Judgment:
1. The issue involved in this appeal, filed by M/s. Indian Plastics and Laminates Ltd., is whether the HDPE Quick Change Coupler, Tail piece, open end cap, bend tee and branch coupler/sprinkler line coupler manufactured by them on job work basis are classifiable under sub-heading No. 8424.91 of the Schedule to the Central Excise Tariff Act as parts of sprinkler irrigation system claimed by them or under Heading No. 39.17 as goods of general use as confirmed by the Commissioner (Appeals) under the impugned Order.
2. Shri Bipin Garg, learned Advocate, submitted that the appellants manufacture PVC fittings which are classified under Heading 39.17 of the Central Excise Tariff; that in addition they manufacture the impugned goods on job work basis strictly on the basis of drawings, specifications and moulds supplied by M/s. Rungata Irrigation Ltd.; that M/s. Rungata Irrigation Ltd. (Rungata in short) supply them the granules and moulds for manufacturing parts of Sprinklers Irrigation Equipments; that M/s. Rungata have clearly declared in the Agreement Letter dated 27-9-1995 that the impugned goods are solely and principally used in the manufacture of sprinkler irrigation equipment and they are not useable for other purposes; that a show cause notice dated 25-5-1998 was issued to them for demanding duty on the HDPE pipe fittings cleared by them to M/s. Rungata; that the Additional Commissioner under Order-in-Original No. 59/98, dated 18-12-1998 dropped the proceedings against them on the ground that the HDPE fittings had been manufactured as per specific design suitable for Sprinkler Irrigation System; such parts had also been marked with the number assigned to Sprinkler Irrigation System by BIS and the Department had not mentioned a single instance where the impugned goods had been used for purposes other than in sprinkler irrigation system; that the Additional Commissioner has thus classified the impugned products under sub-heading No. 8424.91 of the Tariff attracting nil rate of duty; that, however, the Commissioner (Appeals), allowed the appeal filed by the Department on the ground that the finished goods manufactured by the Appellants are of general nature and these have no specific use and these can be used in any liquid delivery system and it is not possible to find how these goods have ultimately been disposed of.
3 The learned Advocate, further, submitted that no evidence has been adduced by the Commissioner (Appeals) that the impugned goods are of general nature whereas the Additional Commissioner has given his specific finding that the number assigned to these goods are only for sprinkler irrigation system as per BIS; that the Adjudicating Authority has also given finding that "also from the facts placed on record I find that the HDPE fittings have been manufactured as per specific design suitable for Sprinkler Irrigation System." He also emphasized that neither the Commissioner in his Memorandum of Appeal nor the Commissioner (Appeals) in the impugned Order have cited a single instance in support of their contention that the impugned products possess general character and nature and have been used by particular person at particular place for the purpose other than sprinkler irrigation system. He also mentioned that Shri R.K. Shukla, Accountant, of M/s. Rungata, in his statement dated 20-11-1997 and 23-12-1997, has clearly deposed that the impugned pipe fittings are the essential parts and components of sprinkler irrigation system. The learned Advocate relied upon the decision in the case of CCE, Aurangabad v. EPC Irrigation, 2002 (142) E.L.T. 630 (T) wherein it has been held that pipes and tubes, fittings for drip laterals and irrigation lines, drip start connectors, fittings for drip mains/sub-mains and fittings for sprinkler lines are classifiable under Heading No. 84.24 of the Tariff; that the said decision has been affirmed by the Supreme Court as reported in 2002 (146) E.L.T. A88. Reliance has also been placed on the decision in Elgi Ultra Appliances Ltd. v. CCE, Coimbatore, 2001 (134) E.L.T. 245 (T), EPC Irrigation Ltd. v. CCE, Aurangabad, 2002 (139) E.L.T 84 (T) and Hallmark Industries v. CCE, Calcutta-I, 2000 (122) E.L.T. 540(T).
4. Finally learned Advocate submitted that a show cause notice was also issued to M/s. Rungata Irrigation Ltd. And therein also the Adjudicating Authority had held under Order-in-Original No. 58/98, dated 10-12-1998 that the HDPE/PVC pipes were parts of sprinkler irrigation system; that the Commissioner (Appeals) also under Order-in-Appeal No. II/CE/MRT/2001, dated 23-3-2001 rejected the appeal filed by the Department relying upon the Tribunal's decision and Board's Circular No. 380/98-CX, dated 16-3-98 wherein it had been clarified that in respect of "plastic part (including modified pipes with attached couplings, fittings, etc.), it is found that the parts have been modified so as to fit only sprinkler equipment, and have no other use, then such plastic parts will be classifiable under Heading No. 8424.91, if they are of such shape that these can be used only in sprinkler equipments." Alternatively he submitted that the Department has taken the price charged by M/s. Rungata as assessable value which is not in conformity with the judgment of the Supreme Court in Ujagar Prints, v. U.O.I., 1988 (38) E.LT. 535 (S.C.); that further the price is to be treated as cum-duty price which the statutory deduction under Section 4(4)(d)(ii) of the Central Excise Act is to be made from in terms of the decision of the Larger Bench of the Tribunal in the case of Srichakra Tyres v. CCE, 1999 (108) E.L.T. 361 (T) = 1999 (32) RLT 1 (T-LB).
5. Countering the arguments, Shri H.C. Verma, learned D.R., reiterated the findings as contained in the impugned Order and emphasized that Shri R.K. Shukla has explained in his statement that PVC/HDPE pipes both can be used for water ways and fittings for joining two pipes; that as such there is no functional difference between PVC pipes and HDPE pipes as both can be used for water ways; that similarly there is no functional difference between PVC and HDPE couplers or fittings because the only purpose of both the fittings is to join two pipe or to join pipes with any other object; that the Appellants have not negated this fact nor they have brought on record any documentary evidence to show that PVC and HDPE pipe and fittings are exclusively used in sprinkler irrigation system. He relied upon the decision in the case of Naresh J. Sukhwani v. Union of India. 1996 (83) E.L.T. 258 (S.C.) wherein it has been held by the Supreme Court that a statement made before the Customs official is a material piece of evidence and can certainly be used to connect the accused in the contravention.
6. We have considered the submissions of both the sides. The facts which are not in dispute are that the Appellants manufacture the impugned goods out of the raw material supplied by M/s. Rungata Irrigation Ltd. With the help of moulds also supplied by M/s. Rungata who are in the business of providing sprinkler irrigation system. It has been emphasized by the learned Advocate and which has not been controverted by Revenue that M/s. Rungata are duly registered with Bureau of Indian Standard and the impugned goods are marked with the number assigned to sprinkler irrigation system. The Adjudicating Authority in the Adjudication Order has duly noted this fact also.
Further/ the learned Advocate has also produced a photocopy of the certificate No. CM/L8208771 granted to them by the Bureau of Indian Standard (Letter GZO/L-8208771, dated 27-8-1997). The Revenue, on the other hand, has not brought any material or expert opinion in support of its contention that the impugned goods are of general nature and these have no specific use and can be used in any liquid delivery system. The Revenue has mainly relied upon the statement of Shri R.K.Shukla, Accountant of M/s. Rungata. Firstly Shri Shukla is only an Accountant and not a technical hand. Secondly he has deposed that HDPE pipes were mainly used in sprinkler irrigation system and may be used in water ways if the end user so required. He has also emphasized in his statement that HDPE Pipe fitting was entirely different from PVC fitting and exclusively used in sprinkler irrigation system to ensure portability of the system with the help of other components. It is thus apparent that Shri Shukla has not categorically deposed that the impugned goods are 'parts of general use'. The onus to classify a product under a specific Heading of the Central Excise Tariff is on the Department which could not be said to have been discharged by relying upon a statement of one person that too an accountant. To classify the impugned goods under Heading No. 39.17 the Revenue has to prove that these are 'parts of general use.' The Revenue has not succeeded in establishing this aspect. As per Note 2(b) to Section XVI of the Tariff, parts if suitable solely or principally with a particular kind of machine are to be classified with the machine of that kind. As the impugned goods have been specifically designed to be used in Sprinkler Irrigation System, the same are classifiable under sub-heading No.8424.91 of the Tariff. The Tribunal has already held in the case of Elgi Ultra Appliances Ltd., supra, that LDPE/HDPE pipes specifically manufactured as part of Deep Irrigation System (DIS) are not parts of general use as defined under Note 2 to Section XV. The Tribunal has held as under :- ".........in terms of Note 2(b) of Section XVI parts if suitable for use solely or principally with a particular kind of machine are required to be classified along with the main item. These parts have become part of DIS and manufactured as per ISI specifications for use only as DIS is required to be considered for classification along with the entire system by applying Note 2(b) of Section XVI." This decision has been affirmed by the Supreme Court as reported in 2000 (120) E.L.T. A119. The Tribunal has again taken the same view in the case of EPC Irrigation, 2002 (142) E.L.T. 630 (T) which has also been affirmed by the Supreme Court as reported in 2002 (146) E.L.T.A88. Even in the case of M/s. Rungta Irrigation Ltd., the Tribunal has upheld, vide Final Order No. A/194/2004-NBC dated 20-2-2004, [2004 (167) E.L.T. 476 (T)] the classification of HDPE pipes under sub-heading No. 8424.91). Following the decisions in Elgi Ultra Appliances, Hallmark Industries, and EPC Irrigation. We, therefore, allow the appeal.