Customs, Excise and Gold Tribunal - Delhi
Lohia Starlinger Ltd. vs Collector Of Customs on 29 May, 1991
Equivalent citations: 1991ECR249(TRI.-DELHI), 1992(57)ELT105(TRI-DEL)
ORDER P.K. Kapoor, Member (T)
1. The appellants are engaged in the manufacture of plastic extruder machines. They imported 4 pieces flat die with profiled lip, each weighing 590 kgs for use as components of plastic extruders. They claimed assessment of the goods under Heading No. 84.59(2) of the Customs Tariff Act read with Central Excise Tariff Item No. 68 as component parts of machinery having individual function (plastic extruder) @ 40% + 25% + C.V. duty @ 10%. However, the Assistant Collector vide his order dated 21-11-1984 held the goods as classifiable under Heading No. 82.05(1) read with Central Excise Tariff Item No. 51A @ 60% + 40% + C.V. duty @ 15% + 5%. The goods were cleared by the appellants against Bill of Entry No. D.I. 1087 dated 28/29-12-1984. The appeal filed against the order passed by the Assistant Collector was rejected by the Collector (Appeals) on the grounds that plastic extruders were machine tools classifiable under Heading 84.59 in terms of Note 5 of Chapter 84 of the Customs Tariff, and the imported dies being tools designed for fitment exclusively on such extruders were by virtue of the Explanatory Notes under Heading 82.05 of the CCCN classifiable under sub-heading (1) of Heading 82.05 of C.T.A. 1975.
2. On behalf of the appellants we heard the learned Advocate, Shri R. San-thanam. He stated that the classification of the imported dies for plastic extruders by the department under Customs Tariff Heading 82.05 was not permissible since it covered only interchangeable tools and dies for were drawing and extrusion dies for metals. He referred to the Explanatory Notes to Heading 82.05 of the CCCN which inter alia states that "dies, punches, drills and other interchangeable tools for machines or appliances other than those specified above fall to be classified as parts of the machines or appliances for which they are intended." He claimed that the imported dies were not covered by the items specified in the notes under Heading 82.05 and being parts of extruders for making plastic tapes they were appropriately classifiable under Tariff Heading 84.59(2) as parts of plastic extrusion machines. He contended that the dies in question were not dies for machines tools as held by the department since they were meant for plastic extruders for producing tapes. In this regard he placed reliance on Supreme Court's decision in the case of Spaco Carburettors (India) Ltd. v. Collector of Customs, Bombay [1988 (34) ELT 3 (SC)]. He added that the imported dies not being in the nature of tools for working on metals they were also not classifiable under Heading 84.45/48. He stated that the question as to what constitutes interchangeable tools was decided in the case of Pure Wall and Associates Ltd. v. Collector of Customs [1984(15) ELT 490] wherein the die sets. in question were held as classifiable under Heading 84.45/48 in preference to Heading 82.05. On this basis he claimed that the dies for plastic extruders not being useable for working on metals or hard plastics were classifiable under Heading 84.59(2). He referred to Item 8 of the items listed in the explanatory notes to Tariff Heading 82.05 as specifically covered by the heading and contended that except for wire drawing dies and extrusion dies for metals, all other dies were excluded from the scope of Heading 82.05. He claimed that on the analogy of dies for drawing glass fibres and spinnerets for extruding man made fibres which were excluded from the Heading 82.05 in terms of the Explanatory Notes, extrusion dies for the manufacture of plastic of plastic tapes would fall outside the scope of Heading 82.05.
3. On behalf of the department we heard the learned JDR Shri M.K. Sohal. He stated that even though the dies in question were meant for use as parts of plastic extruders falling under Heading 84.59 they were classifiable under the Heading 82.05. He argued that the disputed goods being dies it would be permissible to decide their classification on the basis of the relevant Explanatory Notes to the CCCN since the Heading 82.05 the Customs Tariff Act, 1975 and CCCN were identical. He contended that plastic extruder could be deemed as machine tool since the Tool Engineers' Hand Book published by Mc.Graw Hill, defines a machine tool as "any machinery operating other than by manpower which employs a contact tool for working natural or synthetic material." He referred to the Explanatory Notes to Heading 82.05 of the CCCN and contended that plastic extruder being a machine tool falling under Heading 84.59, dies meant to be used as parts of such extruders would be interchangeable tools be covered by Heading 82.05. He contended that on the basis of the definition of interchangeability in I.S.O. Guide which was relied upon by the Tribunal in the case of Purewall Associates v. Collector of Customs, Bombay dies for plastic extruders have to be deemed as interchangeable. He argued that the appellants contention that only dies for wire drawing and extrusion dies were covered by Heading 82.05 is erroneous. He contended that the use of the word `including' before the word 'dies' has the effect of enlarging the scope of the Heading 82.05 so as to include other interchangeable dies as well. In this regard he placed reliance on the decision of the Supreme Court in the case of Commissioner of Income Tax v. Taj Mahal Hotel reported in AIR 1972 SC168. He stated that the decision of the Tribunal in the case of Spaco Carburettors (India) Ltd. v. Collector of Customs, Bombay [1988 (34) ELT 3 (SC)] was not relevant since the issue involved in that case related to the classification of a particular machine.
4. Replying to the points made on behalf of the department Shri Santhanam contended that on a plain reading of the wordings of the Heading 82.05 and the relevant Explanatory Notes it follows that the heading covers only dies for wire drawing and extrusion dies for metals. He stated that the Tribunal had been taking the view that die sets for machines could not be deemed as interchangeable tools. In this regard he referred to the decision in the case of Delhi Kanodia Tin & Drum Factory v. Collector of Customs reported in 1989 (43) 531 (Tri.).
5. We have carefully considered the arguments advanced on behalf of both sides and perused the records of the case. The short point that arises for determination in this case is whether dies in question were classifiable under Heading 84.59(2) as claimed by the appellants or under Heading 82.05(1) of the Customs Tariff as maintained by the department.
6. There is no dispute on the point that the plastic extruder on which the imported dies were to used was classifiable under Heading 84.59(2) of the Customs Tariff as a machine designed for the production of a commodity namely, plastic tapes. However, in regard to the dies in question the department's case is that being interchangeable tools for use on plastic extruders which are machine tools they were classifiable under Heading 82.05 of the Customs Tariff. As against this the appellants claim is that the imported dies were classifiable under Heading 84.59(2) since they were non-interchangeable and were designed to be used exclusively as parts of extruders which being machines for the production of plastic tapes could not be categorised as machine tools. For the proper appreciation of the rival contentions we consider it desirable to refer to Heading 85.02 reproduced below :-
___________________________________)__________________________________________ Heading No. Sub-heading No. and description of article ______________________________________________________________________________ 82.05 Interchangeable tools for hand tools, for machine tools or for power operated hand tools (for example, for pressing, stamping, drilling, tapping, threading, boring, broaching, milling, cutting, turning, dressing, morticing or screw driving) including dies for wire drawing, extrusion dies for metals, and rock drilling bits:
(1) Not elsewhere specified.
(2) Rock drilling bits.
___________________________________)__________________________________________ It is seen that the dies in question would be classifiable under Heading 82.05 provided the plastic extruder of which they are parts can be categorised as a machine tool; In this regard the following extracts from the Supreme Court's decision in the case of Spaco Carburettors (India) Ltd. v. Collector of Customs, Bombay (supra) are relevant :-
"Machine tool, according to Tool Engineers Handbook published by Mc.Graw Hills means "any machine operating other than by man power which employs a contact tool for working natural or synthetic material. Mc.Graw Hill Dictionary of Scientific and Technical Terms gives the following meaning :-
"A stationary power driven machine for the shaping, cutting, turning, boring, drilling, grinding or polishing of solid parts, especially metals."
5. Even according to the Department, machine tools coming under Entry 84.45 are machines used for shaping or surface working metal or metal carbides by either :
(i) cutting away or otherwise removing metal or metal carbides (for example, lathes, drilling, planing, slotting, milling or grinding machines).
(ii) Changing the shape or form of the metal without removing any of it.
The note indicates that machine tools in general remain classified under this heading even if specialised for a particular industry. Machine tools include slotting machines, drilling and boring machines, tapping machines, reaming machines and riveting machines."
7. Thus, in order to be categorised as a machine tool, the machine has to be power driven and should be meant for carrying out processes such as turning, boring, drilling, grinding, polishing etc. of solid parts, especially metals. The department case that the plastic extruders are machine tools falling under Heading 84.59 is based on the CCCN Notes to the Heading 82.05 from which the relevant extracts are reproduced below :-
"Whereas...the present heading covers an important group of tools which are unsuitable for use independently, but are designed to be fitted, as the case may be into.
(A) ...
(B) machine tools, of Heading 84.45, 84.46, 84.47 or falling within Heading 84.59 by reason of Note 5 to Chapter 84.
(C) ...
for pressing, stamping, threading, tapping, drilling, boring, reaming, milling, gear-cutting, turning, cutting, morticing, drawing etc., metals, metal carbides, wood, stone, ebonite, certain plastics or other hard materials or for screw driving."
On a plain reading of these provisions it follows that for the purpose of Heading 82.05 a machine falling under Heading 84.59 could be deemed as a machine tool only it was meant for carrying out any of specified functions in relation to one or more of the listed materials. Having regard to the definition of Machine Tools in the Mc.Graw Hill Dictionary of Scientific and Technical terms and on perusal of the listed materials in the CCCN Notes extracted above, it is evident that the words 'certain plastics' in these notes can be taken to imply only hard plastic materials. On this reasoning in our view plastic extruders for the manufacture of tapes out of raw materials such as HDPE and Poly Propelene could not be categorised as machine tools.
8. As regards the question whether the dies meant to be used as parts of plastic extruders for the production of plastic tapes could be deemed as interchangeable tools, we consider it desirable to refer to the following extracts from the decision of the Tribunal in the case of Purewell & Associates Ltd. v. Collector of Customs, Bombay [1984 (15) ELT 490] in which die sets intended to be fitted to power presses for the manufacture of watch parts were held as not interchangeable :-
"When the tariff heading says 'interchangeable tools', it means that the tools should be interchangeable and not that the machine to which they are fitted should be capable of doing multiple jobs. According to the definition appearing in the ISO Guide interchangeability means the suitability of a product to be used in place of another product to fulfil the relevant requirement. When the Department admits that one particular die set can manufacture one particular watch part only, that it cannot do any other job and that no other tool can take its place and do the same job, we fail to understand how such a die set could be classified as an interchangeable tool."
9. It cannot be denied that in the case before us the dies in question were usable only for the manufacture of plastic tape and no other tool could be used to perform the same function or replace it. Hence, on the ratio of the decisions quoted above it has to be held that they were not interchangeable.
10. It has been contended by the appellants that Heading 82.05 covers only two types of dies namely, dies for wire drawing and extrusion dies for metal. On the other hand placing reliance on the Supreme Court's decision in the case of Commissioner of Income Tax v. Taj Mahal Hotel (AIR 1972 SC 168) the learned JDR has argued on be-half of the department that the word `including' in Heading 82.05 has the effect of enlarging the scope of the heading so as to include other types of dies as well. It is seen that in the judgment quoted on behalf of the department in regard to the effect of the word 'including' when it is used in an entry, the Supreme Court had observed that "the word 'includes' is often used in the interpretation clauses in order to enlarge the meaning of words or phrases occuring in the body of the 'Statute'. When it is so used, these words and phrases must be construed as comprehending not only such things as they signify according to their nature and import but also those things the interpretation clause declares that they shall include." On this basis it has to be held that specific mention of dies for wire drawing and extrusion dies for metal after the word 'including' in Heading 82.05 was only to remove doubts about these items being covered by the main part of the Heading.
11. We also find sufficient force in the appellants claim that on the analogy of spinnerets for extruding man-made fibres and dies for drawing glass fibre which are excluded from the scope of Heading 82.05 in terms of CCCN. Explanatory Notes to this heading, dies for plastic extruders for the manufacture of plastic tapes would be classifiable as parts of extruders.
12. We, therefore, hold that the dies in question were classifiable under Heading 84.59(2) as parts of plastic extruders for the manufacture of plastic tapes and could not be deemed as interchangeable tool for machine tools.
13. In view of the foregoing, the appeal is allowed and the order appealed against is set aside with consequential relief to the appellants.