Customs, Excise and Gold Tribunal - Delhi
Kerala Agro Machinery Corpn. Ltd. vs Collector Of Customs on 5 May, 1992
Equivalent citations: 1992(62)ELT733(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. This is an appeal directed against the order dated 6-5-1985 passed by the Collector of Customs (Appeals), Madras by which he had upheld the order dated 1-10-1.983 passed by the Assistant Collector of Customs (Imports), Cochin Customs Office rejecting the claim of the appellants herein for refund of Rs. 52,602.19 being excess duty paid Power Tiller Tyres. The brief facts are as follows :-
The Appellant is a Kerala Government Company registered under the Companies Act. The appellant is engaged in the manufacture of Power Tillers and its spares. The appellant was importing tyres and tubes for the Kubata Power Tillers. The above Power Tillers for the purpose of Countervailing duty was classified under 16-III. The appellant imported 600 pcs. of tyres and tubes as per ex. SSS. AFRICAN EXPRESS. At the time of clearance of the above, Cochin Customs assessed Countervailing duty under CET 16-1(1). Since the rate of Countervailing duty charged is illegal as per appellants as it can be assessed only 16-III and not under 16-I(1), the appellant filed a refund application. It was also pointed out that earlier similar goods were cleared by the Cochin Customs itself for the purpose of Countervailing duty under CET 16-III. The Assistant Collector of Customs by order dated 1-10-1983 rejected the refund application without any valid reason. Aggrieved by the above the appellant filed an appeal before the Collector of Customs (Appeals), Madras. The Appellate Collector also dismissed by order dated 6-5-1983 which was despatched only on 26-8-1983. Aggrieved by the above order this appeal is filed.
Shri J.B. Koshy, the learned Counsel appearing for the appellants submitted that the tyres imported cannot be held to be falling within the scope of Item 16(1) of the CET. He relied upon the clarification given by the Ministry of Finance Circular No. 24/81 dated 1-3-1981 clarifying that Tyres for Power Tillers would be covered under sub-item III of Item 16 as all other tyres. He further relied upon the another order-in-appeal dated 14-11-1985 in C27/AP/112/1984 passed by the Collector of Customs (Appeals), Madras, wherein he had held that classification of tyres for power tillers will be under 16 III. This order has also not been challenged. The learned Counsel urged that the Departmental classification was binding on the Departmental Officer for which he relied upon the case law reported in 1987 (29) E.L.T. 590 (Tribunal) in the case of Collector of Central Excise, Kanpur v. Samaj Bin Co.
Shri J.N. Nair, the learned Departmental Representative appearing for the Department contended that the classification by the lower authorities was correctly made under Item 16 I(1) as the import related to a period subsequent to 1981 when the Tariff Item was recast. He also pointed out that the appellants herein had clearly admitted before the Collector (Appeals) that the tyres were meant for equipments designed for working off the road. It was also submitted by the learned Departmental Representative that Circular instructions by the Central Board of Excise and Customs are not binding on adjudicating authority for which he relied upon the case of Collector of C.E., Kanpur v.Krishna Carbon Paper Co., reported in 1988 (37) E.L.T. 480 (S.C.) .
2. The submissions made by both sides have been carefully considered. The Tariff entry under Item 16 CET was recast in 1981 as a measure of rationalisation which is indicated in the related Finance Bill. The recast Tariff Item read as follows :
"Tyres. -
'Tyre' means a pneumatic tyre in the manufacture of which rubber is used and includes the inner tube, the tyre flap and the outer cover of such a tyre :
I (1) Tyres for Motor Vehicles : and Tyres for 60% ad valorem.
Vehicles, or equipments, designed for use off the road
(2) Tyres for tractors, including agricultural trac- 60% ad valorem.
tors.
(3) Tyres for trailers 60% ad valorem
II Tyres for cycles and cycle rickshaws -
(1) Tyres. 60 paise per tyre or 15% ad valorem whichever is higher.
(2) Tubes 30 paise per tube or 15% ad valorem whichever is higher.
III All other tyres. 25% ad valorem.
Explanation I
'Motor Vehicles' means all mechanically propelled vehicles, other than tractors, designed for use upon roads.
Explanation II.
'Motor Vehicles', 'Tractors, including agricultural tractors' and 'Trailers' shall include a chasis; but shall not include a vehicle running upon fixed rails.
The Government of India also clarified the rationale behind recasting the tariff item and its ambit in General Circular 24/81 dated 1-3-1981 alongwith the Budget in Finance Ministry F. No. IV/16/68/81 CXI dated 1-3-1981 which is as follows :
4.3 The classification of tyres commonly known as OTR tyres (off-the-road tyres) has also been clearly set out in the new description of Tariff Item 16. Off-the-road tyres are generally designed for fitment in motor vehicles like off-the-highway dumpers, and earth moving equipments like graders, bulldozers, scrapers, front-end loaders, draglines, excavators etc. They are normally of the sizes 12.00 - 24 and above. Some of these tyres are also of the tubeless type. These OTR tyres are essentially equipped with extra heavy tread with rugged bar and block tyre patterns for high traction designed to operate on broken surface strewn with sharp, fresh blasted rocks and boulders as at mining, earth moving and construction sites. Special cut resistant and high abrasion resistant rubber compounds are used in their manufacture to resist damages by cuts and bruises. The revised Tariff Item 1.6 is worded in such a manner as to group these OTR tyres along with the tyres for motor vehicles, attracting a common effective rate of 55% ad valorem (vide S. No. 5 of the Table annexed to the notification No. 27/81-C.E., dated 1-3-1981). However, aero tyres, tyres for fork lift trucks, power tillers etc., would be covered under the residuary category "all other tyres" under sub-item III of Item 16 attracting tariff and effective rates of 25% ad valorem.
These instructions issued at the time of the recasting of the tariff item by the authority which brought it about can be taken note of as a useful guide in classification being in the nature of contemporaneous exposition. Even going by the wording of the Tariff Item, the power tiller for which the tyres were imported is not a motor vehicle designed for use upon roads. Nor is it use off-the-road vehicle or equipment like dumpers, front-end loaders, excavators etc. Therefore, tyres meant for power tillers will fall outside the scope of Item 16-1(1) CET, and will correctly be classifiable under the residuary Item 16-III, CET under "All other tyres". It is also noted that the Collector (Appeals) in the impunged order has largely based his conclusion on the fact that there was an admission by appellants that the equipment for which the tyres are imported is designed for use off-the-road, without detailed consideration of the nature of such equipments and whether power tiller would be covered thereunder. In the result, the appellants' claim for reassessment of the tyres under Item 16-III CET for CVD is well founded. The appeal is accordingly allowed.