9911796707
TMI Blog2003 (4) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... ot contested this portion of the order. 3. The revenue is aggrieved with the order pertaining to classification of the items holding them to be parts of dredger and granting the benefit of the notification in question to those items, holding them to be "parts for repair of dredgers", in terms of the notification. 4.The revenue contends in this appeal that the assessee has not proved that the goods are integral parts of dredgers. It is stated that the goods are in the nature of ancillary or auxiliary equipments and consumables and are not meant for repair of dredgers. It is stated that the importers has not proved that the goods imported are meant for repair of dredgers. It is stated that the 'pick points' which are consumables cannot be said to be parts meant for repair of the dredgers. It is also stated in the grounds of appeal that the Commissioner (Appeals) has also given certain directions regarding allowing of duty drawback on the re-export of goods. It is also stated that it is seen that no finding has been given by the original adjudicating authority regarding duty drawback on the re-exported goods. If the duty drawback goods are re-exported as such, then the importer may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blades on which adapters are welded. The adapters form the base for attachment of chisels or pick points with which the soil to be dredged will be loosened and cut before being sucked by the pumps. The choice of chisels or pick points would vary depending upon the soil or dredging process. The dredged soil is pumped via pipe line with the help of dredging pumps. In the context of the aforesaid operation, the above goods cannot be the treated as the parts of dredgers and as a consequence they are not entitled for benefit of said exemption notification. 7.It is further pointed out that it has not been proved by the importer that the goods imported are meant for repair of the dredgers. It is stated that various gantry items including welding machines, earth boring machines and parts thereof, cannot be said to be "part of dredgers". It is stated that these lathes, welding machines are only imported for carrying out the mechanical operation on the dredges and these cannot be said to be part of dredgers themselves. These appear to be goods in the nature of machines, tools or parts which are usable in connection with the dredging operation but are not parts of the dredger themselves nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edging activity as such. Therefore, it is stated that "pump" as the parts of dredger is not correct. Likewise, the impeller being part of pumps cannot be considered as parts of dredger. Therefore, it is stated that the appeal of the Revenue is required to be allowed by setting aside the impugned order. 13.We have heard Shri A. Jayachandran, learned DR for the appellant-Revenue and Shri V.M. Doiphode, learned Advocate for the respondent. 14.Ld. DR took us through various Bills of Entry, technical literature, submissions made by the respondents before the lower authorities, order passed by the lower authority and the order passed by the Commissioner (Appeals). He pointed out that at no point of time, the respondents had described or declared in the Bill of Entry that the items in question were parts of dredgers. He referred to respondents' letters dated 19-2-99, 6-3-99, 24-4-99, 8-5-99, 11-5-99 and 14-9-99 in the paper book filed by them to argue his case that even respondent have not stated that they were all parts of the dredgers. Their case was as per letter dated 19-2-99 that these items were required "to perform the dredging operation and complete the same with the contractual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative Rule which clearly lays down that classification of goods shall be governed by the titles of Sections, Chapters and sub-chapters and classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the provisions laid down in the other rules of Interpretative Rules. He pointed out that from the reading of these interpretative rules and section notes, the classification has to be adopted in terms of the said rules and sections. Where there is a specific heading and section notes and rules required, that specific heading to be adopted, then in such circumstances the general heading cannot be resorted to. In this connection, he pointed out that all the items in question have specific heading and in terms of Section Notes, interpretative rules, the classification is to be in terms of merits and the items are required to be specifically classified therein as has been done by the original authority. 17.Ld. DR argued on characteristics of individual items and the correct classification to be adopted. He pointed out that the Order-in-Original correctly has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be the basis for classification, as according to DR, when a specific entry is available then in such a case and in the absence of any entry for its classification along with dredger, finding of the Commissioner is not sustainable. 20.With regard to "pumps", learned DR pointed out that the original authority had classified the item under the Chapter sub-heading 8413.19 under the main heading of "pumps for liquids, whether or not fitted with a measuring device; liquid elevators". He points out that in terms of Section Note 2(e) of Section XVII the item is specifically excluded from classification under Chapter 89. When Section Note 2(e) of Section XVII clearly excludes this item falling under 8413.19 it incorporates "pumps", then they cannot be classified along with dredgers under Chapter Heading 8905.10. He pointed out that the Commissioner has not applied his mind and he has merely stated that the pumps are used to suck dredge material and push through pipeline systems into the reclamation yard and on this basis he has considered them to be part of dredger (i) when the same cannot be classified along with dredger (ii) when there is a clear exclusion from Note 2(e) to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls of Entry which described the items as "dredging equipment". He pointed out that they had also claimed the items to be spare parts and their claim had been rejected for considering the same as spare parts. He pointed out that spare parts are also not entitled for the benefit of the notification. He also pointed out to the term "parts" as appearing in page 2215 of S.B. Sarkar's Words & Phrases of Excise & Customs, 3rd Edition and also to the term "repair" as appearing at page 2648 and submitted that in terms of these two definitions in the said book, the items cannot be considered as "parts". He relied on the judgment of CC, Chennai v. Textool Company Ltd., 2001 (136) E.L.T. 262 (Tri. - Chennai) wherein the Tribunal has observed that parts are different from accessories. The Tribunal also observed that terms of the notification are required to be strictly construed. Further referring to the judgment of the Tribunal rendered in the case of Seagull Fabricators Pvt. Ltd. v. CCE, Mumbai-III, 2001 (127) E.L.T. 186 (Tri. - Mum.). Ld. DR pointed out that the term "part" has to be understood as suitable for use solely or principally with the machine and it does not refer to general parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the officers to examine the dredgers and had accepted their contention that the items are parts of dredgers. He referred to the said Order-in-Original dated 28-4-99 wherein such observations had been made. However, in the said order, the importer's contention of items being parts of dredger had not been accepted. But the Dy. Commissioner had held that "logically their case may be correct to the effect that the items imported under Bills of Entry referred above are parts of dredger. But in terms of Section Note XVII such parts and accessories are not to be classified under Chapter 89. As a result the concession claimed under Customs Notification Nos. 23/98 and 20/99 is also ruled out". 25.Ld. Advocate pointed out to the literature to argue that the items "spherilock cutter, spherilock adaptor, pick points/dredge points" are not consumables as contended in the appeal memo. The Counsel read out the appeal memo and countered each point taken therein by the Revenue. He also referred to the Bills of Entry wherein they had claimed these items to be parts for repair of dredger. He contended that pick points are not consumables but parts for replacement of worn out parts while the repa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportive to the importer's claim. He also contended that the Tribunal in the case of Bralco Metal Inds. (P) Ltd. v. CC, Bombay, 1994 (74) E.L.T. 920 (T) has held that spare part is an item which may be an assembly or sub-assembly of the machine or can be required to be replaced with a part or sub-assembly is worn out and hence in that light the Tribunal held that cutters fitted with scalping machine are inter-changeable tools for the purpose of cutting operation. 26.Ld. Counsel filed the written submissions on the basis of his arguments. In the written submissions, he has reiterated his oral arguments. He has relied on the Boskalis Dredging India Pvt. Ltd v. CC, Bhubaneswar, 2001 (135) E.L.T. 1396 (Tri. - Kolkata) in which the Tribunal held that pipe lines attached with suction dredger forms an indispensable part of main mother craft. However, he pointed out that the Bench did not go into the question of the exemption notification. He submits that the analogy would apply to the facts of the present case also for grant of benefit to all other items. He submits that when the pipeline has been considered as a part of dredger, then all these items are also required to be considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2 of the Customs Tariff Act. It states that classification of the goods in the Schedule of the Customs Tariff Act shall be governed by the principles laid down therein and that the important rules are to be observed for the purpose of classifying the goods, which should be in terms of respective section notes and chapter notes. Rule 1 lays down that the titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the rules mentioned subsequently noted therein. Rule 2(a) and 2(b) refers to classification of an article in a heading shall be taken to include a reference to mixtures or combinations of that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. Rule 2(b) lays down the classification of material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has to be adopted in terms of the rules laid down therein. Rule 1 has laid down very clearly that the classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and Rule 3(a) further states that the heading which provides the most specific description shall be preferred to the headings providing a more general description. 31.When we proceed to examine the section notes, we notice that each of the section notes has laid down guidance for classifying the goods in the respective chapters. The section notes clearly laid down the rules for exclusion of certain items within the said chapter and the headings therein. We notice that main imported goods in the present case is dredger which fall under sub-heading 8905.10 under Section XVII. Importers are claiming all the individual items in question to be classified along with dredger. There is no separate heading for parts with a section note that parts, if suitable for use solely or principally with a particular kind machine, or with a number of machines of the same heading, are required to be classified therein based on its suitability for use principally along with goods falli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84.83; (f) Electrical machinery or equipment (Chapter 85); (g) Articles of Chapter 90; (h) Articles of Chapter 91; (i) Arms (Chapter 93); (j) Lamps or lighting fittings of heading No. 94.05; or (k) Brushes of a kind used as parts of vehicles (heading No. 96.03)." 33.Likewise Note 3 also lays down that reference in Chapters 86 to 88 to "parts" or "accessories" do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. It states that part or accessory which answers to a description in two or more of the headings of those chapters is to be classified under that heading which corresponds to the principal use of that part or accessory. 34.In view of this clear cut interpretative rules, and the notes laid down under Section XVII, the learned original authority has proceeded to classify parts on the basis of its merits. He has found that each of the above i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the same and would get entitled for duty drawback does not arise for consideration at this stage. Therefore, at the outset itself, the ground taken by Revenue that the Commissioner (Appeals) has crossed his limit in considering this point in his order is sustainable. Revenue has rightly urged the ground that the proceedings for claim of rebate is an independent proceeding and the importers are required to file their claim and establish their claim for the purpose of claiming duty drawback. As regards the question of granting the benefit for export of the items as noted by the Commissioner, the order itself is not acceptable as there was no adjudication on this aspect of the matter by the authorities. The importers were required to file their claim as per law. Further, the Counsel also clearly admitted that no such claim had been filed by the importer. It is further noted that proviso (c) to Section 129A(1) does not grant any power to Tribunal to consider the aspect pertaining to payment of drawback as provided in Chapter X and Rules made thereunder. The Tribunal cannot go into this aspect of the matter. This is incidentally mentioned as the Commissioner has referred about it in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to the term "accessory" the Apex Court in the case of Annapurna Carbon Industries v. State of A.P.- (1976) 37 STC 378 (S.C.) observed that the deciding factor to consider the item to be an accessory is the predominant or ordinary purpose or use and it is not enough to show that the articles can be put to other uses also. It was held therein that the general or predominant use seems to determine the category in which an article will fall. Examining the term "accessories" in respect of the different entries used in the Schedule to describe the goods, the Apex Court held that it was shown that the word was construed taking into account the fact whether the goods have been manufactured for use as an aid or addition to any of the specified articles in the entry or not. It was also laid down that when it was intended to confine the entry to particular gadgets and particulars thereof, the entry said so; and, therefore, the expression "accessories thereof must mean a general or predominant use of the article only as an accessory of one of the specified items mentioned in that entry. Applying that test, in the case of Union Carbide India Ltd. v. State of Andhra Pradesh, 1995 (76) E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Entry 3 of Schedule I read with Section 3(3). 43.The Madras High Court in the case of T.I. Miller Ltd. v. UOI, 1991 (53) E.L.T. 214 (Mad.) held that the principle of estoppel is not applicable in tax matters and that assessment for one period is not final and conclusive for subsequent assessment periods. While examining the issue pertaining to dynamo to be considered as cycle part or not, the High Court held that since cycle can be used without dynamo, it is not part of a cycle. It observed that further as to how the use of a dynamo in relation to a cycle has been understood by the Govt. of India for the purpose of this Act (Excise Tariff Act) and whether it was treated as an accessory or as a cycle part, the Notification No. 3/86-C.E., dated 16-1-86 provided sufficient guidance. The notification chose to grant relief for cycle accessories and that the notification has not treated dynamo as cycle part but only as an accessory. Therefore, it held that dynamo cannot but be treated as an exemption by relying upon Notification Nos. 54/75, 86/79 and 102/80. In this regard, the judgment rendered by the Apex Court in the case of State of UP v. Cores (India) - (AIR 1977 SC 132) was relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the interpretation of notifications and case law on "parts and accessories", we have to proceed to examine the issue involved in this appeal to consider as to whether they are entitled for the exemption as claimed by them under the respective serial numbers of the notifications in question. Accordingly, we discuss the issue in respect of each items separately as under : 48.Navigational Equipment : It is an electronic equipment to receive signals from satellite in order to position the dredger at the exact position where it has to start dredging. Digital Global Position System Antenna is required for positioning the dredger accurately during the dredging process at the appropriate place. The importers have claimed this item as constituent of the dredger and for its classification along with dredger under Tariff Heading 8905.10 of CTH. As already noted, this tariff sub-heading refers only to dredgers and also as noted, the Section XVII does not have a note for classifying the parts suitable for use solely or principally with a particular kind of machine. Section Note 2 clearly states that the expression "parts" and "parts and accessories" do not apply to articles contained in (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the notification is rejected. The Commissioner has not given any finding as to how this item is entitled for the benefit of the notification and without application of mind, and without mentioning the chapter notes, he has just accepted the claim which is not sustainable. The order-in-original clearly lays down and analyses the section notes and also refers to Explanatory Notes at page 1449 for its classification under sub-heading No. 8905.10 of Customs Tariff Act. Therefore, the impugned order on this item is also set aside and the Order-in-Original on this aspect is confirmed. 51.Computer Peripherals : The Commissioner has noted that dredger is basically computer operated vessel and only a computer can read the signals and aid in the dredging operation. Therefore, he has held that they are essential and integral part of dredger. The Commissioner has clearly fallen in error in noting in the order with regard to this item also. We find that computer peripherals are imported for use of dredger and not as an integral part of the dredger. It may be required for the purpose of feeding the data but it does not dredge per se. There is clear cut Section Note 2(e) which cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n one line that benefit of exemption as contained in Sl. No. 230 of Notification 23/98-Cus., dated 2-6-98 and Sl. No. 252 of Notification No. 20/99-Cus., dated 20-2-99 is applicable to the items noted by him in that paragraph without examining as to whether the terms of notification are satisfied or not. 54.On the other hand, the adjudicating authority has held the same to be classifiable under Heading 8413.19 which has a specific heading for "pumps for liquids, whether or not fitted with a measuring device; liquid elevators". He has also held that the item cannot be classifiable under sub-heading 8905.10 as claimed by the importer by virtue of Section Note 2(e) of Section XVII as noted supra. The item is required to be classified in the appropriate heading and in view of exclusion clause in Section Note 2(e) of Section XVII, the classification adopted by the lower authority under Heading 8413.19 is proper and correct which is upheld by setting aside the Commissioner (Appeals) order. 55.As regards the notification, it is also seen that both the authorities have not given any finding on the same. In the Bill of Entry pertaining to this item, the importers have declared the item as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section XVII. Further, he has also noted the finding of the lower authority that these items were imported and presented separately along with individual value. The Commissioner was bound to have given individual findings to say as to how they are not excluded by Section Note 2(e) of Section XVII for the purpose of classification under individual headings under Chapter 84. They are not something which are integral part of dredger as can be seen from clear reading of heading like, Gantry, Earth boring machines, Lathes, Welding machines etc., they are all separate individual machines used in the workshop and they are by no stretch of imagination integral parts of dredger. The party also did not press their claim and have clearly contended that they are individual machines used in the workshop. Ld. Counsel also fairly accepted this position. In that view of the matter, they being not covered by Chapter sub-heading 8905.10 as dredger, but have individual headings for their classification and that they are excluded by Section Note 2(e) of Section XVII, they are held to be classified under the respective Chapter headings of 84 as held by the lower authorities and hence the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds the claim of benefit of the notification is concerned, we notice that the Commissioner has noted that these are essential parts of cutter suction dredger though they get consumed and require frequent replacements. The Revenue contends that these are consumable tools and are not parts of dredger. We have perused the literature produced by the importer on cutter suction dredger. It is noticed from this literature that these items are the main ingredients or parts which carry out the dredging process which involves an initial powerful cutting action, followed by suction, and pumped discharge via pipeline, or occasionally to barges (page 6 of the paper book). Page 7 of the paper book which is an extract of page 183 of the literature also refers to main advantages of the dredger. It also lists out the various work carried by cutter suction dredger. Page 8 of the paper book refers to the method of operation which states that the soil or rock to be dredged is cut, dislodged, or broken, by a powerful crown cutter. The cutter typically has live or six plain edged or toothed blades according to the ground conditions. The cutter head may be electrically or hydraulically driven. It encloses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded by us. 62 Wearing Plates and Impellers. : The Commissioner has held them to be as parts of "pumps" which are used in the pumping of dredging material. He has also held them to be integral part of dredger which is connected to the pipeline. He has noted that the Madras Custom House has already extended the benefit of exemption and on that ground has allowed the benefit. On consideration of the material on record, we notice that grant of benefit of exemption notification is justified in view of use of the item in the Dredger as parts. However, the Commissioner has not given any finding on the issue of classification. The lower authority has held these items to be not classifiable under Chapter sub-heading 8905.10 but as they are parts of pumps, they are classifiable under Heading 8413.91 in terms of Section Note 2(e) of Section XVII and also on reading of Explanatory Notes to HSN, we are satisfied that the findings given by the lower authorities on classification about being parts of pumps and pumps being classifiable under Chapter Heading 84.13 which parts are classified under Heading 8413.91 and hence the classification as adopted by the lower authority is confirmed. 63. H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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