Customs, Excise and Gold Tribunal - Delhi
Tata Engineering And Locomotive Co. ... vs Collector Of Central Excise on 9 August, 1988
Equivalent citations: 1989(20)ECR433(TRI.-DELHI), 1988(37)ELT432(TRI-DEL)
ORDER G. Sankaran, Sr. Vice-President 1. Appeal No. E/744/82-D. By a notice dated 18.3.1980 M/s. Telco Ltd. (the appellants before us) were called upon to show cause why excise duty amounting to Rs. 54,458.45 should not be demanded from them on various types of "steel furniture" (which, according to the authorities, fell under Item No. 40 of the First Schedule to the Central Excises and Salt Act, 1944 - CET) manufactured during 1977-78 and removed without accountal of the production-and without observing the provisions of Central Excise law and why penalty should not be imposed on them. By a letter dated 29.6.1981 the appellants denied the allegations. They contended that all furniture required by them for homes and offices were purchased from outside and that the goods in question were not conventional steel furniture within the meaning of Item No. 40 GET because they were shop floor equipments made of thick gauge metal and designed and built for the use of workers in the course of manufacturing activities. They did not conform to any standard specifications and were not available in the market. In due course, the Additional Collector of Central Excise, Patna, passed an order on 16.7.1982 holding the subject goods to be steel furniture falling under Item No. 40 CET. He ordered that the Assistant Collector should redetermine the duty liability keeping in. view Central Excise Notification No. 33/71, dated 1.4.1971, as amended by Notification No. 181/72, dated 17.3.1972. He also imposed a penalty of Rs. 1,500/- on the appellants under Central Excise Rules 173Q(1). TELCO filed an appeal against this order to the Central Board of Excise & Customs which has come on transfer to this Tribunal to be disposed of as if it were an appeal filed before the Tribunal. 2. At the instance of the Bench, the appellants furnished a write up on each of the articles in dispute. Photographs of the articles have also been filed. The Collector has also furnished his comments thereon through the Departmental Representative. 3. We have heard Shri V. Lakshmikumaran, Advocate, for the appellants and Smt. V. Zutshi, S.D.R., for the respondent. 4. The position that emerges on perusal of the record, including the Collector's comments on the write-ups furnished by TELCO is that the disputed items such as steel cabinets, steel tables, steel benches and steel racks are meant for storing equipments, gauges, parts and components, dies etc. or to be used as work tables e.g., welding tables, inspection tables. These items are not of aesthetic or decorative value and are not of the type of items of furniture normally used for furnishing homes, offices, or public and private buildings. In some cases, the articles are fixed to the shop floor. All the items are manufactured to specific designs and requirements for use in the Works. There is provision in some items for fixing them by bolts in view of the heights of the racks and the load they are expected to bear. It is the Collector's submission that these special features or characteristics are not relevant to the issue of classification and do not detract from the point that they are "steel furniture" within the meaning of Item 40, CET. The appellants have also contended that the items are much more costly than ordinary items of furniture. 5. It is the appellants' contention that the special features of these items - (a) made of heavier than usual gauges of metal, (b) lack of mobility, (c) lack of aesthetic value, (d) made to specific designs for use in the factory, and (e) non-availability in the market, would take them out of the category of "steel furniture" as normally understood in commercial parlance and as interpreted by Courts and this Tribunal. 6. It is the Collector's contention, however, that the above features would not take the article out of the category of steel furniture. 7. Several decisions were cited before us in support of the respective views of the appellants and the respondent However, it seems necessary to refer only to the Bombay High Court's judgment in Elpro International Ltd. and Ors. v. Joint Secretary, Government of India, Ministry of Finance & Ors in Civil Application No. 1469 of 1970. This is because this judgment contains a very exhaustive discussion on what constitutes furniture for the purpose of Item No 40 of the CET. Most of the other judgments cited refer to Sales Tax laws but when we have a decision directly on the Central Excise law it is naturally to be preferred to the judgments on Sales Tax laws. Another reason is that this judgment, insofar as it relates to one particular article viz. operating tables, has been approved by the Supreme Court 1985 (19) E.L.T. 3 (S C.) The Supreme Court has stated in para 6 of the report that the Court entirely agrees with the reasons recorded in the Bombay High Court judgment and the view taken by the High Court 8. The goods involved in the dispute that arose before the Bombay High Court and which was carried to the Supreme Court were operation tables having a comprehensive ranges of positions for patients to be operated upon, with head and foot controls. They had hydraulic as well as gear mechanism with indicator dials. One model of the operation table was also equipped with accessories such as lateral supports on kidney elevator, shoulder support, knee crutches, etc. They were specially designed to suit the requirements for various types of operations- In coming to the conclusion that these operation tables would not be steel furniture within the meaning of Item No. 40 CET, the High Court had given due consideration not only to their special features as mentioned earlier but also to the meaning assigned to the expression in dictionaries and popular parlance. Among the dictionaries referred to were - (a) Shorter Oxford English Dictionary : "movable articles in a dwelling house, place of business, or public building". (b) Webster Third New International Dictionary : "Articles of convenience or decoration used to furnish living quarters, offices, public and private buildings - usually used of movable articles (as tables and chairs) as distinguished from such permanent installations as bathroom fixtures". (c) Oxford English Dictionary : "Movable article, whether useful or ornamental, in a dwelling house, place of business or public building. Formerly including also the fittings." (d) Random House Dictionary of the English Language : "The moveable articles, as tables, chairs, bedsteads, desks, cabinets, etc., required for use or ornament in a house, office, or the like." 9. Having regard to the above quoted meanings, the Court observed that while understanding the user of the word "furniture", one may have to look to the description of the articles with the object of finding out whether they could be considered as movable articles having the purpose of convenience-cum-decoration as well as their utility and specific user in dwelling houses or places of business or some other building. The Court also observed that, apart from the said concept of use, the price to be paid for the items would also perhaps offer a good guide in concluding whether the items are pieces of furniture Viewed from these criteria, the Court observed that the operation tables, with their controls and other accessories and attachments, would not be pieces of furniture as ordinarily understood The Court also took into account the fact that the price range of the operation tables was from Rs. 7,500 to Rs. 15,000 (exclusive of duty etc.) as also the fact that the petitioner company was established for manufacturing medical and surgical equipments and not for manufacturing furniture. 10. As already noted, the Supreme Court has approved not only the conclusion of the Bombay High Court, but also the reasoning leading to the conclusion. 11. Therefore, we have to approach the question of classification of the goods in dispute in the present appeal bearing in mind the principles laid down in the above judgment. 12. As we have already noted, the appellants have furnished write-ups and photographs of the items in dispute. A complete set of these documents were furnished to the Collector for his comments, if any, thereon which the Collector has done by his letter dated 8.12.1987 to the Departmental Representative who has furnished a copy of the letter to the Bench. The Collector has observed that the disputed item such as steel cabinets, steel tables, steel racks are meant for storing equipment, gauges and parts and components, dies or for working (welding tables, inspection tables). The Collector has also observed that some of these items are welded to the shop floor. He has also noted that the items are manufactured as per specific designs and requirements for use in the appellants' works In some cases, provision has been made for fixing by bolts in view of the load and height factor. All these features, in the Collector's opinion, would not disqualify the items from being considered as steel furniture. In the write-ups furnished by the appellants they have set out the distinctive features of the disputed items which, according to them, are absent in the corresponding articles of furniture normally available in the market. They have also stated that the item manufactured by them are such as cannot be found in the market as articles of furniture. The Collector's comments on these write-ups, however, do not add up to a rebuttal of the appellants' contention, but only to setting out the Department's contention that in spite of the distinctive features claimed by the appellants in respect of the disputed items, the items do not cease to be "furniture" since these features are not relevant to the classification of the items The Department has not produced any evidence to show that the items in dispute are known as articles of furniture in trade and commercial parlance 13. The Collector's observation, as set out above, does not appear to hold water in the light of the observations of the Bombay High Court which have been approved by the Supreme Court. Looking at the photographs and the write-ups, it is fairly dear that the items, though in many instances, they resemble the corresponding items of furniture normally available in the market are nevertheless specifically designed for use in the appellants' works. They are made of thicker metal and are heavier in weight. The appellants contend that they are also costlier than the corresponding articles of furniture available in the market. The Department has not commented on this contention except to say that the value factor is irrelevant. While it would seem that these articles could be used outside the factory to store goods etc. that would not appear to be the normal or designed use. They do not qualify to be called items of furniture going by the dictionary meanings referred to earlier because they are not meant for use or decoration in dwelling houses, place of business or public or private buildings. In this view of the matter, they would not qualify to be classified as steel furniture under Item No. 40, CET 14. There is one more authority in support of the above view and that is the judgment of the Bombay High Court in Materials Handling Engineering Co. v. Superintendent of Central Excise and Ors. 1980 E.L.T. 231 (Bom.). In that case, the question was whether Metal Tube Trolley. Mini Trolley, Trolley Structure (frame), Gas Trolley Storage Bins, Stainless Steel Pump Stands and Box with door fell within the scope of Item 40, CET. The Departmental authorities held that these articles fell under the said item. The Court held that the Trolleys in question were not of the type used in households or doctors' clinics but used only in factories for the purpose of shitting goods from one place to another. As regards storage Bins and Stainless Steel Pump Stands and Box with door, the Court held that merely because the articles resembled cupboards etc. they would not be articles of furniture. 15. In the result, the impugned order is set aside and the appeal is allowed with consequential relief to the appellants. Appeal No. E/1276/82-D 16. This appeal involves the classification of goods like tool holders, cabinets, racks, work benches etc. as in Appeal No. E/744/82-D. The classification was decided against the appellants by the Assistant collector who found that these items were steel furniture falling under Item No. 40, GET. This order was upheld in appeal by the Appellate Collector of Central Excise by the impugned order dated 21.6.1982. 17. For the same considerations set out in our order regarding Appeal No. E/744/82-D, in the present case also, we allow the appeal and set aside the impugned order and hold that the goods in question do not fall under Item No. 40 CET. Appeal No. E/1559/82-D 18. This case also involves the classification of goods like racks, cabinets, tool holders etc. They were held to fall under Item No. 40 CET by the Additional Collector of Central Excise, Patna by his order dated 13.11.1981. This order was upheld in appeal by the Central Board of Excise and Customs except as regards penalty and redemption fine which were set aside. 19. For the same reasons as in Appeal No. E/744/82-D, we hold that the goods here also were not steel furniture within the meaning of Item No. 40, CET. Accordingly, the impugned order is set aside and the appeal is allowed. V.T. Raghavachari, Member (J)
20. Item 40 CET deals with steel furniture. There is no definition of the word furniture either in the Act or in the Tariff. In the circumstances the meaning of the word has to be ascertained only by reference to dictionaries, text books, trade understanding and trade parlance as also the interpretation of the word by courts or other competent authorities. The several decisions cited before us have dealt with this issue with reference to the above sources as to interpretation. The dictionaries referred to are, the Shorter Oxford Dictionary, the Oxford English Dictionary, the Random House Dictionary of English language, the Chambers Twentieth Century Dictionary, etc. A comparison of the meanings as given in these dictionaries would suggest that an article of furniture would be a movable article of convenience or decoration used to furnish a living house, office, a public or private building, and that it may be either useful or ornamental. It is on the basis of such an understanding that the courts have come to their conclusion as to whether the goods concerned in the said cases could be termed as furniture or not.
21. The cases cited before us are:
(i) Chandan Metal Products Pvt. Ltd. 1969 (23) STC 29
(ii) Commissioner of Sales Tax v. Harkut Udyog 1985 (58) STC 334
(iii) Materials Handling Engineering Company 1980 ELT 231 (Bombay)
(iv) Simpson and Co. Ltd. v. State of Madras
(v) Elpro International Ltd. (unreported, certified copy made available)
(vi) The decision of the Supreme Court on appeal from the decision of the Bombay High Court in Elpro International Ltd. 1985 Vol. (19) ELT 3
(vii) Order No. 587/87-D, dated 27.7.1987 of this Tribunal in the case of New Chelur Manufacturers.
(viii) Order No. 384/87-D, dated 12.5.1987 of this Tribunal in the case of Nima Ltd.
22. Excepting in the case of Elpro International Ltd., and Material Handling Engineering Company and other cases before the Courts arose with reference to the interpretation of the word furniture as under the several Sales Tax Laws. It may be noted that the entry for consideration in the Bombay Sales Tax Act mentioned the word "furniture" in entries 40-A and 44H while the entry in the Madras General Sales Tax Act mentioned "furniture of all types" as entry 44. It was noted by the Courts that the word furniture has not been defined in the respective Acts. It is for that reason that all the Courts had to fall back upon the dictionary meaning and trade understanding to construe what would be furniture.
23. In the Chandan Metal Products case it was held that all articles of convenience or decoration used for purposes of furnishing a place of business or an office would be articles of furniture. It was held that a shelving rack used in an office or an industrial organisation would be an article of convenience for purposes of keeping files, papers, etc. and would, therefore, be an article of furniture. In the case of Simpson and Company Ltd. the Madras High Court held that a garage stool though to be used in a garage only by the workers in the garage would be a piece of furniture. In doing so the High Court took note of the fact that the relevant entry covered furniture of all sorts and would, therefore, not be confined to furniture used in homes and offices only. In the Materials Handling Engineering Company case the Bombay High Court took not of the fact that the trolleys concerned were to be used in factories only, for shifting goods from one place to another and would not, therefore, be articles of furniture. In the Union Sales Corporation case the Bombay High Court held that motorised elevators mobile copper roller rod racks would not be furniture as the same was a power operated storage rack which performs special functions such as storing as well as shifting the goods placed thereon backward and forward as well as upward and downward. Thus that case dealt with specialised equipment which though resembling a storage rack was in fact performing the functions of movement of goods upwards as well as sideways. In the Elpro International case the Bombay High Court held that an operation table which was equipped with special gadgets and special controls for movement of parts of the table to facilitate the performance of the surgical treatment of the patient placed thereon would not be furniture. In coming to that conclusion the Bombay High Court took note of the fact that the operation table apart from convenience-cum-decoration had special utility value by reason of the sophisticated attachments thereto to enable performance of special functions required on the part of the surgeon. At the same time the High Court held, so far as the other item is concerned (X-ray protective screen), that though the said screen was provided with special features such as lead glass window as well as a secondary radiation shield protective coating it would yet be an article of furniture as it could be used in a house as a normal screen. As pointed out, the judgment of the Bombay High Court with reference to operation table has been upheld by the Supreme Court when the Revenue approached the Supreme Court with reference to that finding.
24. When there is a decision of the Supreme Court on a particular issue it would be binding on all subordinate authorities. Therefore, the ratio of the Bombay High Court decision with reference to the operating table would have to be followed whenever the nature of any goods is to be considered for deciding whether the same would be an article of furniture. As earlier mentioned, the Bombay High Court took note of the fact that though termed a table, the operation table had specialised functions to perform and was suitably fabricated to facilitate the performance of such functions and has special attachments for use by the surgeon using the table. It further took note of the fact that the cost was much beyond what a similar article of normal household furniture would cost and by look also the operation table could not be called a mere table or a price of furniture. Hence if with reference to any of the goods in issue before us these criteria are satisfied, we are bound to hold that the said item would not be an article of furniture. On the other hand if, as held by the Bombay High Court with reference to X-ray screen, an article though provided with special features could yet be used as an ordinary article of furniture, it would still qualify to be classified as an article of furniture for purposes of levy of duty. All the decisions establish that an article of furniture may be found in a house or in an office or an industrial establishment. The qualification is, it should be an article of convenience or decoration. It should be noted that it need not be both an article of convenience and an article of decoration.
25. To summarise, an item could be termed as an article of furniture if (i) it is an article of convenience or decoration; (ii) is used for either purposes in the house or an office or a public building or an industrial establishment; (iii) is not fabricated specially to perform special functions; and (iv) is not so constructed as to be not usable in the line of ordinary furniture, as found in the house, office, etc. It is with reference to these criteria that we have to classify the several items in issue in this case.
26. On a perusal of the proceedings before the lower authorities in the 3 appeals before us (vide show cause notices, orders-in-original, etc.) the products in issue are roughly seen to be described as tool holder, pigeon hole, welding table, storage rack; work bench; rack; 3-tier almirah die rack; 4-tier bin; and tea table. The appellants have filed detailed write-up in respect of these articles, giving details of specifications, material used in the making of the articles; weight as well as cost of manufacture and additional provisions as would not be found in normal office or house furniture of similar description and finally the appearance. The factual details are not in fact denied in the reply filed on behalf of the Collector, the contention therein being that the fact that the articles are made of heavy material or that some of them are not movable and that they are all made to be used by the appellants only and are not for sale, would not be relevant for a decision on the question whether they would be furniture falling under Item 40-CET. Therefore, we will have to assess the respective contentions with reference to the factual data furnished by the appellants.
27. It is seen that all the articles are made of heavy gauge steel, the necessity therefor being the nature of the use to which they were to be put. The tool holders and the die racks are mentioned to be so fabricated as to be capable of bearing very heavy weight. The tables are again manufactured out of heavy gauge steel and reinforced suitably as they have to withstand heavy pressures such as hammering, chipping, filling, sawing, etc. that will take place on the materials placed on the table for being worked on. It is again mentioned that a large number of these articles have provisions for being grouted to the floor by means of bolts since they will have to be kept rigid and without movement as may result due to the work performed on them. It is also mentioned that many of them, by reason of the heavy gauge material used, are abnormally heavy. It is also mentioned that the work benches are so fabricated as to facilitate particular pieces of machinery being kept thereon for being worked. It is mentioned that otherwise the workers will have to perform the work on the machine in a bending position, resulting in loss of productivity and that is why the work benches of necessary height are fabricated to enable the respective machinery to be kept on the bench for being worked. In such instances they would be really in the nature of being part of the machine itself though separate. So far as the tea table is concerned it has been mentioned that it is not really a table but in the nature of counter attached to the wall with the legs being grouted on the floor. The tool holders and pigeon holes are also fabricated with heavy gauge material in order to keep the heavy goods etc. at a convenient height and in separate lots to enable the workers to take them out as and when necessary. The 4-tier bins are also shown to be specially fabricated with heavy gauge material with provision for being fixed to the floor. It has also been mentioned that all these articles are not of the normal type design but are specially designed to suit the needs of the appellants in the respective places in the shop-floor where they are to be used and that they are roughly finished and do not have the aesthetic appearance one associates with furniture to be used in the house or office.
28. It is thus seen that all the articles are specially designed to suit the needs of the appellants and many of them are either grouted to the floor or have provision therefor and thus would not be movable. Furniture as commonly understood would be movable pieces. From the nature of the material used and the weight of the articles it is clear that none of them could, or would, be used as normal house-hold or office furniture as was the case of the X-ray screen in the case of Elpro International. Since we thus find that the articles in issue are tailor-made to suit the needs of the appellants, and have special design with special features also and are also not capable of being used in the way of normal furniture in the house or office, I also agree that they would not, applying the principles enunciated earlier, answer to the description of furniture as commonly understood. I also therefore, agree that these 3 appeals are to be allowed.