1999(04)LCX0129
IN THE CEGAT, COURT NO. II, NEW DELHI
S/Shri Lajja Ram, Member (T) and A.C.C. Unni, Member (J)
S.M.S. UDYOG LTD.
Versus
COLLECTOR OF CUSTOMS, BOMBAY
Final Order No. 100/99-B2, dated 29-4-1999 in Appeal No. C/773/93-B2
Cases Quoted
Collector v. Wasan & Company — 1995(11)LCX0006 Eq 1996 (085) ELT 0106 (Tribunal) — Distinguished [Paras 3, 15]
Food Specialities Ltd. v. Collector — 1988(06)LCX0059 Eq 1988 (037) ELT 0415 (Tribunal) — Distinguished [Para 15]
Sun Export Corporation v. Collector — 1997(07)LCX0044 Eq 1997 (093) ELT 0641 (S.C.) — Distinugished [Para 15]
Moorco (India) Ltd. v. Collector — 1994(09)LCX0102 Eq 1994 (074) ELT 0005 (S.C.) — Distinugished [Para 15]
British Machinery Supplies Company v. U.O.I. — 1996(08)LCX0024 Eq 1996 (086) ELT 0449 (S.C.)
— Distinugished [Para 15]
Advocated By : Shri Ashok Agarwal, Advocate, for the Appellant.
Shri K. Panchaksharan, JDR, for the Respondents.
[Order per : Lajja Ram, Member (T)]. - In this appeal filed by M/s. S.M.S. Udyog Ltd., being aggrieved with the Order-in-Appeal dated 3-2-1993 passed by the Collector of Customs (Appeals), Bombay, the matter relates to the classification of the imported Air Drier (Molecular Sieve Battery). The importers sought clearance under sub-heading No. 8419.39 of the Customs Tariff and claimed the benefit of Exemption Notification No. 59/87-Cus., dated 1-3-1987. The goods were said to be the component of the Molecular Sieve Adsorption unit for the air separation plant to produce different gases. The Asstt. Collector of Customs, Bombay, who adjudicated the matter, observed that in the Molecular Sieve Battery, no change in temperature takes place and that by virtue of adsorption, molecular sieve battery filtered the air. He classified the said goods under sub-heading No. 8421.39 of the Customs Tariff. On appeal, the Collector of Customs (Appeals), Bombay observed that the gaseous impurities like moisture, carbon dioxide and acetylene are removed by the said molecular sieve battery through the process of filteration and that no process involving change in temperature was involved. He held that the impugned goods were of the nature of filtering apparatus for gas and were correctly classifiable under sub-heading No. 8421.39 of the Customs Tariff.
2. The matter was heard on 6-1-1999 when Shri Ashok Agarwal, Advocate appeared for the appellants. Shri K. Panchaksharan, JDR represented the respondents/Revenue.
3. Shri Ashok Agarwal, ld. Advocate submitted that the molecular sieve battery removes the moisture from the air before its fractionating to produce industrial gases. Air is taken from the atmosphere and at that stage, it contained impurities like solid particles, moisture and other gases which are not required for the purpose of producing industrial gases by the appellants. From such air the solid particles are first removed through the process of air filteration. Thereafter the moisture content had to be removed. This is done through the use of the imported air driers (molecular sieve battery). As the process involves the dehydration of air, the imported molecular sieve battery could be considered as a dryer. He relied upon the Tribunal’s decision in the case of Collector of Customs (Appeals) v. Wasan & Company - 1995(11)LCX0006 Eq 1996 (085) ELT 0106 (Tribunal).
4. In reply, the ld. JDR referred to the detailed discussions in the adjudication order and that in the order-in-appeal and pleaded that the goods imported were not a drier but were designed to filter the air to make it usable for production of specified gases. He submitted that a correct view has been taken in the matter by the adjudicating and the appellate authority and the goods imported had been rightly classified under sub-heading No. 8421.39 of the Customs Tariff.
5. We have carefully considered the matter. The appellants imported molecular sieve battery for their molecular sieve adsorption unit for use in their air separation plant. They sought its classification under sub-heading No. 8419.39 of the Customs Tariff. The goods classifiable under Heading No. 84.19 of the Customs Tariff are described as under :-
84.19 Machinery, plant or laboratory equipment, whether or not electrically heated, for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilising, pasteuring, steaming, drying, evaporating, vaporising, condensing or cooling, other than machienry or plant of a kind used for domestic purposes; instantaneous or storage water heaters, non-electric."
6. The use of the molecular sieve battery (hereinafter referred to as MSB), for the production of Oxygen/Nitrogen gas by the cryogenic process (process operating at a temperature below minus 15oC), had been described as for purification of the atmospheric air from which sand, dust, and other solid particles had already been removed by the process of air filteration. The Model No. INOX 70 P of the air separation plant was for production of liquid oxygen. The Model Nos. INOX 200 and Model No. INOX 400 of the Air separation plant were for the production of oxygen. In their communication dated 28-4-1992 at page 7 of the paper book, it had been explained by the appellants that the atmospheric air, besides sand and dust particles also contains gas phase impurities like moisture, carbon dioxide, acetylene etc. which are required to be separated and which could not be stopped otherwise by the air filter. Such separation is done by passing the process air, free of solids through the MSB which adsorbs molecules of a particular size. The MSB had a filling of adsorption with a pre-layer of silica gel. The silica gel is a regenerative absorbent consisting of amorphous silica. The process air free of solids passes through a bed of molecular seives which had a special property of selectively adsorbing molecules of a particular size. Once the bed of the MSB is loaded with these molecules, the bed is then regenerated by a gas, which does not contain moisture, carbon dioxide and acetylene etc.
7. It is thus seen that the use of the MSB in the hands of the appellants was for separation of molecules on the basis of size. The function of the MSB was to free the air of moisture, carbon dioxide, acetylene etc. The removal of moisture, carbon dioxide acetylene etc. from the air was done by the process of adsorption. Adsorption is the surface retention of solid, liquid or gas molecules etc. as opposed to absorption, the penetration of substance into the bulk of the solid or liquid. Adsorption separation of a chemical mixture (gas or liquid) is effected by passing it over an adsorbent bed which adsorbs different components at different rates.
8. According to the `Condensed Chemical Dictionary’ 9th Edition revised by Gesner G. Hawley (page 586) Molecular Sieves are used in many fields of technology; to dry gases and liquids; for selective molecular separations based on size and polar proprieties; as ion-exchangers; as catalyist; as chemical carriers; in gas chromatography; and in the petroleum industry to remove normal paraffins from distillates. According to the same dictionary adsorption has been defined as under :-
“Adherence of the atoms, ions or molecules of a gas or liquid to the surface of another substance, called the adsorbent (q.v.). The best-known examples are gas/solid and liquid/solid systems. Finely divided or microporous materials presenting a large area of active surface are strong adsorbents, and are used for removing colors, odors, and water vapor (activated carbon, activated alumina, silica gel). The attractive force of adsorption is relatively small, of the order of Van der Waal’s forces (q.v.). When molecules of two or more substances are present, those of one substance may be adsorbed more readily than those of the others. This is called preferential adsorption.”
9. The product description as per the technical specifications by the suppliers is as under :-
“This adsorption unit serves for removal of air moisture, carbon di-oxide and possible traces of acetylene from the compressed process air in an air separation plant. Main equipment of the adsorption unit is the adsorber battery which has a filling of zeosorb adsorbent with a prelayer of silica gel. Reactivation of the adsorbent fillings of the battery can be carried-out with heated nitrogen which is usually available in air separation plants as a waste product. To achieve fast restoration of operating conditions the heated adsorbent filling has to be put to cold-running immediately after heating is stopped. For this purpose nitrogen can be used too. At the intake end of the battery there is a condensate separator. The buyer has to provide an air cooler designed to be fed with chilled water the temperature of which should not exceed 15 degrees centigrade. This ensures, particularly under critical climatic conditions or in case of unfavourable cooling water conditions, that the air intake temperature limit of 20 degr. ctgr. at battery inlet is not exceeded and an optimum efficiency of the adsorbent is maintained. In case of chilled water of 15 degr. ctgr. not being available, the buyer should make suitable arrangements by providing a refrigeration unit. The condensate separator serves for removal of moisture particles which form in the air stream after it passes the cooler. This also reduces the adsorption load on the fillings of the battery. To prevent any carry-over of adsorbent dust to the other systems of the air separation plan a dust filter is installed at the outlet end of the battery.”
10. Heading No. 84.19 of the Customs Tariff already extracted above, describes the goods for classification thereunder as the machinery, plant or laboratory equipment whether or not electrically heated for the treatment of materials by a process involving a change of temperature. By way of illustration of the process involving a change of temperature, the processes had been given as heating, cooking, roasting, distilling, rectifying, sterilizing, pasteurising, steaming, drying, evaporating, vaporating, condensing, or cooling. The dryers had been distributed in three sub-headings as (1) for agricultural products (2) for wood, paper pulp, paper or paper board and (3) other.
In the Harmonised Commodity Description and Coding System (HSN) Explanatory Notes, it has been explained with regard to Heading No. 84.19 that with the specified exceptions, the heading covers machinery and plant designed to submit materials (solid, liquid or gaseous) to a heating or cooling process in order to cause a simple change of temperature, or to cause a transformation of the materials resulting principally from the temperature change (e.g. heating, cooking, roasting, distilling, rectifying, sterilising, pasteurising, steaming, drying, evaporating, vaporising, condensing or cooling processes). The heading however, excludes machinery and plant in which the heating or cooling, even if essential, is merely a secondary function designed to facilitate the main mechanical function of the machine or plant e.g. machines for coating biscuits, etc. with chocolate, and conches, washing machines, machines for spreading and tamping bituminous road-surfacing materials. Explaining the evaporating or drying plant, it has been described that the most common forms of the industrial appliances of this heading are evaporators, laboratory lyophilisation apparatus and freeze drying units, tunnel dryers, rotary dryers, plate dryers and spray dryers. This group also includes machinery or apparatus for the evaporation of fissile solutions or radio active solutions or for drying fissile or radio active products.
11. From the above description and discussion, it is clear that the imported MSB was designed to filter the compressed process air to remove air moisture, carbon dioxide and acetylene through the process of adsorption. From the compressed process air the solid particles had already been removed through the air filter. Once the compressed process air was so filtered through the MSB, it was fractioned into various gases. Filteration includes, among others, separation at the molecular level [refer definition of ‘filteration’ in the Condensed Chemical Dictionary (supra) at page 383]. It was not designed to submit the compressed process air to a heating process to cause any transformation of the said compressed process air resulting principally from the temperature change.
12. Thus, its classification under Heading No. 84.19, sub-heading No. 8419.39 is ruled out.
13. The Collector of Customs (Appeals) had confirmed the classification of the MSB under Heading No. 84.21 and sub-heading No. 8421.39 of the Customs Tariff. Heading No. 84.21 covers centrifuges including centrifugal dryers; filtering or purifying machinery and apparatus for liquids or gases. Filtering or purifying machinery and apparatus for gases (other than intake air filters for internal combustion engines) were classified under sub-heading No. 8421.39. According to the HSN, filtering or purifying machinery and apparatus covers filters and purifiers of all types (physical or mechanical, chemical, magnetic, electro magnetic, electrostatic etc.). The filtering or purifying machinery and apparatus for gases are used to separate solid or liquid particles from gases, either to recover products of value (e.g. coal dust, metallic particles, etc. recovered from furnace flue gases), or to eliminate harmful materials (e.g. dust extraction, removal of tar, etc. from gases or smoke fumes, removal of oil from steam engine vapours). The filtering or purifying machinery etc. for gases include the following :-
(1) Filters and purifiers acting solely by mechanical or physical means; these are of two types. In the first type, as in liquid filters, the separating element consists of a porous surface or mass (felt, cloth, metallic sponge, glass wool, etc.). In the second type, separation is achieved by suddenly reducing the speed of the particles drawn along with the gas, so that they can then be collected by gravity, trapped on an oiled surface, etc. Filters of these types often incorporate fans or water sprays.
Filters of the first type include :
(i) Intake air filters for internal combustion engines. These often combine the two systems described above.
(ii) Bag filters. These consist of a series of bag shaped cloth filtering elements, and often incorporate a shaker mechanism to cause the trapped particles to fall through the bottom of the bags.
(iii) Screen filters. These consist of an endless filtering gauze running on two rollers and stretched across the chamber through which the gases are passed. The screen is cleaned by a scraper mechanism.
(iv) Rotary drum filters, e.g., as used in sand blasting plant. They usually consist of a filter drum into which the air is drawn by suction. The drum revolves against a scraper which frees the drum of the residue.
Filters of the second type include :
(v) Dust extractors, smoke filters, etc., fitted with various types of obstructing elements to reduce the speed of the particles in the gas stream, e.g., baffle plates, partitions perforated with non-corresponding orifices, circular or spiral circuits fitted with baffles, and cones of superimposed baffle rings.
(vi) Cyclones, usually consisting essentially of sheet metal cones enclosed in a cylindrical tank. The gases are fed into the narrower part of the cone by a tangential pipe and the turbulent currents thus set up decrease sharply as the gases approach the broader section of the cone, so that the dust falls to the bottom of the tank
(2) Electrostatic filters for air or other gases in which the essential element is usually a series of vertical wires charged with static electricity. The dust in the air passing through the apparatus is attracted to and retained on the wires from which it is removed periodically.
(3) Gas scrubbers or absorption towers. These are used for purifying producer gas, coal gas, etc.; they consist of tall metal columns containing coke or other fillings, and filted at the top with water sprays.
(4) Other chemical filters and purifiers for air or other gases (including catalytic converters which change carbon monoxide in the exhaust gases of motor vehicles to carbon dioxide).
14. MSB was designed to make the compressed process air, free of moisture, carbon dioxide, acetylene etc., by the process of adsorption, to make the filtered air fit for fractioning into oxygen/Nitrogen gases. MSB thus, could be considered as a filtering/purifying apparatus. We, therefore, consider that its classification under Heading No. 84.21 sub-heading No. 8421.39 of the Customs Tariff was appropriate.
15. In the nature of the goods under consideration, the decisions referred to by the appellants are not applicable to the facts of the case.
In the case of Collector of Customs, Bombay v. Wasan & Company - 1995(11)LCX0006 Eq 1996 (085) ELT 0106 (Tribunal), it had been admitted by both the sides that the primary function of the imported Super/Quick 18, toggling and drying machine with 1500 Automatic toggles was that of drying (refer para 2 of the decision). The togglers were fitted at different ends of the frame with perforated holes for placing the hides and skins in the drying chamber. The togglers were thus, used before the actual drying process and were to ensure that the hides and skins avail of the equal heat and did not fall down.
In the case of Food Specialities Ltd. v. Collector of Customs, Bombay - 1988(06)LCX0059 Eq 1988 (037) ELT 0415 (Tribunal) the goods were double drum roller dryer for use in food and beverage industries. The product was found to be a versatile drying machine which could dry not only food products but also products like glue, paints etc. As the principal purpose of the machine imported was drying, the Tribunal held it to be classifiable under Heading No. 84.39 and not under sub-heading No. 8419.81 as decided by the lower authorities.
The decisions in the cases of Sun Export Corporation v. Collector of Customs, Bombay - 1997(07)LCX0044 Eq 1997 (093) ELT 0641 (S.C.), Moorco (India) Ltd., Madras v. Collector of Customs, Madras - 1994(09)LCX0102 Eq 1994 (074) ELT 0005 (S.C.) = 1994 Supplementry (3) SCC (562) and British Machinery Supplies Company v. Union of India & Ors. - 1996(08)LCX0024 Eq 1996 (086) ELT 0449 (S.C.) = 1996 (9) SCC 663 are also not applicable to the facts and circumstances of the case. In the case of Sun Export Corporation, it had been held that assuming that there are two views possible then the view favourable to the assessee in matters of taxation had to be preferred. The goods imported in that case were premix of vitamin AD-3 Mix (feed grade) and the question for consideration was whether they were Animal Feed Supplements. In the case of Moorco (India) Ltd., it was observed that the specific headings will prevail over general headings even if the general heading comes later in the tariff. In the case of British Machinery Supplies Company, it was held that the onus to substantiate that the imported material fall under specific category is on the Revenue.
We do not consider that these decisions are relevant to the facts before us.
16. Taking all the relevant facts and cirsumstances of the case into consideration, we do not find any merit in this appeal and the same is rejected. Ordered accordingly.
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Equivalent 1999 (111) ELT 752 (Tribunal)
Equivalent 1999 (033) RLT 0580