Judgment:
1. In this appeal filed by M/s. Stewarts and Lloyds of India Ltd. (hereinafter referred to as 'SLI'), being aggrieved with the order-in-appeal dated 22-5-1987 passed by the Collector of Central Excise (Appeals), Calcutta, the matter relates to the classification of the Tubular Steel Coils for machineries, such as, superheaters, economisers etc. The SLI had sought classification of the coils in question under Heading No. 73.03 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the Tariff), while the of Collector of Central Excise (Appeals) had confirmed the classification of these coils under Heading No. 84.04 of the Tariff.
2. The matter was heard on 12-12-1996, when Shri B.M. Chattopadhyay, advocate, appeared for SLI. Shri M. Jayaraman, JDR, represented the respondent/Revenue.
3. Shri B.M. Chattopadhyay, advocate, stated that the matter related to the classification of pipe coils for superheaters and economisers under the new-Central Excise Tariff effective from 1-3-1986. According to him, the goods in question were classifiable under Heading No. 73.03 of the Tariff as tubes and pipes. The Revenue had classified the same under Heading No. 84.04 as parts of superheaters, economisers etc. The learned advocate referred to the Supreme Court decision in the case of Bharat Forge and Press Industries Pvt. Ltd. v. Collector of Central Excise -1990 (45) E.L.T. 525 (S.C.), and pleaded for acceptance of their appeal.
4. In reply, Shri M. Jayaraman, JDR, submitted that the goods involved were parts of machinery and were specifically made for use in superheaters and economisers. They had ceased to remain pipes and tubes and had been manufactured out of pipes and tubes. He reiterated the grounds taken by the adjudicating and appellate authorities in classifying the goods in question under Heading No. 84.04 of the Tariff.
5. We have carefully considered the matter. The goods involved were described by SLI in their classification list [under Serial No. 7 of the Classification List relating to other goods - other than excisable goods intended to be removed] as Pipe Coils (economiser, superheater and other type of pipe coils). The appellants had listed these goods under Serial No. 7 of the Classification List as non-excisable. The Assistant Collector, Central Excise, Calcutta, F Division, who adjudicated the matter classified the goods described by the appellants as pipe coils under Heading No. 84.04 on the ground that the item economiser had been clearly indicated in Heading No. 8404.00 and hence the parts of such goods were also liable to be classified under that Heading. The Collector of Central Excise (Appeals), Calcutta, confirmed the classification as decided by the adjudicating authority.
6. The appellants SLI manufactured tubular steel coils from mild steel welded tubes, hot-rolled cold drawn seamless steel tubes by cutting them to the required lengths and subjecting them to the various processes of bending and arranging to the required configuration. The individual tubes from which the coils were built up were cross-welded together into one continuous length by electric resistance welding, or metal arc welding, or oxyacetylene welding (refer page 39 of the paper book - Annexure 'E' to the Appeal Memo - Literature regarding Tubular Steel Coils). The tubular steel coils, so produced, were specifically designed/fabricated to be used as parts of economisers, superheaters and othe machines. They were not bends, but were tubular coils. They were not used for the purposes to which the pipes and tubes are normally used, such as, conveying fluid from one place to another, as flag masts for purposes of scaffolding, for transmission of electric energy etc. They are not available in the same market in which normally pipes and tubes are otherwise available [refer para 13 of the Supreme Court decision in the case of Indian Metals and Ferro Alloys Ltd., Cuttack v. Collector of Central Excise, Bhubaneshwar - 1990 (2) SCALE 231 at page 1109].
7. The line diagram of the pipe coils in question has been given by the appellants in Annexure 'C of their Appeal Memo at Serial No. 5, page 30 of the paper book. The schematic diagram of the superheater in which the pipe coils were used has been given by the appellants in Annexure 'D' at page 34 of the paper book as under : It is seen from the schematic diagram that the tubular steel coils in question are an integral and essential part of the superheater. They had been designed to withstand high pressure/high temperature.
8. Superheater is a component of a steam generating unit in which steam after it has left the boiler drum is heated above its saturation temperature. According to the Customs Co-operation Council Nomenclature, Explanatory Notes (referred to as 'BTN'), superheaters consist of headers with a high-pressure steel tube system in which the saturated steam from the boiler is further heated to remove moisture and to produce steam at high temperature. Superheaters are often part of the main boiler assembly, but in some cases have a separate flue system.
In industrial plants where large quantities of high pressure steam are required for a wide variety of purposes, the steam is generated in boilers at pressures of about 175-600 lb./in2 (in power stations: up to about 24001b./in2 ). Modern high-efficiency boilers, capable of very quickly coping with high peak loads, are of the water-tube type. In it the tubes are interconnected at their ends by so-called headers, which are usually set at right angles to be tubes. The boiler feed-water, preheated by the flue gases, enters the upper steam drum from where it flows through unheated or only slightly heated tubes to the lower headers or drums. From here it ascends into the water tubes in which it is evaporated and is returned in the form of a water and steam mixture to the upper drum. In the latter the steam is separated from the entrained water and flows through the superheater tubes, which are heated by flue gases of sufficiently high temperature. The steam then flows to the consumer equipment. The separated water, together with additional water, flows back to the lower headers or drums and the cycle is repeated (refer page 36, Volume 1 of How Things Work, Paladin).
Economiser is a forced flow, once through connection heat transfer tube bank in which feed water is raised in temperature on its way to the evaporating section of a steam boiler, thus lowering flue gas temperature, improving boiler efficiency and saving fuel. According to the BTN, economisers are for pre-heat-ing the boiler feed water by utilising the waste heat of the flue gases or, in some types, exhaust steam; they usually consist of headers fitted with a system of cast iron or steel gilled tubing, sometimes contained within a separate chamber of sheet metal into which the flue gases or exhaust steam are discharged. In the mixing type economiser, waste steam is passed directly into a chamber containing the feed water.
9. The appellants had sought classification of their goods described by them in their Classification List as pipe coils for superheaters, economisers etc., under Heading No. 7303.00 of the Tariff as in force during the year 1986. Heading No. 7303.00 of the Tariff covered tubes and pipes and blanks therefor of iron or steel, rolled, forged, spun, cast, drawn, annealed, welded or extruded (other than rain water pipes). The raw material for the production of the coils under consideration were welded/seamless pipes.
10. Under Section XV of the Tariff (under which Chapter 73 was covered), it was provided by Section Note l(f) that articles of Section XVI (under which Chapter 84 was covered) were not covered by that Section XV. Thus, if the goods were classifiable under Chapter 84, then their classification under Chapter 73 was not to be considered. In this scheme of the things, the classification of the goods in question under Chapter 84 had to be first considered and the classification under Chapter 73 could only be taken up for consideration after their classification under Chapter 84 was ruled out.
11. The Central Excise Tariff in respect of ferrous (iron and steel) was aligned with the Customs Tariff as a part of 1983 Budget (effective from 1-8-1983). The Central Excise Tariff was aligned with the Customs Tariff which during the relevant time was based on BTN. Under BTN Heading No. 73.18 tubes and pipes and blanks therefor, of iron (other than of cast iron) or steel, excluding high-pressure hydro-electric conduits, were covered. Tubes and pipes made up into specific identifiable articles, such as, machinery parts were excluded from the coverage of Heading No. 73.18. The goods in question were not coiled tubing but tubular coils. In the BTN Explanatory Notes, the tubes remained classified under Heading No. 73.18 as tubes and pipes, whether they were straight or curved (including coiled tubing), and whether or not they were of uniform diameter or wall thickness. The example was given as locally expanded tubes, necked or waisted tubes, conical and stepped tubes. In this case, the pipes and tubes had lost their basic character as pipes and tubes, after they had been converted into tubular coils. As is seen from the product literature, they had been specifically designed, fabricated and organised, as to be suitable for no general purpose, but to go with the well defined uses as part of engineering products.
Under Section Note 2 of Section XVI of the BTN, parts of machines, subject to the condition mentioned therein, if suitable for use solely or principally with a particular kind of machine or with a number of machines falling within the same heading, were to be classified with the machines of that kind. It is provided at page 1167 of Volume 3 of the BTN as under : Subject to the general provisions regarding the classification of parts (see General Explanatory Note to Section XVI), parts of the boilers falling in this heading are also covered, e.g., boiler bodies and bases, internals of boilers, consisting of an assembly of tubes, watertube caps, headers, boiler drums, steam domes, non-mechanical fire-boxes, inspection covers and fusible plugs.
Metal tubes or tubing which have been bent or curved but not otherwise worked, presented unassembled, are not considered to be identifiable as parts of boilers and are therefore to be classified in Section XV. At page 1169 again it is provided as under : Subject to the general provisions regarding the classification of parts (see General Explanatory Note to Section XVI), the heading also covers parts of the above apparatus and appliances.
Metal tubes or tubing which have been bent or curved but not otherwise worked, presented unassembled, are not considered to be identifiable as parts of goods of this boilers and are therefore to be classified in Section XV.12. The goods in question were not parts of general use for the purposes of Section Note 2 of Section XV of the Tariff. They were not tube or pipe fittings. The section of the trade dealing in such coils is different from the section of trade dealing in pipes and tubes. In common parlance in the commercial world, these coils for superheaters, economisers etc. are not understood as tubes and pipes.
13. In view of the above discussion, we are of the view that the tubular steel coils were correctly classifiable under Heading No. 84.04 of the Tariff.Bharat Forge & Press Industries (P) Ltd. v.Collector of Central Excise -1990 (45) E.L.T. 525 (S.C.), the matter related to the classification of pipe fittings such as elbows, bends and reducers. The question for consideration was whether the pipe fittings produced by cutting the pipes and tubes into different sizes and shapes by heating, hammering and pressing were classifiable under Item No. 26AA(iv) or under Item No. 68 of the old Central Excise Tariff (prior to 1-8-1983). During the relevant time, Item No. 26AA(iv) covered the pipes and tubes (including blank therefor) all sorts, whether rolled, forged, spun cast, drawn, annealed, welded or extruded.
The Supreme C'ourt observed that the smaller pieces of pipes and tubes differently shaped were merely intended as accessories or supplements to the larger pipes and tubes; there was no change in their basic physical properties and there was no change in their end use. It was in this context that the Apex Court held that the pipe fittings for the purposes of Item No. 26AA(iv) were pipes and tubes; they were only a species of pipes and tubes. The tariff at that time was not aligned to BTN and the Supreme Court held that no assistance could be derived in that matter from the BTN entries. We consider that this decision had no applicability to the goods before us.Indian Metals & Ferro Alloys Ltd., Cuttack v. Collector of Central Excise, Bhubaneshwar - 1990 (2) SCALE 231 at page 1109, the matter related to the classification of poles.
In his order-in-appeal dated 28-2-1981, the Member, Central Board of Excise & Customs had observed that the bent tubes or pipes remained tubes and pipes notwithstanding the bending process. He had referred to BTN Explanatory Notes that the coiled tubing was classifiable under Heading No. 73.18. As we see from the product literature, the goods in question were not the coiled tubing but tubular steel coils. They were not tubing. They had lost the character of tubing and were specific identifiable part of the superheaters, economisers etc.
15. In view of the above discussion, we do not find any merit in this appeal and the same is rejected. Ordered accordingly.