TMI Blog1988 (2) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that the finished items had no resemblance with the rough blanks imported. He, therefore, decreed that the rough forgings did not have the essential characteristics of the finished items and would not attract the provision of Rule 2(a) of the Rules for the Interpretation of the First Schedule of the Customs Tariff of 1975. He assessed the goods under Heading 73.33/40 with Notification No. 254/76-Cus. as more appropriate, with countervailing duty under Item 26AA of the Central Excise Tariff and ordered refund to the appellants of the excess duty claimed by them. By notices under Section 131 of the Customs Act, 1962, the Government of India called upon the importers M/s. Motor Industries to show cause why the Appellate Collector s order should not be set aside, and the Assistant Collector s order assessing them as parts should not be restored, etc. 2. The dispute that we have to arbitrate is only in respect of this application of Rule 2(a) of Interpretation and not any other matter. The importers M/s. Motor Industires imported other goods like camplates for distributor pumps, control lever forgings used in governors, measuring head and retraction device. In all the decisions, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Counsel said that the value of the finishing and processing of the rough forgings will contribute in the case of the adjusting pins over 500% of their value. The size of the pins is larger when they are imported ; they have no holes in them, but making holes is one of the processes of finishing. The Appellate Collector also observed that the goods were mere pieces of forged iron and have no similarity with the finished product except for outward shapes, and that the adjusting pins have to undergo the process of tumbling, turning, grinding, heat treatment, chromium plating after which only the finished pins are fitted in the governor. 4. It is the same with the other forgings like the camplates, said the learned Counsel. They require processes such as preturning, finish turning, pregrinding, broaching, electro-chemical machining, carburising, annealing and several other processes. 5. Control levers require operations like drilling, reaming, tapping, camfurning, milling and so on. 6. Considering that the value added by the processing in their factory to the forging is so high to bring them to the state of completion, it is clear that the goods they imported were not compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nent parts neither by dealers nor by engineers or mechanics who deal in such parts or who will house or fit the parts in automotive engines. Their sizes alone will disqualify them from the role of parts to say nothing of holes, channels, threads etc. that are required to be given to them to turn them into finished parts and which they lack. 9. But the Rules of Interpretation are totally against M/s. Motor Industries. Rule 2(a) reads: Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as imported, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), imported, unassembled or disassembled." The matter can be understood more clearly from one or two figures. I will illustrate below the coined forging for control lever as imported and the finished control lever made from the forging: Diagrams of finished and unfinished control lever forging not produced here. The contour and the outline ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtends the scope of any heading which refers to a particular article to cover not only the complete article but also that article Incomplete or unfinished, provided that, as imported, it has the essential character of the complete or finished article. (II) The provisions of this Rule also apply to blanks unless these are specified in a particular heading. The term blank is to be taken to mean an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which, other than in exceptional cases, can only be used for completion into the finished article or part. Semi-manufactures not yet having the essential shape of the finished articles, (such as is generally the case with bars, discs, tubes etc.) are not regarded as blanks . (III) In view of the scope of the headings of Sections I to VI of the Nomenclature, this Rule does not normally apply to goods of these Sections. (IV) Several cases covered by the Rule arc cited in the General Explanatory Notes to Sections or Chapters (e.g., Section XVI, and Chapters 60,61,86, 87 and 90). (V) The second part of Rule 2(a) provides that complete or finished articles imported unassem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived, have the essential character of the part and will fall under the heading in which they are referred or named. Accordingly, the orders of the Appellate Collector are set aside. Assessment of the forgings shall be made under the heading(s) which cover the article or the part, and not as forgings. 13. [Order per: M. Santhanam, Member (J)]. 14. I had gone through the judgment of my Ld. Brother, Shri H.R. Syiem, Member (Technical) and I would like to add these few lines reflecting my views of the matter. 15. Out of the 15 cases, Appeal Nos. 1415/81, 580/82, 586/82 and 3080/87 to 3085/87-B2 relate to adjusting pins used in the .Governors. 16. Appeal Nos. 1514/82,1556/82 and 1558/82-B2 relate to Camplates used in the distributors pumps. 17. Appeal Nos. 570/82 and 1564/82-B2 are in regard to Control Lever Forgings used in the Governors. 18. Appeal No. 1568/82-B2 is a distinct appeal regarding the Measuring Head and Retraction Unit . For use solely and principally with the Grinding Machine for the purpose of convenience, I shall first deal with the last but one appeals. 19. At the outset, an objection was raised that the review show cause notice issued by the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c.i.f. value of the import would not be the proper criteria. At the same time, it was specified that shape or contour of the imported article could not be brushed aside as not relevant. This ruling of the Tribunal has been followed in the later decisions reported in 1987 (30) E.L.T. 1985 and in 1988 (33) E.L.T. 367. In my view the broad guidelines specified by the Larger Bench should be taken into account in order to assess the merits of the case of both the parties. Essentially it dwindles-down to a scrutiny of the essential character of the items in question. The stress is not merely on the broad characteristics of the forgings but whether the imported forged items have the essential character of the complete or finished products. 22. With this background, if we scrutinise the facts of the case, brone out by the drawings, the adjusting pins have the specified part number indicated in the drawings. This is a clinching circumstance which shows that this imported item has attained the approximate shape or outline of the finished article and could be used only for the completion of that finished article. It is pointed out by the respondents that the operations like turning, gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out to 360% of the value. But as already observed, the cost alone cannot be the basis for deciding the question. A scrutiny of the drawings shows that the item has assumed the shape and contour of camplates used in distributor pumps. 24. In regard to the Control Lever Forgings , I notice from the drawing that the imported item has assumed the shape and contour of the finished product even at the time of the import and the other minor operations were required merely to enable the item to be fitted in the machine. 25. I am, therefore, of the view that an analysis of the drawings and in the light of the judgement of the Larger Bench, the conclusions of my Ld. Brother, Shri H.R. Syiem, Member (T) is proper. 26. Appeal No. 1568/82-B2 is in respect of Measuring Head and Retraction Unit . The department seeks to classify it as Machine Device" under Heading 90.28 (4) read with Heading 90.16(1). The respondents want the assessment under Heading 84.45/48 as part of machine tools. It was urged that this is merely a machine tool. But as rightly urged by the department, the function of the imported article is to serve as a Measuring Device . The main equipment is the grinding mach ..... X X X X Extracts X X X X X X X X Extracts X X X X
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