1997(02)LCX0176

IN THE CEGAT, COURT NO. II, NEW DELHI

Ms. Jyoti Balasundaram, Member (J) and Shri G.R. Sharma, Member (T)

BIMETAL BEARINGS LIMITED

Versus

COLLECTOR OF CUSTOMS, MADRAS

Final Order No. C/380/97-B2, dated 24-2-1997 in Appeal No. C/1571/88-B2

Advocated By : Shri R. Sudhinder and Mrs. V. Mohna, Advocates, for the Appellant.

Shri R. Pant, SDR, for the Respondent.

[Order per : G.R. Sharma, Member (T)]. - The short point for determination in this appeal is whether the imported product is classifiable under Chapter Sub-heading 9027.90 read with Heading 98.06 of Customs Tariff Act, 1975 as claimed by the appellants or was classifiable under Chapter Sub-heading 8473.30 of the Customs Tariff Act, 1975 and for Central Excise purposes, it should be assessed to Countervailing duty under Chapter Sub-heading 8473.00 of the Central Excise Tariff Act, 1985.

2. The facts of the case are that the appellants imported the goods in dispute and declared them as spare parts for Atomic Absorption Spectro-photometer. The appellants had imported earlier spectrophotometer. The original CPU units supplied along with the complete spectrophotometer had got damaged and therefore, the appellants imported the present goods. The Assessing Officer classified the goods under sub-heading 8473.30 of the CTA, 1975 at a rate of duty of 200% + Countervailing duty 20% under 8473 of the CETA, 1985. The Appellants agitated this classification stating that CPU Board was a part of spectrophotometer and should therefore, be classified under Chapter sub-heading 9027.90 of the Customs Tariff Act read with Chapter Heading 98.06 as amended. The Adjudicating Authority held that CPU Board imported by the appellants was classifiable under Chapter 84 and ordered that it should be assessed to duty under Chapter Sub-heading 8473.00 for purpose of countervailing duty. Against this order, the appellants filed an appeal before the Collector (Appeals) who upheld the order of the Asstt. Collr. and hence the appeal before us.

3. Shri R. Sudhinder, Advocate with Mrs. V. Mohna, Advocate appearing for the appellants submitted that the admitted position was that CPU Board imported by the appellants was a part for spectrophotometer. The ld. Counsel submitted that the service manual of the manufacturer described the function of product as “All the signal processing is handled on this single board. The analog input signal from the photomultiplier is connected for emission and dark current, the resultant signal levels are integrated and then converted to digital words which was read by the processor and computed to provide the required output information.” The ld. Counsel also submitted that while the adjudicating authority conceded that the imported goods are part of the spectrophotomer. He has held that the processing of information with the help of CPU Board in the processor unit of the spectrophotometer is not main function of the spectrophotometer. He submitted that this finding of the adjudicating authority which was concurred by the Appellate Authority is erroneous. The ld. Counsel also submitted the finding that the imported product `CPU Board’ performs the function of processing of information, therefore, it will be excluded from Chapter 90 in view of Note 2(a) to that Chapter; that this finding of the ld. adjudicating authority is not based on his first finding that the imported goods are part of the spectrophotometer. The ld. Counsel submitted that the adjudicating authority has concluded that the CPU Board is a part of the spectrophotometer but in view of Chapter Note 2(a), 2(b) and 2(c) of Chapter 90 of CTA, the CPU Board will get excluded from Chapter sub-heading 9027.90. The ld. Counsel also submitted that Chapter Note 2(a), 2(b) and 2(c) of Chapter 90 will get attracted only when the CPU Board itself is a part of the spectrophotometer. He submitted that the finding of the adjudicating authority that CPU Board is a part of the spectrophotometer and then applying Chapter Note 2(a), 2(b) and 2(c) of Chapter 90 is bad in law. Explaining the function of spectrophotometer, the ld. Counsel submitted that it is an instrument for measurement; that this is an instrument which processes information from a spectrum or spectra and thereafter measures the information received through the instrument. He therefore, submitted that the observation of the lower authorities holding that the processing of information through the CPU Board is not the main function of a spectrophotometer is totally wrong and incorrect. He submitted that the very purpose of a spectrophotometer is to obtain the results. Referring to the meaning of spectrophotometer given in the Macgraw-Hill Dictionary of Scientific and Technical Terms (Second Edition), the ld. Counsel submitted that it reads: “Spectrophotometer - An instrument that measures transmission or apparent reflectances of visible light as a function of wave-length, permitting accurate analysis of colour or accurate comparison of luminous intensities of two sources of specific wave lengths.” The ld. Counsel referred to Encyclopaedia Britannica, 1980 Edition on this issue. The ld. Counsel submitted that in the spectrophotometer, there is an integrated process unit which measures the date from the spectrum or spectra; that this process unit is not a separate entity but is a part and parcel of the spectrophotometer. He referred to the photographs of the spectrophotometer and submitted that CPU Board is a part of the integrated process unit. The ld. Counsel submitted that the product, therefore, should necessarily fall under Chapter Sub-heading 9027.90. He submitted that in the Finance Act 1987, a new Heading 98.06 was created reading as follows :

He submitted that concessional rate of duty has been provided under Notification No. 124/87-Cus., dated 1-3-1987; that since their product was classifiable under Chapter Heading 90.27, therefore, the above notification will be applicable. The ld. Counsel submitted that the rate of auxiliary duty applicable will be nil as provided under Notification No. 113/87-Cus., dated 1-3-1987 as amended by Notification No. 207/87 dated 12-5-1987. The ld. Counsel also submitted that the rate of countervailing duty applicable will be under Heading 90.27 of the Central Excise Tariff Act, 1985. Concluding his arguments, the ld. Counsel submitted that CPU Board is nothing but a printed circuit board which can be seen from the manual and photographs. According to Note 4 to Chapter 85, the ld. Counsel submitted that this would fall under Heading 85.34 appropriately as printed circuits; that if it is assumed that CPU Board is a printed circuit then it should be classified under Heading 85.34 as printed circuits and it will have to be read with 98.06 as indicated above. He therefore, prayed that in view of the submissions made and the legal position as explained above, the appeal may be allowed.

4. Mrs. R. Pant, ld. SDR appearing for the respondent Commr. submitted that what was imported by the appellants was a CPU Board; that the appellants produced the service manual and the service manual described the function of the CPU Board. She submitted that on analysing the functions given by the appellants, it is clear that the imported product is nothing but a data processing unit. She submitted that the appellants have claimed classification of the product under sub-heading 9027.90 read with 98.06. She submitted that since this claim was made by the appellants it was necessary for the adjudicating authority as well as for the Lower Appellate Authority to examine the classification of the imported goods as claimed by the appellants. She submitted that that is why a reference has been made to Chapter [Note] 2(a), 2(b) and 2(c) of Chapter 90. She submits that these chapter notes lay down the guidelines for classification of parts and that the lower authorities have rightly interpreted these chapter notes. She submitted that the function of spectrophotometer is not the analysis of data. It is a measuring instrument whereas CPU Board as indicated by the appellants themselves is a single processing unit; that it receives data, processes it and sends signals on the display board, therefore, the ld. SDR submitted that it was nothing but a part of automatic data processing machine. She submitted that since it was not imported with the machine and since it was goods classifiable under Chapter 84 of the CETA, therefore, the lower authorities have rightly held that the imported product should be assessed to duty under Chapter Heading 8473.30 for purpose of Customs Duty and under Chapter sub-heading 8473.00 for purpose of CVD. She reiterated the findings of the lower authorities and submitted that in view of the above submissions, the appeal may be rejected.

5. Heard the submissions of both sides. We find that the product imported is the CPU Board. We also observe that according to para 12.1 of service manual of the manufacturers, para 12.1 reading as “All the signal processing is handled on this signal board. The analog input signal from the photomultiplier is connected for emission and dark current, the resultant signal levels are integrated and then converted to digital words which are read by the processor and computed to provide the required output information.” This paragraph clearly shows that CPU Board imported by the appellants is a data processor. Now the question arises whether this data processor is a part of the spectrophotometer or is a part of the goods identifiable elsewhere. For finding out we have to refer to Chapters 84, 90 and 98 of the Tariff. The first is Chapter 90 sub-heading 9027.90 read with 98.06 as claimed by the appellants and second Chapter as Chapter sub-heading 8473.00 read with 87.71 as held by the Revenue Authorities. For purpose of classification under Chapter 90 we have to look at the Notes 2(a), 2(b) and 2(c) of Chapter 90. A lot of emphasis was laid by the appellants that Chapter Note 2(a) reads as : (a) “Parts and accessories which are goods included in any of the headings of this Chapter or of Chapter 84, 85 or 91 (other than Heading No. 84.35, 85.48 or 90.33) are in all cases to be classified in their respective headings”. It was pointed out that this chapter note is joined by the word `or’ claiming that it has to be examined whether the imported product is a part of accessory of spectrophotometer or not. Now for purpose of knowing whether the CPU Board is a part of accessory of spectrophotometer. We have to examine the various entries under Chapter Heading 90.27. We find that none of the sub-heading include Central processing unit and hence 1st part of Chapter Note 2(a) is excluded. We have therefore, to examine the alternative classification given after the word `or’. For this we have to examine as to what the function of spectrophotometer is and whether spectrophotometer is an instrument for measurement. Now we have to examine whether the CPU Board is an integral part of the spectrophotometer. For this purpose, we have to refer to the function of the CPU Board. We find that this CPU Board is for processing the data received from the photomultiplier fitted in the machine. Thus we find that the CPU Board performs a distinct function and once it performs a distinct function we have to find out whether it is a part of the goods classifiable in Chapters 84, 85 or 91. We find that Chapter sub-heading 8473.30 is a distinct entry for parts and accessories of the machines of Chapter Heading 84.71. Automatic data processing machines and units thereof have been classified under Chapter Heading 84.71. Thus we find that there is a specific entry for Central processing unit. We also observe that this unit is fitted along with the input and output unit and since this is a specific unit, therefore, it will merit classification under Chapter 84. We would like to observe that it is not necessary for to go into the question whether the precessing of information through the CPU Board is not the main function of spectrophotometer and that it is only an incidental for obtaining results. We would like to observe that for assessing the parts when imported separately what we are required to examine is whether the parts and accessories are parts and accessories included in any of the headings of the Chapter claimed by the appellants and it so, they will merit classification under that heading and if not, then we have to examine them whether they are parts and accessories which are goods included in any of the headings of Chapter 84, 85 or 91. This clearly indicates that if any product is not mentioned as part under the particular chapter heading then we have to see whether it is goods classifiable under Chapters 84, 85 or 91 then the same will be classifiable under that headings. In the instant case, we find that CPU Board is an item under Chapter 84 and not an item so specifically mentioned under Chapter 90. We therefore, hold that the goods have rightly been classified under Chapter sub-heading 8473.30 for purpose of Customs duty and 8473.00 for purpose of countervailing duty. In the result, the impugned order is upheld and the appeal is rejected.

Equivalent 1997 (93) ELT 564 (Tribunal)