Collector of Customs vs J.K. Synthetics Ltd.>1993(06)LCX0068

1993(06)LCX0068

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

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

COLLECTOR OF CUSTOMS

Versus

J.K. SYNTHETICS LTD.

Final Order No. C/73/93-B2, passed on 21-6-1993 in Appeal No. C/1324/84-B2

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

Shri Ravinder Narain, Advocate, for the Respondents.

[Order per : S.L. Peeran, Member (J)]. - This is a Revenue’s appeal challenging the validity and correctness of the order in appeal passed by Collector of Customs (Appeals), Bombay in Order S/49-999/84 CL, dated 30-6-1984.

2. The question that arises for consideration is the correct classification of the item “Grinding Steel Balls”. The importer claimed assessment under tariff sub-heading 73.33/40 of the Customs Tariff Act, 1975, while the Asstt. Collector held the item to be classifiable under sub-heading 73.33/40(2) of the Customs Tariff Act, 1975 as articles of stainless steel. The Collector (Appeals) ordered for reassessment of the item under sub-heading 84.56, on the ground that the item is used in clinker grinding mills of cement plant. The ld. Collector has taken into consideration the fact that the item constitute as an integral part of grinding mill and thus being a spare part of the grinding mill, it should be reassessed under sub-heading 84.56 of the Customs Tariff Act, 1975.

3. It is the Revenue’s case in this appeal that as per section notes of Chapter 84, it clearly specifies that other steel balls are to be classified under sub-heading 73.33/40 with exception to polished steel balls. In other words, it is contended that ‘steel balls’ are to be classified under sub-heading 73.33/40 and the classification under this heading is also reinforced as per explanatory notes at page 1036 of CCCN, where it is stated that Balls for use in grinding and crushing mills are specifically included in Chapter Heading 73.40.

4. We have heard Shri B.K. Singh, ld. SDR for the Revenue and Shri Ravinder Narain, ld. Advocate for the respondent. Shri B.K. Singh, ld. SDR contended that Note 1(f) of Section XV excludes “articles falling within Section XVI (machinery, mechanical appliances and electrical goods)” from the purview of chapter falling under Section X V. Therefore, it is his contention that as per Note 4 of Chapter 84, the item in question would get excluded from Chapter 84, as the imported item is not polished steel balls and hence would rightly be classifiable under sub-heading 73.33/40. He further submitted that as per Note 1(a) of Section XVI “other articles of a kind used for machinery” is also excluded from the Section XVI, under which chapter Heading 85 falls and hence the item in question is excluded from the said Chapter. He placed his reliance on the Chapter Note 73.33/40 of CCCN. He drew our attention to note 2 of Section XV which refers to “parts of general use” and to Note 1(g) of Section XVI to support his argument that the item is liable to be classified only under sub-heading 73.33/40 of the Customs Tariff Act, 1975. It is his further plea that the item is a stainless steel article and should fall only under Chapter 73.

5. Shri Ravinder Narain, ld. Advocate contended that Note 1(g) of Section XVI is not attracted in this case as the item has been manufactured as per specification and hence the item is not a part of general use, as defined in Note 2 of Section XV; to be excluded from Section XVI by virtue of its Note 1(g). He further contended that the item is a part of machinery and without the clinker grinding mills, it will not be able to function. Arguing further he submitted that there is also nothing on record to show that the item is of stainless steel and hence Chapter 73 is not attracted. The burden of proving that the item is of stainless steel has not been discharged by the Revenue.

6. We have carefully considered the submissions made by both the sides and perused the records.

7. In the order-in-original, the ld. Assistant Collector has noted that the importer had declared the item as alloy steel balls of two categories (qualities) having different sizes in each quality. As per their declaration in the invoice the 2nd item (of invoice) was declared to contain chromium in the range of 10-20%, The ld. Assistant Collector has referred to the definition of stainless steel and has held that steel containing more than 12% Chromium is to be categorised as stainless steel item as it being not a tool, and therefore, held the classification under Customs Tariff Act 73.33/40(2) as stainless steel. The Revenue in this is seeking to uphold this view and they are also relying on the explanatory notes also.

8. The ld. Counsel has pointed out to the show cause notice dated 14-10-1983 wherein the importer had been charged for violating the Import Control Order No. 17/55, dated 7-12-1955 issued under Section 3 of the Import & Export (Control) Act, 1947 on the ground that they had imported steel other than stainless steel and that the goods are not as per the description. This show cause notice had been adjudicated by the ld. Collector of Customs, Bombay vide Order No. 22-11-1983 by which he has accepted the plea of the importer and allowed the clearance under OGL. Therefore, it follows that the finding of the ld. Assistant Collector in the impugned order that the goods are stainless steel no longer survives and hence the basis of classification taken by ld. Assistant Collector do not survive any more. The ld. Collector has proceeded to classify the item under sub-heading 84.56 under a different footing although the importer had claimed classification under sub-heading 73.33/40(1) & 73.33/40(2) of Customs Tariff Act, 1975. The importer has not filed cross appeal but has accepted the classification under sub-heading 84.56 of Customs Tariff Act, 1975 and are defending its classification under this heading. The ld. Collector’s reasoning given are well founded and the same is reproduced herein below:

“I have gone through the records of the case and have taken into consideration the submissions made by the appellants. I find that the Steel Balls were imported as such and the Customs had obviously assessed the Steel Balls taking into consideration the form, in which they were imported under Heading 73.33/40, by applying the interpretative Rule 3(a) for interpretation of the Customs Tariff, since the Steel Balls are specifically described as Steel Balls in a general manner, in the F/E. But even though the original assessment done by the Customs House by applying interpretative Rule 3(a), appears to be prima facie correct, nevertheless, the Custom House overlooked the fact that in this case, the imports steel balls by themselves were not usable without the grinding mill of which they formed an integral part. Thus, the imported steel balls could not have been held as mere steel balls. These balls were a part of the grinding mill of the Cement plant. The interpretative rules are merely guidelines for the interpretation of the First Schedule to the Import Tariff. The invocation of the interpretative Rule is only essential in such cases, where the goods are composite goods or where the characterisation of the imported goods cannot be determined by general yard-sticks. But, here the fact that the imported steel-balls were imported by a cement plant was known and the importers had explained to the lower authority that the Steel Balls had no other use excepting in the grinding mill of the Cement plant. The fact that the Steel balls were imported, since these had to be used in the grinding mill designed by foreign collaboration, would have made it obvious to the lower authority that the imported steel balls were mainly meant as parts of the grinding mill of the cement factory.

In this connection, it would be pertinent to observe that the importers have laid stress on the fact that the imported steel balls were accessories of the Cement Mill, inasmuch as without these balls, the Cement Mill cannot function effectively. In other words, for the effective function of the Cement mill, these balls are very essential. Therefore, there was no doubt about the fact that the imported steel balls were parts of the Grinding Mill of the Cement Plant. -. Accessory and parts have been defined in the Import Control Policy as under:

“Accessory (or attachment) means a part, sub-assembly or assembly that contributes to the effectiveness of a piece of equipment without changing its basic function”. ‘Part’ means an element of a sub-assembly or assembly, not normally useful by itself. It could be a component,, spare or accessory depending upon the nature of its use/requirement.

Viewed in the light of the above definition, it is obvious that in this very particular case, the imported steel balls were meant to contribute to the effectiveness of the clinker grinding mill of the Cement Plant and these Balls were not normally useful by themselves. These Steel balls therefore, were very much an integral part of the grinding mill of the cement plant.

In the Concise Oxford Dictionary “accessory” means, additional, subordinately contributing dispensable, adventitious or attachment, whereas according to the same dictionary, “Part” means each of several equal portions of a whole, component of a machine, etc. The appellants therefore, claimed the assessment of these accessories parts (Steel Balls) under Heading 84.56 of the CTA, ‘75 on the ground that these balls really perform the grinding job after being attached to the grinding mill. It is obvious from the description as given under Heading 84.56 of the CTA, 75 that this heading is purely meant for grinding mill and mineral industry. This heading is meant both for machine and machineries, obviously hereby including the accessories/parts as well, since the term “Machinery” will not only include machines, but also the accessories and parts of such machines. Had that not been so, then the term ‘machinery’ would not have appeared under this heading as contrasted to the description under 84.57, 84.58 and 84.59 of the CTA’75, the word ‘machine’ only has been incorporated. In other words. Heading 84.56, of the CTA ‘75 is so constituted that it includes both machine and its accessories/parts under its ambit. It is pertinent in this connection to refer to Section XVI of the CCCN under Heading 84.56, wherein at (B)(7) at page 1355, it had been clearly mentioned that the above heading i.e. 84.56 will also include Ball or Rod Mills. The description of the Ball or Rod Mill in the above literature is given as follows :-

“This consists essentially of a rotative drum containing a number of balls or short-rods (i.e. of Steel or Porcelain). The material is placed in the rotating drums and is crushed or ground by action of the Balls or Rods.”

The description and function of the grinding mill in the Cement Plant as furnished by the appellants in the appeal petition shows that the grinding mill for crushing clinkers in the Cement Plant of the Appellants is a Ball Mill, since these Balls are used in this Mill for crushing the clinkers and therefore, since the grinding mill for crushing clinkers in the Cement Plant of the Appellants is a Ball Mill, the inclusion of the imported Steel Balls for assessment to Customs Duty under Heading 84.56 will be more appropriate, since these Steel Balls would be fixed in the grinding mill.

Here I want to dispense with the wrong notion of the appellants that the imported Steel Balls are accessories of the grinding mill in the cement plant. From the technical write-up of the Grinding Mill as furnished in the Petition, it is seen that the imported balls are integral parts of the Ball Mill of the Cement Plant, since without these Balls no crushing of the clinkers can take place, and as the balls by themselves are not usable.

In view of this, the assessment of the imported Steel Balls to Customs Duty should have been more appropriately done under Heading 84.56 of the CTA ‘75. I, therefore, set aside the order of the Assistant Collector and allow the appeal. In other words, the imported Steel Balls should be reassessed to Customs Duty under Heading 84.56 of the CTA, 75. The appeal is, therefore, allowed."

There is no infirmity in the reasoning and it has to be upheld.

9. Further Section Note 1(f) of Section XV excludes “articles” falling within Section XVI (Machinery/mechanical appliances and electrical goods).

Note (2) of Section XV refers to "Parts of general use". The finding given by ld. Collector confirms that the imported item is an integral part of the Ball mill of the Cement Plant and without the imported item, no crushing of the clinkers can take place and the item 'by themselves is not usable'. This portion of the finding of the ld. Collector has not been challenged and no grounds have been put forth by the Revenue. In that event of the matter, the Note (2)(b) of Section XVI would clearly apply in this case. The Note (2) is reproduced herein below :

"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 described in Heading No. 84.64 or parts of the following articles falling within Heading No. 85.18/27 namely (i) insulators or insulated electric wire and the like (ii) carbon articles used for electrical purposes, or (iii) electrical conduit tubing and joints there for) are to be classified according to the following rules :

(a) goods of a kind described in any of the Headings of Chapters 84 and 85 (other than Heading Nos. 84.65 and 85.28) are in all cases to be classified in their respective Headings;

(b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines falling within the same Heading (including a machine falling within Heading No. 84.59 or electrical goods and apparatus falling within Heading No. 85.18/27) are to be classified with the machines of that kind. However, goods which are equally suitable for use principally with the goods of Heading Nos. 85.13 and 85.15 are to be classified in Heading No. 85.13."

The sub-item 84.56 of CTA, '75 reads as follows :

"84.56 - Machinery for sorting, screening, separating, washing, crushing, grinding or mixing earth, stones, ores or other mineral substances, in solid (including powder and paste) form; machinery for agglomerating, moulding or shaping solid mineral fuels, ceramic paste, unhardened cements, plastering materials or other mineral products in powder and paste form; machines for forming foundry moulds of sand."

10. The ball mill of the cement plant is clearly classifiable under the above sub-heading and applying the Section Note 2(b) of Section XVI the imported item would clearly fall under the above sub-heading 84.56 of CTA, 1975 and the classification adopted by the ld. Collector is correct one and it requires to be upheld.

11. As regards Revenue's contention that the explanatory note to Heading 73.40 of CCCN is to be applied for classification purpose, it has to be observed that, now it is well settled that explanatory notes are having persuasive value and it cannot override the Section Notes and Chapter Notes of CTA, 1975. Moreover, the Chapter 73.40 refer to "other articles of Iron Steel" the Revenue having dropped the charge of the item being made up of Steel, cannot now urge that the item is of steel one. The items to be classified in Heading 73.40 is more in a nature of a general parts and not those parts which form integral part of a machine. Therefore, we do not see any reason to interfere with the findings of the ld. Collector and we order, for dismissal of the appeal. Ordered accordingly.

Equivalent 1993 (68) ELT 827 (Tribunal)