1995(03)LCX0083
IN THE CEGAT, SPECIAL BENCH `B2’, NEW DELHI
S/Shri Harish Chander, President and G.R. Sharma, Member (T)
COROMANDEL FERTILIZERS LTD.
Versus
COLLECTOR OF CUSTOMS, MADRAS
Order No. C/131/95-B2, dated 24-3-1995 in Appeal No. C/1179/85-B2
Cases Quoted
Collector v. Hydranautics Membrane (India) Ltd. — 1994 (71) ELT 711 [Para 3]
Moorco (India) Ltd. v. Collector — 1994 (74) ELT 5 [Para 3]
Advocated By : Shri K. Narain Rao, Vice President of the firm, for the Appellant.
Shri K.K. Jha, SDR, for the Respondent.
[Order per : G.R. Sharma, Member (T)]. - M/s. Coromandel Fertilizers Ltd. have filed this appeal being aggrieved by the order passed by the Collector (Appeals). The Collector (Appeals) in his order had held : -
“I have gone through the case records and have carefully considered the appeal and also the pleas urged during personal hearing. It is not denied what has been imported is in the form of strips; that these have been cut to size and bevelled for use in their feather valves. It is not the case of the appellants that the strips are to be used altogether in the said form. These are obviously for replacement as and when required when a particular strip is found defective. The literature produced as shown that even strips cut from length of steel strips can be used in emergency. There is nothing in the characteristic of the imported goods to show that these have lost the characteristics as strips which are covered under Heading 73.33. The order of the lower authority is therefore maintainable in law. The appeal is rejected.”
2. Briefly stated the facts of the case are that the appellants imported Feather Valve Strips and claimed assessment of the imported goods under Chapter Heading 84.11 of the Customs Tariff Act, 1975, whereas the Department held that the Strips were covered by Chapter Heading 73.33 and accordingly assessed them to duty. As the duty under Chapter Heading 73.33 on the imported goods was higher than the duty under Chapter Heading 84.11(1), therefore, the appellants preferred a claim for refund of duty before the Assistant Collector. The Asstt. Collector rejected their claim on the ground that : -
“the claimants have forwarded catalogue for the feather valve & drawing. These however, do not show the structure of the feather valve strips. It is not clear whether the strips imported in a ready for fitment condition. In the absence of full details the claim is rejected as unsubstantiated.”
In appeal, the Collector (Appeals) also held that Feather Valve Strips imported by the appellants were covered under Heading 73.33. Against this order of the Collector (Appeals), the appellants have come in appeal before us.
3. Shri K. Narain Rao, Vice President of the appellant’s firm appeared and submitted that the appellants imported Feather Valve Strips for use as spare parts in the Compressors; that the Department assessed these goods under Tariff Heading 73.33/40; that the goods were classifiable under the Tariff Heading 84.11(1); that the goods were specific spare parts imported for use as spares in their Compressors; that the classification under Chapter 73 of the imported goods was incorrect; that the goods imported by them were not articles of general nature of base metals, but were goods specifically produced to a high degree of precision through a series of manufacturing processes for definite use in particular machinery in the instant case for Compressors and manufactured to the tolerance of dimensions specified and stipulated by the manufacturer, that the goods were not inter-changeable; that the goods were called strips to distinguish them from other Valve Sheets which are known as Plates; that the goods are manufactured from base raw-material to achieve high degree of tolerance; that these goods are sold at high prices in comparison to the prices at which the articles of the base metals are sold; that the ld. Collector (Appeals) was not correct in holding that it was the case of appellants that the Strips have to be used in the same form; that the Technical Literature clearly shows that, “as there is a slight variation in thickness of materials for different length of strips, long strips must not be cut down to make short strips except in case of emergency and then should be replaced as soon as proper strips are available”; that this requirement stresses the importance of close tolerance in thickness. The appellants, therefore, submitted that the goods imported by them were Compressor parts conforming to high precision through a complicated process of manufacture and, therefore, cannot be considered as general articles of base metals. The appellant therefore, submitted that in view of the above submissions, the goods imported by the appellants should be classified only under Chapter Heading 84.11(1) of the Customs Tariff Act. In support of this contention the appellants cited and relied upon the decisions reported in 1994 (71) ELT 711, 1994 (74) ELT 5.
4. Shri K.K. Jha, the ld. SDR appearing for the Respondents submitted that the goods are internationally known as Strips; that the goods did not lose their characteristic as Strips; that there was a specific heading for articles of base metals under the Specific Chapter Heading 73.33/40 of the Customs Tariff; that Strips were not specifically described under the Customs Tariff Heading 84.11(1). Therefore, Heading 84.11(1) can be termed only as a general heading for the imported goods; that the principle has now been well settled that as against the general heading more specific heading should be preferred for purpose of classification; that the Tariff Heading 73.33/40 for the imported goods was specific [while] Tariff Heading 84.11(1) was general; that the lower authorities rightly classified the goods under Chapter Heading 73.33/40 and prayed that the appeal may be rejected.
5. Heard the submissions of both sides and considered them. For the purpose of proper appreciation of the description in Tariff, the two Tariff Headings are reproduced below : -
“84.11. Air pumps, vaccum pumps and air or gas compressors (including motor and turbo pumps and compressors and fre-piston generators for gas turbines); fans, blowers and the like :
(1) Not elsewhere specified.
(2) Gas compressors imported for use in air conditioning equipment.
(3) Gas compressors imported for use in refrigerating equipment.
(4) Exhause fans and blowers of not less than 65 cms. sweep; flame-proof fans and blowers.
(5) Fans and blowers not falling within sub-heading (4)."
“73.33/40. Other articles of iron and steel.”
6. From the above, it would be seen that the strips have not been described specifically in the description of goods of the Tariff Items in dispute. However, catalogue & drawings submitted by the appellants specify that, “bending stresses are minimised since the valve strips open quickly with a gentle rolling motion against the single radius.” It has also been provided that, “the feather valve is composed of three major parts, namely, the seat, the guard and the Strip”, again it has been clarified that, “Valve strips are of such dimensions and possess such flexibility that they lie in full contact, of every point.” It has also been clarified that the Valve Strips are free and even though their flexure into the guard profile is slight such is uniform throughout their length." The Collector (Appeals) also relied from one of the clarifications given in the catalogue concerning Feather Valve Strips. It has also been clarified in the literature that the strips should be well rounded on the ends similar to the rounding of the edges of the strips. The ends should be filed making sure that they do not contain any sharp corners. If this precaution is not taken, strip breakage may occur. We find that the goods are articles of general use.
7. In view of the above clarifications, given in the catalogue submitted by the appellants, we find that the goods may be of specific dimensions made by complicated process achieving high degree of precision, however the fact remains that they are articles of base metals and are called as strips, in the trade parlance. It is also seen that the imported goods did not lose their identity as Strips/articles of base metals even after undergoing through the process undertaken in their manufacture.
8. As the description of the product classifiable under the two competing entries was not specific to cover the goods, therefore, assistance was sought from Explanatory Notes of CCCN on which the then Customs Tariff was based. In the general notes on general content of the Section at page 1155 under Note (B)(g) it has been laid down that the Section does not cover :
“(g) Endless belts of metal wire (usually woven wire) or strip.”
Thus, if the imported product happens to be an article of Iron and Steel called the Strip, its classification under Chapter 84 is precluded. Now examining further, whether articles of iron and steel are specifically included under Chapter Heading 73.33/40, we find from Note 5 of the Explanatory Notes on page 980 of the CCCN that the classification of composite articles except where the headings otherwise required, articles of base metals (including articles of mixed materials treated as articles of base metals under the Interpretative Rules) containing two or more base metals are to be treated as articles of base metals predominating by weight. For this purpose (a) Iron and Steel, or different kinds of Iron and Steel are regarded as one and the same metal (b) an alloy is regarded as being entirely composed of that metal as an alloy by virtue of Note 3 it is classified and (c) averment of Heading No. 81.04 is regarded as a single base metal. This also indicates that the goods were articles of general use.
9. Moreover, at Page 983 of the Explanatory Notes of CCCN on parts of articles it has been clarified that, “in general identifiable parts of articles are classified as such parts in their appropriate heading in the Nomenclature.” However, parts of general use as defined in Note 2 imported separately are not considered as parts of articles but are classified in the headings in this Section appropriate to them. This would apply for example in the case of Bolts specialised for central heating boilers or springs specialised for motor cars. The Bolts would be classified in Heading 73.32 (as bolts) and not in Heading 73.37 as parts of Central heating boilers. The springs would be classified in Heading 87.06 as parts of motor vehicles. We also observe that in Chapter Note 1(m) at page 986 of the Explanatory Notes of CCCN Hoop and Strip have been defined as “rolled product with sheared or unsheared edges, of rectangular section, of a thickness not exceeding 6 mm, or a width not exceeding 500 mm and of such dimensions that the thickness does not exceed 1/10th of the width, in straight strips, coils or flattened coils.” Though the items are not strips falling under Chapter Heading 73.12, but are definitely articles of iron and steel falling under Chapter 73 of the Customs Tariff Act, 1975.
10. Now examining them in the light of the case law relied upon and cited, we find that this Tribunal had held :-
“We find that the word `part’ which has not been defined in the Notification No. 155/86, according to the Chembers Twentieth Century Dictionary means :-
`Something less than the whole, a portion, that which along with others makes up, has made up, or may at some time make a whole, a constituent.’
It is also seen that according to the same dictionary the term `raw material’ means :-
`material (often in natural state) that serves the starting point of manufacturing or technical process : that out of which something is made or makable or may develop.’
On a plain reading of the dictionary meaning of the terms `part’ and `raw-material’ it follows that whereas a part which along with other makes up or is a constituent of something has necessarily to be in a state in which it can be used or fitted in the system of which it constitutes a part."
On a perusal of this decision we find that here the issue for determination was whether the imported goods were parts or raw-material for the purpose of availing concessional rate of duty under Notification No. 155/86, we find that the facts in the instant case are different from the facts of the case cited and relied upon by the appellants. In the case before us we find that the goods are called strips and are articles of general use and imported separately and hence are to be dealt with according to provisions of the Customs Tariff Act, 1975.
11. On the second case relied upon by the appellant we find that the Apex Court ruled that the Rule requires the authorities to classify the goods in the heading which satisfies most specific description. No doubt we are following the ratio of this ruling of the Apex Court.
12. Having regard to the catalogue and drawings, Explanatory Notes and the case law cited and the circumstances that the goods were imported separately for replacement of the strips, we hold that the imported goods were rightly classified under Chapter Heading 73.33/40 of the Customs Tariff Act, 1975.
13. Having regard to the above findings, we uphold the impugned order and reject the appeal.
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Equivalent 1995 (77) ELT 695 (Tribunal)