Customs, Excise and Gold Tribunal - Tamil Nadu
Raja Crowns And Cans Pvt. Ltd. vs Commissioner Of Customs on 19 February, 2007
Equivalent citations: 2007(119)ECC48, 2007ECR48(TRI.-CHENNAI), 2007(213)ELT529(TRI-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. This appeal filed by M/s. Raja Crowns & Cans Private Limited, seeks to vacate the Order-in-Appeal No. C.Cus.357/2004 dated 31.5.04 passed by the Commissioner of Customs (Appeals), Chennai which affirmed the order of the original authority denying benefit of Notification No. 16/2000-Cus dated 1.3.2000 to the impugned imports.
2. The facts of the case are that the appellants had imported three consignments of machines/parts claimed to constitute a second-hand plant to manufacture crowns & caps and had warehoused them under warehousing Bills of Entry No. 64328 dated 3.11.98, 64329 dated 13.11.1998 and 64990 dated 16.11.1998. The Bills of Entry had been assessed classifying the impugned goods under chapter sub-heading 8479.80 of the Customs Tariff Act extending the concessional effective rate of Customs Duty available to goods specified at Sl.No. 162 of Notification No. 23/98-Cus. The concessional rate of 20% advolarem mentioned at the above Sl.No. was applicable to "Machinery for production of commodities" falling under Chapter Heading 8479.50 or 8479.89. The appellants had cleared the warehoused goods in the year 2000 under three separate Bills of Entry, when the equipments/machines covered by each Bill of Entry were assessed under the heading appropriate to the individual items without allowing the benefit of Notification No. 16/2000 dated 1.3.2000. The Notification No. 16/2000 had replaced the Notification No. 23/98-Cus but contained a concessional effective rate of 25% advolarem for "Machinery for production of commodities" falling under Chapter Heading 8479.50 or 8479.89. The assessee had approached the lower appellate authority seeking re-classification of all the goods covered by the three ex-bond Bills of Entry as a plant classifiable under Chapter Heading 8479.89 and eligible for the benefit of Notification No. 16/2000 dated 1.3.2000.
3. In the grounds of appeal before the lower appellate authority, the assessee had sought the benefit of procedure prescribed under Public Notice No. 91/87 which had provided for provisional assessment of capital equipments when imported in different consignments and finalization on completion of import of the entire equipment on the importer submitting catalogue, drawings or any other documents necessary for the purpose. They had submitted that the procedure envisaged in the above Public Notice had not been followed at the time of import of the machinery and its warehousing but the goods were assessed in line with the promise it contained.
4. After considering the appeal, the lower appellate authority found that Chapter Heading 8479.89 covered machines and mechanical appliances other than those covered under Chapter Heading 8479.10 to 8479.82. Chapter Heading 8479 covered machines and mechanical appliances having individual functions not specified or included elsewhere in Chapter 84. She observed that the imported machines were:
a) Slitting machines which cut the metal sheet
b) Metal Sheet Feeder (to feed sheets to printing/coating machine)
c) Forklift & pneumatic suckers
d) Coating/varnishing machine
e) Single colours printing press
f) Continuous drying oven
g) Sheet Unloader
h) Bundle Turner
i) Punching Press
j) Air Compressor
k) Lining Machines
l) Turret Head Each item imported was classifiable under specific heading such as 8462.39 (punching machines), 8462.23 (shearing machines) and 8440 (printing press) etc. She observed that once the machines under import had satisfied the definition of machines, as per Note 5 to Section XVI, such machines would not get considered for classification under Chapter Heading 8479 in view of Note 7 of Chapter 84. Therefore, she decided that the imports were not eligible for the concession as per Notification No. 16/2000-Cus as the same applied only to the goods falling under Chapter Heading 8479.89. In passing the above order, the Commissioner also relied on the ratio of the decision of the Tribunal in the case of Sammas Polymers Pvt. Ltd. v. CC 1999 (109) ELT (Tri). In that case, the appellants had imported (1) Injection Blow Moulding Machine and (2) a Decorating Unit for their plastic and laminate collapsible tube manufacturing plant. Though the items were required to work in conjunction to produce the final product and performed complementary functions and also were parts of the tube manufacturing plant as per manufacturer's catalogue, the Tribunal had found that Section Note 3 and 4 to Section XVI and the corresponding HSN Notes had not been satisfied (to classify them as one machine). The Tribunal had decided that the two items had to be treated as distinct machines for tariff classification though they were responsible for the production of the final product in a continuous process of manufacture.
5. Before us the appellants reiterated the arguments that the impugned goods cleared under the three home consumption of Bills of Entry had to be classified as a single plant for manufacture of caps and crowns and that they were classifiable under Chapter Heading 8479.89. They were eligible for exemption under Notification No. 16/2000 as goods "Machinery for production of commodities" falling under CSH 8479.89 were specified at Sl No. 202 of the Notification. A flow chart prepared by the appellants was furnished which showed the various processes undertaken in the plant for manufacturing caps and crowns. The appellants argued that as per the procedure prescribed under Public Notice 91/87 the machines had to be assessed as a single plant falling under Chapter Heading 8479.89 eligible for the benefit of Notification No. 16/2000-Cus. They argued that the observations and findings of the lower appellate authority were not in accordance with law and that the impugned order had been passed without application of mind. They also claimed that the classification decided at the time of warehousing could not be changed at the time of clearance of goods ex-bond unless there had been misdeclaration at the time of warehousing or change in the wording of the tariff, later. In support of this argument ld Counsel for the appellants cited the following case law.
i) Ispat Industries Ltd. v. CC, Nagpur
ii) VBC Industries Ltd. v. CC, Chennai
6. Appearing on behalf of the Revenue, ld. SDR supported the reasoning followed by the Commissioner in the impugned order.
7. After examining the records and hearing the submissions made by both sides, we find that in the instant case the issue involved is whether goods cleared under the three separate Bills of Entry could be classified as a single item and if so, what is its classification and whether the same is eligible for the benefit of Not.No. 16/2000 Cus. The appellants had imported certain machinery along with small quantities of steel sheets and resin and warehoused them under three Bills of Entry describing them as 'conveyor machinery & parts' and 'printed blanking presses & spares'. At the time of warehousing these were assessed as claimed by the appellants under chapter sub-heading 8479.89 extending concessional rate available to goods at Sl. No. 162 of Notification No. 23/98-Cus. The appellants had claimed that they had imported a combination of machines consisting of various components interconnected by cable, piping etc. intended as a whole to contribute to a clearly identified function of manufacturing caps and crowns. The machine was classifiable under CSH 8479.89 and eligible for the concessional rate claimed. In accordance with note 4 of Section XVI, the impugned combination of machines intended to contribute to a clearly defined function of manufacture of crowns/caps not covered by any heading in Chapter 84 or Chapter 85 was to be classified under heading 8479.
8. We find that as per Section Note 4 of Section XVI, a machine (or a combination of machines) intended as a whole to contribute to a clearly identified function covered by any heading in Chapter 84 or 85, then the whole thing has to be classified in the heading appropriate to that function. Also, as per Note 7 of Chapter 84, a machine that is used for more than one purpose is to be classified taking into consideration that its principal purpose is its sole purpose. If the main purpose of a machine is not given in any heading in the Chapter or no one purpose is its principal purpose, then the machine gets classified under Heading 8479. We find that there is no single machine in the group of machines, the function of which can be identified as the principal function of the group of machines for classifying them under that Heading in terms of Chapter Note 7 (supra). As the machinery for production of 'caps and crowns' is not specified in any entry under heading 8479, the machines fall to be classified under the residuary heading 8479.89. Apparently the set of machines which can produce 'caps and crowns' has to be classified under sub-heading 8479.89 and is eligible for the Notification benefit sought. The finding of the Commissioner on classification of the goods is therefore incorrect. However, in the instant case, there is no dispute that individually, each of the machines imported under the three Bills of Entry was classified under a particular heading of Chapter 84 with reference to its individual function or the particular industry in which it is used, correctly. The assessee had not followed the procedure prescribed under Public Notice No. 91/87 and the goods were presented as and when they were imported as 'conveyor machinery & parts' and 'printed blanking press & spares etc'. Therefore, the impugned goods could not be assessed correctly at the time they were warehoused as their description was not correctly declared. The goods were not presented for assessment also as a complete plant when they were cleared from the warehouse. The goods had been cleared piece-meal and had been presented for assessment as machines with individual functions. It is not obvious whether the appellants had opted for assessment of the goods as separate machines as reflected in the relevant home consumption Bills of Entry. It appears that the appellants had claimed assessment of the imported goods as separate machines with individual functions and not as a plant. The appellants had not produced a catalogue of the plant at any stage. Therefore, at this distant date, it is not possible to question the assessment of the goods cleared in 2000. It is not possible also to verity whether the entire goods were a single machinery/plant and could have contributed to a clearly identified function at this distant date after clearance of the goods. Therefore, the impugned order affirming the order of the original authority denying the classification of the imported goods together under Chapter Sub-heading 8479.89 and the benefit available for such goods deserves to be sustained.
9. As regards the case law cited, it is seen that the Tribunal had observed in these decisions that the classification of warehoused goods could not be altered at the time of their clearance unless there was misdeclaration initially. In the instant case the goods had been wrongly described as 'conveyor machinery and parts' etc whereas the home consumption Bills of Entry described the items correctly. Therefore the reassessment was not inconsistent with the decisions of the Tribunal cited by the appellants. The appellants had not followed the procedure prescribed in Public Notice No. 91/87 which could have enabled the assessing officer to classify the impugned goods differently as desired by the appellants at the time of warehousing. In the circumstances we find that the impugned order deserves to be sustained and dismiss the appeal accordingly.
(Operative part of the order pronounced in open court on 19.2.2007)