1996(04)LCX0048

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri S.L. Peeran, Member (J) and J.H. Joglekar, Member (T)

RATHI INTERNATIONAL EQUIPMENT CO. (P) LTD.

Versus

COLL. OF CUS., BOMBAY

Order No. C/127/96-B, dated 30-4-1996 in Appeal No. C/2818/86-B

Advocated By : Shri M.L. Lahoty, Advocate, for the Appellant.

Shri A.T. Usman, JDR, for the Respondent.

[Order per : J.H. Joglekar, Member (T)]. - This appeal is against the order of the Additional Collector dated 26-9-1986. The short facts are as follows :

2. The appellants imported Twin Lobe Compressors (Rotary compressors) with accessories and sought their assessment under Heading 98.01. Their contract for project import had already been registered with the Customs House. The Additional Collector denied the request for assessment under Project Report and ordered assessment of the goods on merit. He also ordered confiscation of the imported goods under the provisions of Section 111(d) of the Customs Act, 1962 read with Section 3 of the Imports & Exports (Control) Act, 1947. He gave the option to redeem the goods on payment of fine in lieu of confiscation of Rs.2 lakhs.

3. The grounds for making this order as listed in the show cause notice and in the discussions made by the Additional Collector were as follows :

(i) That the imported goods were not completed equipment but that they were parts of the full machinery. As such they were not covered under the import licence.

(ii) That the packing list specified the goods as Rotary Piston Blowers and not Rotary Compressors.

(iii) That the licence was for both the quantity and value. After taking into account the value of the present consignment, there was still a credit balance left in the licence.

4. Before us Shri M.L. Lahoty, Id. Advocate appeared for the appellant and Shri A.T. Usman, Id. JDR for the Revenue.

5. Shri Lahoty claimed that the goods imported were actually as per the description in the licence. The same description occurs in the Bill of Entry. The invoice also gives exactly the same description. The misunderstanding in the Department’s mind appears to have arisen on perusal of the packing list. He claimed that the packing list also describes the goods as Twin Lobe Compressors (Rotary Compressors) with accessories and states their Model Nos. The packing list says that the goods are “consisting of” rotary piston blowers and listed accessories. He stated that there is no difference between a blower and a compressor. This claim had been made before the lower authority also. He referred to the Extracts from ‘Encyclopedia of Chemical Process Equipment’ by W.J. Mead in claiming that there was no basic difference between the design of a fan, blower or compressor. A blower was usually called compressor when the operating pressure was higher than 1 (one) psi. Referring to the extract from ‘Fan Engineering’ by Buffalo Forge Co., he stated that the choice of the name between a compressor or a fan was not regulated or standardised. Very low pressure rise machines would probably be classified as fans and very high pressure rise machines would be classified as compressors, whereas intermediate pressure rise machines could be classified as either. running (sic) from the same extract he claimed that compressors were ventilator, exhauster and blower.

Ld. Advocate stated that users of the machinery namely IPCL in their letter dated 29-11-1986 have accepted the machinery imported by them to be a complete compressor. The survey certificate dated 28-11-1986 also certifies that the impugned goods were exactly as per the packing list and the invoice of the supplier. The certificate further stated that even though the suppliers had referred to the equipment as a rotary blower, in India such equipment would be treated as Rotary Compressor. He, therefore, claimed that in view of this evidence, the impugned goods conformed to the description in the import licence.

Arguing on the observation that the goods as imported were not complete machine but parts, ld. Advocate stated that the machine as imported was accepted as a complete compressor unit by the users as was evident from their letter mentioned above. Referring to the supplier catalogue, ld. Advocate stated that all the parts of the complete compressor was shown in a schematic diagram. Except for the driving motor, the imported goods consisted of all other parts. He further stated that the catalogue lists certain optional accessories which had not been imported by them. He also referred to the rules of interpretation and specially Rule 2(a) of the Rules for interpretation of the First Schedule. He stated that the impugned goods were a compressor even without a prime mover.

Arguing on the allegation in the show cause notice that machines operating at gas pressure items above 1.15 without artificial cooling were referred to as blowers, whereas such machines which were artificially cooled were called compressors. Ld. Advocate referred to the earlier reference to the technical literature which showed that these two terms are inter-changeable. Ld. Advocate referred to the letters from the Chartered Electrical Engineering  In same letter he has opined that artificial cooling was not an essential factor for the design and working of a compressor. With the new technology there were compressors having in-built design which cools the compressed gases. In the catalogue of the supplier also, it was listed that the convertion cooling of the machine service was sufficient within the standard load range.

Ld. Advocate further claimed that there was no justification either for refusal to assess the goods under Project Import or for confiscation of the impugned goods. On both counts he requested for appropriate relief.

6. Shri A.T. Usman, ld. DR reiterated the logic of the original authority. He claimed that only a complete machine if imported would qualify for assessment as Project Import. In this case he cited the judgment of the CEGAT in the case of Collector of Customs, Bombay v. Pfoston Colour Processing Lab, as reported in 1996 (81) ELT 257.

7. In his counter arguments, ld. Advocate stated that this was not a case where full machines were eligible for import but parts were prohibited. In their case, they could import the goods with their accessories if they have chosen but to save on foreign exchange they chose to import the machine without certain parts. Non-imposition of penalty upon them shows that the original authority has not questioned their bona fides.

8. We have carefully considered the arguments made by both the sides and have perused the records. The Addl. Collector had ordered confiscation of the impugned goods on the observation that whereas the licence was for complete machine, the importers had imported only certain components of the machine. It has been established on perusal of the catalogue that barring the driver motor, the impugned goods have all the other component parts described in the diagram. As per Rule (2) of the Interpretation Rules, unfinished former can be taken to be a complete or a finished article provided it has the essential character of the complete or finished article. In this case, there is no doubt about the identity of the goods as a complete machine. The substantial evidence placed on record also establishes that the two terms “Blower and Compressor” are inter-changeable alongwith similar other terms like ‘fans’ ‘exhausters’ etc. The evidence also shows that with the advance technology, the distinction between blowers and compressors on count or requirement of artificial cooling also does not exist any longer. On perusal of the evidence including the certificate issued by the Chartered Engineers, the suppliers as also the users, we have no hesitation in accepting the contention that the goods imported were as per the description in the import licence. The order confiscating the machinery was clearly wrong. As regards the allegation that the importers had not utilised the licence as per value, we find that the lower authority has not touched this aspect in his deliberations. In the result, the appeal succeeds. The lower authority is directed to grant the benefit of the Project Import assessment as claimed by the importers. The order of confiscation is set aside with consequential relief.

Equivalent 1996 (85) ELT 301 (Tribunal)