1999(03)LCX0152

IN THE CEGAT, COURT NO. II, NEW DELHI

Shri S.K. Bhatnagar, Vice President and Ms. Jyoti Balasundaram,  Member (J)

Third Member on Reference : Shri C.N.B. Nair, Member (T)

A.N. INSTRUMENTS PVT. LTD.

Versus

COLLECTOR OF CUSTOMS, CALCUTTA

Misc. Order No. 70/98 B2 and Final Order No. 64/99-B2, dated 30-3-1999 in Appeal No. C/Misc. 257/97-B2 in Appeal No. C/2166/91-B

Cases Quoted

Kirloskar Pneumatic Company v. Collector — 1996(12)LCX0087 Eq 1997 (090) ELT 0428 (Tribunal) — Relied on         [Paras 2, 3]

Gorden Woodroffe & Co. v. Collector — 1986(08)LCX0023 Eq 1987 (027) ELT 0099 (Tribunal) — Relied on                       [Paras 2, 3]

Krishan Flour Mills v. Collector — 1987(04)LCX0003 Eq 1989 (041) ELT 0576 (Tribunal) — Relied on                              [Paras 2, 3]

Wardhman Spinning Mills v. Collector — 1990(11)LCX0030 Eq 1991 (053) ELT 0079 (Tribunal) — Relied on                  [Paras 2, 3]

Advocated By : Shri D.N. M           ehta, Advocate, for the Appellant.

Shri R. Pant, DR, for the Respondent.

[Order per : Jyoti Balasundaram, Member (J)]. - The appellants herein imported a consignment of “Hair Spring Stainless steel spring wire round with collet” and claimed classification under sub-heading 9026.90 of the Customs Tariff Act, 1975 read with Notification 172/89 Cus., as specially designed parts of Pressure Gauge. The Assistant Collector classified the goods under sub-heading 7320.90 holding that all types of springs, except for springs for clocks and watches [which alone are excluded from Chapter 73 by virtue of Note 2(b) to Section XV] fall under Chapter 73. He further held that the identity of the goods as spring was not changed merely because they were fitted with collet for the reason that function of the collet was only to retain the position of the pointer in the pressure gauge, relying upon the HSN Explanatory notes to Section XV according to which, springs classifiable under sub-heading 73.20/21 may be fitted with U-bolts or other fittings for assembly or attachment. The lower Appellate authority has confirmed the order of the Assistant Collector; hence this appeal.

2. We have heard Shri D.N. Mehta, learned Advocate and Smt. R. Pant, learned SDR. What is emphasised before us is that the imported goods are specially designed as specific parts of pressure gauges and that they are not just springs but composite items viz. springs with collet. We find that, as rightly pointed out by the learned SDR, the issue in dispute is covered against the importers by the order of the Tribunal in the case of Kirloskor Pneumatic Company v. Collector of Customs, Bombay reported in [1996(12)LCX0087 Eq 1997 (090) ELT 0428 (Tribunal) = 1997 (070) ECR 348] in which springs specially designed as specific parts of air conditioner and refrigeration compressors were classified under sub-heading 7320.90 of the Customs Tariff Act, 1975 relying upon its earlier decision in the case of Gordon Woodroffe & Co v. Collector of Customs reported in [1987 (027) ELT 99], Krishan Flour Mills v. Collector of Customs [1989 (041) ELT 576], Wardhman Spinning Mills [1991 (053) ELT 79] and relying upon the HSN Explanatory Notes under Heading 73.20.

3. The learned Counsel Shri Mehta seeks to distinguish the Tribunal order in the case of Kirloskor Pneumatic Company (supra) by submitting that this decision (as well as the earlier decisions relied upon therein) deals with springs of general use which are covered by Note 2(b) to Section XV of the Customs Tariff Act, 1975 whereas the Hair springs imported in the present case are integral parts of pressure gauges and cannot be equated with springs of general use. However, we find that the orders of the Tribunal referred to (supra) covered springs which were identifiable parts of machinery - in the case of Gordon Woodroffe, the imported springs were specially designed for milling machinery; iron spring rollers were found to be identifiable parts of flour mills in the case of Krishna Flour Mills, while the springs imported by Vardhaman Spinning Mills were specially designed to be fitted in textile machinery viz. (Metteler Hank to Chese and Cone Winder) while Kirloskar Pneumatic Company had imported springs specially designed for air conditioning and refrigeration compressors. Therefore, no distinction exists on this score between the earlier cases and the present appeal.

4. The second distinguishing feature, according to the appellants, is that the goods are equipped with collets which takes them out from the category of general purpose springs which are fitted with U bolts - however, this difference does not result in any real distinction because collets as defined in the Chambers Dictionary of Science and Technology as used for the purpose of gripping of material just like U bolts are used for fixing or attaching or fastening. Since springs are goods included in sub-heading 73.20 which covers `springs and leaves of springs of iron or steel’, they continue to be classified thereunder; according to Note 2(b) to Section XV; which defines `parts of general use’ as :

(a) ......

(b) springs and leaves for springs, of base metal other than clock or watch springs (Heading 91.14);

(c) ......

5. For the above reasons, we note that the goods in dispute fall for classification under sub-heading 7320.90 (they are other than leaf springs covered under sub-heading 7320.10 and other than Helical springs covered by sub-heading 7320.20). We therefore, uphold the impugned order and reject the appeal.

 [Order per : S.K. Bhatnagar, Vice President]. - With due respects to Hon’ble Member Judicial, my views and orders are as follows :-

7. I observe that the basic issue involved is whether the imported article is in the nature of a spring covered by Section Note 2 of Section XV relating to `Parts of general use’ and in view of clause (b) of this Section Note was covered by Heading 73.20 or the imported item was a component part of `pressure gauge’ classifiable under Heading 90.26 which includes ‘Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases’ and was classifiable as such under sub-heading 9026.90 which covers `Parts and accessories of the instruments and apparatus falling under this heading.’

8. In the Bill of Entry the description of the item has been given as “Hair spring; Stainless steel spring wire round with collet; (special designed parts of pressure gauge); (other than hairspring for watch)”.

9. In the invoice the goods have been described as “component parts for pressure and vacuum gauges stainless steel hairspring with collet.”

10. The technical literature filed by the importer includes description of “hairsprings taut bands and current carrying bands for the measurement sciences” and describes `precision groups’ covering instruments and fastening of springs. Further under the heading “Manufacturing Programme” hair springs and other types of springs used in various industries and for various purposes have been indicated and it is also mentioned that ‘for the clock and watch industry, the collets have been standardized according to DIN-standard 8255. These collets can also be used in measuring instruments’. Under the heading “Bourdon operated vacuum/compound/pressure gauges Design and operation the details of components include, inter alia, Bourdon and `Movement assembly.’

11. The appellants have claimed, inter alia, that “the article is hair spring assembly (hairspring with collet) and it is fitted as such to the gauge movement as a component. Needless to say, the attainable reading accuracy of the applied pressure depends to a large extent upon the precision of the hairspring assembly. It must, therefore, be treated as an identifiable component of the pressure gauge being excluded from the general heading of springs.” The Assistant Collector had, however, not accepted the contention mentioning, inter alia, that on physical examination the goods which were found to be `hairspring with collet’ cannot be classified under Heading 9026.90 and the importer’s contention cannot be accepted in view of the fact that all types of springs other than for clock and watch are covered under Heading 73.20. He has also mentioned in this connection that “the goods were identifiable as spring, although a small collet is assembled in the middle of the spring, it does not change its identity as spring”. He has also referred to its function and the HSN in support of his view. The Collector (Appeals) has also taken note of the Section Note 2(b) of Section XV in CTA 1975 and CCN (page 1032) as also Rule 3(a) of the Interpretative Rules. The learned D.R. has reiterated the Department’s view drawing attention to the above findings.

12. The learned Advocate has emphasised that it is not an article in the nature of `parts of general use’ covered by Section Note 2 of Section XV, but an essential component of the measuring instrument specially designed for use as such and, therefore, covered by Heading 9026.90. He has also mentioned that the reference to HSN and the Interpretative Rules is misplaced and drawn attention to the invoice and the technical literature of the importer and technical write-up by the Development Manager.

13. I consider that learned Advocate’s arguments have a lot of force. We have already noted the relevant provisions and the relevant positions of the technical literature of the manufacturer/supplier. Section 2(b) of Section XV undoubtedly includes “springs and leaves of all types, irrespective of their use, other than clock or watch springs of heading 91.14" and Heading 73.20 covers `springs and leaves for springs, of iron or steel’, and at the same time Chapter 90 excludes parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV) or similar goods of plastics; but Chapter Note 2(b) of this Chapter reads as follows :-

“2(b) Other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of Heading Nos. 90.10, 90.13 or 90.31) are to be classified with the machines, instruments or apparatus of that kind.”

What is even more important is that HSN relied upon by the Department does not support the case of the Department, inasmuch as its Heading 73.20 has an exclusion clause. The sub-clause (c) of this clause reads as follows :-

“(c) Springs assembled with other articles to form, for example, automatic door closers (Heading 83.02), identifiable parts of machinery (Section XVI) of the apparatus and instruments of Chapters 90,91, etc.”

14. In my opinion, the departmental officers have missed the fact that the Customs case is hit by this exclusion clause directly and once it gets excluded from Heading 73.20 of HSN (and correspondingly of the Customs Tariff which is patterned on this heading), the case gets covered by Chapter Note 2 of Chapter 90, because factually it is a spring assembly designed as com- ponent part of a measuring instrument and this fact by itself is otherwise not in dispute. It is further supported by the Explanatory Note to the Heading 90.26 of HSN which under the heading `Parts and Accessories’ reads as follows :-

“Subject to the provisions of Notes 1 and 2 to this Chapter (see the General Explanatory Notes), separately presented parts and accessories of apparatus or appliances of this heading remain classified here. Examples include separate graphical recording devices (including those in which the indications supplied by several measuring or checking instruments are recorded), whether or not fitted with devices for signalling pre-selection or control.”

15. In view of this position, the case law cited by the Department does not advance its case; and it is noteworthy that each case is required to be dealt with on its own merits to see whether it is hit by any of the exclusion clauses or not. In the present case, as we have already noted above, the springs assembled with other articles which constitute identifiable parts of the apparatus and instruments of Chapter 90, etc. are excluded from the purview of Heading 73.20 and in so far as the present case is concerned, it is covered by Heading 9026.90. In view of this, the impugned orders are required to be set aside and the appeal is required to be accepted.

Sd/-

(S.K. Bhatnagar)

Vice President

In view of the difference of opinion between Hon’ble Judicial Member and the Vice President, the matter is submitted to the Hon’ble President for reference to third Member on the following points:-

1. Whether in view of the observations and orders of the Hon’ble Judicial Member, the impugned order is required to be upheld and the appeal is required to be rejected?

Or

2. Whether in view of the observations and findings of the Vice President, the impugned order is required to be set aside and the appeal is required to be accepted?

[Order per : C.N.B. Nair, Member (T)]. - 16. I have perused the records of the case and the differing orders with great care. I have also considered the submissions made by learned Counsel, Shri D.N. Mehta during hearing on 15-1-1999 and his written note dated 12th January, 1999. I have also examined the samples of the “Hair springs” and the submissions of the learned D.R., Shri K. Panchatcharan.

17. The goods are “hair spring, Stainless steel springs wire round, groove and staked collet, steel” according to the invoice. One view taken (by the lower authorities also) is that this item is classifiable under Chapter Heading 73.20 as springs. This view is based on Section Note 2(b) to Section XV which states that “springs and leaves of spring of base metal other than clock or watch springs” are included in the sub-heading 7320.00. It also holds that the presence of collet does not result in a real distinction, inasmuch as the fixing of collet has not changed the identity of the springs. The collet is a minor device assembled in the middle of the spring for retaining the correct position of the pointer and that CCCN clarifies that springs falling under Heading 7320.00 may be equipped with U-Bolts or other fittings for assembling or attachment.

18. The contrary view is that the goods are classifiable under sub-heading 9026.90 as parts of instruments and apparatus for measuring or taking the flow level, pressure or other variables of liquids or gas as covered by Chapter sub-heading 9026.90. This view is based on the exclusion clause in 2(b) of Cha- pter Notes of Chapter 90 and HSN Note at page 1032 which reads as under :-

“The heading excludes :

(c) Springs assembled with other articles to form, for example, automatic door closers (Heading 83.20), identifiable parts of machinery (Section XVI) or of the apparatus and instruments of Chapters 90, 91 etc."

The latter view holds that the goods in question are assembly for pressure gauge, as the springs contain collet and the appellants’ claim is that the article is hairspring assembly and it is fitted to the gauge movement as a component.

19. I find that the reason for treating the goods as spring assembly is that the spring is fitted with a collet. A collet is only an attachment for fixing the spring in position. It does not attach two or more components to one another. An item would be an assembly only if two or more components are assembled together. That is not the case here as only one item, namely, spring is involved. The attachment of a device to a part so as to help in the proper fixing of that part in the instrument does not convert the part into an assembly or sub-assembly. The spring remains a single part even with the attachment of the collet. The invoice also does not describe the goods as assembly or sub-assembly. It only calls it stainless steel spring wire round with collet and not an assembly of two or more parts of the gauge. The attachment of such devices to the spring does not alter its classification is also made clear by HSN when it states that: “Springs may be equipped with U-bolts (e.g. for leaf-springs) or other fittings for assembly or attachment.” The collet is only “other fittings” for assembly or attachment of the spring in the gauge instrument. Therefore, the appellants’ claim that the presence of the collet makes it a “hairspring assembly” is not correct.

20. Note 2 of Section XV clarifies that “Throughout this Schedule, the expression ”parts of general use" means :

(a) ............................

(b) Springs and leaves for springs, of base metal, other than clock or watch springs (Heading No. 91.14)

(c) ............................

Thus, it is clear from this Note that the only springs which can be treated as “part” of instruments and apparatus are springs used in clock or watch and all other springs will go as parts of general use. And the appropriate classification for springs of general use is 73.20. Exclusion clause 2(b) to Chapter 90 and HSN clause (c) under Heading 73.20 do not make a difference in view of the aforesaid clear provisions in Note 2(b) to the effect that all springs other than clock and watch springs are parts of general use for the entire Central Excise Schedule and that equipping the springs with U-Bolts or other fittings for assembly or attachment does not make a difference to their classification.

21. In view of these discussions, I am of the view that the impugned order is required to be upheld and the appeal is required to be rejected.

In view of the majority opinion, the impugned order is upheld and the appeal is rejected.

______

Equivalent 1999 (110) ELT 823 (Tribunal)