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S.L. Peeran

1. This appeal arises from Order-in-Appeal No. M.Cus.1203/96 dated 22.7.96 which the Ld. Commissioner has confirmed the confiscation of imported components of printer calculator model EL-1611 H (Sharp) - 1500 setson the ground that they are consumable item requiring licence and are liable or confiscation under ITC (HS) classification of Export Import Policy sub-heading 84702100 and Customs sub-heading 8470.21 of Customs Tariff which reads as under:-

"84.70 Calculating machines and pocket-size data recording, reproducing and displaying machines with calculating functions; accounting machines, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device; cash registers .....

4. The Ld. Commissioner (Appeals) in his order has set aside the penalty and has reduced the fine to Rs. 3 lakhs but has not accepted the plea that the Interpretative Rules cannot be applied for classification under the ITC policy. Appellants have also made the plea that the item was not in CKD condition and has not satisfied the tariff description but did have essential characteristics of final product also for clarification only as a part under 84.73. They contended that they had to use several other parts indigenously procured and required to carry out several processes to make the item a complete one. They were registered under the Central Excise Act as a manufacturing unit in relation to their final product viz. Electronic printer calculator and were paying excise duty. Although in para-24 the Commissioner has accepted all these pleas but yet he has applied the interpretative rules of the Customs Tariff to the ITC (HS) classification, and on that premise, held the item to be in CKD condition as consumer goods which required licence.

5. Ld. Counsel Mrs. Anita Sumanth argued that the Interpretative Rules of Customs Tariff cannot be applied for the purpose of classifying the items under ITC (HS) classification. She submitted that this issue is no longer res integra and the matter is already covered by number of Tribunal judgments. She relied on the following Tribunal judgments:-

(1) WIPRO LTD., v. CC Chennai - 1999 (107) ELT 398 (2) L.M.L. LTD., v. CC Bombay - 1999 (105) ELT 718 (3) K.R. TRADING CO. v. CC Calcutta - 1999 (110) ELT 746

8. We have carefully considered the submissions made by both sides and have perused the impugned order. In para-24 of the impugned order, the Ld. Commissioner (Appeals) has accepted the appellants' contention that they were manufacturing the final product and were buying various indigenous items for various process of manufacture and clearing the same, paying excise duty. However, for ITC purpose, he has applied the Rule 2(a) of Rules of Interpretation of the Customs Tariff to hold the item to be in CKD condition and the final product requiring it to be classified as final product itself under 8470.21. This is contested on the ground that Rule 2(a) of Interpretative Rule cannot be applied to ITC HS classification and the judgments are relied on this aspect. We have considered these judgments and note that in the case of WIPRO LTD (supra) in para-7(d), have clearly laid down that Interpretative Rule 2(a) cannot be applied to interpret either notifications or Import-Export Trade Control Order. The findings recorded in para-7(d) is reproduced herein below:-