1999 (11) TMI 582 - AT - Customs

Summary

Issues Involved:
1. Classification of Motor Vibrator with Actuator.
2. Classification of Sealing Water System.

Detailed Analysis:

1. Classification of Motor Vibrator with Actuator
The primary issue in this case was whether the Motor Vibrator with Actuator should be classified under Chapter 84.39 as "machinery for making pulp of fibrous Cellulosic material" or under Chapter 84.79 as "machines and mechanical appliances having individual functions, not specified or included elsewhere in this Chapter."

Collector (Appeals) Findings:
The Collector (Appeals) found that the Motor Vibrator with Actuator is an integral part of the Defibrator. It was noted that the Motor Vibrator ensures the continuous feed of wood chips into the screw feeder, which is essential for the smooth functioning of the Defibrator. The Collector (Appeals) held that the Motor Vibrator does not have an individual function and is designed to operate in conjunction with the Defibrator, thus it should not be classified under the residuary heading 84.79.

Revenue's Argument:
The Revenue argued that the Motor Vibrator with Actuator has an individual function distinct from the Defibrator. They referred to the Harmonized Commodity Description and Coding System (HSN) Explanatory Notes, which classify Vibrator Motors as machinery of general use under Chapter 84.79. They contended that the Motor Vibrator's role to ensure the wood chips flow at a predetermined rate indicates it does not play an integral part in the operation of the Defibrator.

Tribunal's Decision:
The Tribunal noted that according to the HSN Classification, a Vibrator Motor falls under Chapter 84.79. The Supreme Court's ruling in Collector of Central Excise, Shillong v. Wood Craft Products Ltd. emphasized resolving tariff classification disputes with reference to HSN unless an express different intention is indicated by the Central Excise Tariff Act, 1985. The Tribunal observed that the impugned order did not consider the HSN Notes, which classify the Vibrator Motor under 84.79. Consequently, the Tribunal accepted the Revenue's appeal regarding the classification of the Motor Vibrator and set aside the Collector (Appeals)'s order, restoring the original classification under Chapter 84.79.

2. Classification of Sealing Water System
The second issue was whether the Sealing Water System should be classified as an integral part of the Defibrator or as machinery of general use under Chapter 84.79.

Collector (Appeals) Findings:
The Collector (Appeals) found that the Sealing Water System is attached to the packing box to maintain the temperature within the permissible range during the pulp manufacturing process. This function is crucial as high temperatures are generated, and maintaining the temperature is essential for production. Therefore, the Sealing Water System was deemed an integral part of the Defibrator and should be assessed as such.

Revenue's Argument:
The Revenue contended that the Sealing Water System has an individual function distinct from the Defibrator. They argued that it works as an accessory to the main machine and should be classified under Chapter 84.79 as machinery of general use.

Tribunal's Decision:
The Tribunal agreed with the Collector (Appeals) that the Sealing Water System is a functional requirement for the machinery and an integral part of the Defibrator. This finding was not in conflict with the HSN Notes to Section XVI, Chapter 84.79. Therefore, the Tribunal found no reason to interfere with this part of the order and upheld the classification of the Sealing Water System as part of the Defibrator.

Conclusion:
The Tribunal accepted the Revenue's appeal regarding the classification of the Motor Vibrator with Actuator under Chapter 84.79 and restored the original order confirming the short levy on this item. However, the Tribunal upheld the Collector (Appeals)'s classification of the Sealing Water System as an integral part of the Defibrator. The Assistant Collector was directed to furnish the amount of duty payable on account of the revised classification, and the respondent was instructed to make the payment of the differential amount upon receipt of the communication indicating the actual amount payable.