1. Collector of Customs, Calcutta has filed an appeal being aggrieved from the order passed by the Collector of Customs (Appeals), Calcutta.
Briefly the facts of the case are that respondents Neeraj Newspaper Associates (Pvt.) Ltd., Kadamkuan, Patna had imported 2 numbers of photo composing machines equipped with display screen, English/Devnagari keyboard, type setting unit and standard equipment and 4 numbers of 5404 (40K) Off-line keyboards for English/Devnagari.
The goods were examined on the original bill of entry and the contents were found to be:- (1) 2 Nos. of photo composing machines, Model 4560W with standard accessories and (2) 4 Nos. of 5404 (40K) VDI Off-line keyboards for English/Devnagari.
The dispute is in regard to the classification of the 4 Nos. of VDI Off-line keyboards which had been imported in addition to the keyboards already fitted with the photo composing machines. The Assistant Collector had examined the issue of classification of 5004 (40K) VDI offline keyboards. The respondent had claimed classification under Heading 84.34 on the ground that there are component parts of photo composing machines. The Assistant Collector had observed from the catalogue that the machines consist of input unit, data storage and playback unit and these were imported in assembled form as one unit and the machine, though designed for use with the photo composing machine, would also be found to be used for input from other sources such as other word processors computers and wire-services. It was further observed by the Assistant Collector that in terms of the explanatory note at page 1346 of the CCCN under Heading 84.53, the essential requirements of a data processing unit were input unit, central processor and output unit and the above requirements were satisfied in this case. He had held that the machine in question was appropriately assessable under Heading 84.51/55(2) of the CTA 1975. The duty chargeable under Heading 84.51/55(2) is 100% ad valorem. The respondents in a write-up dated 14-8-1984 had stated that the 4 Off-line video display keyboards i.e. for each photo composing machine were required for input to each photo composing machine and were integral parts of a complete photo composing unit in single machine and that the keyboard unit was meant for record/playback and would give an output which was optimum in the photo copying machine. This unit could record copy on disks for output on the photo composing machine and upto 5 keyboards display units could be used in the comp./set 4560 machine.
It was further pleaded by the respondents that use of additional 2 keyboards was necessary for each photo setting machine when large number of copies had to be made in editing newspapers, periodicals etc.
The input in the instant case was made of by the newspapers organisation. The video display keyboard unit 5404 with record/playback unit was an Off-line terminal for inputting only on photo composing machine 4560. The function of the Off-line keyboard 5404 (40K) was entirely different from keyboard 5004 (40K) which had been decided in the Collectors' Tariff conference (held at Cochin during March, 1984) to be classifiable under Heading 84.51/55(2) of the CTA, 1975. The Assistant Collector had observed that the main distinction drawn by the respondent so far as the imported keyboards were concerned from the one No. 5004 was that there was nooutput unit in the imported keyboards Model No. 5404 and it was only data storage and playback units. The Assistant Collector had ordered the assessment of 4 Off-line keyboards under Heading 84.51/55(2) of the CTA, 1975.
2. Being aggrieved from the aforesaid order, the respondent had filed an appeal before the Collector of Customs (Appeals), Calcutta. The Collector of Customs (Appeals) accepted the contention of the appellant and held that the 4 keyboards are assessable under Heading 84.34 of the CTA and the respondents are entitled to the benefit of Notification No.114/80-Cus. which refers to composing machine with keyboards. He had set aside the order passed by the Assistant Collector and being aggrieved from the order passed by the Collector of Customs (Appeals), Calcutta, the revenue has come in appeal before the Tribunal.
3. Shri M.K. Sohal, the learned JDR who has appeared on behalf of the revenue, pleaded that data processing machines are assessable under Heading 84.51/55(2), whereas the respondents want assessment under Heading 84.34. Shri Sohal argued that there is no separate invoice. He referred to the Notification No. 114/80-Cus., dated 19th June, 1980. He pleaded that the goods imported are Off-line keyboard and keyboard can be used for office purposes. He argued that the classification of 4 keyboards will be governed by Accessory Rules 1963. He pleaded that the keyboards were essential for the functioning of the imported machine for which the revenue has given benefit and these 4 keyboards are accessories and not components. He has relied on the order-in-original and pleaded that the order passed by the Collector of Customs (Appeals) is not a speaking order and has pleaded for the acceptance of the appeal.
4. Shri L.P. Asthana, the learned advocate who has appeared on behalf of the respondent pleaded that the keyboards imported by the respondents are to be used with the printing machine and are to be assessed under Heading 84.34 and the respondent is entitled to the benefit of Notification No. 114/80-Cus., dated 19th June, 1980. Shri Asthana argued that the keyboard classification shows that it was for printing industries. It has to be used with the photo composing machine. Keyboard helps the function of the photo composing machine.
Shri Asthana argued that many times 8-12 pages of the newspapers are to be published and the material had to be feeded into the machine and each keyboard is used for each page and the keyboards can be attached with the machine. He has referred to the bill of entry. He has referred to Note 5 to Chapter 84 and Note 3 to Section XVI. He argued that full beneficial effect of the notification has to be given. He has pleaded for the rejection of the appeal.
5. We have heard both the sides and have gone through the facts and circumstances of the case. The facts are not disputed. The main machine, photo composing machine equipped with display screen, English/Devnagari keyboard, type setting unit and standard equipment has been assessed under Heading 84.34 of the CTA 1975 read with Notification No. 114/80-Cus., dated 19th June, 1980. We have perused the order-in-original and the order-in-appeal. In para No. 4 of the original it has been mentioned that catalogue was produced before the Assistant Collector. In the matter before us, neither the appellant nor the respondent has filed the catalogue or its copy. We had enquired from both the sides whether they have got the catalogue or not. Both the sides expressed their inability to file the copy of the catalogue.
In view of the Hon'ble Calcutta High Court's order dated 5th February, 1991 in Appeal No. 424 of 1987 matter No. 2032 of 1986, we are disposing of the appeal. The dispute is in respect of 4 Nos. of 5404 (40K) VDI Off-line keyboards for English/Devnagari. The learned Junior Departmental Representative in the course of his arguments had referred to the bill of entry where the bifurcation of the value of the photo composing machine and Off-line keyboard 5404 has been given, but it is also not disputed that there is no bifurcation of value in the invoices I. As we have discussed earlier while narrating the brief facts the catalogue was filed before the Assistant Collector and he had observed in his order that the machines consist of input unit, data storage and playback unit. These were imported in assembled form as one unit. The machine, though designed for use with the photo composing machine, would also be found to be used for input from other sources such as other word processors computers and wire-services and in terms of the explanatory note at page 1346 of the CCCN under Heading 84.53, the essential requirements to a data processing unit were input unit, central processor and output unit and the Assistant Collector was of the view that these requirements were satisfied and, therefore, the machine in question was appropriately assessable under Heading 84.51/55(2) of the CTA. The respondent has also filed technical write-up which has been referred to by the Assistant Collector in his order and in the technical write-up it was mentioned that 4 Off-line video display keyboards i.e. 2 for each photo composing machine are required for input to each photo composing machine and are integral parts of a complete photo composing unit in single machine. The keyboard unit was meant for record/playback and would give an output which was optimum in the photo copying machine and this unit could record copy on disks for output on the photo composing machine and upto 5 key-boards/video display units could be used in the comp./set 4560 machine. Use of additional 2 keyboards were necessary for each photo setting machine when large number of copies had to be made of by the newspaper organisations. The video display keyboard unit 5404 with record/play-back unit was an Off-line terminal for inputting only on photo composing machine 4560 and the function of the Off-line keyboards 5404 (40K) was entirely different from keyboard 5004 (40K) which had been decided in the Collector's Tariff conference (held at Cochin during March, 1984) to be classifiable under Heading 84.51/55(2) of CTA. During the course of arguments, Shri L.P. Asthana, the learned advocate had filed copy of the grounds of appeal before the Collector of Customs (Appeals). Grounds of appeal No. 1 to 7 are reproduced below:- "1 For that a reference to the Invoice and Packing List will confirm that your appellants imported 2 (two) Nos. photo composing machines equipped with display screen, English/Devnagari keyboard, typesetting unit and standard equipment and 4 (four) Nos VDI Off-line keyboards for English/Devnagari in the subject consignment There is no dispute about the aforesaid facts from either side whatsoever In other words it is apparent that 4 (four) Nos additional keyboards for English/Devnagari had been imported by your appellants for enabling them to publish/print 8 page to 12 page newspaper simultaneously.
2. For that the question at issue is whether the said 4 (four) Nos VDI Off-line keyboards for English/Devnagari scripts were - (a) covered by the Appendix -2, Serial No. 12(1) of Import Policy for 1983-84 to become eligible for clearance under OGL and whether (b) those were covered by the Exemption Notification No 114-Cus/80 within the description of 'Photo composing machines with keyboards' shown therein and whether (c) additional keyboards for photo composing machines fall under Tariff Heading No. 84.34 or 84 51/55(2) of the Customs Tariff Act, 1975.
3 For that a reference to the wordings of Appendix 2 Serial No 12(1) will show that the same covers inter alia - Photo composing/type setting machines and systems and ancillaries such as keyboards, editing terminals, film/paper processors line printers (other than line printers covered by Appendix 8) Keyboards having been specifically included as ancillanes of photo composing machines, the said 4 (four) VDI Off-line keyboards were correctly covered by OGL and were correctly recognisable as ancillanes of photo composing machines without any dispute.
4 For that a reference to the wordings of the Exemption Notification No 114/Cus/80 will further reveal that it specifically exempted from levy of basic customs duty in excess of 30% ad valorem on photo composing machines with keyboards at serial No 2 thereof, if imported by printing industry It is, therefore, established that not only photo composing machines but their key boards have also been specifically recognised by the Government of India for according partial exemption from levy of basic customs duty So the observations of the learned Assistant Collector of Customs that keyboards did not enjoy such exemption, were based on misconception of facts only.
5 For that the descriptions of Tariff Heading No 84.34 clearly show that it covers Machinery, apparatus and accessories for type-founding or type setting, machinery, other than the machine tools of Heading No 84.45/48, for preparing or working or working printing blocks, plates or cylinders, printing type, impressed flongs and matrices, printing blocks, plates and cylinders, blocks, plates, cylinders and litnographic stones, prepared for printing purposes (for example planned, grained or polished) Since photo composing machine and keyboards thereof are considered as accessories and apparatus for type setting and/or machinery for preparing or working printing blocks, plates or cylinders, those correctly fall under Heading No 84.34.
6 For that keyboards are considered to be ancillanes to photo composing machines as will be evident from the wordings of Appendix 2, Serial No 12(1) of the Import Policy for 1983-84 The terms ancillary and accessory being synonymous the definition given at para 5(14) of Import Policy for 1983-84 confirms such keyboards as part sub assembly or assembly of photo compos ing machines inasmuch as it contributes to the effectiveness of the said machine without changing its basic functions Therefore, it was illogical for the learned Assistant Collector of Customs to proclaim their classification under Heading No 84.51/55(2) of the Customs Tariff.
7 For that the printed literature as also the Technical Write-up as enclosed herewith will corroborate that the keyboards are essential parts of the photo composing machines in two different languages viz English and Devnagri scripts simultaneously for publication of newspapers having 8 to 12 pages Since one set of keyboard is not capable of publishing more than four pages, two more sets were imported for requirement of publication of 12 pages newspaper in two scripts simultaneously, which does not appear to be offending against any provision of Law Nor such import of additional keyboard changes their status from components of photo composing machine to an altogether different category of goods falling under Heading No 84.51/55 of the Customs Tariff".
While corning to the conclusion both the lower authorities had not looked into the Section Notes and Chapter Notes The larger Bench of the Tribunal had the occasion to deal with the provisions of Section Notes and Chapter Notes in the case of Saurashtra Chemicals, Porbandar v Collector of Customs, Bombay reported in 1986 (23) ELT 283 The Tribunal had held that Section Notes and Chapter Notes are part of statutory tariff and the headings are to be interpreted and applied in the light of the Section Notes and Chapter Notes and bound by their overriding force. The details have been discussed by the larger Bench in paras 4 and 7 of the said judgment. Shri Asthana had referred to Note 3 of Section XVI and Note 5 of Chapter 84 which are reproduced below:- "3. Unless the Headings otherwise require, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function".
"5. A machine which is used for more than one purpose is for the purposes of classification, to be treated as if its principal purposes were its sole purpose".
A simple perusal of these Notes shows that the principal purpose is the sole purpose. The machines imported by the respondents are photo composing machines with display screen for printing. The Department also admits that they are designed for use with photo composing machines. The respondents have claimed the benefit of Notification No.114/80-Cus., dated 19th June, 1980. Relevant extract from the said notification is reproduced below:- "Ch. 84 Notification No. 114-Cus., dated 19-6-1980 as amended by Notification No. 236-Cus., dated 29-11-1980 and Notification No.38-Cus., dated 28-2-1982.
The goods specified in the Table below and falling within Chapter 84 or Chapter 90 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), and are designed for use in the printing industry, when imported into India, are exempt from so much of that portion of the duty of customs leviable thereon which is specified in the said First Schedule, as is in excess of 30 per cent ad valorem.
A simple perusal of the notification shows that the main condition for extending the benefit of the notification is the same and it should be used in the printing industry and it should fall under Chapter 84 or Chapter 90.
6. The machine has been assessed under Heading 84.34. In view of Section Note 3 to Section XVI and Note 5 to Chapter 84 and the legal position discussed above, we are of the view that it would be appropriate if the 4 Nos. of 5404 (40K) VDI offline keyboards for English/Devnagari imported by the respondents are assessed under Heading 84.34 of CTA, 1975.
7. In the result, the revenue's appeal is dismissed. The revenue authorities are directed to give consequential effect to this order. We are dismissing the Revenue's appeal keeping in view the peculiar facts and circumstances of the case. This order need not be treated as a precedent for other cases.