Custom, Excise & Service Tax Tribunal
M/S. Chemplast Sanmar Ltd vs Commissioner Of Customs, (Import) ... on 26 September, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/128 to 130/2008
(Arising out of Order-in-Appeal C. Cus. No. 2, 3 and 4/2008 dated 17.1.2008 passed by the Commissioner of Customs (Appeals), Chennai)
M/s. Chemplast Sanmar Ltd. Appellant
Vs.
Commissioner of Customs, (Import) Chennai Respondent
Appearance
Shri V.S. Manoj, Advocate for the Appellant
Shri A. Cletus, Addl. Commissioner (AR) for the Respondent
CORAM
Honble Ms. Sulekha Beevi C.S., Member (Judicial)
Honble Shri Madhu Mohan Damodhar, Member (Technical)
Date of Hearing : 20.09.2017
Date of Pronouncement: 26.09.2017
Final Order No. 42168-42170 / 2017
Per Bench
All these three appeals since involve identical issue, they are heard together and are disposed by a common order.
2. Facts of the case are that the appellants had imported Titanium Pipes and Fittings of various sizes and dimensions from M/s. Loterios S.P.A. Italy. Appellants had sought to clear the items as parts of Bi Polar Membrane Electrolyser claiming benefit of Notification No. 21/2002-Cus. Sl. No. 285, as amended. However, the claim of the appellant was rejected and goods were classified under CTH 81089090 and assessed to duty accordingly. On appeal filed by the importer, Commissioner (Appeals), vide impugned order dated 17.1.2008 rejected the same. Aggrieved the appellants are before this forum.
3. Today, when the matter came up for hearing, ld. counsel Shri V.S. Manoj appearing on behalf of the appellant made oral and written submissions which can be summarized as under:-
(a) Titanium Pipes and Fittings have been imported to handle brine to feed the Bi Polar Membrane Electrolyser. This is crucial since only such pipes can withstand corrosion attack of saturated brine as well as chlorinated brine at elevated temperature.
(b) The supplier of Membrane Electrolyser M/s. Asahi Kasei, Japan have advised them to use titanium pipes and fittings.
(c) He also relied on the following case laws:-
(i) Jawahar Mills Ltd. Vs. Commissioner of Central Excise, Coimbatore 1999 (108) ELT 47
(ii) Commissioner of Central Excise, Coimbatore Vs. Jawahar Mills Ltd. 2001 (132) ELT 3 (SC)
(iii) Commissioner of Central Excise, Coimbatore Vs. Southern Iron & Steel Co. 2000 (121) ELT 164
(iv) Eureka Forbes Limited Vs. Commissioner of Central Excise, Meerut 2001 (130) ELT 146
(v) Sree Bhawani Cotton Mills Ltd. Vs. Addl. Collector of Customs 2000 (125) ELT 13 (Cal.)
(vi) Collector of Central Excise Vs. Himalayan Co-op Milk Product Union Ltd. 2000 (122) ELT 327 (SC)
(viii) Hallmark Industries Vs. Commissioner of Central Excise, Calcutta 2000 (122) ELT 540
4.1 On the other hand, ld. AR Shri A. Cletus supports the impugned order. He also makes the following submissions:-
(a) Titanium pipes and fittings are not part of Membrane Electrolyser nor have they been sent by Japan supplier along with the Membrane Electrolyser. This item has been separately imported from Italy.
(b) The titanium pipes and fittings are not specifically made for the Membrane Electrolyser and hence they cannot be part or component.
(c) There is distinction between the words plant and machinery. A part has to be component which is integral to the machinery. Even an accessory cannot be part of a machine. The Notification extends benefit only to parts thereof. The pipes are of general use and therefore cannot be considered to be parts of the machine which is covered under the Notification.
5. Heard both sides and gone through the case records.
6. The core issue that comes up for appellate decision is whether the impugned items can be considered as parts of the Membrane Electrolyser imported separately by the appellants, or otherwise.
(a) For better understanding of the dispute, it would be useful to reproduce the relevant portion of the Notification No.21/2002-Cus (as amended) which extended duty benefit to import of Membrane Electrolyser or membranes.
285
85 or any other chapter
The following goods, namely:
15
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62 (1) Mono or Bi polar Membrane Electrolysers and parts thereof including secondary brine purification components, jumper switches, filtering elements for hydrogen filters and any other machinery, required for modernization by using membrane cell technology, of an existing caustic soda unit:
(2) Membranes for replacement of worn out membranes in an industrial plant based on membrane cell technology The said entry was subsequently amended vide Notification No.161/2003 dated 4.11.2003 as under:-
Membranes used in caustic soda unit Exemption Amendment to Notification No.21/2002-Cus.
In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 21/2002-Customs dated the 1st March, 2002, namely:-
In the said notification, in the Table, against S. No. 285, for the entry in column (3), the following entry shall be substituted namely:-
The following goods, namely:-
(1) Mono or Bi polar Membrane electrolysers and parts thereof including secondary brine purification components, jumper switches, filtering elements for hydrogen filters and any other machinery, required for,-
(i) modernization by using membrane cell technology, of an existing caustic soda unit, or
(ii) capacity expansion of an existing caustic soda unit using membrane cell technology, or
(iii) setting up of a new caustic soda unit using membrane cell technology;
(2) Membranes and parts thereof for replacement of worn out membranes in an industrial plant based on membrane cell technology
7. Thus entry No. 285, as amended, does indicate that the exemption thereat extends to parts thereof including secondary brine purification components, jumper switches, filtering elements for hydrogen filters etc. Evidently, parts of Membrane Electrolyser will also get notification benefit.
8. The Honble Apex Court in the cases of Commissioner of Central Excise, Delhi Vs. Insulation Electrical (P) Ltd. 2008 (224) ELT 51 (SC) has elucidated the meaning and scope of parts. The relevant portion of the judgment is reproduced below:-
18.?After considering in detail, the difference between the accessories and parts, this Court in the case of Pragati Silicons (supra) came to the conclusion that accessory is something supplementary or subordinate in nature and need not be essential for the actual functioning of the product.
19.?Chapter 9401 covers all types of seats and not only the seats of a car and a seat is complete even without the rail assembly from seat, adjuster/assembly slider seat and rear back lock assembly. They are not essential parts of the seat. Chapter heading 9401 covers only the parts of seats and not accessories to the seats. A part is an essential component of the whole without which the whole cannot function. (Emphasis supplied)
9. Applying the ratio laid down by the Honble Apex court, we are not able to appreciate how the titanium pipes and fittings which are generic products made in standard sizes obtained from another supplier and another country can be considered as a specifically designed for the Membrane Electrolyser part which is essential and integrated with the Membrane Electrolyser separately imported.
10. The Tribunal in the case of Eureka Forbes Ltd. 2001 (130) ELT 146 had held that a plastic hose used only as part of vacuum cleaner due to special design and not capable of general use will require to be classifiable along with vacuum cleaner under Heading 8509 of CETA, 1985. This decision has also been relied upon by the appellants. However, closer analysis of the ratio laid down by the Tribunal, therein will mean, that to be considered as a part, the impugned item should not be capable of general use but will necessarily have a special design to facilitate integration and specific usage with the parent item. That certainly is not the case in this appeal. Admittedly, the imported titanium pipes and fittings are not specially designed or created to work as integral part of the Membrane Electrolyser. They are only generic items which have been obtained to complete the functioning of the imported Membrane Electrolyser. At the most, it can be brought within the ambit of accessory, but certainly not as a part or a component. The reliance of the lower appellate authority on the case law of of Dharangadhra Chemical Works Ltd. Vs. Collector of Customs, Madras 1983 (12) ELT 553 (CEGAT) which held that pipes and fittings made on specialized materials are not component parts of machinery is therefore correct.
11. In light of the above discussion, we do not find any merit in the appeals filed by the appellants for which reason all the three appeals are dismissed.
(Pronounced in open court on 26.09.2017) (Madhu Mohan Damodhar) (Sulekha Beevi C.S.) Member (Technical) Member (Judicial) Rex 7