TMI Blog1991 (2) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... 84.65 of the old Tariff, whereas the revenue had assessed the same under Heading 87.04/06(1). The appellant had filed the refund claim and had asked for re-assessment, and in the refund claim it was stated that oil seals rings imported in the consignment were for sealing the oil leakage and preventing the dust from entering into the rotating shaft i.e. shaft for automobile trucks. Since the goods were protection seal rings for truck shaft, the goods had not to be designed relative to construction of shaft. The importer had not produced any evidence as to the goods being used with other machineries. Even if it had got use with other machineries, its use with automobile truck shaft for which the subject oil seal rings were imported, could not be ruled out and further the seals rings were made of composite materials to suit the oil seals for truck shaft. Since these were adaptable for use with automobile truck shaft, their assessment under Heading 87.04/06(1) was held to be more suitable read with Rule 3(c) of the Rules of Interpretation of the Schedule of the CTA 1975 and the Assistant Collector had rejected the claim. 3. Being aggrieved from the aforesaid order, the appellant had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants have imported oil seals of various dimensions to be used in their factory. Shri Sridharan argued that the appellant seeks classification of the oils seals imported under Heading 84.65 of the old Tariff corresponding to Heading 84.85 of the new Tariff, whereas the revenue has assessed the same under old Tariff Heading 87.04/06(1) corresponding to the new Tariff Heading 87.08 as parts of motor vehicle. Shri Sridharan argued that Heading 84.65 relates to the importation of parts of machinery for general purpose application, Shri Sridharan pleaded that while determining the nature of the oil seals, the following parameters have to be looked into :- (i) Shaft diameter. (ii) Maximum shaft speed RPM. (iii) Medium of oil to be used. (iv) The highest temperature to be attained by the medium. Shri Sridharan, the learned advocate pleaded that the appellants have imported three brands of oil seals, the first one being the oil seals manufactured by SIMRIT (CFW make), the second one being KACO and the last one being ELRING oil seals. He farther argued that among the SIMRIT oil seals the appellants had imported only B1 series and B1 SL series. The difference betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otating shafts with radial sealing elements. He pleads that in KACO cataglogue type DF is equivalent to B1 of SIMRIT catalogue and type DFS is equivalent to B1 SL and the DFSL is equivalent to B1 SL which is used for extra lip for protection from dust. Shri Sridharan has referred to the Machinery s Handbook 22nd edition published by Industrial Press Inc. New York page 444 which explains the methods of sealing and it is mentioned that In applications where lubricants or process fluids are utilized in operation, provision must be made normally to prevent leakage to other areas. This is accomplished by the use of static and dynamic type sealing devices. In general three terms are used to describe the devices used for sealing: Seal: A means of preventing migration of fluids, gases, or particles across a joint on opening in a container. Packing : A dynamic seal used where some form of relative motion occurs between rigid members of an assembly. Gaskets : A static seal used where there is no relative motion between joined parts." Shri Sridharan argued that the matter is covered by an earlier judgment of the Tribunal in the case of Collector of Customs v. Bharat Sales Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In BTN it has been mentioned that but not as parts of any particular machine. Subject to these conditions, the heading includes oil seal rings. He has also referred to HSN page 1329 Heading 84.85 in which there is also mention of oil seal rings. Shri Sridharan pleaded that the Tribunal should follow the earlier decision and allow the appeals filed by the appellant. 6. Shri M.K. Sohal the learned JDR who has appeared on behalf of the respondent, stated that for the proper appreciation of facts, he will refer to appeal No. C/1459/86-B2. He pleaded that a simple perusal of the invoice will show that the supplier is Daimler Benz. He has also referred to the bill of entry in appeal No. C/1503/85-B2. He has referred to the invoice as well as the purchase order and in the invoice there is description of Daimler-Benz Aktiengesellschaft and in the purchase order it is written that it is TAIL PINION OIL SEALS. He has referred to BTN page 1388 Heading 84.65 and HSN page 1329 Heading 84.85. He pleaded that in BTN motor vehicle parts fall under Heading 84.04 and in HSN under Heading 87.08. He pleaded that as per the appellants oil seal rings are not designed for any particular machine. Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he broad description of the article fits in with the expression used in the Tariff. He has referred to another judgment in the case of Sundaram Clayton Ltd. v. Collector of Customs, Madras reported in 1983 (13) E.L.T. 966 where the Tribunal had held that Guide plates used in the air brake system of commercial vehicles are classifiable under Heading No. 87.04/06 of the Customs Tariff as parts and accessories of motor vehicles and not under Heading No. 84.61(2) as parts of pressure reducing valves. He has also referred to a judgment in the case of Krishna Company v. Collector of Customs, Bombay reported in 1983 (12) E.L.T. 185 where the Tribunal had held that Canter Shaft Splined, Sleeve main shaft gear, Clutch main shaft slinger, Gear main shaft low and Busing man shaft gear are classifiable under Heading 87.03 of the Customs Tariff. - Even though the parts in question may be for the purpose of transmission, yet they are to be treated as parts of special purpose motor vehicles, viz. fire tenders, which fall within the Heading No. 87.03 of the Customs Tariff Act and not under Heading 84.62 or 84.63. Shri Sohal has argued that the imported goods bear TELCO part numbers as given o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the old Tariff and 87.08 of the new Tariff. The appellants main plea is that the oil seals imported are to be used for general purposes including stationary engines and has-laid heavy reliance on the SIMRIT and KACO oil seals. Shri V. Sridharan, the learned advocate had argued that the sole purpose of a radial shaft seal was to seal and is not intended as a guide for machine components. The learned advocate has laid reliance on an earlier judgment of the Tribunal in the case of Collector of Customs v. Bharat Sales Corporation reported in 1990 (46) E.L.T. 480. The detailed finding of the same has already been reproduced in para No. 5 on internal pages 10 and 11 of this order. Earlier the importation was made by Bharat Sales Corporation who was a retailer and a detailed perusal of the judgment shows that neither the appellant nor the respondent had made any reference to the Rules of Interpretation to the First Schedule and there was no reference to Section Notes and Chapter Notes by either side and as such it does not become a precedent. Para No. 11 from the judgment in the case of Motiram Tola Ram and Others v. Collector of Customs, Bombay reported in 1987 (29) E.L.T. 278 (T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific outcome, the decision is not an authority on point B. Point B is said to pass sub-silentio". A good illustration is Gerard v. Worth of Paries Ltd. (K). There, a discharged employee of a company, who had obtained damages against the company for wrongful dismissal, applied for a garnishee order on a bank account standing in the name of the liquidator of the company. The only point argued was on the question of the priority of the claimant s debt, and, on this argument being heard, the Court of appeal granted the order. No consideration was given to the question whether a garnishee order could properly be made on an account standing in the name of the liquidator. When, therefore this very point was argued in the subsequent case before the Court of appeal (No. 1), the Court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R. said that he could not help thinking that the point now raised had been deliberately passed sub-silentio by counsel in order that the point of substance might be decided. We went on to say that the point had to be decided by the earlier Court before it could make the order which it did; nevertheless, since it was decided without argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly had allowed that appeal No. 245/78-D.The dissenting, Member, relying on Note 1(a) to Chapter 84 of the Tariff, had upheld the Department's classification under Heading 68.01/16(1). During the hearing on 30-4-1984, the appellants relied on the earlier majority judgment of the Bench while the Department's representative relied on the dissenting judgment. After the hearing was over, the Bench reserved its orders. When members of the said Bench discussed the matter among themselves, they notice that the Section Notes and Chapter Notes in the Customs Tariff Act were a part of the statutory tariff and were thus relevant in the matter of classification of goods under the Customs Tariff. The Bench also noticed that in the earlier majority judgment there was no discussion on the relevant Section Notes and Chapter Notes. In the circumstances, the Bench felt that in the interests of justice to both sides, the two appeals should be heard afresh and decided by a Larger Special Bench. The matter was accordingly placed before the President who constituted the Larger Special Bench on 14-5-1984. This is how these two appeals have come up before the present Larger Special Bench". 7. Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal, other than clock or watch springs (Heading No. 91.14); and (c) Articles of Heading Nos. 83.01,83.02,83.08,83.10 and frames and mirrors, of base metal, of Heading No. 83.06." Note 2 of Section XVII of the new Tariff is also reproduced below :- 2. The expressions parts" and parts and accessories do not apply to the following articles, whether or not they are identifiable as for the goods of this Section: (a) Joints, washers or the like of any material (classified according to their constituent material or in Heading No. 84.84) or other articles of vulcanised rubber other than hard rubber (Heading No. 40.16); (b) Parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods to plastics (Chapter 39); (c) Articles of Chapter 82 (tools); (d) Articles of Heading No. 83.06; (e) Machines or apparatus of Heading Nos. 84.01 to 84.79, or parts thereof; articles of Heading No. 84.81 or 84.82 or, provided they constitute integral parts of engines or motors, articles of Heading No. 84.83; (f) Electrical machinery or equipment (Chapter 84); (g) Articles of Chapter 90; (h) Articles of Chapter 91; (ij) Arms (Chapter 93); (k) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als 04. C/1813/90 9846 Elring Crank Shaft Oil Seals 05. C/1670/90 6146 Elring Crank Shaft Oil Seals 06. C/1566/90 6146 and 9846 Oil Seals 07. C/2747/90 9846 B1 45 SLDRR Tail Pinion Oil Seals 08. C/2744/90 9846 Tail Pinion Oil Seals 98.06 09. C/2835/90 4171410 Oil Seal 4113299 Oil Seal 40.16 10. C/2836/90 4070744 Oil Seals 40.16 11. C/2150/90 0119979846 Tail Pinion Oil Seals 12. C/1498/87 0119979846 Tail Pinion Oil Seals 13. C/406/88 0119979846 Tail Pinion Oil Seals 14. C/405/88 B1 U5 SLDRR 0119979846 Tail Pinion Oil Seals 15. C/366/88 0119979846 Tail Pinion oil Seals 16. C/1651/88 0039972247 2546 Oil Seal 17. C/2693/89 0119979846 B145SLDRR 18. C/2820/89 0069975446 DF65 19. C/390/86 0119979846 DFS68 Tail Pinion Oil Seals 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S FOR BAJAJ COMPONENTS FOR BAJAJ SCOOTERS: Connecting Rod forgings as per your part drawing No. 40.0022.03" (ii) SEMI-FINISHED COMPONENTS FOR BAJAJ 3 WHEELERS : Cross Forgings as per your part drawing No. 40.0007.03 and old Part No. 3779/S/1/7". We note that in the import invoices, the suppliers themselves described the goods as semi-finished components. We also note that the goods were forged to specific part drawings. On account of these facts, coupled with our visual inspection of the samples produced by the appellant, we are satisfied that the goods as imported had attained approximate shape and outline of the finshed article. We find further that the imported goods were not general purpose blanks that could be further machine for being fitted in any one of the several machines that may require complete article. On the contrary, the goods having been precisely shaped and forged to specific dimensions according to specified part drawings, they could be finished only into the connecting rod and cross, the two components which fitted the appellants vehicles. We find also that the goods were made of special steel - EN 353 and EN 28. In the circumstances, we agree with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a kind used as parts of vehicles (Chapter 96)." The oil seals do not fall under sub-notes (a) to (k) of Section XVII and as such, we are of the view that the goods imported, viz., oil seals fall under Chapter 87 read with Section Notes XVII. Shri Sridharan, the learned advocate during the course of argu ments mentioned that oil seal is just a gasket. Heading 84.64 of the old Tariff relates to gaskets. This argument is not acceptable. The oil seals cannot be equated with gasket. We have also looked into the Rules for the Interpretation of the First Schedule. Rule 3 of the old Tariff as well as new Tariff are reproduced below :- "3. (old Tariff) When for any reason, goods are, prima facie, classifiable under two or more Headings, classification shall be effected as follows :- (a) The Heading which provides the most specific description shall be preferred to Headings providing a more general description. (b) Mixtures and composite goods which consist of different materials or are made up of different components and which cannot be classified by reference to (a) shall be classified as if they consisted of the material or component which gives the goods their essential charac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied under the Heading which occurs latest among those which equally merit consideration. The goods imported do not fall under Interpretatory Rule 3(a) or (b). Accordingly, we are of the view that they fall under Rule 3(c). The learned advocate had also referred to page 1388 of BTN and page 1329 of HSN. A simple reading of the BTN Explanatory Note shows that :- In general, therefore, the goods of the present heading are such as can be recognised as being parts of machineries but not parts of any particular machines subject to these conditions the heading includes - non-automatic lubricating pots; greasing nipples; oil seal rings; hand wheels; levers and hand grips; safety guards and baseplates. The learned JDR had laid great emphasis on the words subject to these conditions. The goods imported by the appellant, viz., oil seals are specially designed to be fitted in the motor vehicle and as such we are of the view that the oil seals imported by the appellant fall under the old Tariff Heading 87.04/06 and new Tariff Heading 87.08 as parts of motor vehicle. Since the goods imported were specially designed for motor vehicles, the judgment cited by the learned advocate as to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of arguments, it was also pointed out by the learned advocate, Shri Sridharan that the Section Note XVII (3) will be relevant which is as follows: 3. References in Chapters 86 to 88 to parts" or accessories do not apply to parts of accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under the heading which corresponds to the principal use of that part or accessory." and, therefore, to uphold the view that the part imported should be brought under the Heading 84.65 of the old Tariff or 8485.90 of the new Tariff as machinery parts. On perusal of this Chapter Note, it is seen that the references to parts or accessories under Chapters 86 to 88 do not apply to parts or accessories which are not suitable for use solely or principally with articles of those Chapters. The words which are not suitable for use solely or principally would indicate that if the parts are not meant for use solely or principally with the articles, they would go under the headings of the Chapter which corresponds to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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