Full Judgment Text
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CASE NO.:
Appeal (civil) 11388 of 1995
PETITIONER:
COLLECTOR OF CUSTOMS, BOMBAY
Vs.
RESPONDENT:
M/S.GRASIM INDUSTRIES LIMITED
DATE OF JUDGMENT: 11/05/2000
BENCH:
S.V.Patil, S.S.M.Quadri, S.P.Bharucha
JUDGMENT:
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J U D G M E N T
SYED SHAH MOHAMMED QUADRI, J.
The short question that arises in this appeal is:
whether hydrochloric acid synthesis unit of combustion
chambers is classifiable under Heading 84.17(1) or Heading
68.01/16(1) of the Customs Tariff Act, 1975. The appeal
came up before us on reference by a Bench of two learned
judges, taking the view that the decision of this Court in
Ballarpur Industries Ltd. Vs. Collector of Customs, Madras
[1995 (75) E.L.T. 6 (S.C.)] holding that a part of paper
finishing machinery was classifiable under Heading 84.31 of
Customs Tariff Act, 1975 (for short, the CTA) and not
under Heading 68.01/16(1) of the CTA, is seemingly different
from what is stated in Saurashtra Chemicals Vs. Collector
of Customs [1997 (95) E.L.T. 455 (S.C.)]. The facts giving
rise to this appeal fall in a short compass. The respondent
imported four cases of hydrochloric acid synthesis unit of
combustion chambers and claimed that they are classifiable
under Heading 84.17(1) of the CTA. By order dated October
7, 1982, the Assistant Collector of Customs, Bombay,
rejected the claim and classified them under Heading
68.01/16(1) of the CTA. The Collector of Customs (Appeals),
Bombay, acceded to the contention of the respondent for
their classification under Heading 84.17(1) of the CTA. The
appellant appealed before the Customs Excise and Gold
(Control) Appellate Tribunal, New Delhi (for short, the
CEGAT). On November 11, 1991, the CEGAT confirmed the
order of the Collector of Customs (Appeals) and dismissed
the appeal. The appellant challenges the order of the CEGAT
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in this appeal. Mr.N.K. Bajpai, learned counsel appearing
for the appellant, has contended that the respondent
imported parts of machinery which are articles of graphite
falling within Heading 68.01/16(1) of the CTA and as Note
1(a) of Chapter 84 of the CTA specifically excluded articles
falling within Chapter 68 of the CTA, they were wrongly held
to be classifiable under Heading 84.17(1) of the CTA. He
submitted that in Saurashtra Chemicals, Porabandar Vs.
Collector of Customs, Bombay [1986 (23) E.L.T. 283], the
larger Bench of the Tribunal by majority held that the spare
parts of the machinery made of carbon were classifiable
under Heading 68.01/16 of the CTA which was approved by this
Court in Saurashtra Chemicals vs. Collector of Customs
(supra). Therefore, the order under appeal has to be set
aside.
In support of the order under appeal, Mr. Joseph
Vellapally, learned senior counsel appearing for the
respondent, drew our attention to title of Chapters 68 and
84 of the CTA to point out that plants and machinery fell
within Heading 84.17(1) of the CTA and not within Heading
68.01/16(1) of the CTA. According to the learned counsel,
Note 1(a) to Chapter 84 of the CTA has no application to
machinery or part of machinery covered by Heading 84.17(1)
of the CTA. As such the Collector of Customs (Appeals) as
well as the CEGAT rightly classified the goods under Heading
84.17(1) of the CTA.
Inasmuch as the controversy relates to the
interpretation of Headings 68.01/16(1) and 84.17(1) of the
CTA, it would be useful to quote them here:
CHAPTER 68 ARTICLES OF STONE, OF PLASTER, OF CEMENT,
OF ASBESTOS, OF MICA AND OF SIMILAR MATERIALS
NOTES This Chapter does not cover: (a) to (n)
*
_________________________________________________________
Heading Sub-heading No. Standard Central No. and
description Rate of Excise of article duty Tariff Item
_________________________________________________________
68.01/16 Articles of natural or 22F, artificial stone,
of 23C, agglomerated natural or 51 artificial abrasives, of
plastering material, of cement, of concrete, of asbestos, of
asbestos-cement or cellulose fibre cement, or of mica;
articles of vegetable materials agglomerated with mineral
binders; mineral wools; expanded mineral materials;
articles of other mineral substances, not elsewhere
specified or included :
(1) Not elsewhere 100% specified
(2) Grinding stones,grinding 40% wheels and the like,
of natural stone, of agglomerated natural or artificial
abrasives, and segments or other finished parts of such
stones and wheels but excluding hand polishing stones, whet
stones, oil stones, and hones.
A perusal of the title of Chapter 68 of the CTA and
the description of the sub-heading shows that what is
brought in thereunder are articles of stone, plaster,
cement, asbestos, mica or similar materials. There is no
scope to bring within that Chapter machinery and mechanical
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appliances and parts thereof.
CHAPTER 84
BOILERS, MACHINERY AND MECHANICAL APPLIANCES; PARTS
THEREOF
NOTES
1. This Chapter does not cover:
(a) millstones, grindstones and other articles falling
within Chapter 68;
2. to 5. *
_________________________________________________________
Heading Sub-heading No. Standard Central No. and
description Rate of Excise of article duty Tariff Item
_________________________________________________________
84.17 Machinery, Plant and similar laboratory
equipment, whether or not electrically heated, for the
treatment of materials by a process involving a change of
temperature such as heating, cooking roasting, distilling,
rectifying sterlising, pasteurising steaming drying,
evaporating, vaporising, condensing or cooling, not being
machinery or plant of a kind used for domestic purposes;
instantaneous or storage water-heaters, non electrical:
1. Not elsewhere specified 40%
2. Machinery and equipment 60% for food and drink
other than those used for treating milk, instantaneous or
storage water-heaters, non- electrical; machinery and
equipment imported for use in air conditioning.
The title of Chapter 84 of the CTA leaves no room for
doubt that the goods falling within it are boilers,
machinery, and mechanical appliances and parts thereof. The
description and the sub- headings enumerate various
categories of machinery and appliances falling thereunder.
At the beginning of the Chapter are Notes which specify what
articles are excluded from that Chapter. A reading of the
Note 1(a) on which reliance is placed by Mr.Bajpai, suggests
that it excludes millstones, grindstones and other articles
falling within Chapter 68 from being classified under
Heading 84.17(1) of the CTA. There can be no controversy
about the proposition that if the goods in question are
machinery, plant and similar laboratory equipment or parts
thereof, they fall within Chapter 84 of the CTA; but if
they are millstones, grindstones or other articles that fall
within Chapter 68 of the CTA, they get excluded from Chapter
84. A perusal of the order of the Tribunal shows that
though the combustion chamber of the goods in question is
made of graphite, they constitute a complete unit,
consisting of three parts fitted with burners and other
accessories forming part of synthesis unit of caustic soda
plant and thus an equipment. In that equipment hydrogen is
burnt with chlorine and thereby a new product hydrochloric
acid is produced. In the latter part of the judgment the
Tribunal recorded the following finding :
Further there is no dispute that what they have
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imported is for combustion chambers and drawing also
indicates that the combustion chamber consist of three
parts, that is, upper shell, intermediary shell and lower
shell alongwith fittings. Based upon the records and
functioning of the imported parts we are of the opinion that
they constitute a complete unit.
In view of this categorical finding, there can be no
hesitation in holding that the goods in question fall within
Heading 84.17(1) of the CTA unless it is shown they being
millstones, grindstones and other articles falling within
Chapter 68 have to be excluded from Heading 84.17(1) of the
CTA in view of Note 1(a) of Chapter 84. Obviously the
articles in question are not millstones, grindstones or the
like. We have carefully gone through various sub-headings
of Chapter 68 of the CTA and we are of the view the
contention that the goods in question fall within Chapter 68
has no substance. In the case of Saurashtra Chemicals,
Porbandar (supra), a larger Bench of the Tribunal by
majority took the view that carbon rings and carbon seals
which are used as spare parts in turbosets and compressors
fall within the Heading 68.01/16(1) of the CTA and the
minority held that they fall within Heading 84.65 of the
Customs Tariff Schedule. The view of the majority was
approved by this Court in Saurashtra Chemicals case
(supra). No reasons are given in that case. But a perusal
of the order of the Tribunal shows the question there
related to articles which were spare parts made of carbon
and not to a complete unit or an equipment, unlike in the
present case where the goods constitute a complete unit.
Also, the goods here are not made entirely of graphite;
only a part thereof is graphite. Further in Saurashtra
Chemicals case, there was agreement between the parties
that those articles would fall both within Heading
68.01/16(1) as well as within Heading 84.65.
In Ballarpur Industries Ltd.s case (supra), granite
press rolls fitted with mild steel shafts and end-plates and
its cavities filled with concrete were admitted to be a part
of the paper finishing machinery. Disagreeing with the
judgment of the Tribunal that parts of the machinery were
classifiable under Chapter 68 of the CTA, this Court held
that they were classifiable under Heading 84.31 of the CTA.
The distinction between the Saurashtra Chemicals case and
the Ballarpur Industries case is that in the former case
the articles made of carbon were conceded to fall both
within Heading 68.01/16(1) as well as within Heading 84.65
being spare parts of machines whereas in the latter case the
goods were part of machinery not falling within Chapter 68
and were not made entirely of granite. In the instant case,
in view of the finding recorded by the Tribunal that the
goods in question constitute a complete unit, an equipment,
and are not made only of graphite they are clearly
classifiable under Heading 84.17 (1) of the CTA. We,
therefore, find no illegality in the order of the Tribunal.
The appeal fails and it is accordingly dismissed with costs.