2001(09)LCX0061

IN THE CEGAT, COURT NO. II, NEW DELHI

[LARGER BENCH]

Justice K.K. Usha, President, S/Shri C.N.B. Nair, Member (T) and P.G. Chacko, Member (J)

SYNDICATE EXPORTS LTD.

Versus

COMMISSIONER OF CUSTOMS, CALCUTTA

Final Order No. 495/2001-B, dated 25-9-2001 in Appeal No. C/358/99-B

Cases Quoted

Collector v. Eastman Export — 1998(03)LCX0159 Eq 1998 (103) ELT 0267 (Tribunal) — Relied on............... [Paras 2, 6]

Collector v. Knic Knac Agencies — 1997(09)LCX0142 Eq 1998 (099) ELT 0339 (Tribunal) — Relied on............ [Paras 2, 6]

Advocated By :   S/Shri B.L. Narsimhan and Nand Kishore, Advocates, for the Appellant.

Shri M.P. Singh, JDR, for the Respondent.

[Order per : C.N.B. Nair, Member (T)]. - The appellants are traders in imported goods. They filed Bill of Entry No. 1910 dated 25-3-1998 in Calcutta Customs for the clearance of a consignment declared as 300 sets of “Industrial Steam Iron” Model No. GY1-120D2 alongwith their accessories. The Bill of Entry claimed classification of the imported goods for customs duty under Tariff Chapter Heading 8451.30 read with exemption Notification No. 11/97-Custom dated 1-3-1997. For the purposes of import control, it was claimed that goods were permitted for import under OGL under Import Policy for 1997-2002. The Customs authorities rejected these claims of the appellant, both in regard to classification and clearance under OGL. Order-in-original dated 10-6-1998 passed by the Assistant Collector of Customs assessed the goods to duty under Chapter Heading 8516.40 without the benefit of Notification No. 11/97 and the goods being consumer goods, were held to be not covered under OGL. The consignment was, therefore confiscated with an option to redeem the same on payment of a fine of Rs. 1 lakh. A penalty of Rs. 24,000/- was also imposed on the appellant under Section 112 of the Customs Act, 1962. The appellant took up the matter in appeal before the Commissioner (Appeals); but did not succeed. Therefore, they filed the present appeal before the Eastern Regional Bench of this Tribunal at Calcutta.

2. When the matter was heard by the Eastern Regional Bench, both sides submitted that the issue is covered in their favour by the earlier decisions of Division Benches of this tribunal, the revenue relying on the decision in the case of CCE, Bangalore v. Knic Knac Agencies reported in 1997(09)LCX0142 Eq 1998 (099) ELT 0339 (T) = 1997 (023) RLT 25 and the importer relying on the decision in the case of CCE, Madras v. Eastman Export reported in 1998(03)LCX0159 Eq 1998 (103) ELT 0267 (T) = 1998 (026) RLT 649. It appeared to the Division Bench that both the orders related to classification of steam iron and they were not in consonance. The Division Bench therefore, placed the matter before the President of the CEGAT for considering the constitution of a Larger Bench to hear this appeal. The matter has, thus, come before us in Larger Bench.

3. The substance of the dispute on customs classification is whether the steam iron in question would be “Ironing machines and presses (including, fusing presses)” mentioned under chapter sub-heading 8451.30 or whether they would be “Electric smoothing irons” falling under chapter sub-heading 8516.40. Exemption Notification No. 11/97, dated 1-3-1997 mentions “Steam Press” at No. 95 under list 10 of this notification.

4. None appeared for the appellants when the matter was posted for hearing on 23-7-2001 and 24-9-2001. However, Shri B.L. Narsimhan, ld. Advocate assisted in examining the issues as amicus curiae. Shri Narsimhan placed before us relevant pages from the book Encyclopedia of Textile Finishing by Dr. rer. Nat. Hans-Karl Rouette relevant HSN notes to Headings 8451 and 8516 and other relevant materials for considering the issue. He also explained in great detail difference between “Ironing machine and presses” mentioned under sub-heading 8451 and “electric smoothing iron” mentioned in sub-heading 8516. According to him, “ironing machine and presses” figuring under Heading 8451.30 are used for rational shaping and finishing work in the press room. Those machines leave permanent creases, thus, imparting permanent shape, when garments are pressed by them. As against this, electric smoothing irons remove wrinkles and folds temporarily. Thus, only temporary smoothing of surface of garments is achieved by pressing a garment with electric smoothing iron falling under Chapter Heading 8516.40. In this regard, Shri Narsimhan took us to the undermentioned extract relating to “ironing machine” in the Encyclopedia of Textile Finishing :

“Ironing machines : Ironing machines are used in making-up shops, laundries and dry-cleaning plants for rational shaping and finishing work in the press room. Ironing machines consist of an upper and lower plate. The article to be ironed is shaped between these two plates by means of pressure, heat and moisture (for underwear) or direct steam (for outerwear). It is then heat-set by a) contact drying in the case of underwear and b) drying and cooling extraction in the case of outerwear. The forms of the pressing surfaces (upper and lower plate) are adapted to the various spec, shaping requirements. The ironing covers which are elastic to a greater or lesser extent, must be totally perrmeable to air. Common combinations are as follows :

I. Upper and lower plate insulated; upper and under steam; lower plate with extraction.

II. Upper plate uninsulated (metal), heated; lower plate insulated, with under-steam and extraction.

III. Upper plate uninsulated, heated; lower plate insulated, heated (contact drying). The high-performance pneumatic ironing machine which is activated via a hand switch and foot pedal with controllable pressure has replaced the manual model. In addition : automatic timing and function control of the individual operations by the programmer”.

(Encyclopedia of Textile Finishing Vol. 2 Pg. 1139)

5. Shri Narasimhan pointed out that explanatory note to HSN in regard to Heading 8451 has clarified that the heading included ironing machine and steam presses for pressing garments (including finishing presses). He also referred in particular to the following notes at page 1470 of the explanatory notes to Electric Smoothing Irons under Heading 85 :

“(D) ELECTRIC SMOOTHING IRONS :

This group covers smoothing irons of all kinds, whether for domestic use or for tailors, dressmakers, etc., including cordless irons. These cordless irons consist of an iron incorporating a heating element and a stand which can be connected to the mains. The iron makes contact with the current only when placed in this stand. This group also includes electric steam smoothing irons whether they incorporate a water container or are designed to be connected to a steam pipe”.

6. With regard to the two previous decisions of the Tribunal, the learned Counsel submitted that those decisions could be taken only as relating to the particular varieties of irons covered by those decisions. The decision in the case of CCE, Madras v. East Man Exports reported in 1998(03)LCX0159 Eq 1998 (103) ELT 0267 (T) has given a finding that the iron in question was a machine for industrial use only and was not in the nature of smoothing irons. The Tribunal also noted the finding by the Commissioner (Appeals) that the industrial irons under import were suitable for ironing the rough and hard fabrics, for which ordinary irons were not suitable. The literature on the subject item indicated that the goods were for industrial use only. In the case of CC, Bangalore v. Knic Knac Agencies reported in 1997(09)LCX0142 Eq 1998 (099) ELT 0339 (T) = 1997 (023) RLT 0025 (CEGAT) the Tribunal observed that the goods under import were electric steam iron for all applications. They were equipped with cork handle for ease of use. They were more an iron than an ironing machine or machinery for ironing. Therefore, the Tribunal held that they could not be considered as ironing machine falling under 8451 and should be treated as falling under Heading 8516 as electric smoothing iron.

7. With regard to exemption under Notification No. 11/97, Shri Narsimhan pointed out that the exemption was for “Steam Press” (Sl. No. 95 in List 10) and the entry read as under :

8. With regard to the import control provisions, learned Counsel pointed out that during the relevant period, electric smoothing irons were restricted for import and the policy read as under :

9. The learned DR submitted that from the literature available in the appeal file, it appeared that the item under import is only an ordinary electric steam iron for pressing of clothes. He pointed out that with regard to its application the literature stated that “this iron is suitable for pressing clothes in the garment workshop including steam pressing and dry heat pressing”. The literature contained direction for use under steam pressing as well as dry heat pressing. The learned DR opined that it is clear that the iron was for use in smoothing garments rather than for industrial use as it was not suitable for creating permanent creases or shapes on the garments. The learned DR, therefore, submitted that going by the features and use of the imported steam presses they would be classifiable only as smoothing iron under Heading 8516.40 and not as industrial ironing machine and presses falling under Heading 8451.30. With regard to exemption Notification No. 11/97 claimed by the importers, learned DR submitted that the exemption was applicable “only to machinery or equipment specified in List 10 required for textile industry.’ Learned DR pointed out that if the goods are not the type required for “textile industry” they will not be eligible for the exemption. He also submitted that once the goods are held to be smoothing iron, they would be restricted for import, and since the importer had not produced a special import licence, they were not eligible for importing the goods. Ld. DR further observed that both the lower original and appellate authorities had recorded a specific finding that the goods in question were not for industrial use and were only electric smoothing irons. He submitted that there was nothing on record which called for a reversal of the findings on facts reached by the lower authorities.

10. A perusal of the literature produced by the importer shows that the steam iron in question is suitable for steam pressing and dry heat pressing. It also contains directions for both the types of pressing. The literature does not at all indicate that this iron leaves permanent creases on garments, thus, imparting rational shaping and finishing when they are pressed with it, which is the distinguishing feature of ironing machines according to the Encyclopedia of Textile Finishing by Dr. rer. Nat. Hans-Karl Rouette. These irons only remove wrinkes and provide temporary smoothness to garment surfaces. HSN explanatory notes under ironing machines and steam presses under Heading 8451 make it clear that ironing machines and steam presses for pressing garment, including fusing presses are included under that heading while smoothing irons are excluded. It is also clear from note ‘D’ in respect of electric smoothing irons that this group covers smoothing irons of all kinds whether for domestic use or for tailors or for dress makers etc. It also covers all varieties of such items, cordless electric smoothing iron etc. The goods under import appear to be smoothing iron only because they only impart temporary smoothing of surface, whether used for dry press or steam press. That the literature produced mentions them as suitable for pressing clothes in garment workshops does not take them out of their category as ‘smoothing iron’, because that categorisation is based on the function performed, and not where that function is performed. The literature also calls them as “Industrial”; but from the preceding discussions it is clear that they are not for use in garment industry. The two previous decisions of this Tribunal are that if the iron is suitable for industrial use it would be classifiable under Heading 8451 and would be eligible for the exemption and if it is not such pressing machinery for treating textiles, but only for smoothing of clothes, irrespective of their place of use, they will be classifiable under Tariff Heading 85 and would not be eligible for the exemption.

11. We observe that in the present case there is a concurrent finding by the lower authorities upon examination of the goods that they are not machinery used in textile industry but were smoothing irons usable as a domestic article or otherwise. It is clear from the Encyclopedia of Textile Finishing that only presses which will impart lasting shape (by leaving permanent creases etc.) would constitute textile finishing machinery and not irons which temporarily remove wrinkles, folds etc. and smooth them. The criterion accepted in the two previous decisions of the Tribunal is that presses for industrial use would fall under Chapter Heading 84, while smoothing irons would fall under Chapter Heading 85. This categorisation is also in conformity with HSN explanatory notes, particularly note ‘D’ under Heading 85 for electric smoothing irons. It is clear from this note that electric smoothing irons come in different types. The irons under import are only electric steam smoothing irons.

12. In the above facts and circumstances, we are of the opinion that the goods in question were correctly classified under Heading 84 by the lower authorities.

13. With regard to the claim for exemption, it is clear that the exemption provided under Heading No. 150 was for ‘machinery or equipment required for textile industry’. We have already upheld the finding that irons in question cannot be called as industrial machinery or equipment required by textile machinery. It follows that the importers were not eligible for the exemption. The lower authorities were therefore, right in denying the exemption to the goods. From the relevant extracts of the import policy for 1997-2002 it is clear that smoothing irons required Special Import Licence (SIL). The appellant did not produce any SIL; instead they claimed import under OGL. The claim was clearly contrary to the relevant entry in the import policy. The lower authorities, therefore, could not be faulted for taking action against the import as being in violation of import restrictions.

14. In view of what has been stated above, we hold that there is no merit in the present appeal. The appeal is, accordingly, rejected.

Equivalent 2001 (134) ELT 47 (Tri. - Del.)

Equivalent 2001 (047) RLT 0155