Full Judgment Text
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CASE NO.:
Appeal (civil) 4234 of 2000
PETITIONER:
Western India Plywoods Ltd.
RESPONDENT:
Collector of Customs, Kochin
DATE OF JUDGMENT: 07/10/2005
BENCH:
Ruma Pal & S.H. Kapadia
JUDGMENT:
JUDGMENT
KAPADIA, J.
Whether, in the facts and circumstances of this case, the Customs, Excise
and Gold (Control) Appellate Tribunal (hereinafter referred to as ‘‘the
tribunal’’) was right in classifying ‘‘motor-vibrator with actuators’’
under residuary sub-heading 8479.89 of Customs Tariff Act, 1975 (for short
‘‘CTA’’), is the question which arises for determination in this civil
appeal filed by the assessee against the impugned judgment of the tribunal
dated 10.11.1999.
The appellant herein imported a complement of pulp-making machinery for
conversion of wood-chips into pulp. The said machinery comprised of five
components, namely, delibrator, screw feeder chutes, motor vibrator with
actuator, sealing water system and high temperature protection equipment.
According to the appellant, the function of the motor vibrator is to work
in conjunction with the delibrator in feeding the wood-chips into the screw
feeder at a pre-determined rate. According to the appellant, since the said
motor vibrator works in conjunction with the delibrator, it constitutes an
integral part of the pulp-making machinery.
It is the case of the appellant that the said motor vibrator with actuator
is classifiable under CTA: SH 8439.91 whereas according to the department
it is classifiable under CTA: SH 8479.89.
We quote hereinbelow relevant headings:
"Heading 8439.91: - Parts of machinery for making pulp of fibrous
cellulosic material.
Heading 8479.89: - Machinery and mechanical appliances having individual
functions, not specified or included anywhere in this chapter.’’
It is evident from the above that the latter heading is a residuary item
which is applicable only if the machinery in question does not fall within
any other heading. It is well settled that the application of the residuary
tariff entry must always be made with a good deal of caution as it is
attracted only when no other provision expressly or by necessary
implication applies to the goods in question. [See: Bharat Forge and Press
Industries (P) Ltd. v. Collector of Central Excise, reported in (1990) 45
ELT 525]. In the matter of classification, identification of an entity is
the primary step. Identification is concerned with goods and not with the
description of goods. The description would be relevant for the application
of a particular tariff entry to the imported goods. In several cases, a
single tariff item refers to a large number of goods of different types. It
is not possible to encapsulate them in completely comprehensive titles.
Therefore, the titles of sections, chapters and sub-chapters are for ease
of reference. A note in a section or a chapter is for that section and that
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chapter alone.
The basic question which was required to be examined by the tribunal was -
whether the entire complement of pulp-making machinery imported as a single
entity constituted one single item consisting of separate components. In
the present case, the tribunal has classified the imported motor vibrator
in CTA: SH 8479.89 solely on the basis of clause (5) of the explanatory
notes to the HSN, which reads as follows:
"5. Vibrator Motor consisting of an electric motor with eccentric discs
fitted to the protruding ends of the shaft, generating radial vibrations
which are transmitted to the apparatus or appliance (chutes, bins, hoppers,
conveyors, compacting appliance, etc.) to which the vibrator motor is
fixed.’’
In our view, the tribunal has failed to consider the various provisions of
section XVI and chapter 84 as appearing in the CTA and in HSN. Note 2(b) of
section XVI lays down that in the absence of a specific heading, a part
suitable for a particular machine is classifiable under the heading
applicable to that machine. Section XVI in CTA and in HSN is captioned
‘‘machinery and mechanical appliances’’. Section XVI makes a distinction
between ‘‘machinery’’ and ‘‘machines’’ (See: Note 5 to section XVI).
Further, according to note 7 to chapter 84, machines used for more than one
purpose have to be classified according to their principal purpose.
Therefore, note 7 classifies ‘‘machines’’ according to their functions.
Where a function is relevant for classification and where a machine is
capable of performing two or more complementary or alternative functions,
they have to be classified according to their principal purpose. In the
present case, the motor vibrator with actuator regulates the flow of wood-
chips into screw feeder at a pre-determined rate and, therefore, it is not
a prime-mover only, as held by the tribunal. This aspect needs in-depth
examination. Lastly, section XVI of HSN covers mechanical or electrical
machinery. It is not confined to machines. In the present case, the
appellant imported a full complement of pulp-making machinery and it
submits that the motor vibrator with actuator is an integral part of the
pulp-making machinery: In the explanatory notes to the HSN, it is made
clear that items falling under headings 84.25 to 84.78 would cover machines
which are classifiable by reference to the field of industry in which they
are used, regardless of their particular functions. This explanation has
also not been considered by the tribunal.
As stated above, in the matter of classification, unless the department is
in a position to establish that the goods in question can by no conceivable
process of reasoning be brought under CTA : SH 8439.91, resort cannot be
had to the residuary heading 8479.89.
On account of non-consideration of various aspects enumerated above, we set
aside the impugned judgment and remit this case to the tribunal for its
decision in accordance with law. Accordingly the appeal is allowed, with no
order as to costs.