1996(11)LCX0108
IN THE CEGAT, COURT NO. II, NEW DELHI
Shri S.K. Bhatnagar, Vice President and Ms. Jyoti Balasundaram, Member (J)
DANFOSS (J) LTD.
Versus
COLLECTOR OF CUSTOMS, BOMBAY
Final Order No. C/1468/96-B, dated 18-11-1996 in Appeal No. C/371/87-B
Advocated By : Shri Gopal Prasad, Advocate, for the Appellant.
Shri K.K. Jha, SDR, for the Respondents.
[Order per : S.K. Bhatnagar, Vice President]. - This is an appeal against the order of Collector (Appeals), Bombay, dated 3-12-1986.
2. The ld. Counsel stated that the appellants are manufacturers of Hydraulic Systems which are customs built to suit individual needs and help in the modernisation of existing equipment or for introducing this modern technology to the Indian manufacturers.
3. Certain components/sub-assemblies of the hydrostatic steering systems were imported by them and the A.C. classified them under Heading 87.04/87.06 and passed the order dated 17-8-1984.
4. They cleared the goods under protest and the appeal was rejected by the Collector (Appeals) as unsubstantiated.
5. It was their contention that it was erroneously rejected as such because they had produced all relevant documents including invoice, catalogues of suppliers etc. Separate catalogues of components could not be produced as such catalogue is not supplied by the manufacturer.
6. They have enclosed a brief technical note on the hydrostatic steering system which shows that such system is designed for transforming energy of fluid flowing under pressure through pump and hydrostatic cylinder into motive power to steer the wheels of vehicles or to properly position the platform of the stationary equipments.
7. When the steering wheel is turned, the Danfoss steering unit motors oil volume proportional to the amount of turn. This volume of oil is led to the appropriate side of the pistons in the steering cylinders.
8. These systems find their best use for applications where very heavy forces are required to be applied for steering moving vehicles or positioning stationary equipment. The technology for these items has been developed recently only and therefore, there is no separate entry for such systems only. However, since the working system is that of the hydraulic engine, the analogy of such hydraulic engine is required to be applied. The hydraulic engines and parts thereof are classifiable under Heading 84.07 and Explanatory Notes of BTN show that this heading covers all engines and motors which can, by themselves, transform into motive power the entry possessed by moving liquids or liquids under pressure.
9. The goods imported by the appellants are parts assembled of hydrostatic steering systems and they do not find commercial application in fast moving vehicles or vehicles under continuous duty as they are uneconomical and are not fall safe. They are therefore, best used in moving earth-moving machinery etc.
10. The ld. DR drew attention to the order-in-original and in particular, to the observations of the A.C. The observations and findings of the A.C. are as follows :
11. “Invoice alongwith perusal of catalogue reveals that party has imported 100 steering systems, each system consisting of one OSPB 80 steering unit, one OVP 15 value - Block, one OTPB 750 steering column.
12. Goods on examination are found to be as per invoice description. Original literature submitted by the importer describes above three Items as “Hydrostatic Steering Components”; General information contained in the literature reveals that such “Hydrostatic Steering” components are used in vehicles and ships where the driver must control high steering forces and where safety and comfort are demanded.
13. Importers view that “Steering-Units”/Steering Columns are to be assessed under Heading 84.07 as “Hydraulic cylinders” is not tenable on the ground that “Steering Units/Steering Columns” are not merely “Hydraulic cylinders” but a combination of “distributor value, rotary meter in addition to hydraulic-cylinder; As per explanatory notes at page 1179 FEB 1981 of CCCN vol. III, ”only cylinders" used on machinery, construction machinery, steering machinery etc. are included in 84.07. Hence, assessment Steering columns “Steering Units” under Heading 84.07 is ruled out.
14. Goods being part of “control equipment” such as “steering system”, in view of explanation at page 1501 of CCCN under Chapter 87.06 under Paras (G) and (M) goods imported viz. component parts of “Steering Systems” such as “Steering Unit” “Value Block” “Steering Column” merit classification under Heading 87.06 of CCCN.
15. Application list of M/s. Danfoss Hydraulic for OSP type products, at pages 1 to 4 reveals that the “Steering system components” have wider use in agricultural tractor, combine harvester, grit spreader, paver finisher asphalt seraper, road roller, concrete mixer, stone drasser, loader, miniloader, excavator dumper, mini dumper, cranes, forklite truck, container truck, transport SKG-lift, mining truck, mining dumper, municipal vehicle, airport vehicle sweepers, textile machines.
16. In view of explanatory notes figuring at pages 1460, 1470, 1471 for classification of “parts and accessories suitable for Articles falling under Chapters 86 to 88 and in terms of conditions (a), (b) and (c) stated therein it can be fairly adjudged that imported ”Steering-system (control system) components" and principally used with the Articles of Heading 87.02(1), 87.03 viz. container truck, municipal vehicle, airport vehicle, dumper, loader, mining trucks, concrete mixer, sweepers, cranes, transporter.
17. In view of above finding, I hereby hold that “Steering system components” viz. steering units, steering columns and value block are classifiable under Heading 87.04/06(1) as “part and accessories of motor vehicles” falling within Heading 87.02(1) or 87.03."
18. The ld. DR also drew attention to the order of the Collector (Appeals) stating that as mentioned by the Collector (Appeals) - “In the absence of detailed catalogues and other documents such as drawing, literature etc., the correct classification cannot be decided.”
19. The appellants have not denied the application of these items in mobile vehicles and hence they were required to be classified by reference to their function and regardless of industry in which are used. The appellants had produced two catalogues of Jessops Hydraulic Road Roller and M/s. Larsen and Toubro Sismapactor TT-900 but the steering systems shown in these catalogues cannot be correlated with the goods imported. The goods imported are Danfoss components for steering. The catalogues clearly show the application of the components in tractors, forklifts, harvesting machines etc., hence he was right in upholding the order of the A.C. and rejecting the appellant’s case as unsubstantiated.
20. We have considered the above submissions. We observe that the ld. Counsel is correct in pointing out that the goods imported are parts of hydraulic steering system and such system functions on the basis of conversion or transformation of the energy possessed by liquid or liquid under pressure into motive power.
21. The ld. Counsel is also correct in pointing out that such systems find application in heavy earth-moving machinery and the positioning of stationary equipment etc. However, this was by itself, not sufficient because this much part of their submission including technical write-up and the diagram of configuration of the circuit filed by them are not in question. The question before us is whether the goods satisfy the criteria of 84.07 as claimed by the appellants. The Heading 84.07 as it sood during the relevant period reads as under :-
“84.07 - HYDRAULIC ENGINES AND MOTORS (INCLUDING WATER WHEELS AND WATER TURBINES)
22. The literature submitted by the importers before the A.C. shows that such hydrostatic components are used in vehicles and ships where the driver must control high steering force and where safety and comfort are demanded.
23. It is also noteworthy that the imported items are control equipment and the application list of M/s. Danfoss itself reveals that they have wide use in agricultural tractor, Combine-harvestor, road roller etc. cited by the A.C.
24. Therefore, the ld. A.C. was justified in treating them as parts of motor vehicles on the ground that they were to be used in the articles of Heading 87.02(1) C.T.A. in terms of the Explanatory Notes of CCCN. The appellants contention that they should be classified under Heading 84.07 on the basis of analogy of hydraulic engines is not acceptable because the items are not hydraulic engine per se nor are they merely hydraulic cylinders of a type covered by that heading but admittedly parts of the steering systems which themselves act as controlling equipment in motor vehicles. Therefore, the appellants contention that the items are classifiable under Heading 84.07 of CTA which covers only hydraulic motors and engines cannot be accepted and the Collector (Appeals) has rightly observed that we cannot look merely on their method of functioning but what is important from the point of view of the tariff is to see the application which includes motor vehicles of various types and therefore, they were required to be treated as component parts of vehicles classifiable under Heading 87.04/06(1) as held by the A.C. and the Collector (Appeals). We therefore, uphold the order and reject the appeal.
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Equivalent 1997 (90) ELT 317 (Tribunal)