Customs, Excise and Gold Tribunal - Bangalore
M/S. Millipore India Pvt. Ltd., ... vs The Commissioner Of Customs Bangalore ... on 18 June, 2001
Equivalent citations: 2001(77)ECC384, 2001(138)ELT256(TRI-BANG)
ORDER
Shri S.S. SEKHON
1. Appeal No. C/SB 2593/94(MAS) has been filed by the appellant Company and C 506 95C by Revenue, against the same order in original, they are taken up for decision by the common order, after hearing both sides.
2. We find, the DRI officers, Bangalore on receipt of specific information that M/s. Millipore India (P) Ltd. (herein after referred to as M/s. MIPL for short) were evading Customs Duty by misdeclaring the actual value of goods imported in as much as they receive two sets of invoices from their supplier collaborator m/s Millipore Inter Tech. USA (herein after referred as M/s. Millipore for short) declaring the actual value and lesser values and the higher value invoice was suppressed and lesser value invoice was declared for Customs Assessment of duties. It was also informed that the gods were being misdeclared for clearing at lower rate of duty under heading 8421, instead of 3920.79 as was being declared and assessed earlier. On such consignment was found under clearance vide BE 009557 dated 17.4.93 filed by M/s. MIPL for clearance of filter. Material alongwith the an Invoice enclosed at CIF Value USD 5325.80 which was assessed and duty was paid as assessed. On comparison with the Invoice obtained by DRI from their sources, it was revealed that the value should have been USD 12022.45. The difference being only in Unit prices while freight, insurance, forwarding charges was the same. These goods were seized on 21.4.93.
3. After detailed enquiries made, a show cause notice dated 11.10.93 was issued by the Collector to M/s. MIPL and Sh. Subhash Bagaria, Director of M/s. MIPL asking the to show cause as to why-
a) The "Inventory filter material" valued at Rs. 9,68,178/- seized under section 111(m) of Customs Act 1962 and duty on differential value amounting to Rs. 3,20,077 - should not be demanded on these goods under section 28 of the customs act 10962 (if goods under BE 009557 intercepted by the officers)
b) Provisional assessment should not be finalised as proposed.
c) Differential duty on spare parts imported since 1990 onwards should not be demanded as facts that such parts were being imported at much lower price than the given in the Memorandum dated 26.10.89 & 10.6.91.
d) Differential duty not be demanded on imports made covered by BE 024015. Invoice No. 24712 for having suppressed the correct value.
e) Provisional assessment on 5 Bills of Entry where "Inventory Filter Material" were deliberately misclassified under heading 8421.00 instead of 3920.79 under which the classification should be finalised and differential duty on such misclassification should not be demanded under the extended period.
f) Why penalty should not be imposed on M/s. MIPL and Mr. Subhash Bagaria, Director of M/s. MIPL under section 112(a) & (b) of the customs acts 1962.
4. The Collector came on the following finding, after hearing the matter ordered:
a) Bills of Entry No. 009557 dated 17,4,93 be finally assessed on the declared value of USD 5325.80.
b) Goods on the other Bills of Entry should be finally assessed by reclassifying the goods under heading 3920.79 and directed the importer to pay the differential duty of Rs. 17,23,052/-
c) Bills of Entry provisionally crossed for "Spare Parts" be finalized based on the investigation order No. 120/92 issued by SVB, Madras.
d) Differential duty amounting to Rs. 14,512.63 on import of..... vide BE 024015 dated 23.11.91 for which the M/s. MIPL had admitted the discrepancy in the invoice, was demanded.
e) Further penal proceedings in the case was dropped.
5. The appellant, have challenged only the part of the order, as regard classification determined on five Bills of Entry under heading 3920.79 and consequent demand of duty of Rs. 17,34,052/- while the Revenue has prayed for setting aside the entire order and the order of assessment of BE 009557 dated 17.4.93, on the declared value for assessment as not legal and correct and also for misdeclaration of the value with interest on duty and calling for liability of penalty on M/s. MIPL & its Director Sh. Subhash Bagaria.
6. We have heard both sides, and considered the matter, and find-
a) The order of the Collector as regards the classification of goods covered under heading 3920.79 is restricted to five Bills of Entry while on BE 009557 dated 17.4.93 there is no finding about the classification since the order reads "I order the Bill of Entry No 009557 dated 17.4.93 be finally assessed adopting the value of USD 5325.80 for the purpose of assessment."
This BE No. 009557 dated 17.4.93, the declared goods are INVENTORY FILTER MATERIAL (MIXTURE OF CELLULOSE ACETATE & CELLULOSE NITRATE) cleared classification by the Importer under heading 3920.79, which has been provisionally approved as such. While finalising the assessment of this BE, the Collector should have given an order as regards classification on this BE also, since for assessment classification and valuation, both are to be determined and classification of INVENTORY FILTER MATERIAL was under dispute before him. The order therefore for assessment only as regards value for final assessment of the BE is therefore no complete even if the importer had declared it to be under 3920.79, the same was being disputed by him.
b) We find that the entity under classification dispute is "INVENTORY FILTER MATERIAL". As per the submissions made by the learned advocate and the technical literature produced, the goods are determined to be-
Membrane Filter Material is form of Roll Stock of about 1 foot width and 500 feet length with thickness form 0.2 mm to 0.5 mm generally in white colour made up of Mixed Esters of Cellulose Acetate, Cellulose Nitrate, Poly Tera Fluro Ethylene and Poly Vinyl Fluoride with pore size from 0.025 microns to 10 microns, the pore sizes are in built in particular fashion of manufacture which is patented by M/s. Millipore, USA, the collaborator and supplier. The type of material and the pore size is selected by its dedicated application for filtration activities alone. After receipt in India, they are cut to required size and then used as part of membrane filter which are thereafter then used as a filter material in the filtering system/equipment/machines.
Heading 84.21 claimed by M/s. MIPL read as:
"8421.00 Centrifuges, including Centrifugal dryers, filtering or purifying machinery and apparatus for liquids or gases"
and parts of 8421.00, as per section note XVI, would be covered under heading 8421. When we read the HSN notes under heading 84.21 especially for Parts we find that at pages 1183-1184 it read as-
"PARTS"
"Subject to the general provision regarding the classification of parts (see the general explanatory note to section XVI) the heading covers parts for the above mentioned types of filters and purifiers. Such parts include inter alia.
Leaves for intermittent vacuum filter: Chassis, Frames and plates for filters process: rotary drums for liquid or gas filters, baffles and perforate plates, for gas filters. It should be noted, however that filter blocks of paper pulp fall in heading 48.12 and the many other filtering elements (ceramics, textiles, felts etc) are classified according to their constituent materials".
Therefore, the exclusion clause of the HSN notes, would assume great importance in the classification of the entity in question. We cannot find the entity to be in the form of leaves, plates, drums perforated or otherwise, but to be in roll length of 1 foot by 500 feet as imported. The inclusion clause for Pars, as per HSN notes (supra) will not include the entity as imported. If it is cut to a desired shape and size, subsequent to import, and if it becomes a leave, plate or and drum with or without perforation, that cannot be the factor to determine the classification for goods as imported. We find the exclusion clause for Parts in the HSN notes (Supra), exclude 'Filter Elements' and the learned advocate on the question from the Bench, admitted during the hearing that 'Filter membrane' or 'Inventory filter material' is nothing but interchangeable names for 'Filter Elements' and the entity under import is admittedly for use as filtering medium. In this view we have no hesitation in coming to a finding, that the Rolls under import, are excluded by the HSN notes for Parts from being classified under heading 84.21 relying on HSN head notes, which are binding as per the statutory Rules of Interpretation to Customs Tariff.
c) Once the entity is excluded from heading 8421, as claimed by the Importer, we proceed to find out whether it could be classified under chapter 3920.79 which read as:-
"3920 Other plates, sheets, film foil & strip, of plastic non cellulose and non rediforced, laminated, supplied or similarly combined with other materials; 3920.79: of other cellulose derivatives"
Chapter no. 10 of chapter 39 reads as:-
"10 heading nos. 30.20 and 39.21, the expression 'plates, sheets, film, foil and strip' applied only to plates, sheets, film, foil and strip (other than these of chapter 54) and to block of regular geometric shape, whether or not printed or otherwise surface covered, uncut or cut into rectangle (containing squares) but not further covered (even if when so cut, they becomes articles ready for use)".
There is no doubt from the physical dimensions of the imports, that the entity under import is a Sheet in Roll Form. From Chapter note 10 of Chapter 39, extracted herein above processes, even if the sheet is further worked and cut, they would remain under the definition of sheet or even if they become 'ARTICLES READY USE'. Therefore classification under 3920.79 could be valued, provided it is made up of other cellulose derivative plastic material. As evidence from the description submitted by the learned advocate and the technical literature produced, it is said to be made up of Cellulose Acetate. Cellulose Nitrate, Poly tera Fluro Ethylene and Poly Vinyl Fluoride. However there is no finding arrived at as to how these constituents are Plastics. Since the constituent material has to be a plastics, to come under the Chapter 39, this finding was required. As sample of entity under import, as it appears from the show cause notice, were drawn for test, results of the test should be considered. This was required to rule out the possibility of classification of entities made form Cellulose to be classified under Chapter 48 as Cellulose Waddring Sheets. The matter which appears to be of classification, therefore requires to be redetermined under chapter 39 or Chapter 48.
d) We have considered the case law relied upon by the learned advocate to claim the classification of the entity imported to be under heading 84.21 parts and we find-
(i) The case law as reported in Eureka Forbes Ltd 2001 (42) RLT 27 (CEGAT) is on Pipes Hoses as parts of 85.09, ASCU India Ltd. 2000 (119) ELT 458 (Tribunal) is for sheets as parts of 84.17, Elgi Ultra Appliances 1999 (35) RLT 175 (CEGAT) on pipes as parts of 8424, Collector CE vs. BETCO Insulators 1998 (104) ELT 523 (Tribunal) is on electrical grade insulating paper under 85.46, Tapex Corporation 1998 (103) ELT (580) (Tribunal) on Electrical Insulting Tapes under 85.46, Collector of CE, Hyderabad v. Behalude Kalyuan 11997 (91) ELT 13 (SC) is on classification under erst while central excise tariff 15A(2) Metrowood Engineering works 1989 (43) ELT 660 is on classification of industrial laminates under 85.46, These authorities do not consider the specific exclusion clause vide HSN Note under relevant heading for coverage of Parts of 84.21 therefore they are not relevant to determine the classification in this case of the goods under import.
(ii) The case of Calame Industries Ltd. 1998 (100) ELT 379 (Tribunal) is primarily and particularly, designed parts. The entity under import is designed fro serving a particular of filtration end use on. However as imported that is running length, it cannot be said to be particularly designed to be part of a filtration equipment machine nor any such evidence is produced as a claim to that end. On the other contrary, it is an admitted position that after imports, the roll is subjected to process of cutting, slitting to achieve specific end use shapes and size. Therefore, this case law does not help the appellants claim for classification of the entity under import as parts of 84.21.
(iii) The case law in Filter Pharma Lab Pvt Ltd. 2000 (120) ELT 372 is on whether the process of cutting of imported glass micron filter paper and nylon micron filter paper into specific end use sizes would amount to manufacture under the Central Excise act 1944. It is not helping the case of appellant since the issues of further process of slitting/cutting the 500 feet roll imported is not before us.
(iv) The Case of Bells India Ltd. the classification was not disputed by the Revenue or the appellants under 84.21 in the present case, the appellant have on their own declared it no as 84.26, but 3920.76 and the classification is disputed.
(v) The case of Titanium Equipment's and Anode Mfg Co. Ltd 1999 (107) ELT 112, has been carefully perused by us, we find that the goods in that case under clearance for classification were 'Membrane Elements' uses as filter made up of Polyamide. It was observed to be 'a high technology product where the elements' is vacuum sealed and used for reverse osmosis and filtration systems, and available in various diameters and lengths. The supply in the present case is not of 'vacuum-sealed elements in different diameters and lengths' but a running length roll. Therefore the entities under import are different and cannot be compared. That case of Titanium Equipment was also decided on the basis of Classification Opinion by Customs Co-operative Council presented by the appellant in that case. A perusal of the Compendium of the Classification Opinion by Customs Co-operative Council reveal "Filtering material" classified as per constituent material only. Since the entity under import is only 'filtering material' and not 'Replacement Oil Filter Castings', we cannot find any reason to apply the Customer Co-operation Opinion, to arrive at a classification for the entity under import in this case. We therefore find that the case of Titanium Equipment's & Moulds Mfg. Co. Ltd 1999 (107) ELT 112 does not help the appellant to determine the classification for imported goods in this case under 8421.99 as Parts thereof.
(e) As regards the appeal of Revenue, we find, the Collector has considered memorandum dated 2.7.90 entered into between M/s. MIPL and M/s. Millipore, USA and the price of Invoice 70747 showing lower value had been accepted and that the sale price of all types of 'inventory filters' are same and there is no evidence to prove extra payments to M/s Millipore, USA. However he has not considered the material evidence at a page 17 & 19 and has glossed over the fact of original higher priced Invoices recovered from Freight Forwarder. The reliance placed by the learned Collector on the SVB (Special Valuation Branch, Madras Customs House) Circular for imports at Bangalore, is not correct in law. While Collector, Bangalore would be exercising the power of a Proper officer for determining value as per law, he is not bound by SVB circular of another Customs House not in his jurisdiction. Such determinations may be relevant evidence for Collector Bangalore to consider, but cannot be binding on him Collector. Bangalore should have considered the evidence, as on record,and came to his Independent Determination of the Value. We find that on this very issue, the Southern Regional Bench at Madras in case of M/s. DIGITAL EQUIPMENTS (INDIA) Ltd. (tribunal order no. 400/1995 has held:
"5. ..... The instructions issued by the Special Valuation Branch may be of guidance which might be taken into consideration by the original authority while exercising his independent powers and application of mind as quasi-judicial authority under the provisions of the Customs act, 1962. But at the same time he cannot abdicate his individual function as an adjudicating authority, while exercising his Quasi Judized Powers. He has held that because of instructions of the Special Valuation Bench he has loaded the value. In other words while it is open to the Assistant Collector to take note of the instructions of the Special Valuation Branch, the order should make it clear that objectivity on consideration of the issue by application of mind the Assistant Collector concerned gave a finding by taking into account the Instructions of the Special Valuation Branch. This is a legal requirement and is often said justice must not only be done but manifestly seem to be done.
We would also come to a similar conclusion in this case, more so when Revenue has taken a ground that, the SVB circular has not been completely & correctly applied. We would therefore consider that the aspect of valuation is required to be redetermined as regards as the charges in the show notice as per Law.
(f) Since the issue of classification under chapter 39 or 48 alongwith valuation is required to be readjuticated we leave the question of a case or cause for penalty, also open. Since the M/s. MIPS has not appealed against the finding of an admission of differential duty liability of Rs. 14,512.63, the said issue is treated as closed. The other issues except classification under heading 84.21 are left open for both sides to be decided in the de novo proceedings.
7. The appeals, disposed off in the above terms.
(Pronounced in the open court on 18/6/2001)