1. The question for consideration in this appeal is the classification of goods described as automated vertical storage systems or vertical carousel storage systems. The product consists of a very large structure generally vertical whose dimensions, we are told ranges from a minimum height of 4 mtrs. to a maximum of 10 mtrs. The length and depth varies with a minimum of 2470 to 3000 mm and 880 to 1800 mm respectively. The product houses a system of shelves vertically arranged and connected to a system of gears revolving around a central shaft. Each shaft contains a specific product. The system has computerized controls. By using all these controls it can be so operated that goods contained in any one particular shaft delivered to the person requiring them at one or more openings in the product which are called access trays. The dispute is whether this article is to be classified under Heading 94.03 as that of furniture has been held by the Commissioner in the order impugned in the appeal or as a material lifting handling or loading and unloading machinery under Heading 84.28. Apart from demanding duty the Commissioner in the impugned order imposed penalty on the appellant under Sub-rule (i) of Rule 173Q and ordered confiscation of the plant and machinery. The notice to show cause invoked the extended period contained in the proviso to Section 11A.2. Advocate for the appellant raises the following contentions. The primary function of the product is to deliver to the person retrieving the goods stored in one of the shelves contained for which it has complicated and expensive machinery, the cost of such machinery forming a substantial part of the cost of the item. The function of delivery at given point of the goods is a significant feature and without taking into account the classification of the product cannot be decided.
Similar product manufactured by Vinar Systems Ltd., Calcutta have been classified by the jurisdictional excise authorities under Heading 84.28. Similar goods on import have been classified by the Customs under Heading 84.28 which is identically worded as Heading 84.28 of the Central Excise Tariff. The items having dimensions with complicated machinery would not answer to the description of the furniture as it is commonly and technically understood. He cites the judgment of the Bombay High Court in Union Sales Corporation v. State of Maharshtra - 39 S.T.C. 452, and Material Handling Engineering Co. v. W.G. Waknis, Supdt. of Central Excise -1980 (6) E.L.T. 231. He also refers to the Explanatory Notes to the Harmonized Commodity Description and Nomenclature to say that the heading does not include items which contain machinery or are intended to house or contain machinery. He cited the examples of cupboard cabinets etc. equipped either with refrigerating units or having provision for such equipment and drawing tables. He also draws our attention to entries in the Mc Graw Hill Dictionary of Science and Technology relating to vertical conveyor and conveyor which describe them as material handling equipment. He further relies upon the notes at page 1298 of Explanatory Notes of the heading to the HSN Harmonised System of Nomenclature which refer to elevators (which he says conform to the description of the goods under consideration) as being classifiable under Heading 84.28. Arguments on limitation were also raised.
3. Departmental Representative contends that the manufacturer of the goods had taken a consistent stand that they are for storage. The pamphlet and statements of two Directors shows that the primary purpose of the goods was storage. She seeks to distinguish the two judgments of the Bombay High Court on the ground that one of them related to the entry in the Bombay Sales Tax Act which has not been shown to be in pari materia with the description given in the Central Excise Tariff, and the other related to goods of different kind. She relies upon the decision of Tribunal in the Pressure Cooker & Appliances v. CCE -1987 (28) E.L.T. 566. She contends that the goods in question conform to the definition of furniture as provided in page 1698 of the Explanatory Notes. The fact that they contained the machinery and are of large dimensions does not affect the classification. She contends that the fact that the machinery in any case would not detract from the goods being considered to be furniture and she cites examples of rotating tables and chairs. She cites the decision of this Tribunal in Nima Ltd. v. CCE -1989 (21) E.C.R. 94. She contends that primary purpose of the goods being for storage of goods would determine that classification citing for this purpose. Supreme Court judgment in CCE v. Fusebase Eltoto Ltd. - 1993 (67) E.L.T. 30. She says that in the event of there being a dispute in the classification the heading that occurs last will have to be applied as provided in Interpretative Rule 3(c).
4. It is not possible for us to say that primary function for which the article has been designed and for which it was purchased is storage of goods. A rack or cupboard, or similar goods which only store goods or which primarily store goods which may have subsidiary or ancillary functions would perhaps be considered to be furniture in view of the primary function of storage. The product under consideration was designed and is used not only for storage of goods but to deliver one out a number of kinds of goods stored to a person requiring them at a particular point or points provided for this purpose. The article does so by means of the machinery which enables a particular shelf containing the desired item to be identified and transported to the accessory from where the person concerned removes the stored articles which he desires. The system is described as a storage and retrieval system. The pamphlet printed by the manufacturers emphasizes the importance of this aspect in some detail. Obviously, one cannot have a system of retrieval of goods unless they are stored. The storage therefore, is a pre-requisite for retrieval of goods in this type of system. This is what doubtless distinguishes such goods from material handling machinery simplicator which does not store the goods handled or carried. The cost of the machinery for retrieval in the product which we are told is about Rs. 5 lakhs as against the cost of that part of it necessary only for storage of about Rs. 50,000/- emphasizes this aspect. Similar goods which have been imported by M/s Siemens Ltd. and Dytex Tools Ltd. have been classified by the Customs under Heading 8428.39; the literature for these products which was produced by the appellant shows this to be similar in appearance and function to the goods under consideration.
4. The Explanatory Notes to Chapter 94 of the HSN define furniture as follows: (A) Any "movable" articles (not included under other more specific heading of the Nomenclature). Which have the essential characteristic that they are constructed for placing on the floor or ground, and which are used, mainly with a utilitarian purpose, to equip private dwellings, hotels, theatres cinemas, offices, churches, schools, cafes, restaurants, laboratories, hospitals, dentists, surgeries, etc. or ships, aircraft, railway, coaches, motor vehicles, caravan-trailers or similar means of transport. (It should be noted that , for the purpose of this Chapter, articles are considered to be "movable" furniture even if they are designed for bolting etc. to the floor e.g. chairs for use on ships). Similar articles (seats, chairs, etc.) for use in gardens, squares, promenades etc. are also included in this category.
(B) Cupboards, bookcases, other shelved furniture and unit furniture designed to be hung, to be fixed to the wall or to stand one on the other or side by side, for holding various objects or articles (books, crockery, kitchen utensils, glassware, linen, medicaments, toilet articles, radio or television receivers, ornaments etc.) and separately presented elements of unit furniture.
Now it will be clear that this heading does not include every item which has storage as a function, or one of its functions. Items such as refrigerators, armoured safes etc. would be excluded by applying the above definition. It is clear from this definition that if an item conforms to its terms but is included any other heading it will not be classified under 94.03. In our view, the goods in question having regard to their construction designs and intended are more specifically to be considered material handling than requirement of furniture.
5. The examples given in page 703 of the Explanatory Notes of Heading 94.03 of articles which are so designed or equipped that they would perform functions other than of furniture as generally understood supports this view. A dentist's chair whether or not equipped with various dental instruments is not classifiable under this heading but under a more specific heading. Armoured or reinforced safes are excluded as is furniture equipped with refrigerator unit or furniture design for containing this. It is hence, reasonable to conclude that the scope of the items does not include goods where perform a predetermined purpose in which functions other than storage.
6. The question of applying the interpretative rules would arise only if the goods cannot be classified without reference to the tariff entries. In our view, even without such reference to these notes, of the two tariff headings, Heading 84.28 is more appropriate. Even on the assumption that reference to the interpretative rules is justified, we cannot straightaway proceed to Rule 3 (c). This rule will only apply, if the rules preceding it do not provide an answer. Rule 3 (a) provides that the heading which provides the most specific description shall be preferred to headings providing a more general description. In our view, the goods more specifically merit classification as material handling equipment, and not as furniture.
7. It is in this context that the judgment of the Bombay High Court in Union Saks Corporation v. State of Maharashtra - 39 STC 452 assumes significance. The question before the High Court in that matter was whether goods described as power operated storage rack which stores and shifts and places rolls in the printing department at the required place, would be covered by Entry 56 of Schedule C to the Bombay Sales Tax Act, 1959. This entry was for furniture. The Court noted that the article in question consists of not merely of storage rack but of such a rack which contains elaborate machinery namely, a motorist conveyor for moving the goods to be stored and the use of this article was not merely for storage of goods and also for conveying of the same for the purposes of loading or unloading. It said that by a common sense point of view and even by the test of popular parlance, it would be difficult to regard it as an article of furniture. No doubt, the words of the entry in the Schedule C to the Bombay Sales Tax Act, do not correspond to the words in the tariff. However, the observation of the Court that from a common sense point of view and applying the common parlance, it would be difficult to consider this as an item of furniture is significant in deciding its particular character which applying Rule 3 (a). While applying that rule, it has to be kept in mind that provision of the machinery contained in it with the object of moving some of the goods from the place of storage to its delivery is what distinguishes from ordinary racks or cupboards meant only for storage. This entitles it, in our view, to be more specifically considered as material handling equipment.
8. In the light of these discussions, we have not considered the argument on limitation which are made by both sides.
9. Appeal allowed. Impugned order set aside with consequential relief if any.