1996(10)LCX0104
IN THE CEGAT, COURT NO. II, NEW DELHI
S/Shri S.L. Peeran, Member (J) and Shiben K. Dhar, Member (T)
EVEREST INTERNATIONAL
Versus
COLLECTOR OF CUSTOMS, BOMBAY
Final Order No. C/1348/96-B, dated 8-10-1996 in Appeal No. C/1684/89-B2
Cases Quoted
Bharat Earth Movers Ltd. v. Collector — 1984(03)LCX0001 Eq 1987 (031) ELT 0112 (Tribunal) [Paras 1, 8]
Universal Surgical Traders v. Collector — 1988(05)LCX0010 Eq 1988 (037) ELT 0058 (Tribunal) [Paras 1, 7]
Pan Asia Commercial Enterprises v. U.O.I. — 1986(07)LCX0031 Eq 1986 (025) ELT 0508 (Bom.) [Para 3]
Advocated By : Shri V.G. Kumar, Advocate, for the Appellant.
Shri S.N. Ojha, JDR, for the Respondents.
[Order per : S.L. Peeran, Member (J)]. - This appeal arises from the Order-in-Appeal dated 24-2-1989 passed by the Collector (Appeals) holding that the item declared in the Bill of Entry is “Motor Running Capacitors 36 MFD 450 Volts & 25 MFD 450 Volts as per I.S. 2993/1975" has not been assessed as part of a motor but as a capacitor which is specifically covered by Heading 85.32. He has held that when there is a tie, classification is preferred under a specific Entry 85.32 is also to be preferred being a later entry, in terms of the interpretation rules. He has noted that since it is not denied that the items are electrical capacitors, the benefit of exemption Notification No. 67/86-C.E. will not be applicable because it is not classified as part of electric motors falling under Heading 85.03. The appellants in this appeal are contending that the Notification No. 67/86, dated 10-2-1986 exempts Electric Motors and parts of Electric Motors on the condition that such motors or such parts are used in the factory of production as component parts in the manufacture of :
(1) electric motors and parts of electric motors falling under Chapter 85 of the said Schedule.
They State that in the Notification there is no distinction between the parts of electric motors classified under 85.03 or under 85.32, and the only condition is that the item should be part of electric motor falling under Chapter 85. In this connection, the appellants rely on the judgment rendered in the case of Bharat Earth Movers Ltd. v. Collector of Customs as reported in 1987 (031) ELT 112 wherein the Tribunal took the view that the article may fall under any heading, as long as the part falls within the specified headings, the exemption is required to be extended. It is stated by them that it is immaterial as to whether part of motor running capacitor is listed in any of the heading but as long as the same item is considered as suitable for use solely or principally with the machine Heading 85.01 or 85.02 i.e. electric motor then the said part is eligible for the benefit of exemption contained in Notification No. 67/86. They also rely on the ruling rendered in the case of Universal Surgical Traders v. Collector of Customs as reported in 1988 (037) ELT 58 in their support. Their contention is that the exemption is granted to the same goods under a particular Notification in one Customs House, the same practise has to be followed in all the Custom Houses. They state that there is an established practice to grant the benefit of exemption from CVD to Motor Running Capacitor.
2. We have heard Shri V.G. Kumar, the learned Advocate for the appellant and Shri S.N. Ojha, the learned DR for the Revenue.
3. The learned Advocate argued on the basis of the grounds made out in the appeal memo and also relied on the judgment rendered in the case of Pan Asia Commercial Enterprises and Another v. Union of India and Another as reported in 1986 (025) ELT 508.
4. The learned DR submitted that the capacitor classified under 85.32 is not mentioned in the Notification and therefore, the Collector has rightly rejected their plea for grant of exemption. It is his submission that only parts of the electric motors falling under 85.02 are required to be considered and not capacitors falling under 85.32.
5. We have carefully considered the submissions made by both the sides and have perused the records.
6. It is the contention of the appellants that the capacitor imported by them are solely or principally meant for electric motors and they are required to be considered as classifiable under 85.01 or 85.02. Heading 85.02 refer to electric motors and generators excluding generating sets. The Notification grants exemption for electric motors and parts of electric motors or description specified in the table and falling under Headings 85.01 and 85.03 or 85.11 of the CET’ 85 and the whole of the duty [of excise] leviable thereon under Section 3 of the Central Excises and Salt Act, 1944 subject to the conditions laid down in Column 3 of the Notification which states that such motors or such parts are used in the factory of production as component parts for the manufacture of -
(1) electric motors and parts of electric motors falling under Chapter 85 of the said Schedule.
In this case there is no dispute that the electric capacitor imported by the appellants are used in the manufacture of production, as `component parts’ in the manufacture of electric motors, which fall under Chapter 85. The electric motors have thus been granted benefit of the exemption under Notification No. 67/86-C.E., dated 10-2-1986 for the purpose of excise duty. The question is as to whether CVD can be imposed in the present case in respect of LT capacitor which have been classifiable under Chapter 85.32. It is the contention of the appellants that these capacitors are classifiable as parts suitable for [use] solely or principally with machines of Heading 85.01 or 85.02 under Chapter Heading 8503. Heading 8503 refers to electric motors and generators. Therefore, it is their contention that the classification adopted by the lower authorities under 85.02 is also not correct and that the item should be classifiable under 85.03 as parts used solely or principally with electric motors or generators. While interpreting the Notification independently, we notice that these electric capacitors are `parts’, which are used in the factory of production as component parts in the manufacture of electric motors. On a premises that these parts are suitable for use solely or principally with machines falling under Heading 85.01 i.e. electric motors, the item for the purpose of classification would get covered under Heading 85.03 for the purpose of CVD duty. There is no dispute in this case as regards basic duty and additional duty and the dispute reverts only on levy of CVD. As pointed out by the learned Advocate electric motors and parts thereof are exempted for levy of excise duty under Notification No. 67/86, dated 10-2-1986. In such a circumstances levy of CVD would not be justified. This has been so held in the case of Pan Asia Commercial Enterprises (supra) by Hon’ble Bombay High Court in para 3 of the cited judgment. The Hon’ble High Court has held that Section 3 of the Tariff makes it clear that the countervailing duty cannot be levied on the article imported in India, if such articles manufactured in India is exempted from payment of Excise duty. It has been held that the provisions of Section 3 has to be read in connection with the provisions of Central Excise duty. Hence, liability to countervailing duty would depend upon the liability to pay excise duty. Further it has been held that it cannot be said that the goods are exempted from payment of excise duty which will have no bearing to determine the liability to pay countervailing duty under the Customs Tariff Act, 1975. This judgment would clearly apply to the fact of the case.
7. We also notice, the plea that the various other custom houses have been granting the benefit in respect of all the items. In the case of Unival Surgical Traders v. Collector of Customs as reported in 1988 (037) ELT 58, the Tribunal took such a view and held that in such circumstances, the benefit cannot be denied to the importers.
8. In the case of Bharat Earth Movers Ltd. (supra) the Tribunal took the view that the term `parts of any article’ and the word `article’ have to be read disjunctively and has further held that the `part’ may fall under any heading and as long as article falls under the listed heading, the benefit is required to be extended. It is further held that in the phrase “parts of any articles” there will be two commodities :
(1) the article and
(2) the part imported for that article.
Only the commodity in (1) must fall under the listed headings of the exemption Notification No. 35/79-Cus. Therefore, it has been held that the Tribunal considers that the goods if they are designed for articles that fall in the specified headings should qualify for exemption even under the old unamended Notification No. 35/79-Cus. The Tribunal noticed that in the unamended Notification No. 35/79-Cus. the term `the parts of article’ fell under certain headings of Custom, when required for initial setting up or assemble or manufacture of all that article from payment of Customs duty, as in excess of the duty leviable on the respective article itself. The unamended Notification No. 129-Cus., dated 15-2-1979 sought to amend Notification No. 35-Cus., dated 15-3-1979, so as to bring out the intention clearly that the exemption will apply to all parts regardless of whether or not they fell under the same heading in the Tariff as the article itself. Interpreting these clauses in the Notification, the Tribunal accepted the appellant’s contention that the old Notification No. 35/79-Cus. was meant to cover all parts even if the parts would not fall in the headings listed in Notification No. 35/79-Cus. and it was held that the subsequent Notification and clarification must be given effect from 15-2-1979. We notice that the analogy applied by the Tribunal, is also required to be applied in the present case. In that view of the matter, taking into consideration the citations relied before us, we uphold that the appellants are entitled to the benefit of the Notification. Hence we set aside the impugned order and allow the appeal with consequential relief, if any.
Equivalent 1997 (92) ELT 559 (Tribunal)