Custom, Excise & Service Tax Tribunal
Mahindra & Mahindra Limited vs Mumbai on 28 January, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NOS: C/442 to 445/2004
[Arising out of Order-in-Appeal No: 13-16/2004/NCH dated 7th February 2004 passed by the Commissioner of Customs (Appeals), Mumbai I]
For approval and signature:
Honble Shri MV Ravindran, Member (Judicial)
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Mahindra & Mahindra Limited
Appellant
versus
Commissioner of Customs
Mumbai
Respondent
Appearance:
Shri MH Patil, Advocate for the appellant Shri K Puggal, Asstt. Commissioner (AR) for the respondent CORAM:
Honble Shri M V Ravindran, Member (Judicial) Honble Shri C J Mathew, Member (Technical) Date of hearing: 28/01/2016 Date of decision: 28/07/2016 ORDER NO: ____________________________ Per: C J Mathew:
The issue in dispute in these four appeals against common order no. 13-16/2004/NCH dated 7th February 2004 of Commissioner of Customs (Appeals), Mumbai I is that of classification of press tool dies imported by the appellant, M/s Mahindra & Mahindra Ltd, under heading 82.05 or 846694 of the First Schedule to the Customs Tariff Act, 1975 and 84.45/48 of the erstwhile Customs Tariff and the applicability of countervailing duty (CVD) under Tariff Item 51A or Tariff Item 68 of the Central Excise Tariff. Departmental authorities favoured Customs Tariff Heading (CTH) 82.05 and TI 51A. Relying almost entirely on the decision of the Tribunal in New Haven Steel Ball Corporation Ltd v. Collector of Customs [1991 (56) ELT 761 (Tribunal)] and Bajaj Auto Ltd. v. Collector of Customs, Bombay [1994 (74) ELT 312 (Tri.)], the impugned order confirmed the rejection of refund claim by the lower authority.
2. One appeal has been filed against the order in appeal no. S/49-40/88/CL decided by the first appellate authority which relates to a demand for short-recovery of Rs. 1,58,59,587.20 adjudicated on 21st October 1987 that was returned to M/s Mahindra & Mahindra through proceedings before the Honble High Court during the pendency of appeal against adjudication order and re-deposited by appellant as pre-condition for continuation of appeal before Commissioner (Appeals) in 2002.
3. A further recovery of Rs. 1,18,20,273/- relating to imported goods classified under heading 846694 of First Schedule to Customs Tariff Act, 1975 vide order dated 28th March 1997, sought for in refund claim and rejected, came up before the first appellate authority as appeal no. S/49-60/97 CL and was remanded back vide order dated 25th February 1999.
4. Two other appeals, S/47-08/98CL and S/49-16/98CL, sought refund for Rs. 17,15,473 and Rs. 1,16,615/-by claiming classification under 846694 of First Schedule of Customs Tariff Act, 1975 instead of the assessed heading of 820730 of First Schedule to the Central Excise Tariff Act, 1975.
5. In the four appeals were disposed off by the impugned order assessment had been effected at duty of 25% leviable on goods, classifiable under heading 8205 of the erstwhile Customs Tariff/820730 of First Schedule to the Central Excise Tariff Act, 1975 against the claim of the appellant to be liable to duty at 20% on classification under heading 84.45/48 of the erstwhile Customs Tariff/8466.94 of First Schedule to the Central Excise Tariff Act, 1975.
6. In the erstwhile tariff for 1985-86, interchangeable tools were classifiable under 82.05 while for the period from 1986-87 it is classifiable under 8207.30 whereas what earlier had been under 84.45/48 i.e. tools for use with machines in the erstwhile tariff of 1985-86 was, with effect from 1986-87, classifiable under heading 846694 when the old tariff was substituted.
7. The appellant is in the business of manufacturing vehicles known as jeeps and, the production being under a licenced design, involving supply of tools and dies by overseas entities. The manufacturer presses sheet metal parts into desired shapes for the body and parts of the jeep by fitting dies and tools to a machine known as press which exert appropriate pressure on the sheet metal. The die provides the shape while the press produces the required pressure. Thus with the same press machine and different tools/dies it is possible to form different shapes.
8. The classification under 82.05 decided upon by the assessing officer is:
:Interchangeable tools for hand tools, whether or not power-operated, or for machine-tools (for example, for pressing, stamping, punching, tapping, threading, drilling, boring, broaching, milling, turning or screw driving), including dies for drawing or extruding metal, and rock drilling or earth boring tools.
9. On the other hand, importer claims classification 84.45/48 described as:
parts and accessories suitable for use on solely or principally with the machines of heading nos. 84.56 to 84.65, including work or tool-holders, self-opening die-heads, dividing-heads and other special attachments for machine-tools; tool-holders for any type of tools for working in the hand and of 8466.94 being for machines of heading no. 84.62 or 63.
10. According to the appellant press tool dies are customized for manufacture of specific shape, that these support and clamp the primary material in position and also guide the tools which work on metals, and that each such press tool-die can work only in conjunction with a specified press. It is consequently their submission that the press tool/die is a part and parcel of a specific machine tool which is not interchangeable.
11. Learned Counsel for the appellant submits that these are not interchangeable tools and are designed for a specific end-use and that the findings in the impugned order that press tool-dies were excluded from classification under Chapter 84 by placing reliance on note (1)(o) is erroneous. Learned Counsel produced catalogues of various tools as well as their description to evince the specialized nature of the tool/die under import. Reliance is placed on the Explanatory Notes to the erstwhile CCN as well as to the Explanatory Notes to the HSN. Reliance was also placed on decisions in Prince Metal Works v. Commissioner of Central Excise, Bombay [1999 (113) ELT 463 (Tribunal), Jay Engineering Works Ltd v. Commissioner of Central Excise [1997 (94) ELT 527 (Tribunal), Pharmachine Mfg. Co. v. Collector of Central Excise [1999 (107) ELT 624 (Tribunal)], Sarda Industries v. Collector of Customs [1989 (41) ELT 560 (Tribunal), Commissioner of Central Excise v. Sundaram Fasteners Ltd [1999 (111) ELT 796 (Tribunal), Lohia Starlinger Ltd v. Collector of Customs [1992 (57) ELT 105 (Tribunal), Government Tool Room and Training Centre, Rajajinagar v. Asstt. Collector of Central Excise, Bangalore [1982 (10) ELT 898 (Kar.), Delhi Kanodia Tin & Drum Factory v. Collector of Customs [1989 (43) ELT 531 (Tribunal)], Purewall & Associates Ltd. V. Collector of Customs, Bombay [1984 (15) ELT 490 (Tribunal), Spaco Carburettors (India) Ltd. v. Collector of Customs, Bombay [1988 (34) ELT 3 (SC), ICI (India) Ltd. v. Commissioner of Customs, Calcutta [2002 (139) ELT 211 (Tri.-Del.) and Tata Engg. & Locomotives Co Ltd v. Collector of Customs, Bombay [1997 (90) ELT 59 (Tribunal). We have examined some of the germane decisions below.
12. Learned Authorised Representative highlighted the specific findings of the first appellate authority and placed emphasis on the importance of the expression interchangeable in heading adopted by the assessing officer. Reliance was placed on the decision of the Tribunal in Bajaj Auto Ltd. v. Collector of Customs, Bombay [1994 (74) ELT 312 (Tri.)].
13. Appellant is aggrieved that their claim was rejected by the lower authorities without considering their submissions. According to Learned Counsel, the dies/tools cannot be disaggregated from the machines for pressing because they cannot work independently and that tools or dies of heading 8207 performs one identified function whereas their imported tools act simultaneously on the same metal sheet. It was also contended that note 2 of Section XVI makes this abundantly clear. Claiming that General Rules for Interpretation require that the more specific description would prevail over the more general Learned Counsel contends that parts of the press machines is the appropriate entry.
14. In re Prince Metal Works, the Tribunal held that dies used in press machine for manufacture of motor vehicle parts are to be classified as parts of the machine with which they are intended to be used. In re Jay Engineering Works Ltd it was held that only where a tool/die can be used for more than one purpose it would be classifiable under 84.59 of the Tariff prior to 1986. The proposal of Revenue to classify punches and dies under heading 82.07 for levy of Central Excise duty was negated by the Tribunal in re Pharmachine Mfg. Co. In re Sarada Industries, it was held that 82.05 covers tools that can be used in more than one hand tool or machine; this relied upon on an earlier order of the Honble High Court of Madras in the matter of the very same assessee and had the approval of the Honble Supreme Court. The Tribunal, in re Sundaram Fasteners Ltd, reaffirmed that the classifiability of tools under 8466 of the First Schedule to the Customs Tariff Act 1975 as held by the Tribunal in Purewall & Associates Ltd v. Collector of Customs, Bombay [1984 (15) ELT 490 (Tribunal) by interpreting the expression interchangeable.. It was held in re Lohia Starlinger Ltd that dies for a specific output is not amenable to description as interchangeable and, therefore, would be classifiable under Chapter 84 of the Tariff. That these fell within the erstwhile Tariff Item 68, and not Tariff Item 51A as claimed by the Revenue, was held in favour of the assessee in re Government Tool Room & Training Centre, Rajajinagar v. Asstt. Collector of Central Excise, Bangalore [1982 (10) ELT 898 (Kar.) by the Honble High Court of Karnataka.
15. Having heard both sides, we find that we required to arrive at a classification by reference to specific description in the two rival entries of Chapter 82 and 84 of the First Schedule to the Customs Tariff Act, 1975. We note that the Tribunal in re Bajaj Auto Ltd has held that 5.?From a reading of the Explanatory Notes it is clear that the scope of Heading 82.05 covers those tools which are unsuitable for use independently but are designed to be fitted into hand tools, machine tools and other tools specified in that heading. We are persuaded by the views of the two member bench that interchangeability in the sense in which it is used in the tariff heading has to be with reference to a particular machine, and does not mean that the tool itself should be capable of performing different jobs. The definition of `interchangeability in the ISO Guide is in fact not too different. The criterion laid down of the suitability of the product to be used in place of another product to fulfill the relevant requirement is in fact satisfied in a situation in which each of the dies performing the same operation function also but because of difference in shape produces differently shaped part - in this case of a motor scooter.
6.?There is another aspect of the matter. By equating interchangeability with replacement, each die or similar tool which should otherwise be classifiable under Heading 82.05 would fall for classification elsewhere and the net result would be that Heading 82.05 would be rendered nugatory and surplus. On the argument that each one of a set of dies produces different parts and the die would, therefore, not be interchangeable with each other, they would not fall for classification under Heading 82.05. It would be observed that if one die is imported it would be classifiable under Heading 82.05 for the reason that it is not interchangeable; if more than one identical die is imported, they would be classifiable under Heading 82.05. To base classification on the ............. of goods imported is obviously absurd. From this perspective too, it is Heading 82.05 which would be more appropriate. On a reading of the decision in the Purewals case it is clear that the Explanatory Notes were not brought to the notice of the Bench. This point has, therefore, passed sub silentio. For the reasons discussed above, if this point had been brought to its notice a different view would well have been taken. It has, therefore, to be held that the decision in Purewals case does not have value precedent. Shri Hidayatullahs argument that the Explanatory Notes were brought to the notice of the Bench as evidenced to the reference in para 4 does not persuade us. This is because the point with reference to the Explanatory Notes was not the question of interchangeability within the meaning of Heading 82.05, but whether Heading 82.05 was confined only to hand tools or not. The decision in Delhi Kanodia Tin & Drum Factory [1989 (43) ELT 531 (Tribunal)] followed the decision in Purewal without much discussion. In the Lohia Starlinger Ltd. v. Collector of Customs [1992 (57) ELT 105 (Tribunal)] there was a reference to the Explanatory Notes but only in the context of whether plastic extruders were machine tools falling under Heading 84.59. It was not with regard to interchangeability as figuring in Heading 82.05. No doubt, this decision was passed after the decision in New Haven Steel Ball Corpn. Ltd. However, it is evident that the latter case was not pointed out to the Bench which decided the Lohia Starlinger case. If it had been pointed out, the decision could well have been different. The Lohia Starlinger decision has, therefore, to be distinguished. and the manner in which the applicability of decisions cited by the appellant, i.e. Purewall & Associates Ltd., Delhi Kanodia Tin & Drum Factory v. Collector of Customs, and Lohia Starlinger have been distinguished.
16. We also note that the heading 8205 turns on the expression interchangeable. Here we are faced with a peculiar situation. While the Tribunal in re Purewall & Associates interpreted the expression to mean multiple usage of the die/tool and guided many subsequent decisions, the Tribunal in re Bajaj Auto Ltd holds that Purewall & Associates was decided, without reference of Explanatory Notes, merely to examine the scope of heading 8205 beyond hand tools. While acknowledging that Lohia Starlinger which did go into the Explanatory Notes, Bajaj Auto Ltd felt disinclined to follow it as it held to have been decided upon without awareness of decision in re New Haven Steel Ball Corpn. v. Collector [1991 (56) ELT 761 (Tribunal)].
17. We note that, in re Bajaj Auto Ltd., there is specific reference to the outcome of the appeal in re Purewall & Associates and Delhi Kanodia Tin & Drum Factory v. Collector of Customs thus:
Rejection of the appeals, therefore, does not necessarily confirm the correctness of the classification decided in those decisions. The impact of dismissal of appeals on impugned orders has been laid down clearly by the Honble Supreme Court in Kunhayammed v. State of Kerala [2001 (129) ELT 11 (SC)] and by the Larger Bench of the Tribunal in S. Kumars Ltd. v. Commissioner of Central Excise, Indore [2003 (153) ELT 217 (Tri.-LB)]. We, therefore, respectfully disagree with that peremptory disregard enunciated in re Bajaj Auto Ltd of Purewall & Associates and Delhi Kanodia Tin & Drum Factory v. Collector of Customs.
18. The dispute has its genesis in the differing rates of duty. That these are different is, undoubtedly, attributable to deliberate design for a desired outcome. Neither side has put forth propositions on that count and for us to speculate, with insufficient information, would be a dangerous foray into the realm of policy formulation. We cannot rule out a re-engineering of the policy and the existing contradiction of interpretation supra may well persuade tax administrators to reverse the classification. The existence of the contrasts may, consequently, frustrate policy itself which is not a consummation to be wished for.
19. Notwithstanding our conclusions supra about the applicability of the decision in Purewall & Associates and Delhi Kanodia Tin & Drum Factory v. Collector of Customs, the existence of anti-podal positions taken by the Tribunal cannot be denied and its continued existence is not desirable. We are of the opinion that this conflict on the meaning of interchangeable requires resolution not merely for expediency but as an unavoidable necessity.
20. Accordingly, we direct the Registry to place the matter before the Honble President for reference to a Larger Bench to resolve whether the decision of the Tribunal in re Purewall & Associates Ltd is the correct proposition of law or that of the view expressed in re Bajaj Auto Ltd.
(Pronounced in Court on 28/07/2016) (M V Ravindran) Member (Judicial) (C J Mathew) Member (Technical) */as 13 13