Customs, Excise and Gold Tribunal - Bangalore
Sree Ganesh Gears Pvt. Ltd. vs Cce on 16 November, 2001
Equivalent citations: 2002(103)ECR475(TRI.-BANGALORE)
ORDER S.S. Sekhon, Member (T)
1. These appeals have been filed by a manufacturer of 'gears and shafts' which are used for different purposes. They had filed certain classification lists applicable for the period 1.3.1997 to 30.9.1997 claiming for certain models of 'gears and shafts' inter alia being manufactured by them and meant for solely and principally for use in Power Tillers were to be classified under heading 84.32 or alternatively under 84.24.91. The Assistant Commissioner gave them a notice and thereafter held that such gears and shafts manufactured and cleared by the appellants were classifiable under heading 84.83.90 and the duty should be discharged under that heading at the proper rate. The Commissioner (Appeals) confirmed the decision of the Assistant Collector, and the present appeal is against the order of Commissioner (Appeals).
2. The subject 'gears and shafts' being manufactured are being used solely and principally in power tillers is not disputed. The learned Assistant Commissioner on the following grounds confirmed the classification under heading 8483.
a that as per Rule 173B of CER 1944, in case a fresh declaration/ amendment has to be filed, the same shall be filed within 30 days and the proper officer may conduct enquiry about the classification declaration. Hence, it is obvious that the intention of the rule is to require assessee to file declaration before production or before making any alteration in the particulars to be incorporated in the classification declaration and it is not open to the assessee to come after one year and claim modification with retrospective effect.
b. the assessees have placed reliance on Section 2(b) of Section XVI by over looking Section 2(a) of Section XVI of CER, 1944.
c. the reliance placed on Board's Circular 17/90 CX. 4 dated 9.7.1990 which has been notified vide Trade Notice 145/90 of Bangalore Collectorate is regarding classification of transmission elements for vehicles of Section XVII and is not relevant in the instant case.
d. power tiller is not an appliance covered under 8424 because it is not used for tilling and not for projecting or spraying. Hence, Gears and Shafts are not classifiable under 8424.91.
e. the classification has to be resorted to as per Section notes and chapter notes and in accordance with the Section Notes and heading the gears and shafts merit classification under CSH 8483.00
3. The Commissioner (Appeals) rejected the appellant's contention on the following grounds:
a the classification of Gears and Shafts are covered fully and clearly under note 2(a) of Section XVI and Section 2(b) and 2(c) does not apply at all.
b. Gears and Shafts of all types are covered under chapter sub-heading 8483 as evident from the plain reading of the description of the heading 84.83 in the relevant tariff. The appellants' contention that chapter 8483, includes only general-purpose gears and shafts is not acceptable.
c. the relevant section note, chapter and chapter heading nowhere state that it excludes such gears and shafts which are specifically manufactured for use in specific equipment or machinery. Therefore, the appellants' argument that since the gears and shafts are specifically manufactured to be used in power tiller and hence classifiable under 8432 along with power tillers or alternately under chapter sub heading 8424.91 is absolutely far-fetched, incorrect and improper and unreasonable.
d. for the reasons stated above, the decision of the Hon'ble Tribunal cited by the appellants in the case of Chamundi Machine Tools is neither applicable nor advance the case of appellant. Similarly boards Cir 17/90 Cx dt. 9.7.1990 in no way advance appellants' case in view of the factual position, tariff heading and subheading and relevant section and chapter note.
c. the general purpose headings and items have been explained in some of the Section notes and specifically section note XVI does not specify anywhere that chapter note 8483 or any other item covered under chapter 84 are for general use.
4. The present appeal is filed on the grounds:
i) The gears and shafts are not for general use but have specific use and are intended to be used solely and principally in power tillers. Therefore, they fall outside the heading 84.83.90, since power tiller is agricultural machinery falling under 84.32 and there is no separate entry for parts of 84.32. Thus gears and shafts would fall under heading 84.32.
ii) Alternatively, the goods should fall under 84.24.91 which read as follows:
Duty ___________________________________________________________________ 8421.10 Mechanical appliance of a kind used in agri NIL culture or horticulture ___________________________________________________________________ Parts: Of goods covered by subheading 8424.10 NIL 8424.91 ___________________________________________________________________
iii) Since at no point of time, the items under 8424.91 attracted Central Excise duty, the duty demand is not maintainable.
iv) The Commissioner (Appeals) holding that Section note 2(b) and 2(c) of Section XVI is inapplicable since Section note 2(a) thereof fully covers the classification of gears and shafts under heading 84.83.90 is not correct, since that heading only covers transmission elements of general use and not of specific use as in this case intended to be used solely and principally in power tillers. Therefore, Section note 2(b) of Section XVI is attracted.
v) Board's Circular No. 17/90-CX. 4 dated 9.7.1990 has been misinterpreted. A careful reading of this Circular and the principals (sic) thereon advance the appellant's case. This circular mentions that transmission elements may not [be] classified under single heading 84.83 when they have been specifically designed for use in vehicles of Section XVII of CETA 1985. They would be considered as parts of motor vehicles and applying the same principals, gears and shafts principally and solely designed for power tillers should be considered as parts of power tillers.
vi) It was the intention of the Parliament to help agricultural sector and the exemptions to the agricultural machinery were granted with this document. Hence, the duty on such gears and shafts is not justified.
vii) Endue (sic) Certificates from the customers viz. Kerala Agrimachinery Corpn. Ltd. and VST Dealers Tractors Ltd. establish that the items were used in power tillers.
viii) The goods were always exempted as per payment of duty when the parts of power tillers and the Commissioner has not interpreted the decision in the case of Chamundi Machine Tools .
ix) They rely upon decisions in the case of 1998 (26) RLT 386 wherein aluminum water tanks used for specific design and used in railway coaches were classifiable under 86.07 and not as a water tank under a specific heading 76.11. They also relied on 1998 (75) ELT 209 : 1995 (56) ECR 633 (SC) where a similar view was taken by the Tribunal. They also relied on 198 (24) RLT 245 wherein it was held that a part of a part is also eligible for exemption and relied upon the ratio of decisions in the following cases on the same lines:
1993 (6) ELT 134, ,
5. When the matter was heard:
(a) The learned Advocate relied upon the decisions and Board's clarification 1990 (49) ELT T 90 and final order No. 1407/98 dt. 24.7.1998 in appellant's own case and reiterated the grounds in appeal.
(b) The learned SDR, drew our attention to HSN section notes and heading notes under the relevant entries and submitted that the rules for classification of parts under Chapter 86 of Section XVII and under rules for parts of Chapter 84 and 85 of Section XVI of CETA 1985, are not the same. The parts here are to be classified under section note 2 to Section XVI. She drew out attention that the Commissioner has distinguished the decisions and the board's instructions relied upon by the appellant. She supported the order of Commissioner (Appeals) and requested for dismissal of the present appeal.
6. We have considered the submissions and find:
(a) The classification of parts under Chapter 84 in Section XVI and the Chapter 86-84 under Section XVII have to be arrived at by applying different sets of rules as it appears from the section notes. The former i.e. under Chapter 84 Section XVI by note 2 to Section XVI, and later, by note 3 to Section XVII for parts and accessories of Chapter 86-88. The decisions therefore relied upon by the learned advocate for the appellant, which relate to parts are for motor vehicles and locomotives falling under Section XVII of Chapter 87 and 86 respectively are not applicable. To a specific question from the bench, the advocate fairly conceded and submitted that there is no specific case law covering classification for the items impugned in this case. No case is made out by the appellants that "Power Tillers" for which the 'gears and shafts' are specifically meant, fall and are classified under Chapter 86-88 of Section XVII. Therefore, case law relied upon by the appellant does not help them. The case law does not induce us to read into section note 2 to Section XVI principles and theories of interpretation applied/upheld for section note 3 to Section XVII. No relief is therefore found to be available based on the case law/instructions relied upon by the appellants.
b) We find that under heading 84.32, the HSN heading notes provide that:
this heading covers machines, whatever their mode of traction, used in place of hand tools, for one or more of the following classes of agricultural, horticultural or forestry work, viz:
(I) Preparing the soil for cultivation (clearing, breaking, tilling, ploughing, loosening, etc).
(II) Spreading or distributing fertilizers, including manure, or other products to improve the soil.
(III) Planting or sowing.
(IV) The working or maintenance of the soil during the growing period (hoeing, weeding, cleaning etc).
The machines of this heading may be hauled by an animal or by a vehicle (e.g. a tractor) or may be mounted on a vehicle (e.g. on a tractor or a horse-drawn chassis). (In this context, 'tractor' includes "pedestrian controlled tractor").
And as regards parts falling thereon the notes provide as under:
PARTS Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), the heading covers parts for the above-mentioned machines. Such parts include, inter-alia:
Plough beams, coulters, shares, mouldboards, plough discs (including diamond-edged shares, discs, etc.); tools and teeth (rigid or springy) for scarifying, cultivating or weeding machines; teeth, drums and discs for harrows; cylinders, segments and parts of rollers; distributing mechanisms for fertilizer distributors, seeding, planting or transplanting machines; shares, teeth, discs and other tools for hoeing machines.
While for 84.24, the HSN heading provides that "it covers machines and appliances for projecting, dispersing or spraying steam, liquids or solid materials (e.g., sand, powders, granules, grit or metallic abrasives) in the form of a jet, a dispersion (whether or not in drips) or a spray." Therefore, heading 84.24.10 of CETA 1985 i.e., for mechanical appliances of a kind used in agriculture or horticulture cannot cover parts of power tillers as is being argued by the appellants since power tillers themselves will not be covered under 84.24 when we see the scope of this heading.
c) Heading 84.83 of the HSN provides that the goods covered by this heading are mainly:
(i) Certain mechanical parts which are used in the transmission of power from an external power unit to one or more machines.
(ii) Certain internal parts of a machine, used to transmit power to the various parts of the same machine.
The heading does not cover simple axles which do not transmit power but merely support a wheel or other revolving part. It also excludes:
(a) Bars of iron or steel of uniform cross-section (heading 72.14 or 72.15).
(b) Simple lengths of twisted wire for the manufacture of flexible drives, not fitted with coupling attachments (heading 73.12).
(c) Oscillating connecting-rods for transmitting motion to cutter bars of lawn mowers or grass cutters (heading 84.33).
A plain reading of the coverage of the heading notes induces us to conclude that 'gears and shafts' even if specifically designed and principally and exclusively used in 'Power Tillers' then also the same would remain classified under 84.83 and are not excluded from the coverage of this heading.
(d) We find therefore no reason to upset the classification under 84.83 as determined by the lower authorities. The other plea taken in the grounds of appeal as regards exemption from duty etc. are not relevant to be considered since we find the classification to be appropriate under 84.83 consequent demands thereunder confirmed as upheld.
7. In view of our findings, we find no merits in these appeals. The orders of the lower authorities are confirmed and the appeals dismissed.
Pronounced and in open Court on 16.11.2001.