Maghalaya Electronic Dev. Corpn. Ltd. vs Collector of Cus., Calcutta>1998(09)LCX0112

1998(09)LCX0112

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri P.C. Jain, Member (T) and S.S. Kang, Member (J)

MAGHALAYA ELECTRONIC DEV. CORPN. LTD.

Versus

COLLR. OF CUS., CALCUTTA

Final Order Nos. 733 & 734/98-B2, dated 15-9-1998 in Appeal Nos. C/1989/91-B2 & C/2091/91-B2

Advocated By : Shri C. Harishankar, Advocate, for the Appellant.

Shri S.N. Ojha, JDR, for the Respondents.

[Order per : P.C. Jain, Member (T)]. - Facts of the case as given in the assessee’s appeal, and not disputed, are as follows :-

1. The assessee, a Government of Meghalaya - MIDC undertaking and an appellant herein, had purchased two High Vacuum High Temperature Sintering Furnaces which were supplied by M/s. Thermal Technology Inc., USA Model No. 428-B, Sl. No. 31-867. These Sintering Furnaces are used by the assessee in the manufacturing process of Tantalum Capacitors for Sintering of Tantalum Power into anodes.

1.2 The Sintering Furnace consists of two main parts (a) the Furnace Heating Control Assembly and (b) the Vacuum Valve Control Assembly. After installation and commissioning of the said Sintering Furnaces, it was found that the Vacuum Valve Control Assembly was functioning well but, the Furance Heating Control Assembly was not functioning at all.

1.3 The main part in the Heating Control Assembly is the digital control Programmer (DCP) - Model - 770311 which has been manufactured by M/s. Honeywell Inc., USA. The main function of the DCP is controlling the temperature inside the Sintering Furnace and consists of the following Electronic Control Printed Circuit Cards.

(a) Key Board.

(b) Microprocessor/Memory Board.

(d) Regulator Printed Circuit Board.

(e) Transformer Assembly.

(f) Reterminal Panel Assembly.

(g) Input/output Printed Circuit Board.

(h) Mother Board.

1.4 After inspection of the said Heating Control Assembly, which was not functioning, the assessee found that the following 4 printed circuit cards out of the above 8 items were immediately required to be replaced in order to put the furnace in operation.

(a) 3073-6237-502 keyboard.

(b) 30750-1127-501 microprocessor/memory board.

(d) 3073-5664-502 regulator printed circuit board.

1.5 The assessee accordingly, placed an order directly to M/s. Honeywell Private Ltd., who actually manufactured the said printed circuit boards.

1.6 On arrival, a B/E was presented for assessment of the four parts. The said goods, i.e. four parts mentioned in para 1.4 above were assessed to duty under Heading 8473.30 at the rate of 200% ad valorem (Basic) + 45% ad valorem (Aux) + 20% (C.V.). The assessee cleared the goods on payment of duty so assessed.

1.7 Later on, the assessee filed a refund claim for Rs. 4,55,252/- claiming assessment of the said parts under Heading 85.14 as parts of industrial furnaces.

1.8 The said refund claim was rejected by the Assistant Collector of Customs, concerned, holding that the parts are of an automatic data processing machine which though is meant for controlling temperature in the furnaces. These have been correctly classified under Heading 84.73. The goods were examined and assessed under second appraisement system. There was not a whisper of protest at the time of assessment.

1.9 In appeal before the Collector of Customs (Appeals), contention of the assessee regarding assessment of key board was rejected on the basis of non-production of any evidence in the shape of supplier’s literature or spare parts catalogue to drive home their pint (sic) that it is part of sintering furnace.

1.10 As regards classification of the other three parts, Collector (Appeals) has held that these are basically printed circuits which are specified under Heading 85.34 of the Tariff. Hence the Collector (Appeals) neither agreed with department’s assesement under Heading 8473.30 nor with the assessee’s contention under 85.14.

1.11 The assessee-appellants in their appeal are aggrieved against the assessment of key-board under 84.73. It has been urged that key-board is a p.c.b.; therefore on Collector (Appeals) own finding, it should have been classified under Heading 85.34 along with the other three P.C.Bs.

1.12 Revenue-appellant in the other appeal is aggrieved against assessment of printed circuits under Heading 85.34 since there are fully assembled/loaded P.C.Bs. These are to assessed as parts of machine to which they belong. Since the parts belong to automatic data processing machine, meant for controlling temperature in sintering furnace, these are to be treated as parts of automotive data processing machine.

2.1 Ld. Advocate Shri C. Harishankar draws attention to Note 2(b) of Section XVI of the C.E.T. which states that parts, if suitable for use solely or principally with a particular kind of machine or with a number of machines under the same heading are to be classified with the machines of that kind.

2.2 Drawing attention to the statement of facts and the invoice available with the Revenue’s appeal as also the catalogue and diagram, he points out that these parts are parts of Digital Control Programmer DCP 7700 for controlling the temperature in the heat control assembly of the sintering furnace. Therefore, all these parts are correctly classifiable under Heading 85.14. In any case, that key board assembly being a P.C.B. should have been assessed like other three P.C.Bs., as stated in memo of appeal of the assessee.

3.1 Ld. JDR, pointing out to the catalogue of Digital Control Programmer produced by the assessee, submits that the various parts imported are PCB assemblies and are parts of Digital Control Programmer (DCP) the name of the machine DCP, suggests that it is a data processing machine for the purpose of controlling certain parameters in an industry. It is a general purpose data processing machine, catalogue nowhere suggests that it is specifically meant for use in conjunction with sintering furnaces alone. Order has been placed by the assessee directly to Honeywell, well-known manufacturers of computer machines or data processing machines. He, therefore, submits that all these parts were originally assessed correctly under Heading 84.73.

3.2 Collector (Appeals) finding that PCBs are specifically covered under Heading 85.34 will be valid only for plain PCBs and not loaded or assembled PCBs. It is amply clear from the HSN Explanatory Notes under Heading 85.34. Therefore, finding of the Collector (Appeals) is patently wrong.

3.3 Reliance placed by the Ld. Advocate for the assessee, on last portion of Note 5 to Chapter 84 is of no assistance to the appellant. Last sub-para of that note states that those machines which are performing a specific function, even though incorporated with, or working in conjunction with a data processing machine, are to be assessed according to their specific function and not as data processing machines under Heading 84.71.

4.1 We have carefully considered the pleas advanced from both sides. Parts list catalogue clearly indicates that all the four items imported are P.C.B. assemblies of DCP 7700, Digital Control Programmer supplied by M/s. Honeywell. Catalogue does not suggest that the DCP is specifically for use with siutering furnaces alone. To treat the imported parts as parts of sintering furnaces will not be correct, though the assessee is using the DCP for controlling the temperature in sintering furnace. Classification is not generally dependent upon the use to which a particular machine is put. Nature and function of the machine is what is relevant for classification of that machine. DCP is clearly an automotive data processing machine which would have fallen under Tariff Heading 84.71, had it been imported. Therefore, parts imported by the assessee, by virtue of Section Note 2(b) of Section XVI being solely for use in DCP 7700, as apparent from parts list catalogue, would be assessable under Tariff Heading 84.73. Assessment originally made by the customs authorities is correct.

4.2 Lower Appellate Authority’s finding that the P.C.Bs. are specifically covered under Tariff Heading 85.34 is not correct because these are loaded or assembled P.C.Bs. Explanatory notes make it clear that Tariff Heading 85.34 is only for plain P.C.Bs.

4.3 In view of the foregoing discussion, impugned order is set aside. Order-in-Original is restored. Revenue’s appeal is allowed. Assessee’s appeal is rejected.

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Equivalent 1999 (106) ELT 246 (Tribunal)