1.2 The appellants herein filed a Bill of Entry for clearance of 9 Nos. of low pressure pumps claiming classification under Tariff Heading 8413.50 with benefit of Notification No. 59/87-Cus. The certificate of origin submitted by the appellants along with the Bill of Entry described the goods as "Airless Paint to be as declared and the catalogue also described the goods as declared for Model No. PPL-1153 with a pump ratio 3 :1 as per catalogue.
1.3 The Revenue however, felt that the said pump was for spraying only and is part of "Airless Spraying Equipment". Therefore, as per Note 2 of Section XVI, there is a dispute as to whether it is to be assessed as under Heading 84.13 as claimed by the appellants or as a part of Spraying Equipment under Heading 84.24.
1.4 Investigation further revealed that the appellants had imported spray guns, fluid regulators and air caps of the said Spraying Equipment under three Bills of Entry Nos. 2720,2719 and 2718 dated 9-3-1992. It was further felt by the Revenue that the present consignment of low pressure pumps combined with the other three Bills of Entry referred to above formed almost a complete. Airless Spraying Equipment and therefore, in terms of Rule 2(a) of the General Rules for Interpretation of the Customs Tariff the goods imported vide various Bills of Entry have the essential character of Spray Painting Equipment and they were, therefore, to be classified as a complete equipment under Tariff Heading 84.24.
1.5 A show cause notice dated 10-4-1992 was, therefore, issued to the appellants. In letter dated 16-4-1992 the appellants submitted a certificate from the supplier of the goods that there was a mistake on the part of the supplier indicating in the certificate of origin that the low pressure pumps were the part of Airless Spraying Equipment. The appellants, therefore, submitted a revised certificate of origin snowing the description of "low pressure pump". They denied the use of the imported goods, low pressure pump for "Airless Spraying Equipment" and stated that the literature talks about handling of the fluid, namely transfer from container to container and it did not state its use for spraying. It was also stated that the spray equipment requires a number of other items like pulsation chamber, fluid shut off valve, filter, flexible hose connector and paint container which were not imported and therefore they have not imported complete spraying equipment intentionally in CKD condition into different consignments to evade duty as alleged in the show cause notice. They have also stated that the pump on its own cannot be used for spraying and this pump is only used for transferring of paint from one container to another.
1.6 As regards the components of spray painting equipment imported by them in three other Bills of Entry, they stated that they are manufacturers of paint spraying equipment and they are regularly importing critical components not available in India for manufacturing of final product.
1.7 It was also stated that even if it is assumed that spray guns were deliberately imported separately to claim lower duties, the imported goods in three earlier Bills of Entry were totally incompatible with Airless Painting technology and there is no matching between pumps and spray guns imported by them. Therefore, the earlier three Bills of Entry cited in the show cause notice could not be clubbed together With the consignment of low pressure pumps to alleged importation of a complete spray equipment in disassembled form. Consequently they again reiterated their stand for classification under Heading 8413.50 read with Notification No. 59/87 and they also denied consequently the allegation of offence under Section 111(m) of the Customs Act, 1962.
1.8 On adjudication, the Additional Collector of Customs did not accept the aforesaid pleas of the appellants herein and upheld the allegations in the show cause notice and passed the following orders :- "(i) The goods under import against the B/E No. 2202/7-3-92 as well as cleared under B/E Nos. 2718,2781 (sic) and 2720 dated 9-3-1992 shall be clubbed together and classified as Paint spraying equipment under the Heading 84.24 of the Customs Tariff Act. As such, the goods taken together shall not be entitled for benefit under Notification No. 59/87-Cus. The said three B/E dated 9-3-1992 should be re-assessed according- (ii) I confiscate the 9 pcs. of so-called "Low Pressure Pumps" under Section 11(m) of the Customs Act, 1962. However, I give the importers an option to redeem the said confiscated goods on payment of a fine of Rs. 50,000/- (Rupees : Fifty thousand only), which should be exercised within a month.
(iii) I impose a penalty of Rs. 1 lakh (Rupees : One lakh only) of M/s. Thermas Devilbiss Ltd., Pune under Section 112 of the Customs Act, 1962, in respect of all the 4 consignments as discussed above taken together." 2.1 Learned Advocate, Shri Arvind Kumar has reiterated the aforesaid pleas taken by the appellants in their reply to the show cause notice.
He has further elucidated the pleas, as aforesaid. Drawing attention to the catalogue in respect of the imported goods in the Bill of Entry relating to low pressure pumps (at page 34 of the Paper Book) learned Advocate submitted that the pump ratio of the imported pump is 3 :1.
The maximum air input pressure is 8 bar, the maximum material pressure is 24 bar and air consumption at 40 cycles per minute is 1151. From this data learned Advocate points out that for working of the air pumps air pressure is required i.e. use of air is called for. In other words, the low pressure pumps cannot be used in Airless Spraying Equipment.
2.2 On drawing attention to the earlier three Bills of Entry goods imported against which are sought to be clubbed by the Revenue with the consignment of low pressure pumps, learned Advocate points out that air caps were imported having United Kingdom as country of origin and these caps were parts for AGG automatic spray guns. Similarly 12 fluid regulators imported by another Bill of Entry were having their country of origin as United Kingdom. Their Part No. is HGB 501. Maximum Fluid input pressure for these two fluid regulators is 12.1 bars. Drawing attention to third Bill of Entry and the corresponding invoice Airless Spray Guns 400 bar was imported having Part No. JGB-526-E. From the description of the goods in the Bill of Entry and in the invoice, learned Advocate points out that these Airless Spray Guns operate on a.
pressure of 400 bars whereas the low pressure pumps imported by the appellants which are the subject matter of enquiry, as already pointed out, work on 8 bars and give an output of 24 bars. All this data, submits the learned Advocate, makes it apparent that the consignment of low pressure pumps now imported is totally incompatible with various parts imported earlier against three Bills of Entry. He submits that all these pleas were taken before the adjudicating authority but these have all been ignored by the adjudicating authority and he has relied upon only a single piece of evidence of the certificate of country of origin which inadvertently described the goods as Airless Spraying Equipment. In the face of other overwhelming evidence, as mentioned above, learned Advocate submits that a clerical mistake in certificate of country of origin should not be blown out of proportion. Finding that this consignment of low pressure pumps forms part of Airless Spraying Equipment when clubbed with the other three Bills of Entry, is not correct. He further submits that it is a well settled proposition that an adjudicating authority should not ignore any relevant evidence.
For this proposition, he relies on AIR 1964 S.C. 735, CIT, Punjab v.Indian Woollen Textiles Mills. Para 4 of the said judgment has held that it has assumed the only fact on which conclusion is founded and ignores other relevant matters on which the Appellate Assistant Commissioner relied in support of this conclusion. The Tribunal has, therefore, misdirected itself in law in arriving at its finding and in refusing to require the Tribunal to state the case and to refer it to the High Court was in error.
2.3 Learned Advocate further pointed out that the burden of proof that the imported low pressure pumps are not parts of Airless Spray Equipment has been shifted to the appellants by the adjudicating authority. This approach in adjudication, he submits, is totally incorrect. It was alleged by the Revenue that the imported low pressure pump was part of an overall Air Spray Equipment imported by the appellants in three different consignments, as referred to above. It was, therefore, for the Revenue to prove its case that the four consignments together formed almost complete Airless Spray Equipment; instead of proving its case the adjudicating authority has shifted the burden on the appellants by holding as follows :- "Party has not produced any evidence to show that the 'pumps' under import, basically meant as per the catalogue for paint spraying equipment only, are not compatible with other goods imported and received by them with the pumps against Airway Bills." 2.4 Burden of proof, he submits, clearly lies on the person who asserts a definite claim or makes it a particular allegation. On this proposition, he relies on 1996 (87) E.L.T. 12 (Para 15), 1996 (82) E.L.T. 129 (Para 11), 1994 (69) E.L.T. 674 (Para 9.4). He, therefore, submits that the impugned order is not sustainable and therefore, be set aside and the appeal be allowed with consequential relief to the appellants.
3.1 On the other hand, the learned SDR, for the Revenue has reiterated the aforesaid findings of the adjudicating authority. He has highlighted certain portions of the impugned order. From a reading of these portions, it is apparent that the adjudicating authority has time and again stressed the fact that the certificate of origin found to be on examination of the goods was in respect of Airless Spray Equipment.
4.1 We have carefully considered the pleas advanced from both sides. We observe that the allegations made in the show cause notice are to the effect that the low pressure pumps considered with the three earlier imports made by the appellants in respect of Airless Spray Guns, Fluid regulators and air caps form almost a complete Airless Spray Equipment.
This allegation, we further observe, has been upheld by the adjudicating authority on the basis of a description in the certificate of country of origin. The description in the certificate was later on contended by the appellants as inadvertently wrong certificate on the basis of suppliers' letter. Be that as it may, we hold on the basis of various documents on record that the three earlier consignments, as fully explained by the learned Advocate for the appellants, are not compatible with the lower pressure pumps imported by the appellants so as to form almost complete Airless Spray Equipment. We further observe, as rightly pointed out by the learned Advocate for the appellants, that the adjudicating authority instead of proving its own case has shifted the burden on the appellants which is an incorrect approach on the part of an adjudicating authority. The adjudicating authority has completely ignored the evidence produced by the appellants to show that the earlier three imports of various goods and the present import of low pressure pumps do not make Airless Spray Equipment because they are working on widely differing pressures. Consequently, we hold that the allegations in the show cause notice have not been proved by the Revenue. Hence the impugned order is not sustainable. We, therefore, set it aside and allow the appeal with consequential relief to the appellants.