1996(12)LCX0045
IN THE CEGAT, COURT NO. II, NEW DELHI
S/Shri S.L. Peeran, Member (J) and Shiben K. Dhar, Member (T)
MACNEILL & MAGOR LTD.
Versus
COLLECTOR OF CUSTOMS, BOMBAY
Final Order Nos. C/74-75/97-B2, dated 4-12-1996 in Appeal Nos. C/2844/87-B2 and C/2845/87-B2, dated 17-1-1997
Cases Quoted
BHEL v. Collector 1983(12)LCX0042 Eq 1984 (016) ELT 0355 (Tribunal) [Para 3]
Collector v. J.K. Synthetics Ltd. 1993(06)LCX0068 Eq 1993 (068) ELT 0827 (Tribunal) [Para 3]
Motor Industries Co. Ltd. v. Collector 1992(06)LCX0031 Eq 1992 (062) ELT 0412 (Tribunal) [Para 3]
Sri Lakshmi Saraswathi Textiles (P) Ltd. v. Collector 1992(07)LCX0027 Eq 1992 (062) ELT 0310 (Tribunal) [Para 3]
Collector v. Delhi Cloth Mills 1995(05)LCX0155 Eq 1995 (078) ELT 0685 (Tribunal) [Para 3]
Coromandel Fertilizer Ltd. v. Collector 1995(03)LCX0174 Eq 1995 (077) ELT 0890 (Tribunal) [Para 4]
S.K. Machinery Pvt. Ltd. v. Collector 1996(08)LCX0047 Eq 1996 (088) ELT 0779 (Tribunal) [Para 4]
Thirumalai Chemicals Ltd. v. Collector `B Bench Order No. C/595/96-B2 [Para 4]
Collector v. Wood Craft Products Ltd. 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.) [Para 7]
Advocated By : Shri K.K. Anand, Advocate, for the Appellant.
Shri K.K. Jha, SDR, for the Respondents.
[Order per : Shiben K. Dhar, Member (T)]. - The short question that falls for determination in these appeals is the proper classification of seamless steel tubes used in Heat Exchanger.
2. The appellants contend that these seamless steel tubes are specially designed and manufactured for use in Heat Exchanger and therefore would qualify for assessment under CTH 84.17 before March, 86 and under CTH 84.19 after March, 86 as against 7304 after that date.
3. Arguing for the appellants, ld. Advocate submits that these seamless steel tubes are not ordinary general purpose goods but are specifically designed and manufactured for the use in heat exchangers. Tribunal in such circumstances has held that such goods are more appropriately classifiable as parts of the finished product. He cites the following cases in support of his contention :
1. BHEL v. Collector of Customs, Madras - 1984 (016) ELT 355
2. Collector of Customs v. J.K. Synthetics Ltd. - 1993(06)LCX0068 Eq 1993 (068) ELT 0827 (Tribunal)
3. Motor Industries Co. Ltd. v. Collector of Customs - 1992(06)LCX0031 Eq 1992 (062) ELT 0412 (Tribunal)
4. Sri Lakshmi Saraswathi Textiles (P) Ltd. v. Collector of Customs, Madras - 1992(07)LCX0027 Eq 1992 (062) ELT 0310 (Tribunal); 1993 (44) ECR. 118
5. Collector of Customs, Bombay v. Delhi Cloth Mills - 1995(05)LCX0155 Eq 1995 (078) ELT 0685 (Tribunal)
In the case of Delhi Cloth Mills (Supra), the Tribunal held that when the item imported is specifically manufactured for use according to specification in warping machines only, the same is classifiable under Heading 84.38 of the CTA and not under Heading 84.63.
4. Arguing for the Revenue, ld. DR submits that even though the impugned goods may have been designed and manufactured for use in heat exchangers, these goods being specifically described under the relevant tariff heading in Chapter 73 by virtue of 2(a) of Section Note VXI would be classifiable under that tariff heading. He also refers to HSN Notes which make it clear that such seamless steel tubes even though designed for a particular machine would be main classifiable only as seamless steel tubes under the relevant tariff heading. In support of the arguments he cites the case of Coromandel Fertilizer Ltd. v. Collector of Customs, Madras - 1995 (077) ELT 890 and S.K. Machinery Pvt. Ltd. v. Collector of Customs, Calcutta - 1996(08)LCX0047 Eq 1996 (088) ELT 0779 (Tribunal) - 1996 (67) ECR. 313. He further submits that `B Bench Order No. C/595/96-B2 in case of Thirumalai Chemicals Ltd. v. Collector of Customs, Madras held tubes, pipes and boilers would be classifiable under Chapter 73.17/19(1).
5. We have heard both sides. It was contended by the ld. Advocate that the appellants are the manufacturer of heat exchangers, pressure vessels etc. The impugned goods while specifically designed and manufactured for heat exchangers are not general purpose parts but are meant specifically for heat exchangers. The goods have been supplied in specified quantity and prescribed specification and had also acquired the quality of being fitted into heat exchangers. We find that seamless steel tubes are specifically described under Heading 73.04 after Feb`86 and under 73.17/19 before that period. Section XV under General Explanatory Note(c) indicates that identifiable parts of articles are classified as such parts in their appropriate headings in the Nomenclature. However, parts of general use (as defined in Note 2 to this Section) presented separately are not considered as parts of articles, but are classified in the headings of this Section appropriate to them. Examples are given as bolts specialised for central heating radiators or springs specialised for motor cars. The bolts would be classified in Heading 73.18 (as bolts) and not in Heading 73.22 (as parts of central heating radiators). HSN Notes under Heading 73.04 further indicate that the products of this heading include in particular line pipes of a kind used for oil or gas, casing, tubing and drill pipes of a kind used in the drilling for oil or gas, tubes and pipes suitable for use in boilers, superheaters, heat exchangers (emphasis added) condensers, refining furnaces, feedwaterheaters for power stations, galvanised or black tubes (so called gas tubes) for high or medium pressure steam, or gas or water distribution in buildings, as well as tubes for water or gas street distribution mains.
Explanatory Note in Chapter 84.19 further specifically exclude such tubes by indicating that metal tubes or pipes which have been bent or curved but not otherwise worked, presented unassembled, are not identifiable as parts of goods of this heading and are, therefore, to be classified in Section XV.
6. It would, therefore, be seen that both by way of inclusive illustration and illustration excluding the item such tubes would be classifiable only under relevant tariff heading in Chapter 73.
7. Throughout the proceedings, the ld. Advocate very forcefully contended before us that these items could not be used except as component parts of heat exchangers and therefore, according to established principles of classification would be classifiable only under the chapter heading relevant to heat exchangers. We are unable to persuade ourselves to accept this line of approach in view of the categorical indication as to classification of these goods in HSN Notes. HSN Notes under Heading 73.04 clearly indicate that the products of this heading include in particular among others tubes and pipes suitable for use in heat exchangers. The Honble Apex Court in the case of Collector of Central Excise, Shillong v. Wood Craft Products Ltd. - 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.) = 1995 (57) ECR. 417 (S.C.) held that Central Excise Tariff Act, 1985 is enacted on the basis and pattern of the HSN, the same expression used in the Act must, as far as practicable, be construed to have the meaning which is expressly given to it in the HSN when there is no indication in the tariff of a different intention. Customs Tariff also like Central Excise Tariff is based on HSN and therefore, this observation would be equally applicable while interpreting an entry in the Indian Customs Tariff also.
8. While in passing we may also mention that even though ld. Advocate placed considerable emphasis on the point that the goods have acquired the character of finished goods for use only in the heat exchangers, we find the Asstt. Collector in his order has observed that the goods imported are ordinary tubes in running length. Collector (Appeals) also observed that there is no further evidence beyond doubt to prove that no process whatsoever has been carried out between the stage of importation and the final fitment of the pipes in heat exchangers. However, since HSN Notes under Chapter Heading 73.04 categorically indicate tubes for heat exchangers and such tubes admittedly are expected to be manufactured according to specifications for heat exchangers, we do not think that these observations about the character of the tubes are of any material significance as HSN Notes make it clear that such seamless steel tubes would fall under Chapter Heading 73.04.
9. In the result, for the reasons mentioned herein before, we reject these appeals and uphold the impugned orders.
Equivalent 1997 (91) ELT 112 (Tribunal)