Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Sundaram Clayton Ltd. on 27 September, 1991
Equivalent citations: 1992(37)ECC125, 1992(58)ELT310(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This is an appeal filed by the Revenue against the order-in-appeal No. 197/89(M) dated 10-8-1989 passed by the Collector of Central Excise (Appeals), Madras.
2. The point to be considered in this appeal is whether Servo Brake Valve and its parts and Shut Off Cock and its parts would be classifiable under Heading 87.08 as parts and accessories of Motor Vehicles as urged by the Department or under Heading 8481.80 as claimed by the respondents.
3. The Assistant Collector has held that the products are classifiable under Heading 8708.00 observing that L.T. Servo mainly consists of a valve assembly and an actuator assembly. While the valve assembly is used for controlling the output of the Servo, the actuator portion is used for converting the air-pressure energy to mechanical energy; further, for the purpose of classification under Heading 8481.80, the valve should be an appliance for pipes,' boiler shell tank, vats or the like including pressure reducing valves. Therefore classification of whole unit of "Lever Type Servo" under Heading 8481.80 is not correct, as only valves are classifiable under Heading 8481.00. For the same reasons, "Shut Off Cock" is also classifiable under Heading 8708.00.
4. In appeal, the Collector (Appeals) reversed the order of the Asst. Collector holding that the assemblies do not fit in with the description of Heading 84.81, as the Shut Off Cock assembly is a manually operated on-off type valve; that in terms of Notes 3 to 5 of Section XVl, even in case of composite machinery or combination of machinery, the classification has to be done based on their clearly defined function; that in the instant case, the function of the valve assembly is predominant; and therefore it is clear that shut-off cock and servo brake valve are correctly classifiable under Heading 8481.80 and their parts under Heading 8481.99.
5. Shri K.K. Bhatia, learned J.C.D.R. while reiterating the grounds of appeal submitted that "Lever Type Servo" and "Shut Off Cocks" are composite assemblies and the valve portion is in-built in these assemblies. It can be seen from the catalogues of these products that L.T. Servo is an assembly consisting of 52 parts, and only 'S. No. 22 - Valve Stem', 23-Valve & Spring Guide, 25-Valve body and S.No. 21 - "inlet exhause valve" can be considered as valves and parts thereof. All other parts which are parts of a larger assembly viz. L.T. Servo cannot be treated as valves or parts of valves. Similarly Shut Off Cock is an assembly consisting of 18 parts out of which only two parts 'Sl. No. 12 Valve and S.No. 14 Valve Stem' can be classified as 'Valves' or parts thereof and not the larger assembly which consists of the Valve (cock) assembly. He contended that in terms of Note 2(e) to Section XVII, the expression 'parts' and 'accessories' do not apply to articles of Heading 84.81 whether or not they are identifiable as the goods of that section. This note shall be applicable only in cases where the goods are valves classifiable under Heading 84.81. As the goods involved in the present case are not mere valves classifiable under Heading 84.81, the exclusion under Note 2(e) shall not be applicable to the present case. He argued that Collector (Appeals) has erred in holding that in terms of HSN, the products are to be classified under Heading 84.81. In terms of Explanatory Notes to Heading 84.81, certain machinery parts which incorporate a complete valve are to be classified as parts of the relative machines, for example inlet/exhause valves of internal combustion engines. As the items involved in this case are motor vehicle parts incorporating valves, such items are to be classified as parts of motor vehicles even as per the Explanatory Notes to HSN. He said that in terms of Explanatory Note (H) to Heading 87.08 the heading would include 'Servo Brakes and parts thereof. The L.T. Servo and parts thereof manufactured by the company are, therefore, correctly classifiable under Heading 87.08. He also said, the Collector (Appeals) has erred in holding that in terms of Notes 3, 4, 5 of Section XVI the goods are to be classified under Heading 84.81. He submitted that the goods are parts of brake system of motor vehicles incorporating a valve assembly and the same are to be classified as parts of the relative machine i.e., motor vehicles in terms of Explanatory Notes to the HSN.
6. Arguing for the respondents, Shri V. Lakshmikumaran, Advocate explained that the function of the servo brake valve is to gradually apply balance and release the brakes in an air over hydraulic system. Inlet of the servo brake valve is connected to a tank through pipe line and it is as mentioned in Tariff sub-heading 8481.80. He referred to the Lyons' Encyclopaedia of Valves, wherein the term 'valve' is defined as "any device which controls the direction or magnitude of fluid flow or its pressure and 'Servo valve' is defined as" a valve which modulates the output as a function of an input signal. He also drew our attention to the McGraw-Hill Dictionary of Mechanical and Design Engineering wherein the term 'valve' reads as a device used to regulate the flow of fluids in piping systems and machinery. He said though it is used as a part of the motor vehicle brake as its main characteristics and as valve function is its principal function, it should be classified under Heading 84.81. He said that shut off cock is an on-off valve and the description 'Shut Off Cock' is to highlight that it is used for shutting off the operating medium. It also can be called as cock. The description 'cock' is covered under Tariff sub-heading 8481.80. The handle in the cock is manually operated and when it is in the on position it allows through passage of air in the pipes and when the handle is in the off position, the valve will close shutting off the inlet wide. The valve, though used in the automotive application is also used for general purposes like the industrial pneumatics. The description cock/valve is covered under sub-heading 8481.80 and the unit is connected to pipes/tanks to regulate the flow for discharge/supply of fluid air. The unit has no dual function and it is not a composite unit. The main function is singular and to regulate the fluid flow (air). It is mainly operated by hand. These are not Servo Brakes but Servo Brake Valves. Hence Shut Off Cocks and Servo Brake Valves are only valves falling under Heading 84.81 and they are excluded from Chapter 87.
7. In reply, Shri K.K. Bhatia said that Tariff Heading 84.81 is more specific and not a residuary entry which covers specific items and not parts or assembly.
8. We have carefully considered the arguments advanced on both sides and perused the records. Heading 84.81 under Section XVI talks of 'Taps, Cocks, Valves and similar appliances for pipes, Boiler Shells, Tanks, Vats or the like, including pressurereducing valves and Thermostatically controlled valves. Accordingly the heading covers taps, cocks, valves and similar appliances used on or in pipes, tanks, vats or the like to regulate the flow (for supply, discharge, etc.) of fluids (liquid, viscous or gaseous), or, in certain cases, of solids. The heading includes such devices designed to regulate the pressure or the flow velocity of a liquid or a gas. On going through the detailed description function and characteristics of the Servo Brake Valves and since they are used in pipes to regulate the flow of air, they come under the category of similar appliances for pipes. There is also a clear finding by the Asst. Collector that the function of the valve assembly is predominant which is corroborated by technical literature placed before us. It is seen from that, that Notes 3 to 5 of Section XVI in which Chapter 84 is included clearly point out that even in a case of composite machinery or a combination of machinery the classification has to be done based on the principal function of that component forming part of the composite machinery or assembly or based on the essential character of such composite one or based on their clearly defined function covered by Chapter 84/85. Further Note says that Taps, cocks, valves, etc. remain in this heading even if specialized for use on a particular machine or apparatus, or on a vehicle or aircraft. However, certain machinery parts which incorporate a complete valve, or which regulate the flow of a fluid inside a machine although not forming a complete valve in themselves, are classified as parts of the relative machines, for example, inlet or exhaust valves for internal combustion engines (Heading 84.09), slide valves for steam engines (Heading 84.12), suction or pressure valves for air or other gas compressors (Heading 84.14), pulsators for milking machines (Heading 84.34) and non-automatic greasing nipples (Heading 84.85). Hence these items continue to remain under this heading though it is used as part of the motor vehicles. Further Section Note 2 to Section XVII says that the expressions 'parts' and 'parts and accessories' do not apply to the following articles, whether or not they are identifiable as for the goods of this Section. Section Note 2(e) reads as under :
"Machines or apparatus of Heading Nos. 84.01 to 84.79, or parts thereof; articles of Heading No. 84.81 or 84.82 or, provided they constitute integral parts of engines or motors, articles of Heading No. 84.83;"
Since these items are articles of Heading No. 84.81, these cannot be considered to be parts of vehicle as it is excluded from Note & Section Notes to this Section XVII. Further Notes to 87.08 parts and accessories of the motor vehicles and Headings also says that:
"This heading covers parts and accessories of the motor vehicles of Headings 87.01 to 87.05, provided the parts and accessories fulfil both the following conditions:
(i) They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles; and
(ii) They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note)."
Since it is specifically excluded from corresponding General Explanatory Note, on this ground also it cannot be considered to be part of the vehicle for the purpose of classification. From all the points of view, we concur with the findings of the Collector (Appeals) that Shut Off Cocks and Servo Brake Valve would be classifiable under the sub-heading 8481.80 and their parts under 8481.99. In the view we have taken, we uphold the impugned order and accordingly appeal filed by the Department is hereby dismissed.