Collector of Customs, Madras vs Automotive Axles Ltd.>1997(11)LCX0199

1997(11)LCX0199

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri G.R. Sharma, Member (T) and S.S. Kang, Member (J)

COLLECTOR OF CUSTOMS, MADRAS

Versus

AUTOMOTIVE AXLES LIMITED

Final Order No. C/2401/97-B2, dated 18-11-1997 in Appeal No. C/1234/92-B2

Cases Quoted

Bhadrachalam Paper Boards Ltd. v. Collector — 1992(05)LCX0067 Eq 1993 (064) ELT 0137 (Tribunal) — Relied on [Paras 7, 11, 12]

Gujarat Steel Tubes Industries v. Collector — 1994(02)LCX0090 Eq 1994 (071) ELT 0756 (Tribunal) — Relied on [Para 8]

Advocated By : Shri A.K. Agarwal, SDR, for the Appellant.

Shri K.K. Anand, Advocate, for the Respondents.

[Order per : G.R. Sharma, Member (T)]. - The Collector (Appeals) in the impugned order held that “Tungsten Carbide Drills” are correctly classifiable as tools under Chapter 82 and not under Heading 98.06 as parts of machinery even though these are used in drilling machines. It was further held by the Collector (Appeals) that the goods classifiable under Heading 98.06 do not attract 60% + 45% + 25% CVD as indicated by the lower authorities and the above duty structure is not at all applicable to goods falling under Heading 98.06. Hence the lower authority’s order is not sustainable and therefore the Collector (Appeals) set aside the lower authority’s order and allowed the appeal of the respondents.

2. The facts of the case in brief are that the respondent imported bevel gear cutting tools (blades) and their parts thereof were assessed to duty under Heading 98.06 as parts of machines tools carrying the rate of duty as 60% + 45% + 25% CVD. Originally the goods were assessed under Heading 8207.90 carrying the rate of duty as 60% + 45% + 20% CVD. The respondents before us in their Memo of Appeal before the Collector (Appeals) claimed that the subject goods are basically tools principally used with gear cutting machine; that since they were tools, they were correctly classifiable under Chapter sub-heading 8207.90 as originally assessed and not as parts of machine under Heading 98.06. It was further contended by the respondents that the goods classifiable under Heading 98.06 attract either 100% + 45% + 15% by virtue of Notification No. 68/87-Cus. or 45% + 45% + Nil CVD by virtue of Notification No. 69/87-Cus. and there was no such rate of duty 60% + 45% + 25% CVD. After careful consideration of the submissions made by the respondents, the Collector (Appeals) allowed the appeal of the respondents before us.

3. Shri A.K. Agarwal, learned SDR appearing for the Revenue submits that Chapter Note 1 to Chapter 98 reads as follows :-

“This Chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein, even though they may be covered by a more than specific heading elsewhere in this Schedule.”

4. The learned SDR submits that in terms of this Chapter Note 1 to Chapter 98 of Customs Tariff, parts of machinery, equipments, appliances, instruments and articles of Chapter 84, 85, 86, 89 and 90, even though covered by a more specific heading elsewhere in the schedule would fall under Heading 98.06. He also refers to Note 7(d) to Chapter 98 which reads as follows :-

“Any other part of machinery which the Central Government may, having regard to its nature of being a part having general application, notify in the Official Gazette in this behalf.”

5. The learned SDR submits that in terms of above clause, Customs Notification 257/88 was issued on 21-9-1988, which excludes the articles specified in Chapter 82 for classifying them under Heading 98.06; that this notification comes into effect from 21-9-1988; that this notification does not have any retrospective effect and therefore will not cover the import of the goods in the case before us. The learned SDR submits that the imported items are bevel gear cutting tools which were imported on 8-9-1988, therefore, will not subject to conditions of Notification No. 257/88, dated 21-9-1988. He submits that the Note 1 to Chapter 98 shall have over-riding effect as the goods are specifically covered by Heading 98.06, this heading would prevail over the classification of the goods on merits. He submits that the correct rate of duty applicable at the relevant period for these type of tools under Heading 98.06 is 100% + 45% + 15% read with Notification No. 68/87-Cus. as against the original authority’s order of confirming duty at the rate of 60% + 45% + 25% CVD. He, therefore, prays that the appeal may be allowed.

6. The ld. SDR also cited and relied upon the decision of this Tribunal in the case of Premier Mills Stores in which the Tribunal had held that in terms of Note 1 of Chapter 98, twist drills even though specifically covered by Heading 82.07, would be classifiable under Heading 98.06 if they can be deemed as parts of any of the machinery, equipments, appliances, instruments and articles of Chapter 84, 86, 89 and 90. It was also held that even though a drill or drilling machine for any drilling operation, yet it does not form an integral part or a constutent of the drilling machine, which in itself is a complete item designed simply for holding and rotating the drill at a high speed and that tungsten carbide twist drills would be classifiable under the specific Heading 82.07 and not under the general Heading 98.06 as parts of machines falling under Chapter 84.

7. In the case of Bhadrachalam Paper Boards Limited, this Tribunal had held that “A clear reading of the write-up on chipper knives discloses that the item cannot be considered independently as a complete machinery or as a tool. The knives are essential parts of chipper and are specially made for the purpose of machinery for chipper and it is not an independent tool for general purpose. Note 1 of Chapter 98 states that the Chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein, even though they may be covered by a more specific heading elsewhere in the Schedule of the Tariff. The chipper knives are, therefore, classifiable under Heading 98.06.”

8. In the case of Gujarat Steel Tubes Industries [1994(02)LCX0090 Eq 1994 (071) ELT 0756 (Tribunal)], this Tribunal had held that it is claimed by the appellants and it appears to be established by the technical write-up that these Saw Blades are parts of machinery falling under Heading 84.61. It is also not disputed that by virtue of being parts of machinery falling under Chapter 84, the goods are classified under Heading 98.06. As regards the plea that once the goods are classified under Chapter 84/Chapter 98, they ceased to be goods falling under Chapter 82, such a view would render the provisos to Notification No. 69/87 inoperative. The tools though classifiable under Heading 98.06 do not cease to be `tools’ classifiable under Chapter 82 for the purpose of Notification No. 69/87 though, the result, in this case, is that, by virtue of Serial No. (xi) of the proviso, such tools get excluded from the benefit of the notification. In view of the foregoing and in the light of the various admitted facts, the goods rightly classified under Heading 98.06 but are not eligible for the exemption under Notification No. 69/87-Cus.

9. Shri K.K. Anand, learned Advocate appearing for the respondents submits that the imported goods were bevel gear cutting tools (blades). He submits that the tools are classifiable under Chapter 82; that they were tools and not parts of machinery. The learned Counsel also refers to Note 1(k) to Section XVI. He submits that this Note clearly shows that the tools which are classifiable under Chapter 82 will not be classifiable under Chapter 98. He submits that the lower authorities have rightly contended that the goods are classifiable under Chapter 82. He, therefore, prays that the appeal may be rejected.

10. Heard the submissions of both sides. Perused the evidence on record. We note that the imported goods are bevel gear cutting tools (blades); that the `blades’ are not independently tools but are parts of machinery. We have also noted while analysing various contentions in the above three cases, the Tribunal had held that these items are parts of machinery and therefore they will be covered by Chapter 98 for the purpose of classification.

11. In the instant case the items imported are `blades’ and are not by themselves being used as cutting tools but are essentially required to be fitted in machines to be used as tools. Hence the ratio of the decision of this Tribunal in the case of Bhadrachalam Paper Boards in respect of `chipper knives’ will be applicable to `blades’ in the present case.

12. Following the ratio of the decision of this Tribunal, we hold that bevel gear cutting tools (blades) are classifiable under Chapter Heading 98.06 and will be assessed to duty at the appropriate rate.

13. The appeal is, therefore, allowed in the above terms and the impugned order is set aside.

Equivalent 1998 (98) ELT 736 (Tribunal)

Equivalent 1998 (024) RLT 0356