Customs, Excise and Gold Tribunal - Tamil Nadu
Elsimate Electronic Industries Pvt. ... vs Commissioner Of Customs, Chennai on 27 November, 2001
Equivalent citations: 2002(80)ECC110, 2002(141)ELT126(TRI-CHENNAI)
JUDGMENT
S.L. Peeran
1. This appeal arises from Order-in-Appeal No. M.Cus.1203/96 dated 22.7.96 which the Ld. Commissioner has confirmed the confiscation of imported components of printer calculator model EL-1611 H (Sharp) - 1500 setson the ground that they are consumable item requiring licence and are liable or confiscation under ITC (HS) classification of Export Import Policy sub-heading 84702100 and Customs sub-heading 8470.21 of Customs Tariff which reads as under:-
"84.70 Calculating machines and pocket-size data recording, reproducing and displaying machines with calculating functions; accounting machines, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device; cash registers .....
8470.21 Incorporating a printing device".
2. Appellants had filed Bill of Entry seeking classification under sub-heading 84.73 of the Customs Tariff which reads as under:-
"84.73 Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings Nos. 84.69 to 84.72."
3. In terms of Export Import Policy, the 'parts' fell under OGL and they could import the same. However, the department initiated proceedings to classify the item as a fully complete printer calculator under heading 8470.21 by applying the Interpretative Rule 2(a) of General Rules of Interpretation of Customs Tariff Act and on that premise, held that being a fully complete electronic calculator, it required licence as it fell under the restricted category of consumer goods vide Sl. No. 156(A) Part - II Chapter XVI of Export and Import Policy - 1992-97. Therefore, the goods were held to be imported without a valid licence and liable for confiscation under Section 111(d) of the Customs Act and for penalty under Section 111(2) (a) of the Customs Act. the goods were considered as complete printer calculator in CKD condition in terms of interpretative rule as stated and hence the Dy. Commissioner ordered for confiscation, however, granting redemption on payment of fine of Rs. 5 lakhs and penalty of Rs. 50,000/-.
4. The Ld. Commissioner (Appeals) in his order has set aside the penalty and has reduced the fine to Rs. 3 lakhs but has not accepted the plea that the Interpretative Rules cannot be applied for classification under the ITC policy. Appellants have also made the plea that the item was not in CKD condition and has not satisfied the tariff description but did have essential characteristics of final product also for clarification only as a part under 84.73. They contended that they had to use several other parts indigenously procured and required to carry out several processes to make the item a complete one. They were registered under the Central Excise Act as a manufacturing unit in relation to their final product viz. Electronic printer calculator and were paying excise duty. Although in para-24 the Commissioner has accepted all these pleas but yet he has applied the interpretative rules of the Customs Tariff to the ITC (HS) classification, and on that premise, held the item to be in CKD condition as consumer goods which required licence.
5. Ld. Counsel Mrs. Anita Sumanth argued that the Interpretative Rules of Customs Tariff cannot be applied for the purpose of classifying the items under ITC (HS) classification. She submitted that this issue is no longer res integra and the matter is already covered by number of Tribunal judgments. She relied on the following Tribunal judgments:-
(1) WIPRO LTD., v. CC Chennai - 1999 (107) ELT 398 (2) L.M.L. LTD., v. CC Bombay - 1999 (105) ELT 718 (3) K.R. TRADING CO. v. CC Calcutta - 1999 (110) ELT 746
6. She also pointed out that there was no dispute raised by the Commissioner (Appeals) but has clearly given a finding in para-24 that they were carrying out various activities and process of manufacture to bring into existence electronic printer calculator and were paying duty. If this be the case, therefore the classification for ITC purpose, rules for interpretation of customs tariff cannot be applied in terms of above judgments.
7. Ld. SDR reiterated the findings given by both the authorities and submitted that item imported as the vital parts, including wires and also the catalogue and therefore it was in CKD condition. He submitted that being in CKD condition, it has to be treated as electronic calculator requiring licence being a consumer item. Hence the confiscation is justified.
8. We have carefully considered the submissions made by both sides and have perused the impugned order. In para-24 of the impugned order, the Ld. Commissioner (Appeals) has accepted the appellants' contention that they were manufacturing the final product and were buying various indigenous items for various process of manufacture and clearing the same, paying excise duty. However, for ITC purpose, he has applied the Rule 2(a) of Rules of Interpretation of the Customs Tariff to hold the item to be in CKD condition and the final product requiring it to be classified as final product itself under 8470.21. This is contested on the ground that Rule 2(a) of Interpretative Rule cannot be applied to ITC HS classification and the judgments are relied on this aspect. We have considered these judgments and note that in the case of WIPRO LTD (supra) in para-7(d), have clearly laid down that Interpretative Rule 2(a) cannot be applied to interpret either notifications or Import-Export Trade Control Order. The findings recorded in para-7(d) is reproduced herein below:-
"(d) It is now well settled law that Interpretative Rule 2(a) of Customs Tariff Act, 1985 cannot be used to interpret either notifications or Import-Export Trade Control Order. The impugned order has held imports violative of the ITC Policy by aggregating imports in terms of the said Rule 2(a). As against this, appellants have all along stressed that Para 156F of ITC Policy superseded the Para 156A thereof, the former being more specific to computers. The impugned order is silent on this issue;"
As can be seen above, the said finding clearly applies to the present case.
9. Likewise, the Tribunal in the case of L.M.L.Ltd (supra) have clearly held in para-8 that the goods being not complete motor vehicles, they are to be classified as 'parts' under ITC Policy and Rules of Interpretation of Tariff and Explanatory notes to HSN cannot be applied for the purpose of interpreting ITC policy. The finding recorded in para-8 therein are noted herein below:-
8. We have carefully considered the facts and circumstances advanced from both sides. On this plea, we agree with Shri R. Santhanam. Rules of Interpretation of Tariff and Explanatory Notes to HSN cannot be applied for the purpose of interpreting the ITC policy. When the policy states in the negative list that consumer goods are required to be imported on licence, it means only the complete motor vehicle which were understood to be in the list and not on the basis of understanding in terms of Customs Tariff Act. Accordingly, we are of the view that confiscation of the goods and imposition of penalty are not warranted. We set aside the same. Appeal disposed of the above terms with consequential relief, if any to the appellants."
10. In the case of K.R. TRADING CO., (supra) the Tribunal has taken a similar view and has also further held that I.T.C. order 1955, although, fully aligned to the schedule to the Customs Tariff Act, 1975 but various appendices and paras in EXIM policy are aligned to the schedule to the Customs Tariff Act and the purpose of both being different, therefore Interpretative Rules cannot be applied. The findings recorded in paras 5.1 to 5.3 are extracted herein below:-
5.1 We have carefully considered the pleas advanced from both sides. While it is true, as pointed out by the learned SDR, that schedule to the I.T.C. Order, 1955 is fully aligned to the schedule to the C.T.A., 1975, but that does not mean that the various appendices and paras in EXIM Policy are aligned to the schedule to C.T.A. They are vastly different. Purpose of EXIM Policy is different from that of Customs Tariff. Purpose of former is to regulate the import and export of goods to and for the country, while the purpose of the C.T.A. is to impose Customs duties. One is a regulatory measure and the other is a revenue one.
5.2. We have therefore, to construe the scope of entry in S. No. 655 of Appendix 3A and of entry in S. No. 37(IX) of Appendix 17, Part II independently i.e., de hors the Customs Tariff Schedule. A bare perusal of entry in S. No. 655 of Appendix 3A clearly indicates that "staples and stapling pins" are covered by this entry without reference to its probable use or form. On the other hand,from the entry in S. No. 37(IX) of Appendix 17, Part III, it is apparent that the use of "Stapling pins" referred to in this entry has to be as "trimmings & embellishment" for the export product "ready-made garments hosiery/knitwear". It is admitted to the Revenue, as found in the impugned order, that the imported goods "staples in strips" are to be used as an article of stationery for office use or for packaging of ready-made garments. Adjudicating authority's finding that packaging of ready-made garments by stapling pins would also be covered within the expression "trimmings and embellishment", is not at all warranted from the plains meaning of that latter expression. Hence the imported goods cannot be covered by entry in S. No. 37(IX) of Appendix 17, Part III of the EXIM Policy. Consequently validity of licence produced by the appellant Company cannot be challenged in view of para 192 of the EXIM Policy. Therefore, we set aside the finding of liability to confiscation of the imported goods and consequently the penalty of Rs. 30,00,00/- imposed on the appellant.
5.3 Learned Consultant has not challenged the classification of the goods for assessment of customs duty. Hence we are not required to give any finding on that issue. Appeal disposed of in above manner.
11. We further notice that the claim for classification under chapter heading 84.73 as 'parts' under the Customs Tariff Act cannot be accepted in terms of the Bill of Entry. The authorities cannot for the purpose of ITC adopt a different classification by applying the Rule 2(a) of the Interpretation Rules of Customs Tariff. Therefore, in the light of the judgments (supra), we find merit in the appeal and allow the same by setting aside the impugned order.
(pronounced in open Court on 27.11.01)