1. In this appeal filed by the Revenue, the matter relates to the classification of the product which the respondents, M/s. Lohotwo Tools (P) Ltd. had described as screw driver special with neon bulb, and had sought classification under sub-heading No. 8205.00 of the Central Excise Tariff as hand tools. The Department was of the view that the said goods were classifiable under sub-heading No. 8543.00 of the said Tariff as electrical apparatus having individual functions. The Collector of Central Excise (Appeals), Pune took a view that the goods in question were electric line tester in the form of screw driver, were a hand tool and were correctly classifiable under sub-heading No.8205.00 of the Tariff and that it could not be called electrical machine or appliance for classification under Heading No. 85.43, sub-heading No. 8543.00 of the Tariff. In the grounds of appeal, the Revenue had pleaded that the goods in question were line tester, an electrically operated apparatus. It was used for knowing whether electric current is flowing at the particular point of electrical line.
2. The matter was heard on 1-6-2000 when Shri Satnam Singh, SDR referred to the mechanism of the goods in question and submitted that it was a special purpose apparatus and could not be considered as a hand tool. It has electric current and was to be classified as an electrical apparatus.
In reply Shri S.R. Bhargave, C.A. submited that the line tester is treated in common parlance as a tool and it was neither a machine nor an appliance. It is not used in the production or processing of any goods. It was also mentioned that their earlier classification lists had been duly approved and that there were no grounds for revising the classification already approved.
3. We have carefully considered the matter. The issue for our consideration is the classification of the product referred to in the classification list as screw driver special with neon bulb. It was popularly known as electrical line tester. The product could be used both as a normal screw driver as well as electric line tester. They are used by the Electricians, Wiremen, etc and also by the common users to test the continuity of circuit and to know whether a particular wire or terminal is electrically live or not.
It was being classified by the respondents under sub-heading No.8205.00 of the Central Excise Tariff. The classification lists were approved from time to time; classification list No. 56/91 effective from 10-4-1991 (Divisional No. 334/91) was approved on 28-8-1991 and the approval was communicated on 9-9-1991. The classification list No.118/91 effective from 25-7-1991 (Divisional No. 733/91) was approved on 27-11-1991 and the approval was communicated on 5-12-1991. Similarly classification list No. 75/92 effective from 1-3-1992 (Divisional No.433/92) was also approved.
When a fresh classification list was filed effective from 28-2-1993, the said classification list was not approved. Two show cause notices dated 13-4-1994 and 18-4-1994 were issued by the Superintendent of Central Excise proposing classification under sub-heading No. 8543.00 on the ground that the goods in question were not hand tools but were electric machines/apparatus having individual function. The Central Excise Duties for the period March, 1993 to Feb., 1994 was demanded.
The Asstt. Collector of Central Excise, Na-sik-2, who adjudicated the matter observed that the issue regarding classification had already been decided by his predecessor vide Order-in-Original dated 3-5-1994, and following the same, he confirmed the demand. In his order dated 3-5-1994, the Asstt. Collector of Central Excise, Nasik-II had observed that the screw driver special with neon bulb was an apparatus, having a individual function to check the existence of electricity, which was not specified elsewhere. He also referred to the Harmonised Commodity Description and Coding System (HSN) Explanatory Notes wherein it was provided that Heading No. 85.43 also included electrical goods incorporating mechanical features provided such features were subsidiary to electrical function. He also ruled out the classification of the said goods under Heading No. 90.30. Against that order dated 3-5-1994 of the Asstt. Collector of Central Excise, the manufacturers had filed appeal and the same had been earlier allowed by the Collector of Central Excise (Appeals) under his order-in-appeal No. A-398/94 holding that the goods in question were correctly classifiable under sub-heading No. 8205.00. Following that order on classification, the ld. Collector of Central Excise (Appeals) set aside the impugned order confirming the demand.
4. Sub-Heading No. 8543.00 of the Central Excise Tariff covered electrical machines and apparatus having individual functions not specified or included elsewhere in Chapter 85. Only electrical machines and apparatus were covered by this Heading. Could the goods in question be considered as an electrical apparatus? 5. An apparatus is a compound instrument designed to carry-out a specific function or for a particular use. According to the McGraw Hill Dictionary of Scientific and Technical Terms, apparatus is a compound instrument designed to carry-out a specific function.
In the Words and Phrases permanent Edition Vol.7 A, apparatus has been defined as a collection or set of materials, implements or utensils for a given work; a complex device or machine or a set of tools, appliances, any complex instrument for a specific action or operation, machinery or mechanism (refer Union Carbide India Ltd. v. Collector of Central Excise, Calcutta-IHekotronics Pvt. Ltd. v. Collector of Central Excise, Bombay -1996 (88) E.L.T. 682 (Tribunal) is extracted below :- 5. The appellants have contended that their product is a single instrument and not a group of instruments. According to them, a single instrument would not be covered by the expression 'apparatus'. As per the Dictionary meaning of the term 'apparatus' as set out in various dictionaries, it is defined as an appliance and the term 'appliance' had been defined as a device or a piece of equipment. The term 'appliance' in Law- Lexicon has been defined as under :- From the meanings by different dictionaries, "it becomes clear that (1) an "appliance" is quite distinct from "materials" from which it is made, and (2) an "appliance" as an apparatus, device or instrument is "means to an end" These two aspects should be borne in mind while considering whether a particular article can be called an appliance. The first aspect seeks to take an integrated view of the article concerned and says that materials or component parts of an appliance should not be mistaken as tantamount to the appliance itself. The second aspect emphasises the fact that the importance of an appliance consists in its utility to serve the object for which it is possessed."Para-16 of I.C.B (P) Ltd. v. Collector of Central Excise, Baroda -1997 (95) E.L.T 239 (Tribunal) is also given below :- "16. We also consider that they were not an apparatus, appliance or equipment. The apparatus is a compound instrument designed to carry out a specific function or for a particular use. In order to decide whether a particular object is an apparatus, an inquiry has to be made as to what operation it performs.
Appliance is a device that draws electric or other energy and produces a desired work saving or other result. The Gujarat High Court in Star Radio Electric Co. v. Commissioner of Sales Tax, 1971 (27) STC 367, had observed that appliance has been defined or employed as meaning a mechanical thing, an apparatus or device; an instrumental means, aid or appurtenance; a thing applied or used as a means to an end, either independently or sub-ordinately. Equipment is one or more assemblies capable of performing a complete function - an outfit, furnishings, supplies, tools for performing a job." 6. Line tester only indicates the presence or absence of electric current in the electric line. After so indicating, the electricity has no purpose for its use. The user will then go ahead to use it as a screw driver on the line where there is or there is no electric current. The goods in question had no application with the electrical current. It has no electrical fittings within and as a screw driver works without the aid of electrical power. It is used manually by hand.
According to the McGraw Hill Dictionary of Scientific and Technical Terms - II Edition page 515, Electrical related to or associated with electricity but not containing it or having its properties or characteristics often used in-ter-changeably with electric.
In William Jacks & Co. Ltd. v. State of Madras - 1955 (6) STC 301 (Madras), the Madras High Court held that only such articles the use of which cannot be had except with the application of electric energy can be termed as electrical goods or appliances.
Thus, those articles which can be used only by the application of electricity are electrical goods.
The Delhi High Court in the case of Simplicity Engineers v.Commissioner of Sales Tax, New Delhi - 1986 (62) STC 267 (Delhi) laid-down the test for deciding what were electrical goods. The test was whether the article in question comes within the meaning of electrical goods as understood in common parlance. It was added that if the article does not work on electricity, it is not electrical and can not come within the description of electrical goods at all. The converse proposition, according to the High Court, however was not true.
In this regard, we may refer to para-15 of the Sales Tax decision in the case of J.B. Advani Oerlikon Electrodes Pvt. Ltd. v. Commissioner of Sales Tax -1972 (30) STC 337 (M.P. - Jabalpur). which is extraced below :- "15. It was emphasised for the State that the assessee's welding rod cannot be used without electricity, but, in our opinion, that is not decisive. In order to name an article as "electrical goods" two things are necessary: (1) Its use cannot be had without electrical energy; and (2) by its very nature it answers the description of electrical goods. For instance, a lathe fitted with electric motor cannot be used except with electric power, but it cannot be said to be electrical goods. Likewise, a motor car cannot be used without a battery or a dynamo fitted to it, but a motor car is never called electrical goods. So also, in electro-plating a solution of silver and gold particles is used, through which electricity is passed in the process of electro-plating. That process of electroplating cannot be done without the use of electricity. Even so the silver or gold particles are never called "electrical goods" by themselves. So also the welding rod manufactured by the assessee is a welding material in the shape of rod." Further, in this regard we can do no better than to extract extensively from the Punjab & Haryana High Court decision in the case of Karnal Machinery Store v. Assessing Authority, Karnal -1973 (31) STC 3 (P & H, Chandigarh). The extracts from pages 6 to 8 are given below :- "It will now be proper to refer to a very illuminating discussion in The State of Andhra Pradesh v. Indian Detonators Ltd., Hyderabad.
The judgement of the court was delivered by the learned Chief Justice. While dealing with the entries in the schedule of the relevant to the Sales Tax Act of the State of Andhra Pradesh and after referring to the observation of the Supreme Court in Ramavatar Budhaipmsad v. The Assistant Sales Tax Officer, Akola, and Anr. it is was observed.
The expression 'electrical goods' has not been defined in the Act.
Neither the Act nor the Rules thereunder have laid down any test to be satisfied before any given article is brought within the scope of entry 37. The appellate authority, therefore, relying on the test laid down in William Jacks & Co. v. The State of Madras held that electric detonators are electrical goods inasmuch as they cannot be oeprated by any means other than electric energy to ignite the fuse.
The Appellate Tribunal did not agree with this view for, in brining any goods under the classification of electrical goods, the goods are to be taken as a whole. For this purpose their component parts cannot be taken separately. To put it differently, the article sold is to be taken as a unit and cannot be split up and considered. On basis which has also been clearly stated in the case relied on, the Tribunal seems to nave held that inasmuch as the electric energy is used only for the limited purpose of ignition, the detonator which is primarily and essentially an explosive accessory depending for its potency and power on the chemical combination, cannot be classified as electrical goods or appliances. In our judgment, the approach of the Tribunal to the problem is correct. The appellate authority was no doubt impressed greatly by the fact that the electrical detonators cannot be used without electrical energy. But before that test is applied, it is essential that the goods must be capable of being classified as electrical goods. It may be that certain goods cannot be used without electrical energy; yet they need not necessarily be electrical goods. Take the case of a motor car. Its use certainly depends on the functioning of the electrical equipment as well. In fact without electrical energy it may not be possible to start or make it run. But on that account the motor car does not become electrical goods. There can be innumerable instances of this kind. The nature of the goods, therefore, has to be determined taking the goods as a whole and not by any of its single factor.
In Williamjacks & Co. Ltd. Madras v. Stale of Madras - [1960] 11 S.T.C. 340] the Madras High Court referring to its earlier decision in William Jack's case -[1955] G S.T.G 301] clarified this position.
The question for consideration was whether lathe can be classified as electrical goods. It was observed thus: A lathe, by itself, even though driven by electrical energy will not come within the scope of the expression "electrical goods" in section 3(2)(viii) of the Madras General Sales Tax Act, 1939.
It is unnecessary to refer to the line of reasoning in that case more elaborately for the position has been made further clear in a later decision of the Madras High Court in Deputy Commissioner of Commercial Taxes, Madurni Division, Madurai v. Ravi Auto Stores [1968] 22 S.T.C. 172]. It was laid down therein as follows : 'Intrinsically, the goods in question must be electrical goods and secondly their use cannot be had without electrical energy. Merely because an article cannot be used without electricity, it may not be decisive. It is necessary that, apart from that fact, the article, by its very nature, answers the description of "electrical goods".
The expression 'electrical goods', of course, as already stated, is not defined in the Act or the Rules. In the absence of any specific meaning given to it in the Act we have to necessarily construe it and understand the same in the sense it is used in common parlance.
This principle is well recognised and has been followed by the Supreme Court in several cases. While construing the word 'vegetables' in item 6 in Schedule II of the C. P. and Berar Sales Tax Act (21 of 1947) in Ramavatar Budhaiprasad v. The Assistant Sales Tax Officer, Akola, and Anr. [(1961) 12 S.T.C. 286 (S.C.)] the Supreme Court observed thus : 'But this word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of everyday use, it must be construed in its popular sense meaning "that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it." It is to be construed as understood in common language: Craies on Statute Law, page 153 (5th Edition).
It was so held in Planters Nut and Chocolate Co. Ltd. v. The King [(1952) 1 Dom. L.R. 385,389].Commissioner of Sales Tax, Madhya Pradesh, In-dore v. Jasvant Singh Charan Singh- [(1967) 19 S.T.C. 469 (S.C.)] where the question arose whether charcoal is included in the word 'coal' specified in entry 1 of Part III of Schedule II to the Madhya Pradesh General Sales Tax Act, 1958. There it was observed thus :...while construing the word "coal" in entry 1 of Part III of schedule II, the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word. A sales tax statute being one levying a tax on goods, must, in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term as coal according to the meaning ascribed to it in common parlance.' 'While interpreting items in statutes like the Sales Tax Act, resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense.'State of Andhra Pradesh v. Satyanarayana Kaithan (P.) Ltd), where the question arose whether 'manganese1 includes 'manganese ore'.
In view of the settled principle the question to be considered is whether according to the popular meaning or the meaning attached to the word in commercial world, electrical detonators can be termed 'electrical goods'.".
7. In the trade parlance, the line tester is covered under the category of hand tools. The respondents have placed on record the catalogue of M/s. R.S. Components and Controls India Ltd. at page 25 of the Paper Book, of Gedore at page 28 of the paper book, of Chinese manufacturer at page 29 of the paper book. It is seen that the screw drivers with electricity tester are known as hand tools.
8. It is also seen that the goods in question will not be covered by the description as having individual functions. For the purposes of Heading No. 85.43, as for Heading No. 84.79 of the HSN, the following are to be regarded as having individual functions :- "(A) Mechanical devices, with or without motors or other driving force, whose function can be performed distinctly from and independently of any other machine or appliance.
Example : Air humidification and dehumidification are individual functions because they can be performed by appliances operating independently of any other machine or appliance.
A separately presented air dehumidifier, even if designed to be mounted on an ozone generator falls, therefore, to be classified in this heading as having an individual function.
(B) Mechanical devices which cannot perform their function unless they are mounted on another machine or appliance, or are incorporated in a more complex entity, provided that this function: (i) is distinct from that which is performed by the machine or appliance whereon they are to be mounted, or by the entity wherein they are to be incorporated, and (ii) does not play an integral and inseparable part in the operation of such machine, appliance or entity." It is also provided in the Explanatory Notes to Heading No. 85.43 that most of the appliances of this Heading consist of an assembly of electrical goods. The articles, the use of which could not be had except with the application of the electric energy could be termed as electrical appliances.
9. We find that in Heading No. 82.05 of the HSN, screw drivers are specifically mentioned. It is, thus seen from the arrangment of the Central Excise Tariff as read with the HSN Explanatory Notes that the goods in question were not electrical apparatus having individual functions.
10. After taking note of all the relevant aspects of the matter, we consider that a correct view has been taken by the ld. Collector of Central Excise (Appeals), Pune. We do not find any merit in this appeal filed by the Revenue and the same is rejected. Ordered accordingly.