1994(08)LCX0031
IN THE CEGAT, SPECIAL BENCH `B2’, NEW DELHI
S/Shri Harish Chander, President and Gowri Shankar, Member (T)
BAJAJ AUTO LTD.
Versus
COLLECTOR OF CUSTOMS, BOMBAY
Order No. C/65-66/94-B2, dated 22-8-1994 in Appeal No. C/1502 & 1255/89-B2
Cases Quoted
Purewal & Associates Ltd. v. Collector — 1983(10)LCX0022 Eq 1984 (015) ELT 0490 (Tribunal) [Paras 3, 4, 6, 7]
Delhi Kanodia Tin & Drum Factory v. Collector — 1984(04)LCX0057 Eq 1989 (043) ELT 0531 (Tribunal) [Paras 3, 6, 7]
Lohia Starlinger Ltd. v. Collector — 1991(05)LCX0012 Eq 1992 (057) ELT 0105 (Tribunal) [Paras 3, 6]
Enfield India Ltd. v. Collector — 1986(11)LCX0068 Eq 1989 (043) ELT 0532 (Tribunal) [Para 3]
New Haven Steel Ball Corporation Ltd. v. Collector — 1991(04)LCX0050 Eq 1991 (056) ELT 0761 (Tribunal) [Paras 4, 6]
Motiram Tolaram v. Collector — 1986(11)LCX0035 Eq 1987 (029) ELT 0278 (Tribunal) [Para 11]
Collector v. Surgichem — 1986(11)LCX0044 Eq 1987 (027) ELT 0548 (Tribunal) [Para 12]
Advocated By : Shri Arshad Hidayatullah, Sr. Advocate and S/Shri M.P. Baxi, A.Z. Sheeraji and L.B. Attar, Advocates, i/b M/s. Crawford Bayley & Co., Advocates, for the Appellants.
Shri B.K. Singh, SDR, for the Respondents.
[Order per : Gowri Shankar, Member (T)]. - The issue for decision in Appeal No. 1255/89-B2 is whether a consignment of dies for manufacture of scooter parts are to be classified under Heading 82.05 of the Customs Tariff or under Heading 84.45/48. The appellant company claimed classification of these goods under Tariff Heading 84.45/48. They were, however, classified by the Assistant Collector of Customs under Heading 82.05. This order was upheld by the Collector of Customs (Appeals); hence this appeal.
2. The issue to be decided in the other appeal No. C/1502/89-B2 by the same appellant is identical. The only points of difference are that the appellant company had imported only one die and that because of legislative amendment the earlier Heading 82.05 was replaced by heading 82.07 and the relevant part of Heading 82.45/48 by 84.66. The issues in both the appeals being the same, they are being disposed of by this order.
3. Shri A. Hidayatullah, Sr. Advocate appeared for the appellant with S/Shri M.P. Baxi, A.Z. Sheeraji and L.B. Attar, Advocates instructed by M/s. Crawford Baylay and Co., Advocates. Shri Hidayatullah’s essential argument is that the dies should be classified under Heading 82.05 only if each of the dies was interchangeable with the others. He argued that it was an admitted fact that each of the dies was designed for performing a specific function; there would, therefore, be no question of interchangeability with any of the others. Since the dies were not interchangeable with each other, these would not be interchangeable tools within the meanings of Heading 82.05. Shri Hidayatullah placed reliance on the Appellate Tribunal’s decision in Purewal & Associates Ltd. v. Collector of Customs [1983(10)LCX0022 Eq 1984 (015) ELT 0490 (Tribunal)] which has been followed in Delhi Tin & Drum Factory v. Collector of Customs [1984(04)LCX0057 Eq 1989 (043) ELT 0531 (Tribunal)] and subsequently in Lohia Starlinger Ltd. v. Collector of Customs [1991(05)LCX0012 Eq 1992 (057) ELT 0105 (Tribunal)]. In that appeal the issue before the Bench was the same as in the present one i.e. classification of dies either under Heading 82.05 or under 84.45/48. Heading 82.05 at the relevant time covered “interchangeable tools for hand tools... including dies for wire drawing, extrusion dies or metal and rock drilling bits.” The Bench took note of the definition of the term `interchangeability’ in the General Terms and their Definitions concerning Standardisation and certification issued by the International Organisation for Standardisation figuring in its ISO Guide 2 of July 1983. This defines `interchangebility’ as “The suitability of a product (products) to fulfil the relevant requirements”. The Bench was of the view that the reference to interchangeable tools in Heading 82.05 was with reference to the tools. It did not mean that the machine to which the tools were fitted were capable of doing multiple jobs. Since one die could manufacture only a particular part and could not perform any other function, it could not be classified as an interchangeable tool. It, therefore, held the dies to be classifiable under Heading 84.45/48. The ratio of this decision was followed in 1986(11)LCX0068 Eq 1989 (043) ELT 0532 (Tri.) and 1992 (055) ELT 0105 (Tri.). Shri Hidayatullah argued that the department’s appeal against the decision in Purewal & Associates Ltd. v. Collector of Customs as well as in Delhi Kanodia Tin & Drum Factory v. Collector of Customs had been dismissed by the Supreme Court. Since the Purewal’s decision has been applied consistently it has to be considered a settled matter.
4. Shri B.K. Singh, SDR, supporting the Assistant Collector’s order relies upon the Appellate Tribunal’s decision in New Haven Steel Ball Corporation Ltd. v. Collector of Customs [1991(04)LCX0050 Eq 1991 (056) ELT 0761 (Tribunal)]. In this decision, as between the two alternative classifications under Heading 82.05 or 84.45/48, the two member bench of the Appellate Tribunal had classified the goods under Heading 82.05. It had taken note of the decision in Purewal & Associates Ltd. case but held that this decision did not have value as precedent for the reason that the Explanatory Notes to the CCCN relating to Heading 82.05 had not been brought to the notice of the Bench which decided that case. It also noted that the emphasis placed by the Departmental Representative before the Bench in that case on equating interchangeability with replacement on wearing out of the tool was incorrect. It, therefore, held that the goods to be classified under Heading 82.04. Para 6.1 of the order of this Bench is reproduced below, since it is central to that decision :-
“6.1 Tariff Heading 82.05 is modelled on the lines of Heading 82.05 of the CCCN. Explanatory Notes to the said Heading, inter alia, states as follows :-
Whereas (apart from a few exceptions such machine saw blades) the preceding headings of this Chapter apply in the main to hand tools ready for use as they stand or after affixing handles the present heading covers an important group of tools which are unsuitable for use independently, but are designed to be lifted, as the case may be, into :-
(A) hand tools, whether or not mechanical (e.g. breast drills, braces and die-stocks);
(B) machine-tools, of Headings 84.45, 84.46 and 84.47 or falling within Heading 84.59 by reason of Note 5 to Chapter 84;
(C) tools of Headings 84.49 and 85.06 for pressing, stamping, threading, tapping, drilling, boring, reaming, broaching, milling, gear-cutting, turning, cutting, morticing, drawing etc., metals, metal carbides, wood, stone, ebonite, certain plastics or other hard materials, or for screw driving [Emphasis supplied in the Explanatory Notes].
While it is well settled that Explanatory Notes to the CCCN are not statutory and are not binding, yet it is well known and also well-settled that they have a great persuasive value particularly in construing headings of Customs Tariff which are modelled closely on the lines of description given in the CCCN. We find that Customs Tariff Heading 82.05 is identical to description in Heading 82.05 of Chapter 82 CCCN. By the emphasis supplied on the kind of tools which are unsuitable for use independently, but are designed to be fitted, as the case may be, into hand tools, machine tools or power-operated hand tools, a meaning has intrinsically been provided to the expression `interchangeable tools’. The expression would not mean as has been contended by the appellants that interchangeable tools under Tariff Heading 82.05 would mean tools which are interchangeable between the various types of machines, hand-tools, machine tools or power-operated hand tools. Had that been the intention, the description of Tariff Heading would have been somewhat to the effect :-
`Tools interchangeable among hand-tools or power-operated hand tools’,
The description as it is provided is a group of entry of three different types of tools i.e. they are (1) interchangeable tools for hand tools, (2) interchangeable tools for machine tools, (3) interchangeable tools for power-operated hand tools. Interchangeability of the tools, therefore, has to be with reference to a particular machine and not that the tool itself should be capable of performing different types of jobs. The term `interchangeability’ in the International Organisation for Standardisation (ISO) Guide II appears to be a general purpose definition of the term `interchangeable.’ The definition of ISO Guide II appears to be relevant in a different context e.g. when we say that this tractor part is interchangeable with a transport vehicle, we mean that the function which that particular part can perform in a tractor, the same function can be performed by that transport in a transport vehicle and it is in that context that it can be said that that part is suitable to fulfil the requirement of both a tractor and transport vehicle and therefore, it is an interchangeable part between a tractor and transport vehicle but this general meaning of the term `interchangeability’ is not apparently applicable to the expression `interchangeable tools’ in the Heading 82.05 as discussed above. The guidance is clear about the meaning of that expression from the Explanatory Notes to CCCN already reproduced."
5. From a reading of the Explanatory Notes it is clear that the scope of Heading 82.05 covers those tools which are unsuitable for use independently but are designed to be fitted into hand tools, machine tools and other tools specified in that heading. We are persuaded by the views of the two member bench that interchangeability in the sense in which it is used in the tariff heading has to be with reference to a particular machine, and does not mean that the tool itself should be capable of performing different jobs. The definition of `interchangeability’ in the ISO Guide is in fact not too different. The criterion laid down of the suitability of the product to be used in place of another product to fulfil the relevant requirement is in fact satisfied in a situation in which each of the dies performing the same operation function also but because of difference in shape produces differently shaped part - in this case of a motor scooter.
6. There is another aspect of the matter. By equating interchangeability with replacement, each die or similar tool which should otherwise be classifiable under Heading 82.05 would fall for classification elsewhere and the net result would be that Heading 82.05 would be rendered nugatory and surplus. On the argument that each one of a set of dies produces different parts and the die would, therefore, not be interchangeable with each other, they would not fall for classification under Heading 82.05. It would be observed that if one die is imported it would be classifiable under Heading 82.05 for the reason that it is not interchangeable; if more than one identical die is imported, they would be classifiable under Heading 82.05. To base classification on the ............. of goods imported is obviously absurd. From this perspective too, it is Heading 82.05 which would be more appropriate. On a reading of the decision in the Purewal’s case it is clear that the Explanatory Notes were not brought to the notice of the Bench. This point has, therefore, passed sub silentio. For the reasons discussed above, if this point had been brought to its notice a different view would well have been taken. It has, therefore, to be held that the decision in Purewal’s case does not have value precedent. Shri Hidayatullah’s argument that the Explanatory Notes were brought to the notice of the Bench as evidenced to the reference in para 4 does not persuade us. This is because the point with reference to the Explanatory Notes was not the question of interchangeability within the meaning of Heading 82.05, but whether Heading 82.05 was confined only to hand tools or not. The decision in Delhi Kanodia Tin & Drum Factory [1984(04)LCX0057 Eq 1989 (043) ELT 0531 (Tribunal)] followed the decision in Purewal without much discussion. In the Lohia Starlinger Ltd. v. Collector of Customs [1991(05)LCX0012 Eq 1992 (057) ELT 0105 (Tribunal)] there was a reference to the Explanatory Notes but only in the context of whether plastic extruders were machine tools falling under Heading 84.59. It was not with regard to interchangeability as figuring in Heading 82.05. No doubt, this decision was passed after the decision in New Haven Steel Ball Corpn. Ltd. However, it is evident that the latter case was not pointed out to the Bench which decided the Lohia Starlinger case. If it had been pointed out, the decision could well have been different. The Lohia Starlinger decision has, therefore, to be distinguished.
7. The argument that the dies could not be considered as tools does not stand in the face of the definition of `die’ in the McGraw-Hill Dictionary of Scientific and Technical Terms, Second edition :-
“Die (DES ENG) A tool or mould used to imported shapes to or to form impression on materials such as metals and ceramics.”
We, therefore, hold that the goods would be classifiable under Heading 82.05 (Heading 8207.90 in appeal No. 1502/89-B2). We are not aware of the circumstances under which the Supreme Court has rejected the appeals against the decision in Purewal’s case and Delhi Kanodia Tin & Drum Factory’s case. It has not been argued before us that the appeals were rejected on merit, holding that the classification arrived at by the Tribunal was correct. Rejection of the appeals, therefore, does not necessarily confirm the correctness of the classification decided in those decisions.
8. In the result, we hold that the goods are classifiable under Heading 82.05 (8207.90 in Appeal No. 1502/89-B2). As for classification under the Central Excise Tariff the goods would be classifiable under Item 51A, which is more or less in pari materia with Heading 82.05.
9. The appeals are, therefore, rejected.
10. [Assent per : Harish Chander, President]. - I have perused the order written by my learned brother Shri Gowri Shankar. I agree with the conclusions arrived at by the Member. However, I would like to add the following observations.
11. The Tribunal in the case of Motiram Tolaram and Others v. Collector of Customs, Bombay, reported in 1986(11)LCX0035 Eq 1987 (029) ELT 0278 (Tribunal) [Paras 10 and 19] had held as under :-
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12. The Tribunal in the case of Collector of Central Excise, Rajkot v. M/s. Surgichem reported in 1986(11)LCX0044 Eq 1987 (027) ELT 0548 (Tribunal) = 1987 (011) ECR 0245 (CEGAT SB-C) [Paras 5 and 6] had held as under :-
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13. In view of the above observations, I hold that the appellants are not eligible to classify the goods under Tariff Heading 84.45/48 and the correct classification would be under Heading 82.05/8207.90. In the result, the appeals are rejected.
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Equivalent 1994 (74) ELT 312 (Tribunal)