Customs, Excise and Gold Tribunal - Tamil Nadu
Gowtham Processors And Bharat Textile ... vs Commissioner Of Customs on 2 December, 2003
Equivalent citations: 2004(95)ECC107, 2004(171)ELT86(TRI-CHENNAI)
JUDGMENT S.L. Peeran, Member (J)
1. In both these appeals, the appellants have challenged the respective Order-in-Original Nos. 9 & 10/2003 dated 6.6.2003 passed by the Commissioner of Customs, Tuticorin. The allegations against the appellants is that they had indulged in mis-declaration of fabric dying machine as dying machine complete with dye kitchen and accessories vide Bill of Entry No. 320892, dated 6.3.03 by M/s Gowtham Processors, Tirupur.
2. Revenue had referred the matter for obtaining the expert opinion from Textile Commissioner, Mumbai and also from SGS India Pvt. Ltd., and besides from South India Textile Research Association (SITRA). The opinion given by SITRA and SGS India Pvt. Ltd., was after weighing after thorough examination of the catalogue, literature as well as the machines. Besides, they have also examined similar sort of machines which have been installed in Sakhti Knitting, Perundurai.
The appellants have also relied on the opinion given by Dr. N. Selva Kumar, Assistant Professor of Textile Technology, AC College of Technology, Anna University.
3. The Commissioner has proceeded only on the opinion expressed by the Textile Commissioner, Mumbai and has held that the imported machines does not satisfy the description available in S. No. 251. The exemption was claimed on the ground that the machine imported falls under heading mentioned against Sl. No. 15 of list 31 annexed to the Notification No. 21/02-Cus dated 1.3.02 which reads as "Fabric dyeing machine complete with dye kitchen and accessories". He found fault with the opinions given by SITRA by stating that it is ambiguous and contradictory in nature. He has also not accepted the opinion expressed by SGS India Pvt. Ltd., on the ground that the report does not mention the exact model No., Supplier's name and description of machines, which were inspected in Tirupur area and hence has held that it cannot be accepted. The appellants grievances against the impugned orders is that the opinion relied upon by the Textile Commissioner, does not pertain to the manner by which the textile dying is done. The Textile Commissioner's concept is outdated and he has taken the dye kitchen as a separate plant, where the dye solution/printing paste/thickener/finishing paste are prepared and are fed to the dyeing machine/printing machine/finishing machine. A dye kitchen consists of weighing arrangement colour/paste preparation drums/buckets/vessels. He has examined the write-up of dye kitchen plant offered by Thies, Germany and on that basis has given the opinion. It is stated that the opinion is bad in law as he has not examined the machines in question nor the catalogue nor literature and has proceeded on extraneous consideration. It is stated that the clarification and opinion given by SITRA, that of the Professor of Anna University and the report of inspection given by SGS Pvt. Ltd., are binding on the Commissioner as two of the opinions were obtained at the level of department itself. It is stated that the equipment imported by the appellants is 'DMS 11 Jumbo Jet Flow RDS Dyeing Machine', which has the facilities for dyeing and also which incorporates the facilities for preparation and supply of dye chemicals. It also meets the description given in the notification. It is stated that the machine carries on all the functions, which are delineated in the said S. No. 21/2002 of the Notification. The leaflet for the machine under reference to the storage tanks, dozing pump, heating device, etc. and the proforma invoice given by the supplier very clearly indicates the supply of the dye preparation equipment, which is incorporated in the dyeing machine. The packing list for the machine also clearly indicates the supply of dyeing tank, chemicals tank, related pipelines and valves, pump, heat exchanges, etc. The presence of all these is not denied by the Commissioner and therefore, his conclusion that the catalogue does not describe the presence of these accessories and denying the benefit on that basis is erroneous.
4. It is stated that as per entry against Sl. No. 15, the main item is only the "dyeing machine" and not a dye kitchen and the benefit has to be given to a dyeing machine with accessories mentioned therein and hence, the requirement for the presence of a separate plant called dye kitchen, which supplies dyes to various dyeing machines cannot be brought within the scope of the above entry. It is stated that the primary machine is dyeing machine and not dye kitchen. To this extent, the reliance placed on the Textile Commissioner's report by the Commissioner is completely erroneous and inappropriate. The appellants relied on the reports given by other agencies and state that they are very much relevant. The Deputy Director of Textiles Committee has clearly indicated in his report, what is a dye kitchen and how a dye kitchen can be an integral part of a dyeing machine and also it can function as stand alone equipment supplying to different dyeing machines. They relied on the following portions of the report:
"Dye Kitchen is a special preparatory provision for preparing the dyes and chemicals, liquor before the actual process of dyeing and to inject into the main system of dyeing under controlled conditions. This includes dye/chemical tank, reserve tank agitators, actuators, dozing system and a PLC controller (which decides how, when and how long the prepared liquor can flow into the main dyeing unit). This dye kitchen facility is of late becoming the integral part of the automatic dyeing machines intended for good results. This dye kitchen also differs from the dye weighing and dispensing unit, which is again a new level of automation, wherein, different dyeing machines of the factory can be supplied individually with a predetermined levels of dyes/chemicals from the storage area."
5. They also stated the SITRA also clarified that the dye mixing tanks form part of the machines and these tanks may or may not be mentioned in the invoice and that these will be indicated in the catalogue or brochure of the manufacturer and these tanks are called 'dye kitchen' by some manufacturers. They also relied on the report dated 15th April, 2003 given by SGS India Pvt. Ltd., to confirm that after a detailed inspection that the machine under reference can be called as a 'dyeing machine' having dye kitchen and accessories. They have given several grounds as to how the Commissioner has committed an error in not accepting the report of the SITRA, SGS Pvt. Ltd. and the clarifications given by the Textiles Committee and have erroneously followed and incorporated the inappropriate order of the Textile Commissioner.
6. The appellants submitted that the dye kitchen is a special preparatory provision for preparing the dyes and chemicals, liquor before the actual process of dyeing and to inject into the main system of dyeing under controlled conditions. The dye kitchen should essentially consist of:
"1. Dye/chemical tank
2. Reserve tank
3. Agitators
4. Actuators
5. Dozing system
6. PLC Controller (decides how, when and how long the prepared liquor can flow into the main dyeing unit).
With the aid of Dye Kitchen a processor can achieve the dye programme (Production) within 6 to 8 hours. But in the atmospheric soft flow dyeing machine it will take minimum of 12 hours to achieve the dye programme (production). Also, the conventional dyeing machine called as which will take 24 hours to achieve the dye programme (production) where all the operations have to be accied out by manually.
The present imported dyeing machine has got fully automatic preparation of Chemical and dye stuff concentration required for the total dyeing programme to achieve in 6 to 8 hours operation, since the machine is equipped with Dye Kitchen. In this machine the total dyeing operation will be monitored and maintained by programme logic controller called as SETEX-737-XL. This PLC will take care of total chemical preparation and dyestuff preparation of the dyeing machine requirement batch-wise. Only the dyestuff and chemical will be added in the dye tank for further required preparation with fully automatic configuration. Necessary chemical and dyestuff preparation all are (sic) takes place in the dye addition tank for service tank."
They said that in view of the above, the machine imported will qualify to be called as a dyeing machine with dye kitchen and accessories.
7. They have also relied on the ratio of the following judgment for purpose of understanding as to how they are to be understood and in common parlance as to how the terms are to be interpreted:
(a) CCE v. Lekhraj Jessumal & Sons, 1996 (54) ECC 85 (SC) : 1996 (82) ELT 162 (SC), where it is stated "An Act is to be interpreted as a Living Act. Presumption of updating the construction has to be given. Industry is not static. There are continuous progress therein. New Processes and methods are developed and new material and components or types of components supersede others. It is unreasonable to give a static interpretation to words used in a tariff schedule ignoring the rapid march of technology. Progress cannot be stifled by over rigid interpretation."
(b)(i) Union of India v. Kanungo Industries, 1991 (32) ECC 81 (SC) : AIR 1990 SC 2190
(ii) Commissioner of Income Tax v. J.K. Hosiery, 1959 LTR (85)
(iii) Sun Export Corporation v. Commissioner of Customs, 1997 (93) ELT 641
(iv) Polestar Electronics v. Additional Commissioner, 1978 (41) STC 409 (SC).
(c)(i) Commissioner of Customs, Mumbai v. Ruby Impex Ltd., 2000 (118) ELT 514 (Tri)
(ii) Indabeator Ltd. v. Commissioner of Central Excise, Mumbai, 2000 (118) ELT 657.
(iii) National Radio & Electronics Co. v. Commissioner of Central Excise, Aurangabad, 2000 (70) ECC 422 (Tri) : 2000 (119) ELT 746 (Tri).
8. We have heard both sides in the matter. Shri Murugappa, Advocate argued on the basis of the above stated grounds and relied on the ratio of the cited judgments. He prayed for allowing the appeals. The learned SDR Smt. Bhagya Devi pointed out that the report and opinion of the Professor of Anna University was not before the Commissioner and it cannot be relied. She also relied on the report given by the Textile Commissioner, Mumbai which according to the SDR is conclusive and final.
9. We have carefully considered the submissions and have perused and gone through all the reports which are annexed in the paper book. We have already extracted about as to what a dye kitchen essentially consist of on a perusal of the invoices. However, we find that the appellants have imported dye kitchen and a composite machinery required for performing the operation which are in S. No. 251 of the National No. 21/2002 (Cus), dated 1.3.2002 as attached. The Commissioner has proceeded on the basis of the opinion given by the Textile Commissioner, Mumbai. As argued by the learned Counsel, we noticed from the said opinion that it nowhere states that the Textile Commissioner, Mumbai has examined the machinery and its functioning. He has given his opinion not on dyeing machine with dye kitchen but on a separate plant called 'dye kitchen'. He has taken these details from the machines imported from Thies, Germany, which clearly discloses that the Textile Commissioner, Mumbai has not examined the machinery in question and his opinion is based on a different machine of Thies, Germany. Therefore, the opinion of the Textile Commissioner, Mumbai is neither conclusive nor having any bearing on the imported machinery. It is not final and cannot be relied and deserves to be rejected.
10. Now, we proceed to examine the other opinions which are on record. The Deputy Director of Textiles Committee by his letter, dated 26.3.03 has clarified on the query as to how a dye kitchen facility in a fabric dying machine that dye kitchen is a special preparatory provision for preparing the dyes and chemicals liquor before the actual process of dyeing and to inject not the main system of dyeing under controlled conditions. He has clearly indicated that a dye kitchen includes dye/chemical tank, reserve tank, agitators, actuators, dozing system and a PLC controller. He has also indicated that this dye kitchen facility is of late becoming the integral part of the automatically dyeing machines intended for good results. He has also stated that this dye kitchen also differs from the dye weighing and dispensing unit which is again a new level of automation wherein different dyeing machines of the factory can be supplied individually with a pre-determined level of dyes/chemicals from the storage area. This opinion of the Deputy Director, Textile Committee, Government of India, Ministry of Textiles clarifies as to how the Textile Commissioner, Mumbai has gone wrong in giving his opinion. Now, we have to see as to whether the imported machinery satisfies all the requirements of description in the notification. The appellants have produced the packing list, and revised proforma invoices and the details of the machinery, which are delineated in the annexures to the invoices. From a reading of this, it is clear that they have imported all the requirements for the purpose of carrying on the function delineated in the notification. This has been examined by the professor of Anna University Dr. N. Selvakumar, who has given the following opinion:
Subject on which opinion sought:
"Whether the preparation tanks attached to dying machines can be considered as dye kitchen".
Opinion:
1. In a manually managed dye kitchen of a dye house, dyes and chemicals weighed, as per the requirement of the recipe decided, in the storeroom is prepared (dissolved) separately using tanks, agitators, mixers etc., and then taken to the respective dyeing machine for use.
2. A fully automatic dye kitchen system weights, (sic, weighs) dispenses, dissolves, matters and distributes dyes and chemicals to a set of dyeing machines.
3. In between the above two, we can have one another system. If the dyes and chemicals weighed manually in the storeroom are taken to the machine, which has preparation facilities, similar to that available in a fully automatic dye kitchen, to dissolve and meter them, it can be called as a 'dying machine with a semi-automatic dye kitchen system'. It is much cheaper compared to the fully automatic dye kitchen. Important benefits given by a fully automatic dye kitchen can be derived from it, which would vary depending on the sophistication incorporated in it.
11. The above opinion given by the Professor is after his detailed examination of the dyeing machines and in the light pf his complete knowledge of the textile technology. He has thus explained, as to how a manually managed dye kitchen of a dye house is different with that of fully automatic dye kitchen system. This itself clarifies the doubts which the Commissioner has expressed in the impugned order. The opinion of the SITRA was obtained by the Department. The clarification given by them is extracted herein below:
"A firm has imported a machine declared as fabric dyeing machine with dye kitchen and accessories. The catalogue of the particular product enclosed alongwith the invoice does not indicate whether the machine has dye kitchen and its accessories.
Mr. K.P. Janikaraman, Assistant, Director SITRA, Coimbatore is having twenty years in industry and has handled different types of processing machine and equipment, both local an imported in his career.
Any fabric dyeing machine requires a tank or tanks to add the chemical auxiliaries, dyes etc., during the process cycle. The process cycle being sequential, the additions are made at certain time interval. Before the additions, the required chemicals or dyes are prepared (dissolution heating etc.) and kept ready. The automatic programme cycle takes in these chemicals or dye solution from the tank or tanks into the main machine. This is the purpose of these tanks. The accessories are steam heating coil, dye mixer, pneumatic valves, water and steam inlet, and dosing pump with totally programmed logic control.
These tanks are part and parcel of the machine and hence may or may not be mentioned in the invoice. However, it will be indicated in the catalogue or brochure of the manufacturer/supplier. These tanks or tanks are called as dye kitchen by some manufacturers.
Hence, I confirm that the imported machine has a dye kitchen and accessories as shown in the brochure of the supplier".
12. The above opinion confirm that the imported machines is a dye kitchen and accessories as shown in the brochure of the supplier The report of the SGS India Pvt. Ltd. has given a detailed report. The report of the inspection dated 15th April, 2003 is also extracted herein below (Paper Book P. 47-50).
SGS India Privat Ltd. Page 1 of 4Area Office: Ref:IN/MDS/IND/20030113/1
443, (Old No. 304.305), Place: Chennai-18
1 St Floor, Date: April 15, 2003
Anna Salai,
Teynampet,
Chennai. 600 018.
Tel: (91-44).4335552,
4347503,4364171
Fax :(91-44)-4347502.
Report No.: CHN/007079
REPORT OF INSPECTION
At the request of M/s. Gowtham Processors, Tirupur, we have
attended to the inspection of imported goods for the purpose of
customs clearance and our report is as under:
Importer : M/s. Gowtham Processors Tirupur
Exporter : M/s. Dilmenler Makina Ve Tekstil SAN
TIC, AS Turkey.
Basis of Inspection : 1. Invoice No A 074655 dt. 20.1.2003
Document Reference 2. Manufacturer's catalogue
3. Customs letter No. 320892/6.3.03
dt. 28.3.2003
addressed to M/s. Gowtham Processors
4. Importer's letter dt. 31.3.2003
5. Bill of Lading No. IST/TUT/295
dt. 26.1.2003
Place & Date of : At St Johns Freight Forwarders
CFS, Tuticorin on 3.4.2003
Inspection At Sakthi Knitting Ld. (Colorsburg),
Perundurai & Stallian Garments and
Chemtek Process, Tirupur on 9.4.2003
Inspector : G. Muthukrishnan
Description & : DMS 11 HT Jumbo Jetflow RDS Rapid Dyeing
System Quantity of Material 600 kg.
Machine with Dye Kitchen and Standard
Accessories-1 no.
Scope of Inspection as : To confirm whether the Dyeing Machine is
per Customs with Dye Kitchen or not
Examination Order
(1) Technical Data
1.1 Technical : DMS 11 HT Jumbo Jetf low Rapid Dyeing System (RDS).
Description For Dyeing any kind of fabric made of natural,
synthetic and their blends.
1.2 Quantity : 1 Unit
1.3 Model : DMS 11 HT Jumbo Jet Flow RDS Rapid Dyeing System
1.4 Manufacturer : M/s. Dilmenler Makina Ve Tekstil SAN TIC. AS Turkey.
1.5 Country of : Turkey
Origin
1.6 Serial Number : 11 H 0600200206
1.7 Year of : 2002
Manufacture
1.8 Net Weight : 8500 kgs.
1.9 Purpose of : Dyeing of Knitted & Woven Fabrics
Utilization
1.10 Accessories : Dye Kitchen and its Accessories
1.11 Documents : Nil (At the time of inspection)
came
Alongwith the
Machinery
(2) Inspection Results
The equipment was found arrived in SKD condition and were identified in 2
containers -- Container no. OCLU 660559-0: With main body, which & filters.
Container No. POCU 101853-6: With reserve tank, chemical tank, dyeing tank, machine main circulation pump unloading wheel, dosing pumps, complete controls and all other accessories.
The parts were visually examined and verified as per packing list A visit was made to few Dyeing industries in Tirupur area where similar type of equipments are in use. The various functions of the equipments were seen and it was noted that Dyes are manually weighted and put into the additional tanks, thereafter all operations like mixing, heating, dosing at required quantity and time etc. are automatically carried out through PLC (Software SETEX 737 XL) operation. It was also noted that simultaneous preparation of dyes and chemicals for the next batch in the additional tanks is possible when the dyeing process is in progress.
The various parts received in the subject consignment were correlated with the similar machines in use at Tirupur and found matching.
The documents referred in this Report were studied and clarifications obtained from the concerned.
A visit was made to Sakthi Knitting, Perundurai where an advanced system called Automatic Laying and Dispensing System is in use. In this machine, the dyes (colours) and chemicals are stored in a rotary conveyor with the racks having transverse movement. Also, the electronic weighing balance is attached for weighing the chemicals and dyes. The dyes and chemicals are having specific identification for the purpose of selecting through command in the attached computer application. Again the dyes are manually drawn in a polythene bag or in bucket and weighed in the electronic weighing system available in the machinery. Such collected dyes are taken into a separate tank where the dyes are mixed with the water of required quantity in a particular temperature and dispensed through pipeline to the additional tanks attached to the dyeing machines. In the additional tank, the dye solution is diluted further, stirred and keeping in the required temperature and fed to the dyeing machine through dosing pump gradually as programmed in the control panel attached to the machinery. Similarly the chemicals are also dispensed to the chemical tanks near by the machine, but if the chemicals are in power form, it cannot be dispensed through pipeline and this has to be manually charged into the additional tank. However, if there is a need to add the dyes to improve the fabric shade when the process is on, small quantity of dyes are collected from the storage manually and directly mixed to the dye tank (additional tank) attached to the dyeing machine.
(3) Conclusions.
Based on our examination and scrutiny of documents provided during Inspection, we conclude as below.
(a) The additional tanks (2 vertical and 1 hot water preparation tank) as shown in the catalogue and controls attached with the Dyeing machine takes care of the mixing, metering and dosing functions at the required quantity and time.
(b) Though the dispensing system inspected at M/s. Sakthi Knitting, Perundurai is having a control to choose the colour (Dye), weighing, preparation of dye solution and dispensing, there is no provision to dose this solution into the dyeing machines directly. The solutions are dispensed to the additional tanks where further heating and stirring takes place to maintain the temperature and mixture respectively. This dispensing system is generally used to dispense the chemicals to many number of machines depending on the capacity.
The dispensing system cannot be used to directly dose the solution into the dyeing machine, as this will not be practically feasible due to following reasons --
- The solution dispensed from the dispensing system needs to be diluted according to the individual dyeing machine batch requirement.
- The temperature & mixture of the solution to be maintained to meet the requirements at the time of dosing.
(c) In view of the above, the dispensing system cannot be used for complete preparation and dosing the dyes and chemicals into the dyeing machine directly, whereas the additional tanks and controls attached with the dyeing machine imported presently takes care of mixing, metering and dosing functions except the weighing. Also, simultaneous preparation of dyes and chemicals for the next batch is possible when the dyeing process is in progress.
(d) Therefore, in our opinion, the dyeing machine imported is having dye kitchen and accessories.
Remarks:
The inspection done and the report issued does not absolve the manufacturer/seller from their contractual obligations towards their buyer regarding any harmful defect not visible or not detected during our inspection.
We issue this report based upon the information provided and the inspection carried out to the best of our knowledge and ability and our responsibility is limited to the exercise of reasonable care. This report reflects our findings at the time and place of inspection.
The supplier has also given his opinion, which is also extracted below:
From: Dilmenler [mailto: dilmenler @ turk. net) Sent: Friday, April 11, 2003 4:31 PM To: s_ radhakrishnan@sgs. com Cc: [email protected]: oguz bolat@sgs. com Subject: RE: Request for information Dear Sirs, Dye Kitchen in the System included in the DMS 11 HT Jumbo Jet Flow RDS Rapid Dyeing System 600 KG Machine in order to supply and maintain necessary amount of dyes and chemicals for the dyeing process. There are two tanks on the side of the machine and one big tank on the top of the machine. These are called as dye kitchen in a dyeing machine. The function of dye kitchen is to prepare dyes and chemicals needed for the dyeing process and inject them inside the machine at the time which those dyes and chemicals are required. Dyes and chemicals are prepared and controlled automatically by means of process controller Setex 737 XL. Dyeing is done with water and in addition of dyes and chemicals. Dye kitchen is the unit that prepares and controls the dyes and chemicals and inject them into the dyeing machine at the required time.
Dye Kitchen is the most important functions of a Dyeing machine and includes dye tank, chemical tank and reserve tank. Each of these tanks are having water inlet, transfer, dosing, drain, heating valves in order to process the dyes and the chemicals and also to dose them inside the machine with a special software written inside the PLC and the control unit Setex 737 installed on the control board of the machine. Each tank is also equipped with a separate stirrer and also with agitator in order to maintain the right level of mixture of product before they are injected or dosed inside the machine with a sequence. Chemical industry allows us to prepare and dose these chemicals and dyes into the dyeing vessel with a special timing prepared and controlled through the controller. Level of each tank is measured and the quantity of liquid inside the tank controlled by means of special pressure transmitter, which gets current output from the controller according to the level of the tank, time required, and the dosing curve selected at the time of preparing the dyeing recipe by the operator.
I hope the matter in clear.
13. The reading of these materials clearly indicates that the SGS report is based on the examination of like machines installed at Shakti Knitting Perundurai. The Commissioner's inferences and conclusions on this report is not proper. He has not cross examined these experts (sic) nor clarified his doubts from them. The technical opinions are binding and it cannot be brushed aside lightly without any rebuttal evidence on records. The SGS report clearly indicates that they have examined these machines and given the opinion and report. Therefore, the conclusive report given by the SGS Pvt. Ltd., cannot be brushed aside lightly. The opinion and the clarification given by the supplier, which is extracted clearly indicates that the dye machine is a most important function of a dyeing machine and includes reserve tank, chemical tank, dyeing tank, machine main circulation pump, unloading wheel, dosing pumps, complete controls and all other accessories. We have seen the catalogue also and satisfied ourselves that the notification in question satisfy all the requirements of the terms of the invoices and, therefore, the appellants claiming the benefit of the same is required to be accepted. The appellants have made out a strong case in their favour in terms of the opinion and the literature and case law cited by them to support their case and hence the impugned order is set aside and appeals are allowed with consequential relief, if any, as per law.