2001(06)LCX0172

IN THE CEGAT, EASTERN BENCH, KOLKATA

Shri Lajja Ram, Member (T) and Smt. Archana Wadhwa, Member (J)

ASSOCIATED CEMENT COMPANIES LTD.

Versus

COMMR. OF CUSTOMS, KOLKATA

Order No. A-412/CAL/2001, dated 21-6-2001 in Appeal No. C/R-400/99

Advocated By :   Shri S.K. Bagaria, Advocate, for the Appellant.

Shri V.K. Chaturvedi, SDR, for the Respondent.

[Order per : Lajja Ram, Member (T)]. - In this appeal filed by M/s. Associated Cement Companies Ltd. (ACC), the matter relates to the classification of the machine referred to as DLN Coater - R-100 (a new line of coating equipment for the deposition of thin films on a wide variety of substrates). According to the ACC, in the process adopted by the coater, a polymer precursor (organic liquid) is electrically heated and gas evaporated to create a plasma (ionised form of vapour), and this plasma is deposited on the substrate in the form of coating which hardens the material, imparts optical and electrical properties to the material and makes it wear and tear resistant. They had sought its classification under sub-heading No. 8419.89 of the Customs Tariff. The Commissioner of Customs (Appeals) had confirmed its classification under sub-heading No. 8479.89 of the said Customs Tariff.

2. The matter was heard on 26-4-2001 at Kolkata when Shri S.K. Bagaria, Advocate, referred to the product literature at page 26 of the paper book. The product has been described in that literature as a coating equipment for the deposition of thin films on a wide variety of substrates. It was his submission that the machinery imported was covered by sub-heading No. 8419.89 of the Customs Tariff, and referred to Chapter Note 2(e) of Chapter 84 of the Tariff. Heading No. 84.79 of the Customs Tariff was a residuary heading. The learned Advocate pleaded that it was not a coating machine.

In reply, Shri V.K. Chaturvedi, SDR, submitted that the machine imported was a coating machine for deposition of thin film on the targeted material by an exclusive process of heating and evaporating the precursor. Basically the main function of this machine was to coat wide variety of materials to give them longer life and protect them from wear and tear. He referred to the HSN Explanatory Notes and submitted that it was a misc. machinery and was correctly classifiable under sub-heading No. 8479.89 of the Customs Tariff.

3. We have carefully considered the matter. According to the product literature at page 26 of the paper book, the title of the machine was as under -

“Art R-100 Deposition System for Diamond-Like Nanocomposite (DYLYN) Coatings”.

It was referred to as “Coating Equipment for the Deposition of Thin Films of a wide variety of substrates”. It was mentioned in the product literature that “DLN R-100 is capable of DC/RF plasma deposition, magnetron sputtering, thermal evaporation PVD and combinations of these processes, to deposit a variety of coatings for technological applications”.

4. In their letter dated 11th September, 1997, the ACC explained that the machine was designed to deposit polymer precursor (organic liquid) on materials (substrates) to be treated by an exclusive process of heating and vapourising the precursor. It consisted essentially of a vacuum chamber containing a plasmatron source and a magnetron gun. The polymer precursor is electrically heated in this chamber and gets evaporated to create plasma (ionised form of vapours of the precursor) with the help of DC or RF voltage. A suitable bias (electrical charge) was applied to substrate to get plasma deposited on the targeted material. This plasma formed chemical bond with targeted material.

It is seen from the product description that it was for heating and vapourising the precursors and not for heating the materials on which the plasma was to be deposited. The main purpose of the machine was to electrically heat the polymer precursor in the vacuum chamber and to obtain ionised form of vapours of the precursor for coating the targeted material. After the targeted material was so coated by the deposition of the Plasma on its substrate, the materials become resistant to wear and tear resulting in longer life. As a result of this process, the optical and electrical properties desired in aerospace applications were imparted. There submissions are extracted below -

“It appears, the function and applications of the subject machine have not been properly appreciated. It may please be noted that the DLN-Coater is not a conventional coating machine, but a high technology equipment designed to deposit polymer precursor (organic liquid) on materials (substrates) to be treated by an exclusive process of heating and vapourising the precursor. It consists essentially of a vacuum chamber containing a plasmatron source and a magnetron gun. The polymer precursor is electrically heated in this chamber and gets evaporated to create plasma (ionised form of vapours of the precursor) with the help of DC or RF voltage. A suitable bias (electrical charge) is applied to substrate to get plasma deposited on it. This plasma forms chemical bond with substrate. In the whole system the precursor is converted into nano composite (particles of atomic level) which imparts special properties to the material treated. Thus the system not only creates a coating on the material being treated by deposition of plasma, but also hardens the material and form a chemical bond with the precursor at atomic level. With this special treatment, the material becomes resistant to wear and tear resulting in longer life and also imparts optical and electrical properties desired in aerospace applications.”

5. From the above description, it is seen that the argument that with such processes the targeted material was treated through heating and vapourising is not correct.

6. Heading No. 84.19 covers “Machinery, plant or laboratory equipment, whether or not electrically heated, for the treatment of materials by a process involving a change of temperature. Heading No. 84.19 is extracted below -

In the present case, the coater imported was a coating equipment for the deposition of thin film the on the materials. The targeted materials, as such, were not subjected to any treatment by this machine. The material coated was not subjected by the coater to any process involving a change of temperature. The change of temperature was not in the material coated but in the coater itself to make the precursors fit for deposition on the targeted material. The heating of the targeted material could be just to facilitate the coating of the film thereon. The precursors were processed in the coater and any change of temperature in the coater was not material for classification of the goods under Heading No. 84.19 of the Tariff. We, therefore, consider that sub-heading 8419.90 did not cover the coater machine under consideration.

7. In Note 2(e) under Chapter 84, it is mentioned that a machine or appliance which answers to a description in one or more of the Heading Nos. 84.01 to 84.24, and at the same time to a description in one or other of the Headings Nos. 84.25 to 84.80, is to be classified under the appropriate heading of the former group, and not the latter. It was further stated that Heading No. 84.19 did not cover, among others, the machinery or plant designed for mechanical operation in which change of temperature, even if necessary, is subsidiary.

This Chapter Note is to clarify the classification of machines and appliances which could answer to a description in one or more of the headings, on the one hand under Heading Nos. 84.01 to 84.24, and at the same time may answer to a description in one or more of the headings in the group of Headings Nos. 84.25 to 84.80. There could be machines for more than one application and there may be a situation when a machine could be classified under more than one heading. It was to clarify such a situation that this Note was relevant. The Chapter Note 2(e) will not help the classification of the machine under Chapter Heading No. 84.19 in the light of the coverage under that heading.

8. Heading No. 84.79 is a residuary entry under Chapter 84 of the Tariff. It covers “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter”. This heading, among others, covers general purpose machines. From the Harmonised Commodity Description and Coding System (HSN) Explanatory Notes, it is seen that such misc. machinery as machines for coating welding electrodes, machines for coating photosensitive emulsions on to a backing, machinery for cask tarring or coating etc. were covered by Heading No. 84.79. On the other hand, according to the HSN, Heading No. 84.19 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)”. It is added that this heading 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”.

From the description of the machine in question and the scheme of the Tariff, it is clear that for its classification, the appropriate Heading was Heading No. 84.79 sub-heading No. 8479.89 as decided by the Commissioner of Customs (Appeals).

9. The appellants have referred to the certificates given by the experts. We have gone through them and we find that while the product description has been correctly given by them, the scheme of the Tariff has not been applied correctly. We, therefore, do not consider that these certificates by the experts in any way help the appellants.

10. In the light of the above discussion, we do not find any infirmity in the view taken by the Commissioner of Customs (Appeals). We confirm the classification of the subject machines under sub-heading No. 8479.89 of the Customs Tariff. Accordingly, the appeal is rejected. Ordered accordingly.

Equivalent 2001 (138) ELT 0936 (Tri. - Kolkata)