1995(09)LCX0103

IN THE CEGAT, SPECIAL BENCH `B2’, NEW DELHI

S/Shri S.L. Peeran, Member (J) and Shiben K. Dhar, Member (T)

KERALA STATE ELECTRICITY BOARD

Versus

COLLECTOR OF CUSTOMS, MADRAS

Order No. C/362/95-B2, dated 22-9-1995 in Appeal No. C/68/86-B2

Cases Quoted

U.O.I. v. Gujarat Woollen Felt Mills — 1977 (001) ELT (J 24)                                                                 [Para 6]

Dunlop India Ltd. v. U.O.I. — 1975(10)LCX0016 Eq 1983 (013) ELT 1566 (SC)                                                                      [Para 6]

C.S.T. v. S.N. Brothers — AIR 1973 SC 78                                                                                                   [Para 6]

Advocated By : Shri N. Narayanan Thampi, Dy. Chief Engineer (Designs), for the Appellants.

 Shri K.K. Jha, SDR, for the Respondents.

[Order per : S.L. Peeran, Member (J)]. - This appeal arises from the order-in-appeal dated 23-7-1985 passed by the Collector (Appeals), Madras. The appellants had filed a refund application seeking reassessment of the imported goods `valve parts for turbine’ under Tariff Heading No. 84.61(2) of CTA. The Assistant Collector partly allowed the refund application by granting refund of only Rs. 979/-. As regards the refund in respect of Valve, on reassessment, the Assistant Collector had held that as per Heading 84.61(2) of CTA only Valve made of corrosion resisting materials such as stainless steel etc. are covered, while the Valve in question will not fall under the said heading and, therefore, the original assessment made under Heading 84.61(1) has been upheld. Before the Collector (Appeals), the appellants produced drawings, operations and maintenance instruction book of the supplier in support of their contention that subject goods are parts of isolating valves. They had further submitted that the document showed that the imported parts viz. sealings and sealing flanges are parts of inlet spherical valve located in front of the turbine. The valve in question is designed for operating and closing by means of servomotor. The Learned Collector held that the documents submitted by the appellants i.e. drawing, operation and maintenance instruction book did not show that the inlet valve of the turbine is in the nature of an isolating valve. He has relied on Lyon’s Encyclopaedia of valves, which states that an isolating valve is a hand operated valve located between the packing lubricator assembly and the packing box assembly in a control valve and is used for shutting off the fluid pressure from the lubricator assembly. Therefore, he has held that the inlet valve does not belong to this category nor is it a non-return valve which allows flow of fluid etc. in one direction i.e., it prevents back flow. Therefore, he has held that the parts of inlet spherical valve for turbine did not qualify for classification as the parts of either isolating valve or non-return valve covered under Tariff Heading 84.61(2) of CTA as claimed by them. Hence, he rejected their refund application. The appellants in this appeal are contending that the item should be classified under sub-heading 84.61(2) of CTA. They have stated that the relevant Section XVI of Chapter 84 of Customs Tariff 1984-85 groups the item into two sub-headings on functional basis and on material make up basis. There are 8 types of valves made of corrosion resisting materials. Functionally the imported item has to be grouped under valves on “functional basis” and hence its classification has to be done under sub-heading 84.61(2) irrespective of the material make of it. It is also submitted that the valve in question is exclusively an isolating valve and the goods imported are parts of the above valve. It has been further submitted in their written write up of the Chief Engineer (Electricity) Generation that the Spherical Valve in generating stations are used for opening and closing the water flow into the turbines belonging to both impulse and reactive groups. This is fixed in between the end of the pressure pipe line and the spiral casing and connected equipments (pressure relief valve, guide valves, injectors, runners etc.). For doing maintenance works on the equipments installed after the valve it is necessary to isolate pressure water for which the Spherical Valve has to be closed. The closing operation isolates pressure water from entering the said equipments for working. From this, they say that, it is clear that the Spherical Valve in question belongs to the group of isolating valve. The appellants have also sent drawings and operations instructions relied in this case. The drawings submitted relate to the Sholayar and Indukki Generating Stations by which it is illustrated that the position of the Spherical Valve in both case. It is stated that by a careful study it can be understood that the Spherical Valve on closing isolates the portion below it, where the turbine spiral casing, and other associated parts are fixed. It is also stated that the Valve is fixed after the high pressure penstock before the spiral casing and connected equipments. While one of the functions of the spherical valve is to close and open the water flow into the turbine, the other function is to isolate the equipments after the valve for carrying out maintenance works on the above equipments. Hence, it is submitted that the spherical valve is to be classified as an isolating valve. It is stated that the Lyon’s Encyclopaedia cannot be taken as a technical authority, while in the face of the technical literature, drawings functional use of the items and the submissions made by them.

2. We have heard Shri N. Narayanan Thampi, Deputy Chief Engineer (Designs) for the appellants and Shri K.K. Jha, the Learned DR for the Revenue.

3. The Learned Deputy Chief Engineer (Designs) who represented the appellants explained the function of an isolating valves and submitted that it has to be classified under the proper heading and not under residuary heading. He also supported his plea on the basis of technical write-up, drawings and the literature which had been produced by the lower authorities including the opinion given by the Chief Engineer, who is expert in this line. He submitted that both the authorities have not understood the technical literature and the impugned goods and have failed to consider the material on record. They had based their finding on the reading of the Encyclopaedia, which has been deprecated by the High courts and the Tribunal. The functional nature of the goods have to be accepted and classification cannot be on the basis of dictionary meaning.

4. The Learned DR reiterated the findings given by the lower authorities.

5. We have carefully considered the submissions made by both the sides and have perused the records. The Heading 84.61 is noted herein below:-

6. As can be seen from the reading of the sub-heading 84.61(2) all types of valves have been mentioned therein and Heading 84.61(1), is a residuary item, in which only those items have to be classified which do not find specified in any heading elsewhere. Therefore, the basic approach of the lower authorities is erroneous. They have failed to apply their mind and also to consider the technical literature, write up and the submissions made by the experts. The appellant is an electricity board and the Chief Engineer has himself explained the case in the light of the drawing and technical literature and use to which the item it put to. The Learned Collector has proceeded on the basis of the definition of valves found in Lyon’s Encyclopaedia. This approach has been deprecated by the Tribunal and Higher Forums. It is well settled that dictionary meaning is a delusive guide for the purpose of classification of the goods and the classification has to be done in terms of Section Note, Chapter Note and the description of the item in question and in the manner in which the item is understood in trade and commercial parlance. The Technical literature and write up explains the nature of the goods which is also to be looked into for classifying a product [See Union of India v. Gujarat Woollen Felt Mills - 1977 (001) ELT (J 24) = AIR 1977 SC 1548; Dunlop India Ltd. v. Union of India - 1975(10)LCX0016 Eq 1983 (013) ELT 1566 (SC) = AIR 1977 SC 597; Commissioner of Sales Tax, U.P. v. S.N. Brothers - AIR 1973 SC 78]. In the present case the Learned Collector has rejected the valve for classification under 84.61(2) on the ground that only stainless steel, monial, winding hastelloy are covered under the said item. The Learned Collector has failed to see that the Tariff heading clearly uses the words “such as” which is illustrative and not exhaustive. In the present case the material is out of bronze and on account of that the Learned Collector has rejected their case and on further finding that the inlet valve is non-returnable valve which allows flow of liquid in one direction i.e. it prevents back flow. The appellants had initially produced drawings, operation and maintenance instructions book besides technical write up to prove their case to be one of an isolating valve falling under sub-heading 84.61(2) of the Tariff. However, the Collector has failed to see any of aspects noticed by us and in a cursory manner has rejected their plea. We do not find any substance in the findings given by the Collector and it requires to be set aside. Admittedly, the goods are parts of isolating valves and isolating valves are clearly indicated in 84.61(2). The parts suitable for use solely or principally with a particular kind of machines are required to be classified in the machine of that kind as per Note 2(d) of Section XVI. In that view of the matter, the appellant’s case is sustainable and it requires to be accepted. The impugned orders are set aside and the appeal is allowed.

Equivalent 1995 (80) ELT 346 (Tribunal)