Customs, Excise and Gold Tribunal - Delhi
Airport Authority Of India vs Commissioner Of Customs on 3 June, 2003
Equivalent citations: 2003(89)ECC231, 2003(156)ELT64(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In this appeal, filed by M/s. Airport Authority of India, the issue involved is whether Van Mounted Heavy Weight Deflectometer and Analysis Computer Programme (Van Mounted Pavement Testing Machine), imported by them, is classifiable under sub-heading 9024.80 of the First Schedule to the Customs Tariff Act and eligible for benefit of exemption under Notification No. 21/2002-Cus. (Sl. No. 232) or is classifiable under sub-heading 8705.90 of the Tariff as confirmed by the Commissioner, under the impugned Order.
2. Shri D.N. Mehta, learned Advocate, submitted that the impugned Dynamic loading device which is mounted for convenience of travel on vehicle is built as per ICAO Aerodrome Design Manual Part III; that this is specifically designed equipment for testing of asphalt and concrete pavement as distinguished from a special purpose motor vehicle; that the equipment consists of hydro-mechanical/electrical pavement loading device supported by electronic package for registration, of load and deflections including hardware/software package for automatic recording and preliminary data processing in the field; that the impugned goods are not special purpose motor vehicle falling under Heading 87.05 of the Tariff; that the equipment is self propelled one like Motor Grader, Pavement Scrubbing Machine, Surface Friction Tester, etc.; that merely because it looks like a vehicle and has got some automatic features, it does not change the classification of the Pavement testing equipment to the category of a vehicle. The learned Advocate mentioned that Explanatory Notes of HSN under Heading 87.05 clearly provides that the "heading excludes self propelled wheeled machines in which the chassis and the working machines are specially designed for each other and form an integral mechanical unit (e.g. self propelled motor graders)." He pointed out that in the present matter also the goods which are essentially a testing machine has been mounted on a Volks Wagon Van, simply for the convenience of the transportation and the chassis and the testing machine are constituted to form an integral unit which would fall outside the purview of Heading 87.05. He relied upon the decision in Gujarat State Fertilizers & Chemicals Ltd. v. CC, Mumbai, 2002 (146) E.L.T. 547 (T) wherein the Gel Documentation and Image Analysis System with Integrated Facility and Glossy Thermal Paper has been classified under Heading 90.27 of the Customs Tariff and not under subheading 8471.91. He also mentioned that vehicle mounted goods had been cleared at Mumbai under Chapter 90 of the Tariff; that the Commissioner has disregarded the said precedent by merely saying that those goods were different; that it is the ratio of the decision which matters and which is applicable squarely in the present case; that it has been held by the Supreme Court in Nirav International v. CC, 1997 (90) E.L.T. 13 (S.C.) that when differing with decision of identical imports at another port, the Authority has to look into the same and say whether it agrees or disagrees with the findings of the decision cited.
3. The learned Advocate, further, submitted that the Commissioner has wrongly relied upon the decision in Indian Hydraulic Industries (P) Ltd. v. CCE, 1988 (37) E.L.T. 213 (T) without appreciating that this decision was given in the context of old Customs Tariff which unlike the present Customs Tariff Act, was not patterned on HSN and was as such distinguishable; that moreover, the testing machines are classifiable under Heading No. 90.24 of the Tariff; that the impugned machine has not been fabricated piece by piece on the vehicle. Finally, he submitted that as per entry No. 232 of Notification No. 21/2002, Runway Marking and Pavement Testing Machine falling under any Chapter of the Tariff are liable to pay duty at concessional rate.
4. Countering the arguments, Shri V. Valte, learned SDR, submitted that when a motor vehicle is constructed or adapted, equipped with various devices so as to perform any function other than transport than it merits classification under Heading 87.05; that in the present matter the special equipment i.e. falling weight Deflectometer is fitted on Volks Wagon Van which has all the essential features of a vehicle as specified in the Explanatory Notes of HSN i.e. it has propelling engine, gearbox and controls for gear changing, steering and braking facilities; that thus the impugned goods clearly meets the requirement of special purpose motor vehicle of Heading 87.05; that special purpose motor vehicle remains classified in Heading 87.05 irrespective of its main function as long as it meets the requirement of the heading; that specialised functions do not bring them out of the scope of the Heading 87.05 despite the fact that machines having similar function fall in other headings. He relied upon the decision in the case of Indocon Projects & Equipments Ltd. v. CCE, Delhi-1 2003 (152) E.L.T. 328 (T) wherein Bulk Mix Delivery System for mixing various chemicals, taking the mixture to blasting site and feeding it into blasting hole - has been classified by the Tribunal under Heading 87.05 of the Tariff. The learned SDR also mentioned that the Central Road Research Institute has clearly mentioned in letter dated 13-11-2002 that "the Heavy Falling Weight Deflectometer is essentially required to be mounted either on a vehicle or a trailer for its functional utility since it is a field equipment"; that specification for a built in version of Heavy Falling Weight Deflectometer clearly shows Volks Wagon Air Conditioned Transport Van as one of the requirement of the impugned goods. He, further, mentioned that the exclusion clause of HSN Explanatory Note will apply only if the chassis is specifically designed at the initial stage and the machine is not simply mounted on a motor vehicle chassis but is completely integrated with a chassis; that this is not so in the present matter. He also contended that the Notification does not cover the special purpose motor vehicle of Heading 87.05 but the "Runway Marking and Pavement Testing Machines" which is different from 'special motor vehicle' and, therefore, benefit of Notification cannot be extended to the impugned goods. Finally, he submitted that as per Import Licensing Notes of Chapter 87 of Harmonized ITC HS Policy issued vide Notification No. 4 (RE-2001) 1997-2002, dated 31-3-2002, the import of new vehicles shall be permitted only through the Customs Port at Nhava Sheva, Calcutta and Chennai; that thus by importing the new vehicle at New Delhi, the Appellants have violated the provisions of Import Policy.
5. In reply, the learned Advocate submitted that the machine and the chassis are completely integrated; that the Commissioner has not considered the functional use of the imported goods which is testing of pavement. He relied upon the decision in Collector of Customs v. Kumudam Publications (P) Ltd., 1997 (96) E.L.T. 226 (S.C.) wherein the Supreme Court has held that "It may not also be entirely correct to say that in no case the end use or function of the goods is relevant on the question of classification." Finally, he mentioned that as per Rule 3(c) of the Rules for the Interpretation of the Schedule, goods shall be classified under the heading which occurs last in numerical order among those which equally merit consideration and as Heading 90.24 occurs last, the impugned goods are classifiable under the said Heading of the Customs Tariff.
6. We have considered the submissions of both the sides. Notification No. 21/2002-Cus., dated 1-3-2002 (Sl. No. 232) provides exemption to "goods specified in list 20 required for development of Airports" falling under Chapter 84 or any other Chapter of the Customs Tariff. List 20 of the Notification includes "Runway Marking and Pavement Testing Machines." We thus observe that the Notification exempts "Runway Marking and Pavement Testing Machine" irrespective of the Heading of the Customs Tariff it falls. We are of the view that the present matter can, therefore, be decided without considering the classification of the product in the Customs Tariff. The Appellants have contended that the primary function of the impugned goods is testing of asphalt and concrete pavements i.e. runways, taxi tracks and aprons at international and domestic Airports in India. According to the Minimum Technical Specification of the impugned goods, the system consists of hydro-mechanical/electrical pavement loading device supported by appropriately matched electronic package for registration of load and deflections including a hardware/software package for automatic recording and preliminary data processing in the field. It further mentions that the unit shall be capable of testing in towing position by automatic controls or via computer located within towing vehicle and that the system shall be capable of carrying out a typical complete test sequence. Central Road Research Institute has also opined in their letter dated 13-11-2002 that "the Van Mounted Heavy Falling Weight Deflectometer (VMH FWD) imported by AAI from M/s. KUAB Konsult and Utvechling AB of Sweden is a non-destructive pavement testing equipment for structural evaluations of Highway and Airfield Pavements. It records pavement deflection under impact loading for determining in situ pavement strength and elasticity of materials used in pavement component layers. It is used to ascertain PCN for classification and development of airfield pavements." It is thus apparent that the impugned goods are used for testing the pavement at airports and is covered by List 20 of Notification No. 21/2002-Cus. We do not find any force in finding in the impugned Order that as List 20 does not cover the special purpose motor vehicle of the Heading 87.05, benefit of Notification would not be available for simple reason that the special purpose motor vehicle is meant for testing the pavements at airport and as such is a goods required for development of airport and accordingly covered by Serial No. 232 of Notification No. 21/2002. The learned Advocate has rightly emphasised that the Serial No. 232 provides exemption to the goods falling under Chapter 84 "or any other chapter" of the Customs Tariff. Therefore, even if the impugned goods is regarded as special purpose motor vehicle under Heading 87.05 of the Tariff, the benefit of exemption notification is available as it will be special purpose motor vehicle for pavement testing.
7. The impugned goods are also not liable for confiscation on the ground that the Motor Vehicle can be imported only at specified ports, Delhi being not the one. The Appellants have a bona fide belief that the product imported by them was a system for pavement, testing and not a motor vehicle which was strengthened as in the past 'Runway Marking Machine' imported by them earlier having features of automobile vehicle was allowed clearance under Chapter 90 of the Tariff. In view of this, we set aside the impugned Order and allow the appeal.