1997(02)LCX0228

IN THE CEGAT, WEST ZONAL BENCH, MUMBAI

S/Shri K.S. Venkataramani, Member (T) and J.N. Srinivasa Murthy, Member (J)

SAP INDUSTRIES

Versus

COMMISSIONER OF CUSTOMS, MUMBAI

Order Nos. 828-829/97-WZB, dated 18-2-1997 in Appeal Nos. C/528/90-Bom & C/532-R/96-Bom

Advocated By : Dr. N.R. Kantawalla, Advocate, for the Appellant.

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

[Order per : K.S. Venkataramani, Member (T)]. - These two appeals relating to the classification of the imported goods described Tungsten Metal Rods (unwrought tungsten) in one case (Appeal No. 532R/96) and as ‘thoriated tungsten metal’ in the other (Appeal No. 528/90). In the latter case the issue involved is whether the goods can be imported under open general licence under Appendix 6 Part 2 Sl. No. 67 which covers ‘tungsten metal’.

2. As far as the classification of the goods is concerned, the Custom House on examination of a sample found that these are welding rods classifiable under Heading 83.11 of Customs Tariff Act, 1975 which covers, inter alia, rods, electrodes, and similar products, coated or coated with flux material of a kind used for welding or deposition of metal. Show cause notice was issued for classifying the goods under Heading 83.11 against sub-heading 8101.91 claimed by the appellants, which covers unwrought tungsten including bars and rods obtained simply by sintering.

3. On considering the reply to show cause notice the Asst. Commissioner passed an order in assessment accepting appellants claim that classification under Heading 83.11 was inapplicable as the goods imported are not coated with flux material. But the Asst. Commissioner also held that the classification claimed by the appellants under such Heading 8101.91 was also inapplicable as the goods were not tungsten unwrought obtained by simple sintering. The Asst. Commissioner found that the goods were thoriated tungsten electrodes conforming to ISO 6848 pertaining to tungsten electrodes, and, as such, are appropriately classifiable as articles of tungsten under sub-heading 8101.99 CTA. He held the charge of misdeclaration as established and ordered confiscation of the goods for such misdeclaration under Section 111(m) of Customs Act levying a fine in lieu of confiscation Rs. 3,25,000/- on the goods valued at Rs. 6,47,150/-. A penalty of Rs. 1,60,000/- was also imposed on the appellants under Section 112 Customs Act. The Asst. Commissioner’s order was upheld by Commissioner of Customs (Appeals).

4. In the other case the question is only relating to the validity of the import from the Import Trade Control angle. The appellant’s claim for importing the goods under OGL was rejected as it was found by the Commissioner of Customs, Air Cargo Complex, Mumbai that the tungsten rods imported are nothing but tungsten-welding electrodes covered by sub No. 728 of Appendix 3 Part A of Import Policy 1991-93, and, as such, required an import licence. The Commissioner confiscated the goods under Section 111 (d) of Customs Act levying a fine of Rs. 1,65,000/- in lieu of confiscation on the goods valued at Rs. 3,84,041/-. The Commissioner, however, took a lenient view and refrained from imposing any penalty as he found that earlier similar goods had been allowed under OGL.

5. We have heard LD. Counsel Dr. Kantawalla for the appellants and Shri V.K. Puri, ld. SDR. On a consideration of the submissions made, it is seen that the goods on examination were found packed 10 pieces of the rods each carton and upon the carton there is the description “TUNCOWELD Tungsten Rod for Plasma/GTAW Batch”. There is also precautions to be taken during use in welding printed on the carton. “GTAW” stands for Gas Tungsten Arc Welding. The goods imported on being tested even earlier in 1973, and again presently, have been found to be tungsten electrodes with an admixture of thorium/rare earth. The appellant had produced before the Asstt. Commissioner ISO 6848 which is an international standard and pertains to tungsten electrodes according to which tungsten electrodes are current carrying bare tungsten rods with or without oxide additive, serving as anode or cathode for the generation of an electric arc. The additional substances added during the manufacture of the electrodes are thoria etc. According to the Mc. Graw Hill Dictionary of scientific and technical terms, ‘welding electrode’ in arc welding, means the current carrying rod used to strike an arc between rod and work. In the Chambers dictionary of Science and Technology, the meaning of Tungsten inert gas welding has been given as electric welding in which the tungsten electrode is not consumed, and a filler rod supplies the metal to the joint which is protected from reaction by an inert gas. The product literature produced on tungsten electrodes under the heading ‘non-consuming electrode’ says that tungsten electrodes are used for shielding gas welding processes known as ‘tungsten inert gas welding process’. The literature also says that plasma arc torches are provided with tungsten electrodes which will be manufactured to customers’ specifications. From the above discussion it is clear that the goods imported are tungsten electrodes manufactured with suitable percentage of thorium designed for use of such electrodes in arc welding. Since they are not coated with flux material their classification under Heading 83.11 CTA is ruled out since these electrodes are not coated with flux material for welding purposes or for deposition of metal. That brings in the other two competing sub-headings 8101.91 CTA claimed by the appellants and 8101.99 CTA determined by the Asstt. Commissioner. The electrodes are clearly manufactured articles with admixture of thorium/rare earth, designed for use in arc welding. They are thus not the result of a process of simple sintering, and, for the same reason, they cannot fall under the description of tungsten unwrought. The electrodes are manufactured articles of tungsten, and, as such, their classification under sub-heading 8101.99 as ordered by the Asstt. Commissioner is sustainable and is upheld. In fact, it is seen that during the adjudication proceedings the appellants had themselves agreed the goods are not unwrought and that classification of goods under the sub-heading 8101.99 will be appropriate. However, since the issue is one of correct classification, and the original classification under Heading 83.11 proposed in the show cause notice had not been found applicable and to that extent the appellant contention had also been accepted, there is justification for a lower penalty which is accordingly reduced from Rs. 1,60,000/- to Rs. 75,000/-. The Asst. Commissiner’s order as upheld by the Commissioner (Appeals) is modified to this extent of the quantum of penalty. It is otherwise upheld.

6. In the other appeal the appellants main contention is that the welding electrodes covered by Sl. No. 721 of Appendix 3 Part A are the consumable type of electrodes and the goods are not welding rods since according to the appellants if the material is not consumed during welding they cannot be welding rods. As against these arguments, it is seen that according to the definition of welding electrodes in Mc. Graw Hill dictionary (supra) welding electrode in arc welding has been given the meaning of current carrying rod used to stike an arc between rod and work piece. The goods are further packed in cartons clearly indicating their use as welding electrodes in TIG are welding with precautions while using in welding . They also figure in the international standard ISO 6848 for tungsten electrodes and are marketed as such. The goods imported therefore are clearly covered by the description welding electrodes at Sl. No. 721 in Appendix 3 Part A. When the goods fall within its ambit by the plain meaning of the words in the entry, it is not necessary to construe its meaning by comparison with other entries in the appendix, which, it was argued, have separate serial numbers for consumable materials. When it is found that the goods imported are manufactured articles of tungsten with thorium/rare earth additives for use as electrodes in TIG are welding process, they cannot be brought under OGL against serial No. 67, Appendix 6 Part 2 of the Import Policy which covers Tungsten metal, because it has already been found that the goods are marketed as tungsten electrodes, and defined in technical literature as such electrodes. It is also relevant to observe in this context that the price of the goods has been indicated in the invoice on per piece basis, and not on weight basis as is usually the practice in international trade in metal in primary form. Therefore, in the absence of a valid import licence, the provisions of Section 111 (d) of Customs Act are attracted and thus the Commissioner of Customs order of confiscation of the goods is sustainable and is upheld. However, in keeping with the fact that the Commissioner had taken a leninet view to refrain from imposing any penalty on the appellants, a lower redemption fine may also be in order. The fine in lieu of confiscation is hence reduced from Rs. 1,65,000/- to Rs. 1,00,000/- (Rupees one lakh only). This appeal is otherwise rejected.

Equivalent 2000 (119) ELT 437 (Tribunal)