1. This is an appeal against the order of Collector of Customs (Appeals), Madras. Brief facts of the case are that the respondents imported goods described as film lined electrodes for batteries. The importers, before the Collector (Appeals), claimed the assessment of the goods under heading 85.18/27(1)CTA as against the classification done by the customs authorities under heading 85.03 CTA. There was no dispute as regards the assessment for C.V. duty purposes. The Collector (Appeals) has disposed of the appeal by a brief order which is reproduced below for convenience of reference : "The drawing and B/E copy produced by the appellants establish that the items imported are film lined electrodes for cells. These are nothing but battery carbons in the form of rods and battery carbon is specifically mentioned in tariff heading 85.18/27(1) CTA. As such the appeal is allowed with consequential refund benefits." 2. Against this order of the Collector (Appeals), the revenue have come up in appeal. Based on the write-up submitted by the importers, it has been stated that film lined electrodes imported consist of zinc sheet of thickness of 0.015", on one side of which there is a carbon coating which serves the same purpose as the carbon rod in any round cell and on the other side of the same is a paper lamination which serves as an electrolyte and that the goods are correctly assessable under tariff heading 85.03 CTA.3. The learned JDR for the department drew our attention to the tariff headings 85.03 and also 85.18/27(1) CTA which are reproduced below for convenience of reference :- carbon, brushes, arc-lamp carbons, battery carbons, carbons electrodes and other carbon articles of a kind used for electrical purposes.
4. He pleaded that it will be seen from the write-up given by the respondents that the goods imported were composite articles which were in the nature of the components of the primary cell battery. These were not battery carbons. He stated that just because there is a carbon coating on one side, this did not make the article a battery carbon and the goods imported were something more than a carbon electrode.
5. The learned advocate for the respondents drew our attention to Section XVI note 2 of the Customs Tariff, The said note 2(a) is reproduced below for convenience of reference :- "goods of a kind described in any of the Headings of Chapters 84 and 85 (other than Heading Nos. 84.65 and 85.28) are in all cases to be classified in their respective Headings." 6. He also referred to the rules for interpretation of the schedule and drew our attention to the interpretative rules 2(b), 3(a) and 3(b). The said rules are reproduced below for convenience of reference :- 2(b) "Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles contained in Rule 3." 3(a) "The Heading which provides the most specific description shall be preferred to Headings providing a more general description." 3(b) "Mixtures and composite goods which consist of different materials or are made up of different components and which cannot be classified by reference to (a) shall be classified as if they consisted of the material or component which gives the goods their essential character, in so far as this criterion is applicable." 7. He stated that the battery carbons were specifically covered under tariff heading 85.18/27(1) CTA and since the goods imported have on one side of the zinc sheet a carbon layer which functions as carbon electrode in the cell and also since carbon electrodes are specifically under tariff heading 85.18/27(1) CTA, the goods imported should be considered as carbon electrodes for assessment purposes, notwithstanding, the fact that it was in combination with other materials in terms of Rule 2(b) of the interpretative rules. He was asked whether the suppliers had described the goods as carbon electrodes and whether the goods imported were known by that name and also whether the other materials combining with carbon layer had any functional role in the generation of electricity in the cell. He clarified that both the zinc sheet and the lamination of paper have a functional role inasmuch as electrolyte was provided in the paper lamination and the zinc got dissolved and served as the other electrode of the cell and that by dissolving the zinc chemical reaction was completed and the electricity generated. He clarified, on a query from the Bench, that the goods imported were for making primary cell flat cell batteries and he read the extracts from McGraw-Hill Encyclopedia of Science and Technology dealing with the construction of the dry cell. He pointed out at page 398, the position in regard to flat cells is set out as under :- "Flat cells are usually made with duplex electrodes. The zinc is coated on one side with a bonaceous coating, which serves to conduct strictly between the zinc and the black mix of the adjacent cell." 8. He stated that the goods imported were duplex electrodes as mentioned above. He also, in this regard, drew our attention to the description of the flat cell as given in the Encyclopedia of Chemical and Tenchnology by Kirk-Othmer - Third Edition Volume 3 and cited the following extracts at page 517 : "The flat cell construction utilizes a series of unit cells usually rectangular in shape. Each unit cell is partially enclosed in an insulating elastic envelope as shown in figure 3, Carbon is coated on a zinc plate and serves as the cathode current collector of the adjacent cell. Contacts to adjacent cells are made through the opening of the envelope when the cells are stacked in series. The flat cell construction is used for high voltage, low current application where space is important." 9. The learned JDR for the department pleaded that so far as the scientific authorities cited by the appellants are concerned, in fact they support his case inasmuch as it is clearly set out thereunder that the goods imported are something more than a carbon electrode and are components of the primary cell for the batteries.
10. The point that falls for consideration is whether the goods imported can be considered as carbon electrodes or the same are component parts of primary cell for batteries or are something more than a component part.
11. We observe that the goods had been described in the records as film lined electrodes. From the description given by the appellants and the authorities quoted by the appellants, it is seen that goods imported are to form the unit primary cells for the flat dry cell battery and all that is required to form a cell is to put a jacket round themselves and to connect the carbon and the zinc ends to the zinc and the carbon ends of other cells respectively for completing the circuit and for making the dry cell battery.
12. The learned Advocate for the respondents, during the course of the hearing, was asked as to what more was required to complete the unit cell and after going through the books cited by him, he stated that a jacket for separation as described in one of the two books was required to be put.
13. We observe that in the McGraw Hill Encyclopedia of Science and Technology, cited by the appellants, carbon rod used in the cells has been described as under :- "Carbon rod - The carbon rod used in a cylindrical cell serves as the conductor of electricity for positive electrode, it also serves as a vent to gas to escape. Carbon rods are usually made of petroleum coke which is calcined, ground mixed with pitch. The "green" rods are baked form a hard carbon, having low electrical ressance. They may be partially waterproofed pregnation with oil or paraffin wax to prevent lary creepage of electrolyte out of the cell." 14. So far as the articles which have been imported are concerned, these had been described as duplex electrodes and are not described as carbon electrodes or battery carbons. The respondents have pressed the interpretative Rule 2(b) in support of their plea for assessment. As pleaded by them, interpretative Rule 2(b) consists of two parts. The first part relates to the mention of material or substance under any heading and it has been set out that the reference to the material or substance shall be taken to include a reference to mixtures of that material or substance with other materials or substances. This part does not talk about the finished goods made out of the material or substance and this part, therefore, does not advance the plea of the respondents. The second part of the interpretative rule deals with the goods of a given material or substance mentioned under any heading of the tariff and reference is to be taken to include a reference to goods consisting wholly or partly of such material or substance. This part again does not deal with the composite goods made of different materials and the relevant rule for the same is interpretative Rule 3(b). What has been imported is not something which has been made of a mixture of carbon with something-else, but a composite article which consists of a carbon layer, zinc sheet and a lamination of paper carrying the electrolyte. The plea for applying interpretative Rule 2(b) is, therefore, not acceptable. Goods have, therefore, to be classified with reference to interpretative Rule 3. It is seen that the goods have not been described nor they are understood as carbon electrodes, and a more specific item for this is under heading 85.03 which covers primary cells and parts thereof. What has been imported in fact is more or less a complete cell without the jacket and this can be considered as a component part of the primary cell.
15. In view of this, the order of the lower authority is not maintainable in law and is set aside and the appeal of the Revenue is allowed.