1994(03)LCX0019
IN THE CEGAT, SPECIAL BENCH `B2’, NEW DELHI
S/Shri P.C. Jain, Member (T) and S.L. Peeran, Member (J)
CHEMILAB CORPORATION
Versus
COLLECTOR OF CUSTOMS, NEW DELHI
Order No. C/21/94-B2, dated 31-3-1994 in C/Appeal No. 410/93-B2
Cases Quoted
Atul Glass Inds. Ltd. v. Collector — 1986(07)LCX0018 Eq 1986 (025) ELT 0473 (S.C.) [Para 4]
Fero Alloys Corpn. v. Collector — 1983 (012) ELT 435 [Para 4]
Hatim Carbon (P) Ltd. v. Collector — 1988 (017) ECR 241 [Para 4]
Kumudam Printers (P) Ltd. v. Collector — 1992 (059) ELT 568 [Para 5]
Advocated By : Shri J.C. Patel, Advocate, for the Appellants.
Shri B.K. Singh, SDR, for the Respondents.
[Order per : S.L. Peeran, Member (J)]. - This appeal is directed against the Order-in-Appeal dt. 22-2-1993 passed by Collector of Customs (Appeals), New Delhi. In this appeal the question that arises for consideration is the correct classification of the goods described in the Bill of Entry “Densitometers, TLC Aluminium Sheets Silica Gel 60 F 254" under sub-heading 9027.90 of Customs Tariff Act read with Notification No. 65/88-Cus. (Item No. 70). The lower authorities have held the same as classifiable under sub-heading 7607.19 for the purpose of customs duty and under Heading 7607.40 read with the Notification No. 69/89-C.E. for the purpose of additional duty of Excise and Special Excise Duty. The adjudicating officer had held that the sub-heading 90.27 of the Customs Tariff covers Chromatographs and the impugned goods are not Chromatographs, but are for use in Densitometer and that the Heading 9027.90 does not cover Densitometer or parts/accessories or consumables used in densitometer. On appeal, the Collector also did not agree with the importer’s contention. He has referred to Expert Opinion dt. 27-9-1992 furnished by the importer themselves, it stated that ”the pre-coated thin layer plates sheets are capable of reuse several times until the layer performance decreased or it gets spoilt due to handling". Examining this certificate and also the catalogue which mentioned these item as “convenient and economical to use”, the ld. Collector has held that the impugned goods are not parts but “Consumables” in the Chromatography process. He has held that the nature of the impugned goods is comparable to ink or writing paper for the fountain pen; the ink and the writing paper is necessary for functioning utility of a fountain pen but these cannot be considered as parts of the fountain pen. The ld. Collector has applied the same analogy and has also observed that the catalogue of the Chromato-graphy also does not show that these goods are parts. Therefore, he has held that the consumable item to be used in functional process of a machine of instrument cannot become a part of the same. In that view of the matter, he has held that para 7 of the Export & Import Policy 1992-97, defines `consumables’ (10) and parts (29) separately, clearly brining out the difference between the two, and hence he has rejected their appeal.
2. In this appeal it is urged by the appellants that the impugned goods being Aluminium Sheets which are pre-coated with an absorbent material viz. Silica Gel and Fluoroscence Indicator, therefore, by the reason of such precoat, the said plates had acquired special characteristics which rendered them suitable for use solely and exclusively in Chromatograph. They submit that they cannot be put to any other use other than in Chromatograph and is specifically covered under Heading 9027.20, as the said sheets were part suitable for use solely and exclusively with the Chromatograph. The said sheets qualified to be clsssified under the said heading by virtue of Note 2(b) of Chapter 90. This note 2(b) of Chapter 90 provides that parts/accessories which are suitable for use solely or principally with a particular kind of instrument of any heading of Chapter 90 are to be classified under that heading in which that instrument falls. They also rely on the literature and the catalogue produced by them and submit that the goods in question are Basic Assemblies for Thin Layer Chromatography. They also submit that in trade parlance and as per Commercial understanding, the item is known as TLC Sheets (Thin Layer Chromato-graphy Sheets) and, therefore, they state that goods are parts of the Chromatograph. They submit that the Collector has wrongly drawn the analogy of ink used for fountain pen or writing paper to hold the goods as `consumables’. It is, further, pleaded by them that heading 7607.19 is not an appropriate heading as the item is not Aluminium Sheets simpliciter, by virtue of they having been precoated with the absorbent material viz. Silica Gel and Fluoroscence Indicator, and they have acquired characteristics which make them suitable for use solely and principally with Chromatograph and by virtue of having acquired these special characteristics they fall under Chapter 90 and stand excluded from Chapter 76. They also point out to the exclusion clause in Note (d) of Chapter 76 to rule out the classification under sub-heading 76.06. The also refer to HSN Notes under Section XV from which they point out the Aluminium Sheets which are identifiable parts of articles of Chapter 90 are classifiable as “parts” in their appropriate headings and only parts of general use would be classifiable as Aluminium Sheets. They also submit that Notification No. 65/88 has not been dealt with by the Collector (Appeals) and that the Assistant Collector erred in denying the said benefit on the ground that the Densitometer referred to therein is for medical purposes and that the Importer had not established that the goods are for medical use. They submit that the item is specifically used for medical purposes which has not been disputed in the show cause notice.
3.We have heard Shri J.C. Patel, ld. Advocate for the appellants and Shri B.K. Singh, ld. SDR for the respondents.
4. Ld. advocate submitted that the impugned goods is a part of Chromatograph and that the Chromatograph is an apparatus for Blood Analysis. The items are being in a nature of sheet which performs this vital function of blood analysis and, therefore, the item in question becomes an inseparable part of the Chromatograph, as an Assembly. He referred to page 20 of British Pharmacopoeia, which describes the various apparatus which comprises the Chromatograph. The certificate issued by the specialists is also referred to by the ld. Advocate to buttress his arguments. Reliance on Note 2(b) of Chapter 90 and the HSN Explanatory Notes under the said chapter is also placed. He submitted that the goods have to be classified as per the commercial and trade understanding and the mental associationship the item brings in the mind of the consumer. He submitted that trade parlance the item is considered as a part of Chromatograph. In this context, the rulings of the Hon’ble Supreme Court rendered in the case of Atul Glass Industries Ltd. & Others v. Collector of Central Excise & Others as reported in 1986(07)LCX0018 Eq 1986 (025) ELT 0473 (SC) is relied. He submitted that merely because the item gets worned out or replaced is not by itself to reject the item as a part of Chromatograph. In this context, he relied on the ratio of the ruling rendered in the case of Ferro Alloys Corporation v. Collector of Customs as reported in 1983 (068) ELT 435; Hatim Carbon (P) Ltd. v. Collector of Central Excise, Bangalore as reported in 1988 (017) ECR 241. The ld. counsel however, did not press for the claim of the benefit of the Notification No. 65/88.
5. Replying to the arguments of the ld. advocate, Shri B.K. Singh, ld. SDR submitted that an apparatus and an instrument is the same, as they perform the same function. An apparatus may not be a machine, while an instrument could be. In this context, he referred to the findings given by the lower appellate authorities, that the item not being used as a consumable, therefore, it could not be considered as parts or accessories. In this context, he referred to the rulings given in the case of Kumudam Printers (P) Ltd. v. Collector of Customs, as reported in 1992 (059) ELT 568, wherein the question of classification of ribbon in photo-copying machine was considered. It was held therein that the ribbon does not become part of a photo-copying machine, in view of the separate Tariff heading for it. He also referred to the portion of the foot-note in the catalogue and submitted that the manufacturer had described the item as a consumable and, therefore, the item is not an accessory. Ld. SDR also submitted that the item is like a film in a camera and it is not considered as a part or accessory of a camera. He submitted that Note 2(b) of Chapter 90 is not applicable to the present facts of the case. He submitted that the definition of Aluminium foil as appearing under Chapter 76 would apply and if its due application is given then item would fall under heading 7607.19, as held by the lower authorities. He submitted that the proviso to note (d) of Chapter 76 is not applicable, as the item in question does not assume the character of articles or products of other headings. There is also no specific heading for part of a article and, therefore, the proviso to Note (d) of Chapter 76 is not applicable to the present case.
6. Ld. advocate encountering the arguments submitted that although the foot-note in the catalogue referred the item as consumable but yet the foot-note had clearly stated that the item is an assembly and used as a basic kit for Chromatograph. As regards the analogy drawn by the ld. SDR Ribbon or film in camera, the ld. advocate submitted that there existed separate headings for their classification and also that once a film is used it cannot be reused, while in the present case, the expert had clearely opined in the certificate, that the item in question could be used several times.
7. We have carefully considered the submissions made by both the sides and have perused the records. The relevant chapter heading and the notes are reproduced berein below :
* * * * *
8. In this appeal there is no dispute that the item in question is being used in the Chromatographs falling under sub-heading 9027.20 of the Customs Tariff Act. However, the lower authorities have considered the item as a consumable and not as a part or an accessory for its classification under the sub-heading 9027.20. The Note 2(b) has not been examined by the lower authorities. It is the contention of the Importer that the item is a part suitable for use solely and principally along with the Chromatograph, which is used for Blood Analysis. It is their plea that the primary function of the Chromatograph is of blood analysis and this function cannot be performed without these plates, as it does the main function of blood analysis. Therefore, they heavily relied on note 2(b) of Chapter 90. They have also disputed the classification under Chapter 76 on the plea that the item is not an Aluminium foil and the proviso of Note (d) of Heading 76 is relied. The Note (d) states that Heading Nos. 76.06 and 76.07 apply inter alia, to plates, sheets, strips and foils with patterns and such products which have been perforated, corrugated, polished or coated, provide that they do not thereby assume the character of articles or products of other headings. Referring to this proviso to Note (d) of Chapter 76, they submit that the item in question has assumed the character of an article and thus the Chapter 76 is excluded. Therefore, the first question that has to be examined is as to whether the item has assumed a character of an article to be classified under Heading 9027.20 by virtue of Note 2(b) of Chapter 90 along with Chromatographs, and in the light of the proviso to Note (d) of Chapter 76. The appellants have relied on product literature, certificates of the Expert and extracts from British Pharmacopoeia, besides the HSN Explanatory Notes in support of their contentions. We will first examine the HSN Explanatory Notes under Heading 90.27 as appearing at page 1516 under this note, Serial No. 24 deals with the Chromatographs which read as follows :
“(24) Chromatographs (such as gas, liquid, ion or thin-layer chromatographs) for the determination of gas or liquid components. The gas or liquid to be analysed is passed through columns or thin layers of absorbent material and then measured by means of a detector. The characteristics of the gases or liquids under analysis are indicated by the time taken for them to pass through the columns or thin layers of absorbent material, while the quantity of the different components to be analysed is indicated by the strength of the output signal from the detector.
The function of Chromatographs as given in the above explanatory note of HSN is that it is used for determination of gas or liquid components. The gas or liquid to be analysed is passed through columns or thin layers of absorbent material and then measured by means of detector. Looking into this function it is clear that the columns, the thin layers of absorbent material and the detector is the essential parts and ingredients of the Chromatography. In this case, the Densitometer, TLC aluminium sheet is specially treated with an absorbent material viz. Silica Gel and Fluoroscence Indicator. Therefore, the primary function of the Chromatograph is performed by this item in question. This view is also supported by the reading of extract from British Pharmacopoeia 1980, Volume-II, Appendix IIIA A61, the same is extracted herein below :-
“Appendix III.
A. Thin-layer Chromatography
Apparatus
Coated-glass plates of appropriate dimensions, which allow the application at specified points of the necessary quantities of the solution being examined and appropriate reference solutions; the plates may be commercially prepared chromatoplates, or may be prepared as described below. A chromatographic tank of inert transparent material, of a size commensurate with the chromatoplates to be used, ground at the top to take a closely-fitting glass lid.
Preparation of chromatoplates : Unless otherwise specified in the monograph, the chromatoplates are prepared in the following manner. Prepare a suspension of the coating substance in accordance with the instructions of the supplier and, using a spreading device designed for purpose, spread a uniform layer of the suspension 0.25 to 0.30 mm. thick on a flat glass plate 20 cm. long. Allow the coated plates to dry in air, heat at 100o to 105o for at least one hour (except in the case of Chromatoplates prepared with cellulose when ten minutes’ heating is normally sufficient) and allow to cool protected from moisture. Store the Chromatoplates protected from moisture and use within three days of preparation. At the time of use, re-dry the chromatoplates, if necessary, as prescribed in the monograph."
The catalogue also describes the “Basic TLC Assembles” as follows :
“All CAMAG TLC and HPTLC basic assemblies have been carefully composed so that you can immediately start thin-layer chromatography work. These assemblies are configured to make it possible for you to form a complete system for quantitative TLC analysis by adding materials at any time without the fear of duplication or redundacy of tools.
Also the transition from using conventional TLC material to high-performance (HPTLC) layers is straight forward.
Using HPTLC material can offer considerable advantages. It does, however, require the consistent use of appropriate instrumentation.
The foot-note which is referred by the SDR appearing at page 55 catalogue is reproduced herein below :
“Note :
These basic assemblies contain only a minimum supply of consumable items such as precoated plates, disposable capillaries, etc. Consider ordering a larger supply of these, e.g. economical shelf packs of 10 dispenser magazines, some more glass devleloping chambers as well as larger packages of precoated plates."
The certificate issued by “Anchrom Enterprises, TLC Specialist” dt. 29th September, 1994 is reproduced herein below :
“September 27, 1992.
To Whomsoever it may concern
Chromatography is a chemical analysis technique of separating a mixture into its individual components and then quantifying them as well as identifying them.
Chromatography can be carried out in numerous ways such as high performance liquid chromatography, gas chrom., paper chrom., thin layer chrom., ion chrom., ion exchange chrom., gel filtration chrom., gel permeation chrom., column chrom., super critical fluid chrom., etc. etc. Again within each technique, there are several sub-techniques e.g. in Thin layer chrom., one can do linear HPTLC, circular HPTLC, anticircular HPTLC, gradient HPTLC, over pressure TLC etc. Thin layer chromatography uses a thin layer of absorbent as the medium of separation, on a flat bed. More than 20 absorbent are used in TLC. A mobile phase comprising one or more solvents of a specific composition is used to wet the layer by capillary action. The combination of the movement of mobile phase and the absorption of the thin layer causes different components to move different distances from starting point i.e. separate from one another. The separated components can then be measured i.e. quantified with the help of ultra violet light.
The thin layer used in TLC is available readymade as plates sheets. The layer may be supported on glass, aluminium foil or polyester. The precoated thin layer plates/sheets are capable of reuse several times until the layer performance decreases or it gets spoilt due to handling.
The procedure of TLC is as follows :
(1) The type of thin layer and appropriate mobile phase is chosen.
(2) The samples are applied on to the layer.
(3) The Chromatogram is then developed i.e. the plate with samples is then allowed to stand in a glass tank containing the mobile phase.
(4) The plate is removed, dried, observed under altra violet light, photographed if required and/or derivatised.
(5) The plate is then put into a densitometer for quantitative measurement.
After one such cycle above, the plate may be washed and used again e.g. Dr. S.P. Acharya Chemicals, one of the leading chemists in India confirmed that he reuses TLC plates sometimes as many as twenty times."
10. The reading of the above material makes it very clear that the basic function of the Chromatograph is carried out by the item in question. The item has also been described in the invoices as “TLC Aluminium Sheets Silica Gel 60 F 254 Layer Thickness 0.2mm x 20cm”. Therefore, the item is not in a nature of a plate or sheet, but it has assumed a character of an article. The definition of aluminium as referred in the sub-heading note to Chapter 76 as well as the proviso of Note (d) of Chapter 76 makes it very clear that the Aluminium in the form of plates, sheets, strips and foil, of the nature described in note (d), has to satisfy the said specifications of the aluminium, for being capable of classification under Chapter 76. The proviso to note (d) of Chapter 76 clearly excludes item which has assumed a character of an article or product. In the present case, the item has clearly assumed a character of an article, as can be seen from its nature, function, characteristics and use in the Chromatograph. Therefore, the proviso to Note (d) of Chapter 76 clearly excludes the item in question for its classification under Chapter 76. Further, Heading 76.07 specifically refers to Aluminium foil of a thickness not extending 0.2 mm. The present item is pre-coated with Silica Gel and Fluoroscence Indicator, although the basic plate is of aluminium, yet the Revenue has not shown that it satisfies the requirements of Note (d) and sub-heading note to Chapter 76, for its classification under Heading 76.07. In the result the classification under Chapter 76 is clearly ruled out. Now, coming to the claim of the appellant for classification under Chapter 90, it is to be observed that the classificatoin has to be based on the applicability of Note 2(b) to Chapter 90. The literature, catalogue and the certificate makes it very clear that the item in question has assumed an essential character of a part of Chromatograph. In that view of the matter applying the Note 2(b) of Chapter 90, the item has to be classified along with the Chromatograph, falling under the sub-heading 9027.20 of the Customs Tariff Act. The ld. counsel has rightly relied on the rulings in support of his case. As regards the rulings relied by the ld. SDR it has to be observed that there is a specific Tariff heading for Ribbon, as well as for film to be used in camera and, therefore, the analogy drawn by the ld. SDR as well as the ld. Collector is not appropriate and, therefore, the rulings cited by them is distinguishable.
In the result the appellants succeed and the appeal is allowed.
Equivalent 1994 (071) ELT 1073 (Tribunal)