Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Bharat Vijay Mills on 11 February, 1986
Equivalent citations: 1986(8)ECC23, 1986(7)ECR186(TRI.-DELHI), 1986(24)ELT662(TRI-DEL)
ORDER H.R. Syiem, Member (T) for himself and for K.S. Venkataramani, Member (T)
1. The Appellate Collector has written one of the most detailed analysis of a technologically difficult subject and has left nothing untouched; it illuminates the matter as few orders have done. It is a tribute not only to the intellectual attainment of the author but also the depth of understanding and the labour that have gone into this tremendous work. The order examines every detail of each machines and goes into its performance, technicalities, features both negative and positive. One learns the subject by reading this exposition.
2. In respect of step and repeat machines imported by M/s. Bharat Vijay Mills, the Appellate Collector wrote seven pages of text and comes to the conclusion that its correct classification was under heading 84.34. The Assistant Collector thought that heading 90.10 was the correct heading. We reproduce these two headings so that we can see their respective coverage :
Heading 84.34:
Machinery, apparatus and accessories for type-founding or type-setting; machinery, other than the machine tools of Heading 84.45/48 for preparing or working printing blocks, plates or cylinders; printing type, impressed flongs and matrices, printing blocks, plates and cylinders; blocks, plates, cylinders and lithographic stones, prepared for printing purpose (for example, planed, grained or polished).
Heading 90.10 :
Apparatus and equipment of a kind used in photographic or cimematographic laboratories not falling within any other heading in this Chapter; photocopying apparatus (whether incorporating an optical system or of the contact type) and thermoeopying apparatus, screens for projectors.
3. The Appellate Collector seems to have been not a little influenced in his decision that this was not a photocopying machine by the fact that its cost is much too high for such a common ordinary job as photocopying and by the fact that it reproduces i.e. prints, a design on a screen in a series of sets which are repeated till the designs or patterns or picture fills the entire space available. Thus spaces of 30" X 20" can be filled with any number of the pattern or design in dimensionally adjusted frames since the machine also adjusts the size of the individual prints or picture to be reproduced to the exact number of reproduction to fill the space available. He took this as evidence that the machine was a printing machine and not simply a photocopying machine for reproducing photoprints of documents and such other matter. The discussions by the learned Appellate Collector are fairly ample but to understand the function of this machine more technical details are required because no details have been given by the importers; even the printed literature show only their characteristics and versatility without detailing their actual application and method of working.
4. It appears to us, however, that there has been error in the reasoning of the Appellate Collector when he advocates an assessment under heading 84.34. It is not difficult to see that this heading concerns itself with machinery used in printing of matter on papers. Such matters are generally reading matter or pictorial matter and other graphic reproduction and illustrations used in communication. The heading speaks of machinery for type-founding or type-setting and there can be little doubt that type-founding and typesetting machinery deal with the setting of type for printing and reading matter and other communication medium. Once we recognise this it is easier to fit rest of the items in the heading to the pattern : printing plates and cylinders, printing type, impressed flongs and matrices, printing blocks, lithographic stones etc. these fit into the main activity of printing i.e. printing of the written word and of photographics and illustrations use for information communication and other media. That the step and repeat machine does work that looks like printing and for which to all appearances is printing will not place it in heading 84.34. To understand this we must consult the heading in the C.C.C.N.
5. The heading reads :
MACHINERY, APPARATUS AND ACCESSORIES FOR TYPE-FOUNDING OR TYPE-SETTING; MACHINERY OTHER THAN THE MACHINE-TOOLS OF HEADING NO. 84.45, 84.46 or 84.47, FOR PREPARING OR WORKING PRINTING BLOCKS, PLATES OR CYLINDERS, PRINTING TYPE, IMPRESSED FLONGS AND MATRICES, PRINTING BLOCKS, PLATES AND CYLINDERS; BLOCKS, PLATES, CYLINDERS AND LITHOGRAPHIC STONES, PREPARED FOR PRINTING PURPOSES (FOR EXAMPLE, PLANED, GRAINED OR POLISHED).
and contain notes under the heading which give a clue to the nature of machinery that this heading covers under the C.C.C.N. This notes speak of :
(i) Printing type and printing parts of printing machinery for example, separate characters, plates, blocks and cylinders engraved or otherwise prepared for printing used to print texts or illustrations (by hand or by the machines of heading 84.35) and prepared lithographic stones, cylinders, blocks and plates (i.e. those prepared so as to be suitable for engraving or otherwise receiving an image for subsequent use in printing). They also include machines, apparatus and accessories used to make the type or other printing parts or used to assemble (compose or set) it for use in printing, whether by hand or mechanically. This explanation is clear enough; what follows is even clearer and says that the heading is restricted to such equipment of a kind used in printing of texts or illustrations etc., whether on paper or sometimes on other material by the normal printing processes, namely :
(a) Relief printing : by means of type characters stereotype or electrotype plates, wood engraving, or by using relief photo-engraved. In these processes, the relief parts of the type are inked.
(b) Planographic printing : by lithography, photolithography or by offset printing. The printing ink is applied only to certain specially prepared parts of plane surface of printing plate. This category of printing also includes stencilling, and
(c) Intaglio printing: by photogravure and rotogravure, or by means of etched or engraved metal plates. The printing ink is accumulated in the engraved or etched parts.
6. Under B of the explanation, the C.C.C.N. carries a paragraph of machinery for making printing plates, blocks or cylinder. But significantly it carries nothing about printing screens. The step and repeat machine imported by M/s. Bharat Vijay Mills, is machine that reproduces the master on a screen for printing on the textile fabric. To revert to the C.C.C.N. the explanatory paragraph explains that the type-founding may be a hand operation, or may be done mechanically by more or less complex machines and they include matrices, table for levelling by hand planing, the face of printing type, automatic type and founders type and casting machines for rules, spacing material etc. composing sticks or setting sticks and chases, monotype machines, keyboard machines for casting and setting separate types, type-founders for line setting type, machine for setting and founding lines of type, machines of the office typewriter type, but with justifying devices and multiple fonts, special moulding presses, impressed flongs, machines for casting stereotyping plates, machines for making printing plates by direct reproduction from a document, black-leading machines for sensitising offset zinc plates and electrolysis and polishing vats for photogravure cylinders.
7. The explanations leave no doubt whatsoever about what this heading is meant for; it does not cover the machines that the Appellate Collector had in mind but only printing machines that print paper and similar stocks for the purpose of reproducing communication intelligence, graphics and printed material on paper and similar surfaces.
8. The Assistant Collector also was in error when he assessed this step and repeat machine under heading 90.10 because 90.10 covers only equipment and apparatus used in photographic laboratories and photocopying machine and apparatus. The Asstt. Collector wrote that the machine does not find mention in 84.40 and so could not be classified there. He preferred 90.10 because he took this machine to be a photographic machine and because it worked only on photocopying process. But it does not find mention in 80.10 either. Similarly the show cause notice of the Government of India said that the Government was of the view that step and repeat machine was basically a photocopying machine meant for reproducing from positive or negative to a light sensitive material and the machine appears to operate on the principle of photocopying contact and exposure. The error in this reasoning is that a photocopying machine is designed for copying written text and similar matter from paper to paper; the machine can be handled by a unskilled worker; that is not the case with the step and repeat machine which requires a certain amount of training although the manufacturers claim its simplicity make it suitable even for unskilled workers. The fact remains that the step and repeat machine is a far more complicated machine that requires far more operations and controls as well as certain amount of skill in the operators. The difference is not so much, as the Appellate Collector put it, that the step and repeat machine operates in complete darkness while the photo-printing machine does not. The fundamental difference is in the use, utility, structure and application of the step and repeat machine which sets it apart from photocopying machines; but these same characteristics also set it apart from a printing machine which the Appellate Collector regarded it to be.
8A. It is a machine used for printing of repetitive designs, repetitive words or overall colour on textile leather, wall paper, wrapping paper, linoneum and other materials. In point of fact, the importers had asked for heading 84.40 before the lower authorities for the reasons which have been only insufficiently explained, this was refused. It is the only heading which is most suitable and appropriate for this machine. Since we totally disagree with the Asstt. Collector and Appellate Collector, we direct this machine to be assessed under heading 84.40 particularly bearing in mind that this heading had figured in the proceedings before the lower authorities.
9. One reason given by the Appellate Collector for his order on the step and repeat machine is that the Act incorporates rules of interpretation that goods not falling within any other heading shall be classified under the heading appropriate to the goods to which they are most akin. In this context he held that this rule made it clear that changing technology, throwing up new goods never before contemplated, will make a tariff incomplete. Nothing has a single use and this has been underlined by the statutory Section Notes and Chapter Notes that everything had multiple alternative uses. Though the rule of interpretation quoted by the learned Appellate Collector says that true enough, it will not enable one to arrive at his conclusion in respect of the step and repeat machine. The Chapter Notes, Section Notes and the rules of interpretation cannot ignore the fact that heading 84.34 does not embrace a machine which is not used in printing of written texts and such like matters used in communication. This simple fact, which cannot be missed when one reads the heading and its notes in C.C.C.N. will be enough to exclude from here a machine that is used in the textile industry for printing fabrics. The printing that this machine does is not the kind of printing one associates with the printing of text, papers, books, pictures, graphics, illustrations etc. We repeat it by inviting the reader to read the heading and the notes that appear in this heading; it is a complete description and explanation of machines, components and parts that are employed on that find applications only in printing of documents papers etc. Even the exclusion at page 1284 tells the same story and point to the same fact: what are excluded are articles like stencil of zinc, special paper board for making printing flongs, machines for cutting stencils, telegraphic or radio equipment for sending or receiving perforation pattern, hand operated inking rollers.
10. Let us look at C.C.C.N. 84 35. This heading covers all machines used for printing by means of the type, printing blocks, plates or cylinders of the previous heading, excluding therefore :
(a) Special machinery for the decorative printing of fabrics, wall paper etc. which print repetitive designs, repetitive words or overall colour by means of plate or a cylinders (heading 84.40).
11. It is clear from this that item 84.34 and 84.35 will both cover only printing machinery which print by means of type i.e. reproductive intelligence communication, printing of words, pictures, illustrations etc. etc. A look at heading 84.40 and the notes under it under the C.C.C.N. will clarify the matter further. The heading covers a wide variety of machines which are used for printing repetitive designs, repetitive words or overall colours etc. on wall paper, wrapping paper, rubber, artificial plastic sheeting linoneum, leather etc. The work of printing for communication of information of intelligence is not contemplated for these machines.
12. Furthermore the notes say in bold types that to fall within the heading, the apparatus must have mechnical features and must be clearly intended for treating textile. Note that the C.C.C.N. regards the operations as "treating textiles".
13. The machine imported by M/s. Bharat Vijay Mills is a complex one; the heading 84.40 contemplates printing machine for treatment of textiles and using the rule of interpretation relied upon by the Appellate Collector, one can say easily that this heading is the most appropriate of all headings in the entire tariff and that the step and repeat machine therefore should fall under this heading.
14. The Appellate Collector said heading 84.40 refers to machines used for printing repetitive designs etc. on textiles and covers engraved etched plates, blocks or rollers for such machines; and photo-copying machine does none of the. (By photo-copying machine the Appellate Collector meant the step and repeat machine). But heading 84.34 "is restricted to such equipment of a kind used in the printing of texts and illustrations etc. whether on paper or sometimes on other materials by the normal printing processes viz. (I) relief printing (II) planegraphic printing and (III) intaglio printing. 84.40 covers machines "for printing a repetitive designs...on the textiles". Because the step and repeat machine prepared only the negative, it cannot be said it is not used for printing of repetitive design on textiles. The preparation of screen or blocks from the negative made by the step and repeat machine is a step towards the repetitive printing; it is a machine used for printing such repetitive designs. Furthermore in his discussion the Appellate Collector relied on the wording in heading 84.34 that the machines covered are "for preparing or working printing blocks, plates or cylinders". This machine, however, does none of these : it prepares the negative which is employed for etching or engraving the designs on the rollers.
15. The Asstt. Collector assessed the screen-copying installation under heading 90.10 and the Appellate Collector agreed with this. He came to this conclusion because he saw that the installation completely answer to the exclusion clauses under heading 84.34 in the explanatory notes and completely answer the description of goods under heading 90.10. He recorded that for the plate making industry the need to develop or print or take exposure of such sizes is frequent while for the photographic studio it is rather infrequent. The installation will be needed even for plate which do not need the step and repeat machine. The show cause notice of the Government says that the Appellate Collector had extended the benefit of notification No. 112/77 but he did so in respect of film and glass screens. The Government took the view that extension of the benefit of this notification was erroneous but no notice was issued by the Government in respect of the screen-copying installation.
16. There is no dispute by means of the notice for review before us in respect of the screen-copying installation. The learned counsel for the importers did say that he would like to revive this matter as this installation is part and parcel of the main equipments. Unfortunately this cannot be permitted. They had made no appeal/revision petition against the assessment of this installation and as we have said, the installation does not figure in the review notice. The assessment under item 90.10 cannot be modified.
17. As regards the glass screens, there was no assessment order by the Asstt. Collector but the Appellate Collector directed their assessment under heading 90.01 or 90.02 or Chapter 37 depending on whether they were made of glass of films. He furthermore gave concession under notification No. 112/77-Cus.
18. The importers say that there is no such thing as printing industry but there are only printing machines and so on. There seems to be more than a grain truth in this; the notification itself does not refer to printing industry but on the other hand the concession given by the notification will refer only to goods used in a printing process for different from a printing process employed by the importers with the help of their goods. The notification reads like this : -
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 exempt articles specified in the schedule annexed hereto and falling within Chapter 37 or Chapter 90 of the First Schedule to the Customs Tariff Act, 1975 (50 of 1975) when imported into India from so much of that portion of duty of customs leviable there on which is specified in the First Schedule, as is in excess of 40% ad valorem, SCHEDULE:
1. Standard precision cameras for preparing process and photolitho blocks and component parts thereof not capable of being put to any other use.
2. Glass screen, half tones screen and neutral contact screen used in printing processes.
In this respect the Appellate Collector was right in his understanding of this notification that there is no such thing as printing industry; there are only different kinds of processes of printing and some printing is the reproduction of reading matter while some other printing are associated with industry, as when figures, letter etc. are printed for reproduction of goods and wares like textile, cans and card board etc. One can differentiate between the type of printing but to speak of a printing industry is not supported by anything one is aware of. The notification exempted goods that fall within Chapter 37 or Chapter 90 and it is not difficult to see that these goods can and do fall under Chapter 90 of the Customs Tariff. The Government appears to read this notification as exempting only goods used in the type printing industry which print reading matter etc. But this is not borne out by the text of the notification. We, therefore, consider that extention of the notification to a glass film screen to be quite correct.
19. Regarding the Danagraf camera, the Appellate Collector agreed the assessment should be under heading 90.07 but conferred concession under notification No. 112/77-Cus. The Government held the view that this notification was meant for cameras for preparing process and litho blocks in printing industry and not for textile printing, whereas these cameras were for textile printing. There is not much substance in the review notice. We have said there is nothing like a printing industry. The notification reproduced above, will not exclude, by its wordings, a camera used in textile printing. The camera it appears is used in preparing process blocks and is a precision process camera. The Government seems to take book and paper printing as the only printing covered by the notification. But its wording do not confine its scope to this class alone. We agree with the Appellate Collector in this and we order accordingly.
20. The learned counsel for Bharat Vijay Mills said that this review notice was improper. The power to review can be exercised only if the order is improper, illegal and perverse etc. not if there is only a difference of opinion as when the Central Government thinks that the assessment should be made differently from the way the lower authority assessed the goods. For this he quoted 1980 E.L.T. 625 and 1980 E.L.T. page 3; he also read para 1 of the show cause notice and said that this was not a reason for review of the case. He referred to page 1554 under heading 90.10 C.C.C.N. and said this page does not talk of this machine alone but three other different types of machines. He said that the show cause notice is totally vague. He quoted 1985 (19) E.L.T. 329, 198J E.L.T. 1919, AIR 1968 Cal 28. He referred to their reply to the show cause notice and repeated that the notice in respect of the step and repeat machine was vague. In regard to the camera he read the notification No. 112/77-Cus.
21. He pointed that the order in original referred to photographic principle but the show cause notice says that it was a photostat machine, without any reason whatsoever, when the Asstt. Collector says no sweh thing. Me then quoted 1985 (19) E.L.T. 415 and 1983 E.L.T. 1566, 1983 E.L.T. 1607, 1985 E.L.T. 572 and 1981 E.L.T. 325.
22. We have seen the above cases quoted by the learned counsel. We are not able to agree with him that the present review is contrary to the law in force at the time. We think that there is a over-statement on the part of the learned counsel when he said that the show cause notice was caused only by a difference of opinion. In fact it is a moot point if a difference of opinion can operate so as to make it appear to the reviewing authority that the order proposed to be reviewed was improper or illegal; there can be no certain test that when an order is considered to be improper or illegal or incorrect, it cannot be described as merely a difference of opinion with the lower authorities. We must reject this argument of the importers. We agree with the department who argued that the Central Government under section 131 (3) could make a review if it thinks that a wrong decision had been taken.
23. The learned counsel for the department argued that the Government said that the step and repeat machine was basically a photocopying machine. He said that the machine operated on the photographic principle; this is a correct statement. We have discussed the proper assessment of the step and repeat machine in the above paras and there is no need to say anything more now. We would however put on record that we agree with his contention that in interpretation of the Customs Tariff 1975 we would have to go by its rules of interpretation and the notes in the sections and chapters, rather than depend on trade parlance.
S.D. Jha, Vice-President, (J)
24. I have read with great care the illuminating order passed by Appellate Collector of Customs, Bombay and equally illuminating order proposed by Brother Syiem.
25. In respect of the present respondent Bharat Vijay Mills, Kalol, the items involved in the review show cause notice are three :
(1) Step and Repeat Machine which the Appellate Collector classified under heading 84.34 of the Customs Tariff and Revenue through the show cause notice proposes classification under heading 90.10.
(2) Screen Copying Installation which the Appellate Collector assessed under heading 90.10 and which classification is not proposed to be displaced by the review show cause notice. The dispute is about eligibility of the goods to benefit of concession under Notification No. 112/77 which the Appellate Collector had granted in respect of the goods and the show cause notice proposes to withdraw.
(3) Automatic Danagraf Camera which was assessed under heading 90.07 and about which there is no dispute. The dispute is about eligibility of the goods to benefit of concession under notification (supra).
26. Shri Gujral, learned counsel for the respondent, during arguments, no doubt tried to challenge the classification of Screen Copying Installation under heading 90.10. I agree with Brother Syiem that he should not be allowed to do so. I also agree with Brother Syiem that items 2 and 3 referred to above have rightly been granted the benefit of notification No. 112/77 dated 1-7-1977.
27. As for item No. 1 Step and Repeat Machine from the observation of the Collector that the item is not known in the market as photocopying apparatus, I would agree with Brother Syiem that applicability of heading 90.10 of the CTA to the same is clearly ruled out. However, the Appellate Collector of Customs had opportunity to see the item and its performance. From the Appellate Collector's observation in para 12.02 of the order which is based on detailed study and enquiries made by him, it would appear that the item Step and Repeat Machine is employed in printing presses which do the job of printing on paper and which employ the machine for their own block making. The machine is by itself not used for printing repetitive designs or repetitive words but as an aid to the same by making plates, blocks or cylinders. I would, therefore, agree with the Appellate Collector of Customs that proper classification for the machine would be heading 84.34 of CTA but this should make no difference to the present review proceedings, now appeal before the Tribunal, in so far as it relates to the present respondent Bharat Vijay Mills because even according to Shri J. Gopinath, SDR representing the appellant at the material time the duty liability under headings 84.34 and 84.40 were the same. The proposal of Revenue to classify the item under heading 90.10 of CTA not being acceptable, the review notice so for as it relates to the present respondent should be dropped and appeal dismissed.
28. With these observations, I agree with the order proposed by Brother Syiem.