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TMI Blog1994 (1) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... t for industrial furnace as mentioned in the bill of entry. The Customs House also found that as per the Customs Tariff, industrial furnaces are classifiable under Heading 84.17 while convertors are separately classified under Heading 84.54 and took the view that convertors were not covered by Notification 77/90. A show cause notice was issued asking the importer to explain why benefit of Notification 77/90 should not be denied to them and also charging them with misdeclaration. The show cause notice was also for confiscation of the goods under Section 111(m) and 111(o) of the Customs Act, 1962 and for imposing penalty on the appellants. In reply, the appellants explained that the refractory bricks imported by them are meant for use for AOD furnace installed in their steel making plant. They contended that AOD furnace is very much an industrial furnace technically as well as in commercial parlance. Upon hearing them in the matter and considering their reply and submission, the Collector observed that the exemption under Notification 77/90 will be available only if it is shown that refractory bricks are of special shape or quality and also that they are for use as component parts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavits, but the ld. Counsel pointed out that other documents, which are in the nature of textual authorities on furnaces may be taken on record for purposes of submission by the appellants. 3. Smt. Shanti Sundaram, ld. SDR had earlier pointed out this aspect regarding the filing of additional evidence by way of affidavits, which have been obtained after the adjudication of this case and passing of the impugned order and the ld. Counsel has submitted, as above, in response. The ld. Counsel urged that the dispute in this case is whether the AOD furnace is an industrial furnace and the Department chosen to distinguish the convertor from furnace to deny the exemption. It was submitted that the convertor utilises chemical energy for the purpose of melting. The ld. Counsel referred to the literature in regard to AOD furnace in a book called `Ultra Refining Processes for Speciality Steel making A Publication of the Iron Steel Society. In this, there is a reference to AOD furnace as a furnace. The ld. Counsel, further, referred to the book `Elements of Fuels, Furnaces and Refractory by O.P. Gupta in which under the heading furnaces - Introduction, convertors have been listed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat earlier decision or practice was an error. The Collector has not considered in this case the earlier practice of extending the exemption to such goods. As regards the penalty imposed on the appellants, ld. Counsel contended that the penalty was unwarranted because the appellants had not deliberately given any mis-declaration and that this fact is proved by the past practice of the Customs House itself. Therefore, the penalty on the appellants is bad in law. He relied upon the decision reported in 1993 (68) E.L.T. 156 (Tribunal) = 1993 (22) ETR 413 in the case of Mirah Dekor v. Collector of Customs, New Delhi. 4. Smt. Shanti Sunderam, ld. SDR urged that the Collector had found the convertor is not an industrial furnace and the notification granting exemption to refractory bricks, which are component parts of industrial furnace, cannot be extended to the refractory bricks which are to be used in convertors. The Collector s order has brought out a technical differentiation between two based on textual authorities. The ld. SDR submitted that the notification 77/90 grants exemption for goods, which are firstly refractory bricks of special shape and quality, which are used as compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lurgical parlance and terminology. The ld. SDR also stated that the Customs House was within its right to change the past practice if it is found to be erroneous and relied upon the decision reported in 1992 (62) E.L.T. 727 in the case of Rawal Industries v. Collector of Customs. Here the appellants have been served with a show cause notice giving the grounds for not extending exemption to them. The ld. SDR also distinguished the Tribunal s decision in the case of Alembic Glass Industries cited by the appellants and pointed out in that case that regenerator was held to be an integral part of industrial furnace, whereas in the present case the convertor is not an integral part of industrial furnace. The ld. SDR also submitted that the notification has one more aspect that the goods under that notification should be component parts of industrial furnace. Goods, which are in the nature of replacing parts, cannot be held to be component parts and, therefore, will not be eligible for exemption for which she relied upon case law reported in 1993 (66) E.L.T. 683 in the case of Hindustan Sanitaryware Industries Ltd. v. Collector of Customs. The ld. SDR also referred to the Collector s re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of the books `Elements of Fuels, Furnaces and Refractory by O.P. Gupta in the Chapter entitled Furnaces - Introduction, it has been stated as follows : A furnace is a device in which the chemical energy of fuel or electrical energy is converted into heat which is then used to raise the temperature of materials, called the burden or stock, placed within it for that purpose. Furnaces operating at low temperatures are often called ovens depending on their purpose. There are also others used for higher temperatures for different purposes. When associated with the ceramic industries they are called Kilns. Glass is melted in tanks and other special terms often occur, suggest the purpose, such as sintering machine used in metallurgical ore dressing, etc. Classification - x x x x x x x x x x x x Different metallurgical furnaces are : (1) Crucible Furnace (2) Hearth Furnace - Open Hearth (3) Shaft Furnace - Blast Furnace (4) Convertors - Besseme, side-blown or top-blown (LD) (5) x x x x x (6) x x x x x" The above would show that convertors have been mentioned in the chapter on furnaces and has been classified as one type of metallurgical furnaces. Further, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industry, the convertor is considered as a category of furnace for steel making which comes into play at the refining part of the steel making process. Therefore, on the basis of the textual authorities, the claim of the appellants that convertors are a type of industrial furnace, as understood in the metallurgical industry, has a lot of substance and has to be accepted. The Department s view is that the Customs Tariff Act has separately classified the industrial furnaces and convertors and, therefore, the notification which gives exemption to refractory bricks for use in industrial furnaces cannot be extended to such bricks for use in convertors. In examining this contention, the wording of the Notification are important because of the well-settled proposition that exemption notifications have to be interpreted in terms of the plain meaning of the words employed therein. The notification has been extracted (supra). A perusal thereof shows that the description of the goods in column 3 is refractory bricks of special shape or quality for use as component parts of industrial furnace. The Notification, further indicates the tariff heading only for refractory bricks as those falling un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory bricks of special shape or quality for use as component parts of industrial furnaces. - In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts refractory bricks of special shape or quality for use as component parts of industrial furnaces falling under Heading 69.02 of the First Schedule of the Customs Tariff Act, 1975 (51 of 1975), from so much of that portion of the duty of Customs leviable thereon, which is specified in the said First Schedule, as is in excess of 40 per cent. ad valorem." Exemption Notification No. 112-Cus., dated 1-3-1987 (so far relevant). Total exemption from auxiliary duty to certain specified goods - In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), had with sub-clause (4) of clause 95 of the Finance Bill, 1987 which clause has, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), the force of law, the Central Government, being satisfied that it is necessary in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be available if refractory bricks of special shape or quality are imported for use as component parts of industrial furnace whether for the purpose of initial setting up or as spares, cannot be accepted. For, it is settled law that while interpreting an exemption Notification the courts are not to ascertain the intention of the Government by a comparison of expression used in the two different Notifications. See : Coromandel Fertilizers Limited v. Collector of Customs, Madras, 1986 (25) E.L.T. 861 (S.C.). Both these Notifications under reference have been couched in and unambiguous language. Both these Notifications the word Component Parts and not only Parts . Before we part, it may be stated that reference made by the learned Counsel to certain Minutes of the Tariff Conference of Collectors of Customs held at Delhi on 2nd November, 1987 wherein after considering the scope of expression Component Parts appearing in Notification No. 156/86-Cus., dated 1-3-1986, Notification No. 26/84-Cus., dated 22-2-1984 and Notification No. 242/76-Cus., dated 2-8-1976, it was observed that the Board s Office (TRU) was to amend such Notifications saying it clearly that parts and spare part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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