of applicability of Notification 156/86 to turbo-alternators and cross-objections by the respondents. We may state at this stage that the learned Advocate for the respondents has not pressed for cross-objections on classification of technical drawings and manuals. Accordingly, the dispute survives only on one question, namely, whether exemption Notification 156/86 can be made applicable to turbo-alternator imported by the respondents.

2. Learned SDR, Shri B.K. Singh for the Revenue reiterates the finding of the original authority. He submits that any provisions of law, particularly an exemption notification has to be interpreted strictly according to the plain wordings used therein. Notification 156/86 grants exemption to turbo-alternator provided it falls under Heading 85.01. He submits there is no dispute, nor there can be any, that turbo-alternator was imported comprised of both an alternator and a prime-mover i.e. turbine; therefore, they imported goods all under Tariff Heading 85.02. Hence, on the plain words of the notification benefit of the said notification cannot be extended because in order to get the benefit, turbo-alternators must fall under Heading 85.02. If the interpretation advanced by the respondents or as given by the lower appellate authority is accepted, the effect of words “falling under Heading (85.01 or 85.03) of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), specified in the corresponding entry in Col. (2) of the said Table” would be rendered nugatory. This is not permissible while construing a notification. He submits that such a situation did not arise in Jain Engineering Co.’s case supra. Therefore, ratio of the Supreme Court’s judgment in that case would not apply in this case.

3. Learned Advocate, Shri R. Sashidharan on the other hand urges that the impugned order is correct in law and on facts. Exemption Notification 156/86 specifically gives exemption to turbo-alternators which admittedly according to commercial parlance are alternators combined with turbine as prime mover. Central Government has the power to grant exemption to goods in public interest under Section 25(1). It does not have the authority to classify those goods while granting exemption. Therefore, classification of turbo-alternators under Tariff Heading 85.01 under the notification is of no consequence and should be ignored. Supreme Court’s judgment in the case of Jain Engineering, supra, according to him, squarely applies to the facts and circumstances of this case.

4. We have carefully considered the pleas advanced on both sides. On the basis of the technical and commercial literature produced by both sides, it is evident that ‘turbo-alternator’ in the trade means alternator with a turbine (prime mover). This is what the imported goods are. The World Book Dictionary, relied upon by the learned SDR defines turbo-alternator as “an alternating-current generator connected to and driven by a turbine”. Learned SDR has attempted to argue, on the strength of the above definition, that the expression simply means an alternating-current generator (i.e. alternator) which is required “to be connected to and driven by a turbine”; it does not mean that the alternator must be accompanied by, or connected by a turbine. We are afraid that this view is not tenable. Definition leaves no one in doubt that turbo-alternator means a combination of alternator and turbine. Notification 156/86 gives specific exemption to turbo-alternators and therefore, benefit of the said notification cannot be denied to the imported goods.

4.2 Classification of the goods ‘turbo-alternator’ under Tariff Heading 85.01 creates merely an ambiguity in the notification and cannot control the specific exemption given to turbo-alternator. We have to ignore the classification of turbo-alternator in the notification as falling under Tariff Heading 85.01 as merely an absurdity. If we do not ignore the said Tariff Heading 85.01, we will frustrate the purpose of the notification. We shall be making the notification itself meaningless because an alternator imported alongwith a prime-mover (turbine here) cannot fall under 85.01 since it will fall under Tariff Heading 85.02. Ratio of Supreme Court’s judgment in Jain Engineering’s case (supra) squarely applies to the facts and circumstances of this case. Para 7 of the Supreme Court’s judgment in Jain Engineering is reproduced below :-

“7. The notification provides that the articles specified in column (2) of the Table and falling under Heading No. 84.06 are exempt from payment of a certain portion of the Customs duty. Paragraph 2 of column (2) of the Table not only mentions internal combustion piston engines, undoubtedly forming the only subject matter of Heading No. 84.06, but it also mentions the ‘parts thereof, that is to say, parts of such engines. Heading No. 84.06 does not refer to ‘parts’ of such engines. Non-mention of ‘parts’ in Heading No. 84.06 has given rise to a controversy between the parties, it may be that the Notification has been inartistically drafted. It is, however, clear that the Notification not only intends to grant exemption to internal combustion piston engines, but also to ‘parts thereof. When, therefore, the intention is clear and manifest, it will be unreasonable to the parts of the engines referred to in Heading No. 84.06. To accept the contention made on behalf of the respondents that as Heading No. 84.06 does not mention ‘the parts’, the Notification is inapplicable to the parts, will be to amend the Notification, which the court will not do. In our opinion, therefore, the Notification will apply to parts of the engines mentioned under Heading No. 84.06.”

It is thus apparent that the Hon’ble Supreme Court has ignored the Tariff Heading (classification) 84.06 mentioned in the notification with reference to ‘parts’ of internal combustion piston engines in order to give effect to the clear and manifest intention of the notification. Here also intention of the exemption notification being clearly applicable to turbo-alternator, we have to ignore its Tariff Heading 85.01 given in the notification.

4.3 Hence we reject the appeal of the Revenue. Since cross-objection is not maintainable on the aforesaid point and the other point i.e. classification of technical drawings and manuals has not been pressed by the respondents as mentioned in para 1A, cross-objections are also dismissed.

Equivalent 1993 (68) ELT 583 (Tribunal)