Judgment:
1. Whether in the facts and circumstances of the case, Karbate Tubes of artificial graphite impregnated with phenolic resin which are part of heat exchanger are classifiable under sub-heading 6815.10 as held by the department or under sub-heading 8419.50 as claimed by the importer, is the point referred to us for decision.
2. The appeal in the instant case relates to classification of goods imported during the months of May, June and September, 1992 against four Bills of Entry. The admitted position is that the imported goods are for heat exchangers and are made of artificial graphite impregnated with phenolic resins.
3. Shri N.R. Khaitan, learned Advocate appears for the appellants. Shri M.C. Sharma, learned CDR represents the Revenue.
4. It was pleaded by the appellants that the case was fully covered in their favour by the decision of the Hon'ble Supreme Court in the case of Ballarpur Industries Limited [1995 (75) E.L.T. 6 (S.C.)].
5. The issue for decision before the Apex Court was 'Whether there was justification for the CEGAT to classify the article "Graphite Press Roll" under import Tariff Item No. 68.01/16 (1) of the 1st Schedule to the Customs Tariff Act, 1975 as it stood prior to its amendment on 28-2-1986, as against its classification made by the Collector (Appeals) under Import Tariff No. 84.31 thereof.' 6. In this case the Hon'ble Supreme Court was examining applicability of Rule (a) of Note 2 to Section XVI and Rule (a) & (b) of Note 2 to Section XVI as to suitability of the imported goods for use solely and principally with a particular kind of machine (described in Chapter 84) and observed that "What has now to be examined is, when Heading No.84.31 describes the goods (article) classified thereunder as 'machinery for making or finishing cellulosic pulp, paper or paper board', whether the goods or article 'Granite Press Roll', which is held by CEGAT itself, to be a part or a component of paper making machinery, does warrant its classification thereunder. In our view, when Note 2 to Section XVI requires classification of parts of machines to be made according to rules given thereunder and when Rule (a) thereunder requires goods (part of machine) of a kind described in any of the Headings of Chapter 84 and 85 (Other than Nos. 84.65 and 85.28) under respective Headings, every machinery for making or finishing cellulosic pulp, paper or paper board, requires to be classified under Heading 84.31. Then coming to 'Granite Press Roll' the imported article under consideration, being a part of machine or goods Machinery for making or finishing cellulosic pulp, paper or paper board which is suitable for use solely or principally as machinery for finishing paper, it requires to be classified with the machine described in the Heading 84.31 as required by Rule (b) to Note 2 of Section XVI, inasmuch as, 'Granite Press Roll' is described by CEGAT itself as part of machine of paper making machinery. Therefore, 'Granite Press Roll', the imported article, in our view, warrants its classification under Chapter Heading 84.31 as held by the Collector (Appeals). Thus, when classification of imported article, the 'Granite Press Roll' ought to have been made under Chapter Heading No. 84.31, as is held by us, CEGAT has gone wholly wrong in classifying that article under Import Tariff Item No.68.01/16 (1) of the 1st Schedule to the Customs Tariff Act, 1975, particularly when that article could not have been regarded as an article of stone, as such, to become an excepted item under Note 2 to Section XVI read with Note l(a) of Chapter 84, warranting its classification under Heading in Chapter 68 and according to rules governing classification of materials or substances or their parts.
7. It was argued before us that the goods imported in the instant case will fall under Rule 2(b). It was also argued that it was well settled that artificial graphite cannot be regarded as mineral under Chapter 68; that the articles imported in the instant case qualify for classification under Chapter Heading 84.19 as they were not covered by Note l(a) of Chapter 84. It was also argued that the Chapter Heading 68.15 will not apply to the facts of the present case as the imported goods were artificial graphite.
8. Referring to para 4 of the judgment of this Tribunal in the case of Shriram Foods and Fertilisers Industries [1994 (71) E.L.T. 1047], it was argued that the admitted position was that the appellants imported spare parts of furnace burner and claimed classification thereof under chapter sub-heading 8416.90. The contention of the appellants was that the imported goods were of artificial graphite. This Tribunal observed viz. if the question whether these would fall under sub-heading 6815.10 CTA is answered in the affirmative then, they are ipso facto excluded from classification under sub-heading 8416.90 CTA as parts of furnace burners because of Chapter Note l(a) to Chapter 84 CTA which says that the Chapter excludes mill stones, grind-stones and other articles of Chapter 68. Heading 68.15 with the relevant sub-heading reads as follows :- "68.15 Articles of stone or of other mineral substances (including articles of peat), not elsewhere specified or included.
9. The Tribunal observed that Chapter sub-heading 6815.10 has necessarily to be construed and takes it colour with reference to Heading 68.15. This heading covers articles of stone or of other mineral substances. Accordingly, when it is seen that the spares imported herein are not of natural graphite, but are of artificial graphite, they will not fall under Heading 68.15 much less under sub-heading 6815.10 CTA. It was further held by the Tribunal that the goods will not be hit by Chapter Note l(a) to Chapter 84 CTA and the classification of the goods under sub-heading 8416.90 of CTA as parts of furnace and burner will therefore be in order.
10. It was also argued that in the case of Shriram Vinyl and Chemical Industries [1989 (43) E.L.T 87], the Tribunal held that If the goods are made of artificial graphite plus synthetic resin (as in the Albright, Morarji and Pandit Limited case), they would be classifiable under Heading 84.17 (1). If however, they are made of natural graphite, the correct classification would be under Heading No. 68.01/16(1).
11. Appellants also referred to the decision of this Tribunal in the case of Graphite Vicarb India Limited [1997 (93) E.L.T. 710] and submitted that in this case, the ratio of the decision of the Tribunal, in the case of Collector of Customs v. Albright, Morarji and Pandit Limited [1988 (33) E.L.T. 488] was followed.
12. A reference was made to the case of Madhu Chemicals, Bhavnagar [1986 (23) E.L.T. 166] where the issue was as to what was the meaning and scope of the term 'mineral' and the Tribunal following the ratio of the judgment of the Hon'ble Supreme Court in the case of Tungabhadra Oil Industries [AIR 1961 S.C. 413] observed that in the present case, 'mineral silica and precipitated silica' have the same chemical properties; only the latter has superior properties - unlike vanaspati which did undergo a certain chemical change in addition to physical changes,' and held that precipitated silica and synthetic silica are the one and the same thing.
13. It was argued by the appellant before us that since the imported goods were artificial graphite tubes and were used as part of heat exchanger and since artificial graphite is not covered by chapter sub-heading 6815.10, therefore, it is necessary to look for the specific entry for the imported goods and since the imported goods were parts of heat exchanger for which there is a specific entry, therefore, they were covered by Chapter sub-heading 8419.50 and should be classified accordingly, stating that the above view is fully supported by the decisions cited above.
14. The Appellants also cited and relied upon the decision of this Tribunal in the case of Durametallic India Ltd. where the issue was whether carbon tubes made of resin-impregnated artificial graphite are classifiable under Chapter sub-heading 38.01/19 (4) or 68.01/16 (1).
This Tribunal held that the subject goods are correctly classifiable under Chapter sub-heading 38.01/19.
15. A reference was also made to the decision of this Tribunal in the case of Albright & Pandit Ltd. [1988 (33) E.L.T. 488]. In this case a consignment of 'Graphilor Blocks' was imported and the importer claimed re-classification thereof under Chapter Heading 84.17 (1) whereas the department had assessed it under Chapter Heading 68.01/16 (1). This Tribunal held that appropriate classification of the goods is Heading 84.17 (1). It was submitted that this decision was followed by the Tribunal in the case of Graphite Vicarb India Ltd. [1997 (93) E.L.T.710].
16. On behalf of the Revenue, it was submitted that graphite may be natural or artificial; that the source material for both was carbon which is a mineral; that the Chapter Heading 68.15 reads as 'Articles of stone or of other mineral substances (including articles of peat) not elsewhere specified or included', that Chapter sub-heading 6815.10 reads as "Non-electrical articles of graphite or other carbon", that there are different judgments on the subject; that the Larger Bench of the Tribunal in the case of Saurashtra Chemicals, Porbandar [1986 (23) E.L.T. 283] to whom a reference was made about classification of certain machinery parts made of graphite, in their majority judgment held that Carbon rings and Carbon seals for use as spare parts in turbo sets and compressors were classifiable under Chapter Heading 68.01/16 (1) and not under Chapter Heading 84,65 of the Customs Tariff. The Tribunal in this case held that 'Since in this case we have already held that by virtue of Note l(a) to Chapter 84 machinery parts made of carbon cannot fall under Chapter 84 and so would fall under Chapter 68.
17. It was also submitted that this decision of the Larger Bench of this Tribunal has been confirmed by the Apex Court [1997 (95) E.L.T.455 (S.C.)] observing that 'We have perused the judgment of the majority. We are of the view that the majority decision does not suffer from any error which may call for interference by this Court under Article 136 of the Constitution. The appeals are, therefore, dismissed.' 18. It was pleaded that to understand the correct nature of the product reference to technical literature, submitted by the appellant, is necessary. It was pointed out that the product is sold by the name 'Graphilor' (the trade name of the product); that the product is obtained by the process of graphitization; that graphitization has been defined as operations which comprise transformation of carbon into artificial graphite; that Carbon is subjected to the process of graphitization which brings artificial graphite into existence; that this artificial graphite is then converted into tubes; that Tariff Entry 6815.10 includes other carbon; that the source for the manufacture of artificial graphite is carbon; that the tariff entry covers other carbon and, therefore, the imported tube made of artificial carbon is covered under Chapter Heading 6815.10.
19. A reference to HSN Explanatory Notes was made and it was pointed out that note under Chapter Heading 68.15 covers inter alia "(1) Non-Electrical articles of natural or artificial graphite (including nuclear grade), or other carbons for example: Filters, Discs, Bearings; Tubes and Sheaths; worked bricks and tiles, moulds for the manufacture of small articles of delicate design (e.g. coins, medals, lead soldiers for collections)". It was submitted that Customs Tariff is fully aligned to HSN; that the heading in the Customs Tariff is pari materia with this heading in the HSN Explanatory Notes and, therefore, they have persuasive value.
20. Explaining the scope of HSN notes vis-a-vis the persuasive value, it was submitted that the Apex Court in the case of Bakelite Hylam Limited [1997 (91) E.L.T. 13 (S.C.)] following the ratio of its judgment in the case of Wood Craft Products Ltd. [1995 (77) E.L.T. 23] held that for resolving any dispute relating to Tariff Classification, the internationally accepted nomenclature emerging from the HSN is a safe guide, this being the expressly acknowledged basis of the structure of Central Excise Tariff in the 1985 Act and the Tariff Classification made thereon.
21. In the case of Woodcraft Products Limited [1995 (77) E.L.T. 23 (S.C.)], the Apex Court observed that when Tariff Entry is patterned on Explanatory Notes to HSN, then HSN will be preferable to ISI Glossary in case of a conflict, unless a different intention is indicated in the Tariff itself.
22. It was argued that this Tribunal in the case of Hindustan Thermo Prints [1989 (43) E.L.T. 121], observed that for classification of the goods though CCCN is not of binding nature but of persuasive value in interpreting entries in Custom Tariff Schedule.
23. In the case of Lakshmi Cement [1996 (84) E.L.T. 271] this Tribunal held that the imported goods in terms of classification given in the HSN are liable to be classified under Customs Tariff Heading 49.01 and since Customs Tariff is fully aligned to HSN Explanatory Notes, the goods will be classified under Tariff Heading 49.01 of the Customs Tariff. A reference was also made to the decision of this Tribunal in the case of Albright Morarji and Pandit Limited [1988 (33) E.L.T. 488] wherein it was observed that for classification of the goods under Customs Tariff, CCCN Explanatory Notes have the persuasive value but not of binding nature.
24. In the matter of interpretation of Entries in the Customs Tariff Schedule, it was argued by Revenue that since the classification of the imported goods under Chapter sub-heading 6815.10 is fully covered by the HSN Explanatory Notes and since the Explanatory Notes have a binding effect in as much as Customs Tariff is fully aligned with the HSN and its Explanatory Notes and, therefore, in view of the preponderance of decisions in regard to the acceptance of HSN Explanatory Notes as a safe guide, the product imported by the appellants merits classification under Chapter sub-heading 6815.10.
25. Reacting to the case of Saurashtra Chemicals, cited and relied upon by the Revenue, it was argued for the appellants that for classification of the product under Chapter Heading 68.15, parentage is not necessary; that it has clearly been observed in the case of Albright Morarji and Pandit Limited that CCCN Explanatory Notes have only persuasive value and not binding value. The learned Counsel also submitted that HSN Notes referred to by the learned CDR has inconsistency and is not correct interpretation for classification of the product under Chapter sub-heading 6815.10.
26. Heard the submissions of both sides. We note that the product has been described as Karbate Tubes which is made of artificial graphite impregnated with phenolic resin. We also note that the imported goods are used as part of heat exchanger. We also note that the importer claimed the assessment of the product under Chapter sub-heading 8419.50 whereas the department held it classifiable under Chapter sub-heading 6815.10. For examining description of the goods against these Chapter Headings, we have already reproduced Customs Tariff Heading 68.15 and 6815.10. We are now reproducing HSN Tariff headings below: "68.15. Articles of stone or other mineral substances (including Articles of peat), not elsewhere specified or included, 27. In the notes below it, it has been provided that this heading covers, inter alia, (1) Non-electrical articles of natural or artificial graphite (including nuclear grade), or other carbons for example : filters; discs; bearings tubes and sheaths; worked bricks and tiles; moulds for the manufacture of small articles of delicate design (e.g. coins, medals lead soldiers for collections).
28. Chapter Heading 84.19 covers Machinery, plant or laboratory equipment, whether or not electrically heated, for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilising, pasteurising, steaming, drying, evaporating, vaporising, condensing or cooling, other than machinery or plant of a kind used for domestic purpose; instantaneous or storage water heaters, non-electric.
29. We note that the Chapter Heading 68.15 covers articles of stone or other mineral substances (including articles of peat), not elsewhere specified or included whereas sub-heading 6815.10 gives description of the goods as "Non-electrical articles of graphite or other carbon". We note that the main contention of the appellants was that this heading covers only natural graphite or other mineral substances. It was argued that the goods imported by them were articles of artificial graphite and, therefore, were not covered by Chapter Heading 68.15.
30. We have carefully considered the submissions of both sides and perused the case law relied and cited by both sides. The crucial question is whether the imported goods fall under Chapter Heading 68.15 or Chapter Heading 84.19. We have also seen that non-electrical articles of artificial graphite are covered by Explanatory notes of HSN under Chapter Heading 68.15.
31. We also note that we are dealing with the classification of imported goods under the Customs Tariff. We note that Customs Tariff is fully aligned to HSN and its Explanatory Notes after its amendment on 28-2-1986. Thus we find that HSN Explanatory Notes have persuasive value. Whether they are binding also is a mute point.
32. The case law cited before us on the issues can be divided into two parts. The first set speaks of CCCN. This part covers the import of goods before 28-2-1986. No doubt, Customs Tariff was, by and large, conforming to CCCN, but was not fully aligned to CCCN then. But now the position is slightly different inasmuch as the Customs Tariff is now aligned to HSN and its Explanatory Notes.
33. We note that the tariff does not define the goods. There is no ISI Specification also. In these circumstances, we have also seen that HSN Explanatory Notes are a safe guide. Even if we assume that they are not binding, we find that they clearly indicate that HSN Item 68.15 covers non-electrical articles of artificial graphite also. Now examining Note l(a) of Chapter 84, we find that this note provides that Chapter 84 excludes mill-stones, grind stones and other articles of Chapter 68.
Reading Chapter Note l(a) of Chapter 84 of the Customs Tariff and Explanatory Notes of HSN, we find that for the imported goods Karbate Tubes of artificial graphite, the nearest classification will be under Chapter Heading 68.15 and sub-heading 6815.10 of the CTA, 1975 as amended. The plea that 68.15 covers only natural graphite does note survive.
34. The second set of the decisions are either on Central Excise Tariff or the Explanatory Notes under HSN, 68.15 was not brought to the notice of the Tribunal or the court. We note that Central Excise Tariff is not fully aligned to HSN or its Explanatory Notes and hence insofar as classification of the goods under the Central Excise Tariff is concerned, HSN Explanatory Notes have persuasive value, but the same cannot be so said in regard to Customs Tariff which is fully aligned to HSN and its Explanatory Notes unless the intention is otherwise made clear in the Tariff.
35. It was brought to our notice that the Apex Court in the case of Woodcraft Products Limited held : "We are of the view that the Tribunal as well as the High Court fell into error by overlooking the fact that the structure of Central Excise Tariff is based on the internationally accepted nomenclature found in the HSN and, therefore, any dispute relating to tariff classification must, as far as possible, be resolved with reference to the nomenclature indicated by the HSN unless there be an express different intention indicated by the Central Excise Tariff Act, 1985 itself. The definition of a term in the ISI Glossary, which has a different purpose, cannot, in case of a conflict, over ride the clear indication of the meaning of an identical expression in the said context in the HSN. In the HSN, block board is included within the meaning of the expression 'similar laminated wood' in the same context of classification of block board. Since the Central Excise Tariff Act, 1985 is enacted on the basis and pattern of the HSN, the same expression used in the Act must, as far as practicable, be construed to have the meaning which is expressly given to it in the HSN when there is no indication in the Indian Tariff of a different intention." 36. We note that this decision, though on classification of goods under the CETA, 1985, however, it will cover classification of identical goods under the CTA, 1975 as amended with a larger force. The decision of the Apex Court in the case of Bakelite Hylam Limited [1997 (91) E.L.T. 13 (S.C.)] was also cited. We note that in para 17 of its judgment, the Apex Court held as under : "Hence for the interpretation of the New Tariff harmonised system of nomenclature and its explanatory notes are relevant" and followed its earlier decision in the case of M/s. Wood Crafts Products Limited.
37. A reference to para 18 of the judgment of the Hon'ble High Court of Andhra Pradesh in the case of Reckitt and Colman of India Limited [1994 (72) E.L.T. 263] was made. We note that the Hon'ble High Court held as under : "As mentioned earlier, the new Tariff Act was based on the Harmonised Coding System. This system was evolved by the International convention to which India became a party at Brussels on 14-6-1983. The convention agreed to the introduction of headings, sub-headings, Notes and the Harmonised Coding System and also to the incorporation of the General Interpretative Rules. In fact, it constitutes an international economic language and code for identifying and describing goods which should considerably reduce the difficulties in redescribing and recording the goods as they pass from one country to another in international trade, as stated in the objects and reasons. When both the Excise Tariff and Customs Tariff Bills were introduced in 1985. One of the obligations of the contracting parties stated in Article 3 of the Convention was that each contracting party should use headings and subheadings of the Harmonised System without addition or modification and shall apply the general rules for the interpretation and follow the numerical sequence of the Harmonised System. The developing countries were allowed to omit the sub-headings, that is the last two digits of the six digit headings. Since the Government of India has declared the adoption of that system, it is binding on the department. Even otherwise, unless there is any conflict, the interpretation consistent with the international convention and treaties has to be adopted, as pointed out by the Supreme Court in Gramophone Co. of India Limited v. Birendra Bahadur Pandey 667. 'This is currently of a great significance at a time when India seeks globalisation of its markets. Unless the classification of goods is in accord with international system and is clear and certain to the trade, the very purpose of adopting the international standards would be defeated'." 38. On careful perusal of the submissions made and the case law cited and relied upon on the question of acceptance of the Explanatory Notes to HSN, we find that in the tariff there is no specific direction on the issue, there is no ISI Standard etc. placed on record or brought to our notice. We have, therefore, to examine classification of the imported product independent of the specific mention in the tariff and in the absence of any ISI specification. We find that there are earlier decisions wherein it has been held that Explanatory Notes have pursuasive value but are not binding, but it appears that these decisions were taken either before the amendment of CTA, 1975 or the Explanatory Note on HSN were not cited before the Courts/Tribunal.
However with the amendment of the Customs Tariff Act, 1975 effective from 28-2-1986, we have taken note that the Customs Tariff is now fully aligned to HSN and its Explanatory Notes, therefore, these Explanatory Notes remain not only pursuasive, but they acquire higher status in so far as classification of imported goods is concerned. In these circumstances and looking to all the decisions of this Tribunal, the High Court and the Apex Court, we hold that the imported product is classifiable under Chapter sub-heading 6815.10.
39. In the result, the impugned order is upheld and the appeal is rejected.
40. While agreeing with the conclusion arrived in the order proposed by Shri G.R. Sharma, Member (Technical), I would like to indicate my reasoning in brief, separately. I do not propose to refer in detail to the facts of the case or the case law cited before us, since detailed reference has been made in the order proposed by Shri G.R. Sharma, Member (Technical).
41. When the appeal was heard by a two-Member Bench, Shri G.A. Brahma Deva, Member (Judicial) felt that there was conflict of view between certain decisions of the Tribunal and proposed reference of the question involved to a Larger Bench. Shri S.K. Bhatnagar, Vice President and Member (Technical), felt that the article is classifiable under sub-heading 8419.50 and need not be referred to the Larger Bench.
This difference of opinion was referred to Shri P.K. Kapoor, Member (Technical) who agreed with the view expressed by Shri G.A. Brahma Deva, Member (Judicial) that the matter needs to be referred to the Larger Bench. That is how the appeal has come up before this Larger Bench for consideration.
42. The import was made in 1992, after the new Customs Tariff came into force with effect from 28-2-1986. The imported consignment was of "Karbate Tubes of artificial graphite impregnated with phenolic resin" with trade name "Graphilor", admittedly designed for use as parts of Heat Exchangers. The contest in this appeal is between Chapter sub-heading 6815.90 and 8419.50. Chapter 68 of the Tariff deals with "Articles of stone, plaster, cement, asbestos, mica or similar materials etc." Chapter 84 deals with Machinery and Mechanical Appliances, etc. and parts thereof. Heading 68.15 takes in Articles of stone or of other mineral substances (including articles of peat), not elsewhere specified or included. Sub-heading 6815.10 takes in non-electrical articles of graphite or other carbon. There is no dispute that the imported goods are non-electrical articles of artificial graphite. The Chapter and Heading refer to "mineral substances" and sub-heading while referring to graphite does not indicate that artificial graphite is taken in and since only natural Graphite can be regarded as mineral and artificial graphite is not mineral, Heading 68.15 and sub-heading 6815.10 are not attracted - so contends the assessee. The Revenue, in rebuttal, relies on Harmonised System Nomenclature (HSN), part of the code evolved by the International Convention to which India became a party at Brussels on 14-6-1983.
43. The convention agreed to the introduction of Heading, sub-heading, Notes and Harmonised Coding System and also to the incorporation of the General Interpretative Rules. Signatories agreed to use Heading and sub-heading of the Harmonised System without any modification and to apply General Rules and follow also the Harmonised System. HSN Explanatory Note under Heading 68.15 states that the Heading covers, inter alia, Non-electrical articles of natural or artificial graphite, or other carbons. If one is to be guided by the light thrown by the HSN Explanatory Note, it must follow that Chapter sub-heading 6815.10 takes in non-electrical articles of artificial or natural graphite and the imported part of Heat Exchanger would prima facie fall under sub-heading 6815.10.
44. In the case of Reckitt & Colman of India Ltd. -1994 (72) E.L.T. 263 (A.P. High Court) the High Court referred to the Harmonised Coding System accepted by India and stressed the importance of interpretation of Indian Tariff entries consistently with HSN. In Wood Craft Products Ltd. -1995 (77) E.L.T. 23 (S.C.), the Supreme Court observed in the matter of interpretation of tariff entries in Central Excise Tariff Act, 1985 as follows : "The Tribunal as well as the High Court fell into error by overlooking the fact that the structure of Central Excise Tariff is based on the internationally accepted nomenclature found in the HSN and therefore only dispute relating to tariff classification must, as far as possible, be resolved with reference to the nomenclature indicated in the HSN unless there be an express different intention indicated by the Central Excise Tariff, 1985 itself....Since the Central Excise Tariff Act, 1985 is enacted on the basis and pattern of the HSN, the same expression used in the Act must, as far as possible, be construed to have the meaning which is expressly given to it in the HSN when there is no indication in the Indian Tariff of a different intention." In Bakelite Hylam Ltd. case 1997 (91) E.L.T. 13 (S.C.), the Supreme Court observed: "Hence for the interpretation of the new Tariff, Harmonised System of Nomenclature and its explanatory notes are relevant." In Lakshmi Cement -1996 (84) E.L.T. 271 (Tribunal), the Tribunal, noting that Indian Customs Tariff is fully aligned with HSN, relied on the clarification in HSN to decide the dispute about classification.
45. In Durametallic India Ltd. -1983 (12) E.L.T. 609 (T), the Tribunal was guided by the Explanatory Notes to CCCN in deciding a dispute about classification under the 1975 Customs Tariff. So also in Albright, Morarji and Pandit Ltd. -1988 (33) E.L.T. 488 (T). In Hindustan Thermo Prints -1989 (43) E.L.T. 121 (T), it was observed that Customs Cooperation Council Nomenclature (CCCN), though not binding, has persuasive value in interpreting the entries in the Customs Tariff Schedule which is patterned on the CCCN. The analogy of CCCN was not followed in Madhu Chemicals - 1986 (23) E.L.T. 166 (T) while interpreting a customs exemption notification. We notice that there is difference between HSN and CCCN in their relationship with Indian Tariff Schedule. The tariff schedule which came into force in 1986 is fully aligned with HSN while the earlier tariff schedule was not fully aligned with CCCN. Therefore the decisions in relation to CCCN do not conclude the matter in relation to HSN. The correct position, as held by the Supreme Court, is that the classification dispute must, as far as practicable, be resolved with reference to nomenclature indicated in the HSN, unless there is a contrary indication in the tariff schedule.
46. I will now briefly refer to decisions relied on by the parties.
Durametallic India Ltd. -1983 (12) E.L.T. 609 (T) dealt with blocks of resin-impregnated artificial graphite under Customs Tariff Act, 1975 in the context of competing chapter sub-headings in 38.01/19 (4) (specifically relates to artificial graphite) and 68.01/16 (1) (relates to mineral substances). It was held that the goods were semi-finished articles attracting chapter sub-heading 38.01. In Saurashtra Chemicals -1986 (23) E.L.T. 283 (T) a 5-Member Bench dealt with a case of machinery parts made of carbon or graphite under CTA, 1975. Both sides accepted that carbon was a mineral substance. The Bench, by a majority held in favour of sub-heading 68.01/16 and against Heading 84.65. This decision was upheld by the Supreme Court in Saurashtra Chemicals -1997 (95) E.L.T. 455 (S.C.). These two decisions did not consider the question whether Chapter 68 of 1975 Tariff did not apply to articles of artificial graphite or carbon as distinct from articles of the natural variety.
47. In Albright, Morarji and Pandit Ltd. - 1988 (33) E.L.T. 488 (T), the Tribunal held that graphilor blocks made of artificial graphite imported as parts of Heat Exchangers attracted Heading 84.17 (1) of CTA, 1975, since they are not articles of mineral substances which attracted Chapter 68. The import in this case was when CTA, 1975 was in force and long before HSN came into force. This decision was followed in Shri Ram Foods and Fertilizer Industries -1994 (71) E.L.T. 1047 (T), Shriram Vinyl & Chemical Industries -1989 (43) E.L.T. 87 and Graphite Vicarb India Ltd. -1997 (93) E.L.T. 710 (T). These decisions did not take note of the decision in Madhu Chemicals - 1986 (23) E.L.T. 166 (T) holding that the word "Silica" in Notification No. 23/55 comprehended natural silica as well as precipitated silica since the formulae and the properties of both varieties were the same and the latter has been recognised in technical literature as mineral. It was argued that CCCN differentiated between artificial silica (Heading 38.12 or 28.13) and natural silica (Heading 25.05). The Tribunal observed what is good for CCCN may not be good for Central Excise Tariff and, in any event, it has no relevance in interpreting a notification which referred only to 'Silica' without referring to any Chapter or Chapter Heading.
48. In my view, in interpreting entries in 1986 Tariff which is fully aligned with HSN which specifically refers to "non-electrical articles of natural or artificial graphite", the above decisions under 1975 tariff prior to HSN cannot be useful. Neither side has been able to place before us any decision on this question under 1985 Tariff after taking into consideration the classification in HSN. In interpreting the nomenclature in 1985 tariff it will be appropriate to be guided by HSN, except to the extent 1985 tariff contains any contrary provision.
The Tariff refers to "graphite" in sub-heading 6815.10. If what is specified is "articles of natural graphite", that would be a clear provision contrary to HSN. In the absence of the qualifying word "natural" and in the context of HSN description "artificial or natural graphite", it has to be concluded that sub-heading 6815.10 takes in articles of natural or artificial graphite. In this view and in this context, no inference can be drawn from the reference to "mineral substance" in Chapter 68 and the Heading 68.15. Thus prima facie the subject goods would fall under Chapter sub-heading 6815.10.
49. What remains for consideration is the decision of the Supreme Court in Ballarpur Industries Ltd. - 1995 (75) E.L.T. 6 (S.C.) relied on by the appellant. This was also a case of import covered by the Customs Tariff Act, 1975 as it stood prior to its amendment in 1986. The contesting claims were under sub-heading 68.01/16 (1) and sub-heading 84.31. The Tribunal held that the imported article, "Granite Press Roll" was a component part of paper finishing machinery. Such machinery attracted Chapter Heading 84.31 as machinery for making or finishing cellulosic pulp etc. It was held that in view of Chapter Note 2 in Section XVI, the part was required to be classified with the machinery described in Heading 84.31 particularly since it could not be regarded as an article of stone as such to be an excepted item under Chapter Note 2 to Section XVI read with Chapter Note l(a) to Chapter 84. Note l(a) to Chapter 84 stated that Chapter 84 "did not cover mill stones, grind stones and other articles falling within Chapter 68." The Court held that this provision was not attracted as an article of "Granite Press Roll" could not be regarded as an article of stone as such. Any article falling under Chapter 68 must be an article of stone, plaster, cement, etc. The article in question was not such an article, but a composite article of stone and steel. This was evidently the basis for the court concluding that exception in Note l(a) to Chapter 84 did not apply. Hence, the decision cannot help us in the present case. This exception clause has been specifically considered by a three-Member Bench of the Tribunal in Albright, Morarji and Pandit Ltd. - 1988 (33) E.L.T. 488 (T) and a five-Member Bench in Saurashtra Chemicals -1986 (23) E.L.T. 283 (T). It was held that the words "other articles falling within Chapter 68" cannot be understood as "other similar articles falling within Chapter 68". Thus articles falling within Chapter 68 are excluded from Chapter 84. It must follow that the subject article which falls under Chapter 68 is excluded from Chapter 84, though it is part of machine.
"Graphilor" made of artificial graphite is a non-electrical article of graphite falling under Chapter sub-heading 6815.10. It is no doubt a part of machinery which may otherwise attract sub-heading 8419.50, but the same is not applicable in view of the exclusion in Note l(a) to Chapter 84. The classification made by the lower authority is correct.
51. I agree with the finding reached in both the preceding orders that the goods in question merit classification under sub-heading 6815.10.
52. I agree with the view that item in question is classifiable under sub-heading 6815.10.
53. I have had the benefit of perusing the judgment proposed by my learned Brother G.R. Sharma and I agree with the conclusion reached.
However, since the matter had been argued at length, I consider it appropriate to record a separate order.
54. Reliance has been placed on a number of judgments by the appellants to support their claim that articles of artificial graphite could not be classified under Chapter 68. The first judgment in the series is that in the case of Albright Morarji & Pandit Ltd. (supra) where the Tribunal referred to the Explanatory Notes under Heading 68.16 of the CCCN and held as under : "being made of artificial graphite and phenolic resin, the subject goods, in our opinion, do not fit into any of the description in Heading No. 68.01/16. They are not articles of mineral substances since they have been made out of artificially produced substance.
Whereas Explanatory Notes in the CCCN may be of persuasive value, they have no binding value in the matter of interpretation of the entries in the Indian Tariff Schedule".
55. This judgment has been relied upon by the Tribunal in their later judgments in the case of Shriram Vinyl and Chemical Industries (supra) and also of Shriram Foods & Fertilizers Industries (supra).
56. The tariff entry, which was before the Tribunal, was a condensed and compressed version of the various sub-headings under this heading in the CCCN. The heading was divided into only two sub-headings i.e.
(i) grinding wheels, grinding stones, etc.; and (ii) all other articles.
57. In this format, it could not be compared with the parent CCCN entry. Therefore, the clarifications made under the marginal notes were not available for guidance of the officers. In the cited judgment of Albright Morarji and Pandit Ltd. and Anr. (supra), therefore, the Tribunal was correct in not placing reliance on the CCCN Notes.
However, when the impugned goods were imported, the tariff entry was totally and fully aligned with the HSN. The scheme of the Chapter 68 does not confine itself to natural basic material alone, but also admits of artificial materials. This is evident in the language of the entries for sub-heading 6804 and 6805. In defining the coverage of sub-heading 6815, the HSN sub-notes do not distinguish between natural or artificial graphite. As per the judgment of the Supreme Court in the case of Reckitt and Colman of India Ltd. (supra), this note is of paramount importance to determine the classification.
58. Since the tariff entry, as it stood at the time of importation of the goods, did not exclude articles made of artificial graphite, their classification under 68.15 is appropriate. When this is so held, the Chapter Note l(a) to Chapter 84 comes into effect. The note is identical in the HSN and in the ICT. Some discussions centred on the coverage of this exclusion clause. It was suggested that the specific mention of the words "mill stone" and "grind stone" would suggest that the coverage be limited to exclusion from Heading 6804 only and not from the entire Chapter 84. We find that there is no cause for such reading or for resorting to the principles of esjudem generis. The specific mention of wheel stones and grinding stones may give rise to such presumption but the very next words "or other articles of Chapter 68" would set at rest any such speculation. Interpreting the Chapter Note, as it reads, it must be held that what falls under Chapter 68, stands excluded from the coverage under Chapter 84 even if it otherwise passes the test prescribed in Section Note 2 of Section XVI. In the result, the impugned order is upheld and the appeal is rejected.