Customs, Excise and Gold Tribunal - Delhi
Modi Champion Ltd. vs Collector Of Customs on 11 September, 1995
Equivalent citations: 1996(81)ELT497(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from order-in-appeal passed by the Collector of Customs (Appeals), Bombay, dated 6-6-1994, who has confirmed the order-in-original passed by the Assistant Collector of Customs, Group VB, who has classified the product 'spark plug insulator' under Chapter Heading 8547.00 of the Customs Tariff Act and rejected the plea of the importer for classification of the product under Heading 8546.00 of the Customs Tariff Act, and subsequent benefit in terms of Notification No. 153/92-Cus.
2. The importer in their letter dated 23rd June, 1993 filed their claim making out the following grounds :-
(i) Product imported internationally known in trade and commercial parlance as an insulator.
(ii) Items classifiable under Heading 8546.00 are excluded from Heading 8547.00.
(iii) Spark plug bodies mentioned in explanatory notes under Heading 8547.00 are not the same as insulator imported in this case.13/813
(iv) Electrical rating of spark plug is 30-50 Kilo volt and are covered by exemption Notification 153/92 if classified under Heading 8546.00
3. The Learned Assistant Collector after examining their case has held that Heading 8546.00 covers those insulator which are used solely for fixing, supporting or guiding of electrical current conductors. Thus, those electrical insulators which aid in transmission of electrical current conductor by fixing, supporting or guiding only are included in this Heading e.g. Chain suspension insulators, Rigid insulator etc. Whereas Heading 8547.00 covers those insulating fittings which are used for electrical machines appliances or equipment. He has also held that in the present case insulators are used for assembling of spark plugs, used for ignition in internal combustion (I.C.) Engines. The Learned Collector has referred to the para 8 of importer's letter dated 23rd June, 1993 which mentions the functions of these insulators as other than fixing, supporting or guiding of electrical current. Therefore, he has held that the insulator of this kind is excluded from Heading 8546,00. The Learned Asstt. Collector has also relied on the HSN Explanatory Notes for Heading 8546.00 which mentions :-
"Usually there is a relationship between the size of insulators and the voltage (large for high voltages smaller for low voltages)."
4. The Learned Assistant Collector has referred to para 13 of importer's said letter dated 23rd June, 1993, wherein they had mentioned that the voltage present in spark plug is around 30-50 KV. Therefore, he has held that as per above explanation, large size insulators should be present for such a high voltage, to merit classification under Heading 8546.00. While in the present case the insulator is small and voltage is quite high. Therefore, he has held that there is no relationship between voltage and size of insulator. Viewed from this angle, he has held that there is a case for classification of this product under Heading 8547.00 in preference to Heading 8546.00. He also noted that according to the HSN Explanatory Notes for Heading 8547.00 spark plug bodies are included under Heading 8547.00. He has referred to literature and write-up submitted by the importer and has observed that the insulator and sparking plug bodies are different. This differentiation may be for trade and technical purpose. Specific mention of sparking plug of bodies under Heading 8547.00 seems covering only insulation fittings, being fitting wholly of insulating material apart from any minor component of metal. Therefore, the Assistant Collector has concluded that in the present case the insulator is made up of wholly of insulating material i.e. Ceramics and the so called body is fully made up of metal.
5. On appeal, the Learned Collector (Appeals) has also confirmed the finding of the Assistant Collector. Before the Collector the importer had produced the extracts from the text books and literatures and also the understanding in commercial and trade parlance pertaining to the impugned goods to be considered as insulator alone. The following extracts were relied :
(i) The extract from page 302 from the book of Automobile Electrical and Electronic Equipment by A.P. Young and L. Griffiths published by Eibs, Butterworths.
(ii) The extract from page 140 from Dictionary of Automotive Engineering by Don Goodsell published by Butterworths.
(iii) The extract from page 121 from Automobile Truck Driver's Manual by Mir publishers, Moscow.
(iv) The extract from page 7.4 from the book Fundamentals of Internal Combustion Engines by Paul W. Gill. James H. Smith, J. Ziurys.
(v) The extract from page 173 from Automotive Technology by H.M. Sethi published by Tata McGraw-Hill publishing company Limited.
(vi) The extract from page 2168 & 2169 from the Illustrated Science and Invention Encyclopedia, Volume 16 by H.S. Stuttman Inc. publishers.
(vii) The extract from page 510 from High speed Combustion Engines by P.M. Heldt published by Oxford & IBH publishing Co. Pvt. Ltd.
(viii) The extract from page 442-443 from Internal Combustion Engine Fundamentals by John B. Heywood published by McGraw-Hill Book Company.
(ix) The extract from page 181 to 183 from Automotive Electrical Equipment, Construction, Operation and Maintenance by William H. Crouse published by McGraw-Hill Book Company.
(x) The extract from Introductory Automechanics by Normal E. Gibbs., and Led A. Meyer.
7. It had been pleaded before the Collector that the fittings which are to be classified under Chapter Heading 8547.00 are contemplated to be those fittings which have a presence of minor components of metal incorporated during moulding of the fittings. The Learned Collector has held that the impugned goods did not have any minor components of metals and therefore, are not classifiable under the said Chapter Heading 8547. The Learned Collector has observed that the extract from number of books only indicates that the product is an insulator in the sense that it performs insulating functions. However, the literature did not conclusively indicate that it is insulator of a category or of a class classifiable under Chapter [Heading] 8546. He has held that there was no dispute about the product being insulator in the sense that it insulates and thereby protects the vehicle. Otherwise, there would be short circuit. Therefore, he has held that the literature produced did not take him to the destination. It lead him only in the half way.
8. He has also rejected the arguments that the fittings of insulating material under Chapter Heading 8547 should have minor components of metals to be called as insulating fittings is a misplaced argument. He has observed that it is not necessary that the insulating fittings must have metal components. But, even if it has metal components even then, it should have been designed for insulating purpose, and have been in the nature of regular fitting, and hence it would be more appropriately classifiable under Heading 8547 as insulating fittings. The Learned Collector has also examined the HSN Explanatory Notes for both the headings in the light of the literature and understanding in trade and commerce to come to the conclusion that the item in question is classifiable under Chapter Heading 8547 of the Tariff.
9. As regards the applicability of the Notification No. 153/93-Cus., dated 26th March, 1993 as amended from time to time, the Learned Collector has held in para 14 as follows :-
"14. The battery used in the vehicle is generally of 12 volts. Its electrical circuit is of 12 volts only. Once the battery is of 12 volts, it cannot have an electrical circuit of 400 volts and above. Its voltage is stepped up through oscillator but that does not mean that the stepped up voltage let us say of 3500 volts will necessarily have electrical circuit of 3500 volts. The insulating fittings used in the spark plug are designed to work with electrical circuits of 12 volts. Therefore the Notfn. 153/93-Cus., dated 26th March, 1993 as amended from time to time which is applicable to insulators designed for use in the electric circuit of 400 volts and above would not be admissible even if the goods assuming without admitting are held to be classifiable under [Chapter Heading] 8546. Generally, the insulators having electric circuit of 400 volts and above are heavy duty such as Railway Electrical Institutions, Transmission Lines etc. which is not so in the instant case."
10. We have heard Shri V. Lakshmi Kumaran, the Learned Advocate for the appellants and Shri A.K. Singhal, the Learned DR for the Revenue.
11. The Learned Advocate submitted that the literature described the item as insulator, which the Collector in para 13 of his order had accepted it, but, however, had gone by the finding of the Assistant Collector, who upheld the classification tinder Chapter Heading 8547 wholly on the basis of HSN Explanatory Notes. He submitted that in the trade parlance the item is not known as insulating fitting but has been understood only as an insulator. He submitted that when Chapter Heading 8546 is applicable then, the question of going to the next heading does not arise. He submitted that the metal portion and the electrode of the item cannot be called as the 'insulator body', as understood by the Revenue. He submitted that the item is not a general purpose insulator, as it is used specifically for motor vehicles and not in any other electric machines, appliances or equipment, for which alone Chapter Heading 8547 applies. He submitted that the motor vehicle is not an equipment and therefore, Chapter Heading 8547 is ruled out. He also referred to the ruling rendered by the Tribunal in the case of Chetna Polycoats (P) Ltd. v. Collector of Central Excise as reported in 1988 (37) E.L.T. 253. He also referred to Rule 1 of the Interpretative Rules, which laid down that where Chapter notes and Section notes are clear about the classification then that should be applied in the first instance. He further submitted that the appellants had made an alternate plea before the lower authorities that the classification of spark plug comes under Chapter Heading 85.11 and the parts of such spark plugs are required to be classified under Chapter sub-heading 8511.90 and the item was, therefore, exempted by Notification No. 118/93-Cus., dated 4-5-1993. He submitted that this argument has not been considered at all and without considering the applicability of earlier Heading namely, 8511 and 8546, the Revenue has proceeded to classify the item under Chapter Heading 8547 and such a procedure adopted by the Revenue is not sustainable in law. He also submitted that Chapter Heading 8547 refers to electric equipment themselves and not to parts of the equipments and parts of the equipments are, therefore, required to be classified independently as per the Interpretative Rules 2 and Section Notes 2(a) of Section XVI.
12. The Learned DR submitted that the Chapter Heading 8546 is not at all applicable and so also the claim for the benefit of the Notification which pertains to the items falling under Chapter Heading 8546. He submitted that electric circuit is known by source voltage. The source voltage of a car is 12 volts and hence the arguments putforth by the appellants are too far fetched and therefore, the lower authorities were quite right in rejecting their plea. He submitted that Chapter Heading 8546 refers to 'electric insulators' and the item in question does not fall within the said category of 'electric insulators'. He submitted that "spark plug" is an equipment and the item in question is a insulating fitting. Therefore, the classification adopted by the lower authorities is correct. He also submitted that Chapter Heading 8511 is not applicable. In view of Section Note 2 of Section XVI which clearly states that parts of machines (not being parts of articles of Headings 84.84, 85.44, 85.45, 85.46, or 85.47) are to be classified according to the Rules laid down therein. Therefore, he submitted that Note 2 had clearly stipulated that parts of articles of Heading No. 85.46 or 85.47 was not to be included in parts of machines which are required to be classified in terms of Note 2 of Section XVI. Therefore, he submitted that Chapter Heading 8547 includes parts of equipments and HSN Explanatory Notes had referred to "spark plug bodies" to be classified under Chapter Heading 8547. He explained that the equipment is something which is a specific function and in this particular case spark plug has a specific function and, therefore, the authorities had rightly classified the item under Heading 8547. He submitted that Rule 3(c) of Interpretative Rules applies to the present case, as Rule 3 deals about classification of a product which falls under two or more headings and Note 3(c) lays down that when goods cannot be classified by reference to (a) or (b) they shall be classified in the heading which occurs in the last and which equally merit consideration. Therefore, he submitted that the spark plug bodies and their parts are required to be classified under 8546 and 8547 and as Heading 8547 being the latest among those headings which equally merit consideration, therefore, the classification adopted by the lower authorities is required to be upheld. He referred to the judgment rendered in the case of Collector of Central Excise v. Wood Craft Products Ltd. as reported in 1995 (77) E.L.T. 23, wherein the Hon'ble Supreme Court has held that HSN Explanatory Notes is to be preferred, as the Tariff has been designed in the light of the HSN Explanatory Notes.
13. The Learned Counsel countering the arguments submitted that Section Note 2 of Section XVI has to be preferred and only when there is no ambiguity then, Rule 3(c) has got to be applied. As there is no ambiguity in the present case and the "spark plug" is even mentioned in Heading 8511 and there is a heading for parts under 8511.90. Therefore, the classification under Chapter Heading 8547 is not appropriate. He also submitted that Section Note 2(b) of Section XVI speaks about other parts if suitable for use solely or principally with a particular kind of machine or with a number of machines of a same heading (including a machine of Heading No. 84.79 or 85.43) which are to be classified with machines of that kind. However, parts which are equally suitable for use principally with the goods of Headings 85.17, 85.25 and 85.28 are to be classified under Heading No. 85.17. Therefore, he submitted that the principle of classification on the latest of the heading cannot be applied as per Rule 3(c) as argued by the Learned DR. He submitted that parenthesis generally applied, as parts of insulating fittings are hit by parenthesis. The imported goods are insulating fittings per se, hence Section Note 2(a) and Section Note 2(b) of Section XVI cannot be ruled out and applying the same, the alternate plea under Chapter Heading 8511.90 has to be accepted.
14. We have carefully considered the submissions made by both the sides and have gone through the material placed before us. The importers before the lower authorities had submitted that the product imported is internationally known in trade and commercial parlance as insulator and, therefore, had pressed for its classification under Chapter Heading 8546. The Learned Assistant Collector had rejected it on the ground that Heading 8546 covers those insulators which are used solely for fixing, supporting or guiding of electrical current conductors, and further has held after reading the Tariff Heading that those electric insulators which aid in transmission of electrical current conductor by fixing, supporting or guiding only are included in this heading e.g. Chain suspension insulators, Rigid insulator etc. It had been argued before us that Heading 8547 covers insulating fittings for electrical machines, appliances or equipments being fittings solely of insulating material and, therefore, the description itself excludes the item in question and as the item is a "electrical insulator", which is not in doubt, hence it is required to be classified under Chapter sub-heading 8546.20, as it is made of ceramics. We are not impressed with this argument for the reasons that Heading 8546 applies to insulators used for fixing, supporting or guiding of electric current conductors and as the HSN Explanatory Notes further states that "insulators while at the same time insulating them electrically from each other from earth." Therefore, the insulators should be used for the purpose stated "for insulating it electrically from each other from earth" and only such type of insulators are included in Heading 8546. In this case the insulator is a body of spark plug, as can be seen from the definition of the spark plug appearing in page 1348 of HSN Explanatory Notes under Chapter Heading 85.11. The HSN Explanatory Notes defines a spark plug at page 1348. As can be seen from the definition, a spark plug consist of a central insulated electrode and a point attached to the casing. The casing as can be seen is for screwing into the cylinder-head. Therefore, this insulator is not used for "fixing, supporting or guiding of electric current conductors and insulating them electrically from each other from earth" as has been stated in HSN Explanatory Notes under Chapter Heading 85.46 at page 1406. Therefore, Chapter Heading 8546 is clearly ruled out.
15. The other ground for classifying the item under Chapter Heading 8547 is because of reference of the word "spark plug bodies" in the HSN Explanatory Notes pertaining to Heading 8547. Heading 8547 refers to "insulating fittings for electrical machines, appliances or equipments, being fittings wholly of insulating material". The question is whether the item is, "insulating fitting" and "being fittings wholly of insulating material", and used for "electrical machines, appliances or equipments." What is a insulating fitting has been described in HSN Explanatory Notes at pages 1407 and 1408 :
"With the exception of insulators as such (Heading 85.46), this group covers all fittings for electrical machinery, appliances or apparatus, provided :
(i) They are wholly of insulating material, or are wholly of insulating material (e.g., plastics) apart from any minor components of metal (screws, threaded sockets, sleeves, etc.) incorporated during moulding solely for purpose of assembly and
(ii) They are designed for insulating purposes even though at the same time they have other functions (e.g., protection) In general the fittings of this group are obtained by moulding or casting, or by sawing, cutting or otherwise working the raw material. They may be drilled, threaded, filed, grooved etc. They may be made of any insulating material (e.g., glass, ceramics, steatite, hardened rubber, plastics, resin impregnated paper or paperboard, asbestos-cement or mica).
These fittings may be in various forms. This group includes, inter alia, covers, bases, and other parts of switches, circuits breakers, etc.; bases and supports for fuses; rings and other parts for lamp-holders; formers for resistors or coils; connection strips and dominoes not fitted with their terminals; cores for bobbins and windings of various kinds; sparking plug bodies.
The heading does not cover fittings which, even though made wholly of insulating material (for made wholly of insulating material apart from any minor components of metal incorporated during moulding solely for the purpose of assembly), have not been specially constructed for insulting purpose, such as containers, covers and separator plates for accumulators (Heading 85.07).
(B) ELECTRICAL CONDUIT TUBING AND JOINTS THEREFORE, OF BASE METAL LINED WITH INSULATING MATERIAL This group covers the metal tubing used in permanent electrical installations (e.g., house wiring) as insulation and protection for the wires, provided it has an interior lining of insulating material. Uninsulated metal tubing, often used for the same purpose, is excluded (Section XV).
The tubing of this group consists either of spiralled metal strip wound on to an interior tube of insulating material, or of rigid metal tubing (usually iron or steel) coated or lined on inside with insulating material. The insulating material may be special electrically insulating varnish, paper or paperboard, rubber, plastics, etc. Metal tubing simply coated with varnish to prevent corrosion is excluded (Section XV).
This group also covers joints used for connecting the tubing of this heading provided they are also of base metal and coated or lined with insulating material (e.g., straight joints, elbows, tee joints and cross-overs).
Joints such as tee joints, cross-overs, etc. fitted with terminals for electrical connections are excluded (Heading 85.35 or 85.36).
The heading also excludes tubing wholly of insulating material (e.g., of rubber, plastics, braided textile yarns or glass fibre yarns); this is classified according to the constituent material, unless constituting an insulator of Heading 85.46."
16. As can be seen from the above Explanatory Notes that only those electric fittings are covered under Chapter Heading 85.47 which are fittings for electrical machinery, appliances or apparatus. The question before us is, is spark plug a fitting for electrical machinery, appliances or apparatus? The Learned Advocate has vehemently argued for classifying the items as 'parts of sparking plugs' under Heading 85.11. Heading 85.11 reads as follows :
"85.11 Electrical ignition or starting equipment of a kind used for sparking ignition or compression -
ignition internal combustion engines (for example ignition magnetos, magneto-dynamos ignition coils, sparking plugs and glow plugs, starter motors);
generators (for example, dynamos, alternators) and cutouts of a kind used in conjunction with such engines.
8511.10 - Sparking Plugs 65%
8511.20 - Ignition magnetos: magneto-dynamos: 65%
magnetic flywheels
8511.30 - Distributors; ignition coils 65%
8511.40 - Starter motors and dual 65% 85.11
8511.50 - Other generators 65% 85.11
8511.80 - Other equipment 65% 85.11
8511.90 -Parts 65% 85.11"
17. The heading of the Heading 85.11 clearly reads as 'Electrical ignition or starting equipment of a kind used for spark-ignition or compression-ignition internal combustion engines' and it gives the example of 'sparking plug'. It follows from this reading of the heading that 'sparking plug' has been considered as an 'Electrical equipment'. Therefore, no further argument is required to be considered to come to the conclusion about 'sparking-plug' being an 'Electrical equipment'. If this be so, can its 'parts' be not placed in its sub-heading 8511.90. The answer is in the negative, in view of Notes 2 & 5 of Section XVI of the Customs Tariff, which deals about the classification of the Parts.
18. Notes 2 & 5 of Section XVI of the Customs Tariff is reproduced herein below :-
"2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of Headings 84.84,85.44, 85.45, 85.46 or 85.47) are to be classified according to the following rules :-
(a) Parts which are goods included in any of the headings of Chapter 84 or Chapter 85 (other than Heading Nos. 85.85 and 85.48) are in all cases to be classified in their respective headings.
(b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading including a machine of Heading No. 84.79 or Heading No.,8543) are to be classified with the machines of that kind. However, parts which are equally suitable for use principally with the goods of Heading Nos. 85.17 and 85.25 to 85.28 are to be classified in Heading No. 85.17.
(c) All other parts are to be classified in Heading 84.85 or Heading No. 85.48."
"5. For the purposes of these Notes, the expression 'machine' means any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of Chapter 84 or Chapter 85."
19. As can be seen from both the above notes, a 'machine' includes an equipment as well. Note 2 excludes parts of the articles of Heading 85.47 from classification as per the said Note 2. It means that parts of articles of Heading 85.47 are not to be classified in terms of the Note 2 and thus, the classification of 'Parts of Sparking Plug' if they are also parts of the articles of Heading 85.47, they get excludes from classification as a part of sparking plug under sub-heading 8511.90 and would necessarily be classified as parts of article of Heading 85.47.
20. The imported item was declared as "Insulators", in the relevant Bill of Entry. The item in question according to the various write-ups relied upon by the appellants in the Appeal Memo is a part of the Sparking plug made from ceramic material based on aluminium oxide with additions of forms of glass having high mechanical strength and resistence and thus has excellent insulating properties and high thermal conductivity essential for satisfactory spark plug operation. From a plain reading of Heading 85.11, it is evident that spark plug is, for the purpose of Tariff, nothing but an "Electrical ignition or starting equipment, of a kind used for Spark-ignition or compression-ignition internal combustion engines". It would follow that the imported item which is made entirely of insulating material and form an essential part of spark plug is nothing but an insulating fitting for electrical equipment, namely, Spark Plug. The Explanatory Note of "spark plug bodies" appearing at page 1348 of the Explanatory Note also states that it is used for igniting the explosive mixture in the cylinder. The said Explanatory Note appearing at page 1348 is reproduced herein below :-
"(A) Sparking Plugs These consist of a Central insulated electrode and a point (or points) attached to the casing. The casing is partly threaded at its base for screwing it into the cylinder-head, and there is a terminal at the top of the Central electrode for connection to the source of current. When a high voltage is applied to the Central electrode a spark jumps between that electrode and the point or points and is used for igniting the explosive mixture in the cylinder."
21. The definition of the spark plug quoted by the appellants in the appeal memo, also supports the issue that the "insulator" imported is used for protection from grounding of electricity. The Heading 85.47, exclusively covers "Insulating fitting for electrical machines, appliances or equipments, being fittings wholly of insulating materials". The Heading 85.47 is reproduced herein below :-
"85.47 Insulating fittings for electrical machines, appliances or equipment, being fittings wholly of insulating material apart from any minor components of metal (for example, threaded sockets) incorporated during moulding solely for purposes of assembly, other than Insulators of heading No. 85.46;
electrical conduit tubing and Joints therefore, of base metal lined with insulating material.
8547.10 -Insulating fitting of ceramics 65% 85.47 8547.20 -Insulating fittings of plastics 65% 85.47 8547.90 -Other 65% 85.47"
22. As noted above Sparking Plug being an "Electrical equipment", and the imported part/ fitting for spark plug being, wholly an Insulating fitting for electrical equipment and wholly of insulating material in terms of Note 2 of Section XVI, it would be classifiable under Heading 85.47 only. The HSN Explanatory Note under Heading 85.47 also clearly refers to insulating material of ceramics and brings within its ambit "Sparking Plug bodies". For these reasons, the appellants alternative claim that the disputed goods are exempted under Notification No. 118/93-Cus., which exempts goods falling under Heading 85.11, also does not survive.
23. Thus, the position being crystal clear, we have to agree with the findings of the lower authorities and we hold that there is no infirmity in the said order. As there is no merit in this appeal, it deserves to be dismissed-and we order accordingly.