TMI Blog1999 (7) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... only under sub-heading 39.17 on the premises that they are not used solely or principally with DIS in terms of Note 2 of Section XVI but are only parts of general use in view of the Note 2 of Section XV as also Note 1(g) of Section XVI attracting duty at 20% adv. The further ground of the Revenue is that it is specifically included in sub-heading No. 39.17 of the CET Act and that the benefit of Notification No. 67/95-C.E., dated 16-3-1995 is also not available since the final product DIS is exempted from payment of duty. Further ground is that HDPE/LDPE tubes/pipes cleared along with other bought out components cannot be construed as used for captive consumption since they are used in the assembly of DIS only at the site of the customer and not in the factory of production. As a result, duty demand of Rs. 7,70,085/- under Rule 9(2) of CE rules read with provisions of Section 11A of CE Act, has been confirmed along with penalty of Rs. 75,000/- under Rules 9(2), 52A, 173Q and 226 of C.E. Rules. 3. Mrs. Komala Choudhury, learned Consultant for the appellants contends that the DIS are not parts of general use as defined in note 2 of Section XV of the tariff but that they are specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by sub-heading No. 8424.10 8424.99 Other 6. The department in the show cause notice has alleged that LDPE/ HDPE pipes manufactured by the appellants do not appear to be classifiable under sub-heading 84.24 since they are not for use solely or principally with DIS. Note 2 of Section XVI lays down as follows : 2. Subject to Note 1 of this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines (not being parts of the articles of Heading Nos. 84.84, 85.44, 85.45, 85.46 or 85.47) are to be classified according to the following rules : (a) Parts which are goods included in any of the headings of Chapter 84 or Chapter 85 (other than Heading Nos. 84.09, 84.31, 84.48, 84.86, 84.73, 84.85, 85.03, 85.22, 85.29, 85.38 and 85.48) are in all cases to be classified in the respective headings. (b) Other parts if suitable for use solely or principally with a particular kind of machine, or with number of machines of the same heading (including a machine of heading No. 84.79 or heading No. 85.43) are to be classified with machines of that kind or in Heading Nos. 84.09, 84.31, 84.48, 84.66, 84.73, 85.03, 85.22, 85.29 or 85.38 as appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrors, of base metal, of heading No. 83.06. It is contended that only these parts which are specified therein are to be treated as parts of general use and not others. It was also pointed out by the learned Consultant that the parts of DIS falling under 84.24 are not mentioned in the above note No. 2. On consideration of the submissions and on perusal of the above Note 2 of Section XV it is clear that the article and parts of heading 84.24 are not mentioned therein. Further the evidence on record clearly discloses that the items in question are specifically removed for the purpose of DIS and DIS would not come into existence without these manufactured pipes along with its fixtures. The appellants have been manufacturing and clearing the DIS in terms of the specific orders received from the parties. The invoices are supportive of their pleas. They have also produced their marketing literature which shows that these pipes are designed and the system is also designed for lay out for supply of water to the agriculture. On perusal of the evidence it is clear that the pipes are laid out as per the drawings and various strips are fixed to this pipes at the spot laid out. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the control station to the irrigation zone); and (iii) a surface network (dripper lines incorporating the drippers). Such systems are classified in this heading as functional units within the meaning of Note 4 to Section XVI (see the General Explanatory Note to that Section). This heading also covers: (1) Machines for coating various objects (for example, cups, cartons, boxes) by spraying with paraffin wax or molten wax. (2) Electrostatic painting apparatus consisting of a spray gun connected to a paint container by a flexible tube carrying paint, and also connected to a high-tension generator by an electric cable. The electrostatic field created between the object to be painted and the gun attracts the paint particles sprayed by compressed air to that object and prevents dispersion. (3) Industrial robots specially designed for projecting, dispersing or spraying liquids or powders. PARTS Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), the heading includes parts for the appliances and machines of this heading. Parts falling in this heading thus include, inter alia, reservo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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