1997(02)LCX0264

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri G.A. Brahma Deva, Member (J) and J.H. Joglekar, Member (T)

HINDUSTAN KOKOKU WIRES LTD.

Versus

COMMR. OF CUSTOMS, BOMBAY

Final Order No. C/352/97-B2, dated 6-2-1997 in Appeal No. C/340/87-B2

Cases Quoted

Ballarpur Industries Ltd. v. Collector — 1994(12)LCX0070 Eq 1995 (075) ELT 0006 (S.C.) — Distinguished    [Paras 3, 6]

Collector v. Travancore Titanium Products — 1995(02)LCX0114 Eq 1995 (078) ELT 0211 (Tribunal) — Distinguished [Paras 3, 6]

Electrosteel Castings Ltd. v. Collector — 1987(01)LCX0036 Eq 1989 (043) ELT 0305 (Tribunal) — Relied on   [Paras 3, 7]

Grasion Industries Ltd. v. Commissioner — Final Order Nos. C/666 to 670/96-B — Distinguished                                                                [Paras 3, 6]

Tractors & Farm Equipments Ltd. v. Collector — 1986(03)LCX0014 Eq 1986 (025) ELT 0235 (Tribunal) — Relied on [Para 7]

Wipro Products Ltd. v. U.O.I. — 1986(07)LCX0035 Eq 1986 (025) ELT 0485 (Bom.) — Referred                            [Para 8]

State of U.P. v. Kores India (S.C.) — Referred                                                                          [Para 8]

Advocated By : Shri N.R. Kaitan and Ms. Gauri Rasgotra, Advocates, for the Appellants.

 Shri G.D. Sharma, JDR, for the Respondent.

[Order per : J.H. Joglekar, Member (T)]. - The appellants are manufacturer of Auto Tyre Bead wires. One of the machine in their plant is the take up machine which performs certain functions on the wire manufactured in earlier machine after which processed wire is collected on collapsible spools fitted into the take up machines. The appellants imported spares and accessories for the take up machines and sought their assessment under Chapters 84, 85 and 90. The Customs assessed such spares and accessories as per the classification suggested except in the case of collapsible spool for the take up machines. These were classified under Heading 73.33/40(1) in accordance with Note 1(C) of Section XVI of Customs Tariff Act, 1975. The Collector (Appeals) citing the same provisions and on the observation that the spools were not integral parts of the machine upheld the assessment resulting in the persent appeal before us.

2. The case for the appellants was argued by Shri N.R. Khaitan, Advocate assisted by Ms. Gauri Rasgotra, Advocate. The Revenue was represented by Shri G.D. Sharma.

3. Shri Khaitan stated that the collapsible spools were the integral part of the machine without which the machine could not function. He stated that the spool was made to specification. The spool is of special design which does not necessitate its removal along with wire but that after the wire is wound the spool can be collapsed and removed leaving the cheese of wire to be transported on pallets. He referred to the lay out of the machinery to support his submissions that the spools were an integral part of the take up units. In support of his submissions he relied upon the following judgments :

(1) 1994(12)LCX0070 Eq 1995 (075) ELT 0006 (S.C.) - Ballarpur Industries Ltd. v. Collector of Customs, Madras.

(2) 1995(02)LCX0114 Eq 1995 (078) ELT 0211 (Tribunal) - Collector of Customs, Madras v. Travancore Titanium Products.

(3) 1987(01)LCX0036 Eq 1989 (043) ELT 0305 (Tribunal) - Electrosteel Castings Ltd. v. Collector of Central Excise.

(4) Final Order Nos. C/666 to 670/96-B - M/s. Grasion Industries Ltd. v. Commissioner of Customs, Bombay.

Referring to Section Note 2 to Section XVI he stated that being an integral part of the machine it deserved to be classified along with the machine. He stated that in the order placed on the suppliers specification have been enumerated. The invoice also refers to these specifications.

4. Shri Sharma, on the other hand, claimed that spools were not parts of the machinery since the machinery could produce wire even without the spool. The spool could be termed as accessory but not parts. Referring to the copy of the catalogue he argued that the machines could take all sizes of spools and that it was not necessary that the spool should be of specific dimensions alone. He further claimed that if the spools were an integral part, they need not have been ordered or supplied separately. He stated that Note 1(C) referred to in the lower proceedings was correctly relied upon in classifying the spools.

5. We have carefully considered the various submissions made before us by both the sides.

6. The single issue for determination is whether collapsible spools are integral part of the machinery or not. We observe that the various citations made before us are of no assistance in resolving this dispute. In the case of Ballarpur Industries Ltd. the Tribunal had accepted that the contested goods were parts of the machinery. The facts are not akin to those before the Tribunal in the case of M/s. Travancore Titanium Products or M/s. Grasion Industries Ltd., where the Tribunal had gone into the process of manufacture and the fitment of the contested goods in the machines. These two judgments do not provide a readily applicable ratio.

7. The judgment of the Tribunal in the case of Electrosteel Castings Ltd. v. Collector of Central Excise, reported in 1987(01)LCX0036 Eq 1989 (043) ELT 0305 (Tribunal) gives the connotation of Phrase - `Parts of the machine’. The Tribunal had defined part “as a component whose absence will disable a machine or appliance, must be regarded as an essential ingredient or part of that machine”. In the light of this definition the place of the spool in the machinery becomes material. As per description of the machinery in the appeal memorandum, the spool is placed at the last position in the take up units. The wire coming out of the take up units is wound on the spool. In this respect the spool cannot be regarded as a component part but only as an accessory. In its function it is akin to a bobbin or a spool used in the winding of yarn or reels used for winding of papers or textiles. That is why Note 1(C) of Section XVI deals with all such supports as a class and requires them to be classified as per their constituent material. In their judgment in the case of Tractors & Farm Equipments Ltd. And Others v. Collector of Customs, Madras And Others, reported in 1986(03)LCX0014 Eq 1986 (025) ELT 0235 (Tribunal), the Tribunal have stressed the need to read the Section Notes and Chapter Notes which have an overriding force on the respective headings.

8. It is not necessary that every accessories which is essential for performance of a machine is necessarily to be termed as a part. The Bombay High Court when examining the role of diskettes in computers compared the diskettes to cassettes used in tape recorders and held that these could not be called as parts of the machinery or not even accessories [1986 (025) ELT 485]. The same view has been expressed by the Supreme Court in Kores (India) case when dealing with the issue whether Typewriter ribbons were parts of typewriters or not. In that case it was held that even if the typewriter could not perform without ribbon, the ribbon could not become a part of the typewriter.

9. Shri Khaitan sought to distinguish the imported goods from other spools on the ground of its special feature namely collapsibility. We do not find any reason to distinguish these spools from the others only on the simple ground. We find that the specifications given by the importers to the suppliers also used the words “approximately” when giving dimensional specifications of the spool. It is also correct that as per catalogue, the take up machines can take a variety of spool in all sizes. Therefore, it is not possible to accept the arg- uments that the present spools are dispensible parts of the take up machinery.

10. In the result, we find no infirmity in the Collector’s order this appeal is rejected.

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Equivalent 1999 (109) ELT 945 (Tribunal)