TMI Blog1994 (3) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 7516 have been described as enrober machine, conveyor system and coating hardening tunnel ; claiming assessment of enrober machine under Heading 8438.80 (read with Notification No. 59/87-Cus.) and coating hardening tunnel under Heading 8418.69 (read with Notification No. 59/87-Cus.). The Department has not accepted the importer s claim for classification under these headings but has assessed both the consignments under sub-heading 8438.80, as the complete system on the grounds that in the first consignment product forming system itself consists of conveyor and freezing tunnel without which it cannot work and in the other consignment, enrobing system also cannot work without the conveyor and coating hardening tunnel. The importer s contention before the lower authorities is that forming and enrobing system in both the consignments are assessable under sub-heading 8438.80, while conveyor system and freezing system being two different systems, which have been priced separately and also have arrived in the unassembled form from the main systems, should have been assessed on merits i.e. under Heading 8428 and 8418 respectively. 2. The ld. Collector has gone through the manual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or which already exist in the plant. They submit that this would take about 6 to 8 hours for proper freezing of the product. If, however, the product is to be subjected to further embellishments, say, chocolate coating, it would be necessary to have a system of not only rapid freezing but also a tunnel system wherein freezing could take place even as the product moves on to the next stage of chocolate coating. The rapid freezing is facilitated by the freezing tunnel where the dwelling time is about 9 minutes. The main conveyor being carriage system for conveying the products from former to the tunnel. Therefore, they submit that the parts which follow the product former are optional and are for large continuous production. They submit that the freezing section of the Glacier 600-E system is only a rapid freezing system. The desserts from product former can be taken to conventional hardening/freezing rooms and therefore, the freezing tunnel of the Section-I is independent separate equipment having different function than product former. They submit that the freezing tunnel has no common foundation or attachment to the product former. The conveyor system is independent equipment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rming machine, the freezing tunnel and the main conveyor system are 3 different machines which accomplish three different tasks and they are independent machines and not components of the same machine. Therefore, Rule 2(a) is not applicable at all in the present case. They refer to the Explanatory Notes on page 1171 of the Harmonized System of Nomenclature, Volume 3 under Heading 84.18 which includes under this heading certain refrigerating installations of larger type. Referring to this note, they submit that ancillary apparatus essential to the application of the low temperature produced in such installations are classified in this heading provided they are presented together with the other components of these installations. Therefore, they state that the freezing tunnel is essential to the application of the low temperature product and has been presented together with other components of these installations and hence in terms of the aforesaid Explanatory Note, it would be classified under Heading 84.18 only and not under any other heading. They further submit that the main conveyor system can only be classified under Heading 84.28 and not under Heading 84.38 as part of the Produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when a further process of the product is required and it is to be carried to other stations. Otherwise, it could straightaway have been taken to the wrapping section from the main freezer for packing and hardening/storage. They state that the enrober is required only when the product has to be chocolate coated and not otherwise and that considerable part of the product is not so coated. The misc. application for additional document is also taken on record. 5. We have heard Shri L.P. Asthana, ld. Advocate for the assessee and Shri B.K. Singh, ld. SDR for the Revenue. 6. Arguing on these grounds of appeal, Shri L.P. Asthana, ld. Advocate submitted that goods were not in CKD condition and the imported goods are neither parts of the main ice cream forming machine nor are they composite machine and therefore, their assessment as a single machine is incorrect and as such rule 2(a) Note 3 of Section XVI would have no applicability. The product forming machine does not manufacture or make the ice creams, but it only makes and gives shapes to the already prepared ice cream. Although, the licence granted was for the entire composite plant but the importer had not imported the same and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat on actual verification, the ld. Collector has come to the conclusion that machinery in Section II has been imported. Referring to the invoice and the catalogue, the ld. SDR pointed out that the invoice clearly indicated that Chocolate spray coating system and one wrapper infeed mechanism had also been imported. These machines fell in Section II of the catalogue. These machines as a whole produced the Chocolate Ice Cream. The ice cream mix supplied to these composite unit was in the nature of a semi-finished ice cream mix not a complete servable product. In the product forming machine, ingredients like chocolate, milk, crunch and other items were added and hence the complete chocolate ice cream emerged only in this unit. The huge quantity of ice cream formed was admittedly not in a marketable form, unless it gets enrobed in separate desired pieces and therefore, the enrober was a part of a single system. The conveyor was an essential part, as the sliced ice cream had to be conveyed to the enrober and for packing section, before the packed ones are sent to the cold storage. The freezer unit was not a mere refrigerating unit, in the conventional sense of a refrigerator, to be clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t `heating elements were classified in respect of cocoa or chocolate, in this heading, although there is a specific heading for it. Likewise, in respect of ice-cream manufacture, the freezing equipment, should go with the main equipment for the manufacture of ice cream. Ld. SDR pointed out that the Tribunal has already held in the case of Collector of Central Excise v. Gakso Refrigeration Engineers as reported in 1993 (63) E.L.T. 568, that ice cream making machine would not fall under Heading 8418 and therefore, the claim of the appellants for classifying these machines under this heading cannot be accepted. He also submitted that Heading 84.19 would also get eliminated as only those machines would fall therein, which are for treatment of materials. He submitted that `lift and `handling machines had separate Heading 84.17 or 84.14, yet when they were part of these machineries, they were classified under Heading 84.38 as per Explanatory Note at pages 1130 1133. Ld. SDR referred to the following citations, wherein classification of individual machines was done alongwith main machine and submitted that the ratio of the citations would squarely apply to the facts and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and other related documents are referred to by the lower authorities. The appellants case which can be summarised is that the three disputed machineries are not part and parcel of the main machinery and that they are only acting independently and they have, therefore, pleaded that Section Note 3 and Rule 2(a) cannot be invoked in the present case. They have also pleaded that main conveyor system under Section I is not an integral part or connected with Product Forming Machine at all. Likewise, they state that there is no tunnel and conveyor system and are not housed alongwith the Product Forming Machine and they are also not fitted together to form a whole. They do not have a common base or frame. In that view of the matter, they have pleaded that these three disputed machineries have to be assessed independently on their own merits. We have noted in great length the order of the ld. Collector, the grounds of appeal, as well as the submissions made by both the sides. 11. On a careful consideration of the pleadings and the submissions of the appellants, we are of the considered view that the appellants do not have a case on merits. The appellants had taken out a licence for imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re machinery imported by the appellant is as per the supplier s manual and it is utilised as a single unit and that they are perfectly synchronised in speed by use of Varidyne system of synchronous motors throughout . 12. The ld. Counsel had argued that it is not so, but his argument is totally belied by the details given in the manual itself. Ld. Counsel had argued that Section II machineries had not been imported, but it is seen that the freezing tunnel as well as the conveyor clearly comes within Section II. This is also seen from page 3 of the Manual which deals with Frozen product processing and handling (Section II) it states as follows : Components : The basic Section II consists of the secondary conveyor, slice and sticked slice holding devices, stick enrobing and the wrapper infeed assembly. Options include a cone handling and enrobing system, slice enrobing and a drycoater. 2. Processing and handling of Frozen Products : (a) The Section II frozen product processing system permits lifting of individual products from the main conveyor product plate for further processing as desired and then depositing the product into the infeed of an in-line wrapper. The wrappe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber covers the entire product or only the bottom and sides. A chocolate supply tank pump (Assembly 46) feeds the enrober and circulates the coating. The product rides on two wire belt conveyors driven by a motor in synchronization with the varidyne. The product moves through two enrobing areas and may be air stripped after each enrobing, if desired. A bottoming tray coats bottom and sides, if you want to do only those parts of the product with a coating. The enrober settings range from covering either the entire product or using only the bottomer tray. Coating, pumped from chocolate supply tank (Assembly 46), moves through the two overhead enrobing assemblies (choose one PM 37-9, -10, 11) and the bottomer assemblies (choose one PM 37-6, 37-219). After passing over the product, excess coating flows into the hot water jacketed enrober tank (37-4, 37-230). The coating then flows back into the chocolate supply tank. The enrober wire belt conveyors elevation, for most installations is approximately 16 m (52.5 in.). The enrober has four telescoping legs for moving up and down for adjustments. Level the enrober by loosening the set screws at the bottom of the large outer portion of ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function". As can be seen from the above Notes, a composite machine consisting of two or more machines fitted together to form a whole and other machines adopted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. The principal function of the main machines i.e. product forming and enrober machine is for manufacturing of the final product namely various types of ice-cream and desserts. These two machines are not alone sufficient for manufacturing the final product. The other three machines are not independent, in as much as they merely convey the product, or do the preservation function, but they have a specific function in the manufacture of final product which is simultaneously performed. The freezing tunnel is not a mere refrigerating system in the general sense commonly understood, in as much as certain food and other articles are kept for the purpose of preservation. Thus the freezing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le designed (Heading 84.41), Industrial furnaces combined with lifting or handling machinery (Heading 84.17 or 85.14), cigarette making machinery combined with subsidiary packing machinery (Heading 84.78). The note further states For the purpose of the above provisions, machines of different kinds are taken to be fitted together to form a whole when incorporated one in the other or mounted one on the other or mounted on a common base or frame or in a common housing and it further states Assemblies of machines should not be taken to be fitted together to form a whole unless the machines are designed to be permanently attached either to each other or to a common base, frame, housing etc. This excludes assemblies which are of a temporary nature or are not normally built as a composite machine . Referring to the above portion of the note, the ld. Advocate vehemently argued that the entire set of machines are not mounted one on the other or mounted on a common base and thus they are required to be assessed individually. This argument is also without force. The main idea which emerges from the reading of these Explanatory Notes is that the assemblies of machines if they are de ..... 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