Judgment:
1. In this appeal, filed by M/s. Escorts Ltd. (F.E.D.), the issue involved is whether Hydraulic pump manufactured by them are classifiable under Heading 8413.80 as claimed by them or under Heading 87.08 of the Schedule to the Central Excise Tariff Act as decided by the Commissioner under the impugned Order.
2. Shri V. Lakshmikumaran, learned Advocate, submitted that the appellants manufacture Hydraulic Gear Pump which is basically designed to move liquids; that since gear pump belongs to the positive displacement category of pumps the pressure in the hydraulic system fed by such a pump is developed by forcing hydraulic fluid into a constrained space; that the system pressure is governed by a relief or a safety in the system; that they use the gear pump in the tractors; that during 1995-96 they classified the product under heading 8413.10 which was not disputed by the department; that due to budgetary changes in 1996 they classified the impugned product under heading 8479.10 which was changed by the department under heading 8413.80 under letter dated 9.7.98 of the Superintendent. The learned Advocate, further, submitted that a show cause notice was issued to them on 9.12.99 proposing to classify Hydraulic Gear Pump under heading 87.08 as a part of Motor Vehicle and for demanding duty during the period 4.9.96 to 30.9.98; that the Commissioner Central Excise under the impugned Order, classified the impugned product under heading 84.08 holding it as part of motor vehicle as the product in question was made as per specification and industrial standards of the tractors and was used as fitment in the engines. The learned Advocate mentioned that Note 2 to Section XVII of the Tariff provides that the expressions "Parts" and "Parts and Accessories" do not apply to the following articles, whether or not they are identifiable as for the goods of this Section: (b) Machines and apparatus of heading Nos. 84.01 to 84.79 and parts thereof; articles of heading NO.s 84.82, and provided they constitutes integral parts of engines or motors, articles of heading 84.83; 3. The learned Counsel further submitted that Explanatory Notes of HSN contains the similar Section Note and it is provided in HSN that this Note excludes the following parts and accessories, whether or not they are identifiable as for the articles of this Section 11 and at Srl. No.5(e) it is mentioned "Pumps, Compressors and fans (heading 84.13 or 84.14)". The learned Advocate submitted that in view of the clear provisions of Note (2) to Section XVII and Explanatory Note of HSN, Hydraulic Gear Pump manufactured by the appellants cannot be classified under heading 84.08. He, further, mentioned that in terms of Rule 3 of Interpretative Rules a heading which provides more specific description has to be preferred to heading providing a general description; that the product in question fits into a category of specific description and applying Rule 3 Hydraulic Gear Pump should necessarily fall under 84.13. In this regard he relied upon the decision in the case of Stone India Ltd. vs. CCE, Calcutta, 1999 (108) ELT 201 (Tri.), wherein Super Heater Element and spares for super heater for boiler were classified under heading 84.04 of the Tariff in terms of Note 2 of Section XVII.Finally, he submitted that the Commissioner in the impugned Order has relied upon the decision in the case of Collector of Customs vs.
Kumudam Publication Pvt. Ltd.(SC) and CCE, Bangalore vs. Sri Ram Metal Works, 1998 (99) ELT 616 (T); that the ratio of both these decisions are not applicable to the facts of the present case as the rival Chapters in the case of Kumudam Publication were Chapter 37 and Chapter 84 and there is no Note in Chapter 37 like Note 2 to Section XVII; that similarly in the case of Sri Ram Metals, the rival Chapters were 73 and 86 and Note 2 does not exclude the goods falling under Chapter 73.
4. Countering the arguments Shri M.P. Singh, learned D.R. submitted that is note disputed that Hydraulic Gear Pump is specifically designed to be used in tractors; that Note 3 to Section XVII provides that references in Chapter 86 to 88 to parts or accessories do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters; that it is evident from this Note that if there is any part of accessory which is suitable for use solely or principally with the articles of Chapter 86 to 88, it will be classified in relevant Chapters; that as the impugned product is suitable for use solely or principally with the tractors it is classifiable under Heading 87.08 of the Tariff. In support of his contention he referred to the following two Circular issued by the Board:- 5. Learned D.R. also placed reliance on the decision of the Apex Court in the case of JBA Printing Inks vs. CCE, New Delhi, 2000 (115) ELT 24 (SC), wherein the Supreme Court classified Radiator Assembly under Heading 84.09 of the Customs Tariff Act following the Principle of 'parts suitable for use solely or principally'. He mentioned that in this case the Supreme Court held that an I.C. Engine cannot function without calling device and according the Radiator. Cooling device must be held to constitute a part of the engine. He also relied upon the decision in the case of CCE, Chandigarh vs. G.S. Auto International, 1999 (111) ELT 389 (T) wherein items such as 'V' Belt, 'V' Clamps, Check nuts were held to be classifiedable under heading 87.08 and not under Heading 73.18, treating them as parts of motor vehicle.
6. We have considered the submissions of both the sides. Heading 84.13 of the Schedule to the Central Excise Tariff Act applies to "Pumps for liquids, whether or not fitted with a measuring device; liquid elevator". heading 87.08 applies to "Parts and accessories of the motor vehicles of the Heading No. 87.01 to 87.05" Note 2 and 3 to Section XVII explains the ambit of expression "Parts and accessories" in Section XVII which covers Chapter 86 to 89. Note 2 clearly provides that expression "Parts and accessories" do not apply to the articles mentioned in the said Note, whether or not they are identifiable as for the goods of this Section. Sub-clause (e) of Note 2 clearly excludes "machines and apparatus of Heading Nos. 84.01 to 84.79, and parts thereof" from falling under Section XVII and consequently under Chapter 87 of the Tariff. Explanatory Note of HSN makes it very clear that the Headings relating to parts and accessories apply only to those parts of accessories which satisfies all the three conditions mentioned in the Explanatory Notes (at page 1410). One of the conditions is that the "Parts and accessories" must not be excluded by the terms of Note 2 to this Section. The Explanatory Notes thereafter refers to paragraph (A) which provides the details of the articles which are excluded by Note 2 to Section XVII. One of the items mentioned in the Explanatory Notes, as pointed out by the learned Advocate also, is "Pumps, Compressors and Fans (heading 84.1313 or 84.14)". Accordingly we do not find any substance in the submissions of the learned D.R. that the impugned product being suitable for use solely or principally with tractor should b e classified under heading 87.08 in terms of Note 3 to Section XVII. Note 3 to Section XVII cannot make Note 2 in operative merely on the ground that a particular product is suitable for use solely or principally with the article of Chapter 86 to 88. In fact both the Notes 2 and 3 explain the ambit of expression "Parts and accessories" used in Section XVII. The learned Advocate has distinguished both the decisions relied upon by the learned Commissioner and we agree with his submissions in this regard. The decision of the Supreme Court in the case of JBA Printing Ink Ltd. is not applicable as rival headings in that case were 84.09 and 84.79 and the Apex Court went by the use of the Radiator assembly. In that matter no Note like Note 2 to Section XVII was there for consideration of the Apex Court. Similarly in G.S.Auto International the rival Chapters were 87 and 73 and the Tribunal having regard to the Section Note and voluminous evidences and certificate from Chartered Engineers came to the conclusion that the goods involved therein were parts of motor vehicle and not goods falling under heading 73.18 of the Tariff. Again we observe that Chapter 73 is not excluded in terms of Note 2 to Section XVII. On there hand the Appellate Tribunal in the case of Stone India Ltd. (supra) classified Super heater element and spares for super heater boiler under heading 84.04 as parts of boiler instead of parts of railway or tramway locomotive under heading 86.07 in view of the clear language of Note 2(e) to Section XVII. The Tribunal in that case held that in view of Section Note 2(e) to Section XVII. The Tribunal in that case held that in vie of Section Note 2(e) of Section XVII the goods are classifiable under Tariff Heading 84.04 which would be beyond the purview of Section XVII. Accordingly we hold that Hydraulic Gear Pump is classifiable under heading 8413.80 of the Central Excise Tariff and note under Heading 87.08. The appeal filed by the Appellants is thus allowed without going into the question whether extended period of time limit was invocable in this matter.