Judgment:
1. Tata Engineering and Locomotive Co. Ltd., 24, Homi Mody Street, Fort, Bombay-400 023 has filed the abve captioned 40 appeals being aggrieved from the orders passed by the Collector of Customs (Appeals).
Since the issue involved is common, the above captioned 40 appeals are being disposed of by this common order. For the sake of brevity, brief facts of appeal No. C/1459/86-B2 are as under :- 2. Briefly the facts of the case are that M/s. Tata Engineering and Locomotive Co. Ltd. had imported oil seals vide bill of entry No. AI No. 265 dated 13th April, 1983. The description in the bill of entry was given as under :- The appellant had claimed its assessment under Heading 84.65 of the old Tariff, whereas the revenue had assessed the same under Heading 87.04/06(1). The appellant had filed the refund claim and had asked for re-assessment, and in the refund claim it was stated that oil seals rings imported in the consignment were for sealing the oil leakage and preventing the dust from entering into the rotating shaft i.e. shaft for automobile trucks. Since the goods were protection seal rings for truck shaft, the goods had not to be designed relative to construction of shaft. The importer had not produced any evidence as to the goods being used with other machineries. Even if it had got use with other machineries, its use with automobile truck shaft for which the subject oil seal rings were imported, could not be ruled out and futher the seals rings were made of composite materials to suit the oil seals for truck shaft. Since these were adaptable for use with automobile truck shaft, their assessment under Heading 87.04/06(1) was held to be more suitable read with Rule 3(c) of the Rules of Interpretation of the Schedule of the CTA 1975 and the Assistant Collector had rejected the claim.
3. Being aggrieved from the aforesaid order, the appellant had filed an appeal before the Collector of Customs (Appeals), Calcutta. The Collector of Customs (Appeals) had observed in his order that the appellant had themselves admitted that the oil seals rings were used as component parts of the gear boxes of all types for motor vehicles for preventing leakage of oil. Gear boxes of all types for motor vehicles are classifiable under Item 87.06 as per Explanatory Note of CCCN at page 1500. M/s. Daimler Benz, an internationally reputed supplier of motor vehicle parts, were the supplier in the instant matter and they had assigned a particular part number to the goods for identifying the same as specially designed parts of the gear boxes for motor vehicles.
This clearly indicated that these oil seals rings have their principal use in motor vehicles. The appellants had not submitted any document to prove that oil seals of this particular part number can at all be used with other machines and/or with other machines with the same case and utility as with the gear boxes of motor vehicles. As such, even if it is accepted that these sealing rings can be used in other machines also, it cannot be disputed that their principal use is as parts of motor vehicles. Therefore, he had further observed that the goods imported having a part number are specially designed and both the principal and the intended use of theirs was for as parts of motor vehicles. He had referred to CCCN Explanatory Notes at page 1388 under Heading 84.65 which states that oil rings "in general" only were to be classified under Item 84.65, but clearly enumerated that parts merit classification under Item 84.65 should be other than "those specially designed for use solely or principally with a particular machine (including a machine of Heading 84.59 or 85.22 of Section XVII, Chapter 90 etc.)". By virtue of this specific classification the impugned goods which were specially designed having a part number and were for use principally with gear boxes of motor vehicles of Chapter 87 (Section XVII) fall outside the scope of Heading 84.65 and are to be classified under Heading 87.04/06. He had rejected the appeal of the appellants.
4. Being aggrieved from the aforesaid order, the appellant has come in appeal before the Tribunal.
5. Shri V. Sridharan, the learned advocate has appeared on behalf of the appellant. He has reiterated the facts. Shri Sridharan pleaded that the appellants have imported oil seals of various dimensions to be used in their factory. Shri Sridharan argued that the appellant seeks classification of the oils seals imported under Heading 84.65 of the old Tariff corresponding to Heading 84.85 of the new Tariff, whereas the revenue has assessed the same under old Tariff Heading 87.04/06(1) corresponding to the new Tariff Heading 87.08 as parts of motor vehicle. Shri Sridharan argued that Heading 84.65 relates to the importation of parts of machinery for general purpose application, Shri Sridharan pleaded that while determining the nature of the oil seals, the following parameters have to be looked into :- Shri Sridharan, the learned advocate pleaded that the appellants have imported three brands of oil seals, the first one being the oil seals manufactured by 'SIMRIT' (CFW make), the second one being 'KACO' and the last one being 'ELRING' oil seals. He further argued that among the 'SIMRIT' oil seals the appellants had imported only B1 series and B1 SL series. The difference between B1 and B1 SL series is that the latter has extra dust lip. In the case of KACO, the appellants had imported DFS series, and all the oil seals imported by the appellants, even though used by them in motor vehicle applications are of general purpose oil seals which could be used in any application provided the parameters are one and the same. He has referred to page 2 of the SIMRIT catalogue which relates to design series B1 SL and it has been mentioned that "Outer Metal Case Sealing is more difficult with housing bores of considerable surface roughness and subject to thermal expansion." In respect of design series B2, it has been mentioned that: "Outer Metal Case with reinforcing Cap installation and sealing identical to Design Series B1. It is preferred for larger size applications." He has also referred to pages 3, 6, 7 and 8 of the SIMRIT catalogue No. 100 where BA, B1 and B2 design series are mentioned. It has been mentioned that these oil seals are "most commonly used designed in stock acrylo-Nitrilo Butadiene, silicone and fluoro rubber." It is also mentioned that SIMMERING radial shaft seals are appropriate for rotating shaft sealing applications. They prevent loss of lubricants under most operating conditions where pressure is not a problem. He argued that page 7 of the SIMRIT catalogue explains the criteria for oil seal in respect of medium to be sealed. Shri Sridharan argued that the items imported are not for motor vehicles and there is no reference to the same in the catalogue, and he also argued that on page 20 of the catalogue are mentioned the German standards. He has also referred to pages 40 and 51 of the SIMRIT catalogue which relates to dimension and inventory lists. He has referred to KACO catalogue and on page 3 of the KACO catalogue there is a mention that "Radia Oil Seals have been a concept of ready-to-mount sealing elements for decades. Thanks to their reliability they enjoy recognition both at home and abroad and have made a name for themselves as precision components in the motor vehicle, engine, machine and instrument industries." He also argued that in the said catalogue it is also mentioned that their products have decisively influenced the technical development of seals for moving machine parts. This catalogue has been compiled in accordance with present day knwoledge regarding the correlations connected with the sealing of rotating shafts with radial sealing elements. He pleads that in KACO cataglogue type DF is equivalent to B1 of SIMRIT catalogue and type DFS is equivalent to B1 SL and the DFSL is equivalent to B1 SL which is used for extra lip for protection from dust. Shri Sridharan has referred to the Machinery's Handbook 22nd edition published by Industrial Press Inc. New York page 444 which explains the methods of sealing and it is mentioned that "In applications where lubricants or process fluids are utilized in operation, provision must be made normally to prevent leakage to other areas.
This is accomplished by the use of static and dynamic type sealing devices. In general three terms are used to describe the devices used for sealing: Seal: A means of preventing migration of fluids, gases, or particles across a joint on opening in a container.
Packing : A dynamic seal used where some form of relative motion occurs between rigid members of an assembly.
Gaskets : A static seal used where there is no relative motion between joined parts." Shri Sridharan argued that the matter is covered by an earlier judgment of the Tribunal in the case of Collector of Customs v. Bharat Sales Corporation reported in 1990 (46) ELT 480 (Tribunal) where the Tribunal had held as under :- "Oil seals used not only in engines but also in other parts of motor vehicles like Propeller Shaft and Lay Shaft are classifiable under Heading 84.65, Customs Tariff Act, 1975 as machinery parts of general use and not under Heading 84.06 ibid. The respondents have produced the relevant catalogue, namely Simrit No. 690 which shows that oil seals are shown to be capable of varying uses. It is stated in the Catalogue "Simmering Oil Seals are used to a large extent in motor vehicles. The most important areas are in the engine as a crankshaft seal, in the gear box for the front and rear driveshaft in the differential penion and rear axles." It was also shown, with reference to the catalogue that these seals are capable of use in other parts of motor vehicle like Propeller Shaft and Lay Shaft. The perusal of the catalogue also shows that the manufacturer is producing a wide range of oil seals and not only oil seals designed for specific function confined to a particular part of machinery.
Therefore, from a perusal of the catalogue, and on a consideration of the scope of Heading 84.65, the goods imported are correctly classifiable under Heading 84.65 and in this view of the matter, the fact that the suffixes are different in regard to part numbers will not be material and since the use of the oil seal is not confined to internal combustion piston engines only, classification thereof under Heading 84.06 will not also be appropriate." Shri Sridharan, the learned advocate further argued that a close look of the catalogue does not show that these oil seals are for motor vehicles. Shri Sridharan further argued that the Customs authorities are not concerned with the end-use. In support of the same, he referred to the following judgments :-Dunlop India & MRF Ltd. v. Union of India.Collector of Central Excise v. MM Rubber Company Ltd.Indian Aluminium Cables Ltd. v. Union of India and Ors.
4. 1987 (27) ELT 273 (A.P.) - Golden Press v. Deputy Collector of Central Excise, Hyderabad.
5. 1984 (18) ELT 141 (Bombay) - Sainet Private Limited v. Union of India.
Shri Sridharan has also referred to BTN Explanatory Notes page 1388 which specifically deals with oil seal rings. In BTN it has been mentioned that "but not as parts of any particular machine. Subject to these conditions, the heading includes oil seal rings." He has also referred to HSN page 1329 Heading 84.85 in which there is also mention of oil seal rings. Shri Sridharan pleaded that the Tribunal should follow the earlier decision and allow the appeals filed by the appellant.
6. Shri M.K. Sohal, the learned JDR who has appeared on behalf of the respondent, stated that for the proper appreciation of facts, he will refer to appeal No. C/1459/86-B2. He pleaded that a simple perusal of the invoice will show that the supplier is Daimler Benz. He has also referred to the bill of entry in appeal No. C/1503/85-B2. He has referred to the invoice as well as the purchase order and in the invoice there is description of Daimler-Benz Aktiengesellschaft and in the purchase order it is written that it is TAIL PINION OIL SEALS. He has referred to BTN page 1388 Heading 84.65 and HSN page 1329 Heading 84.85. He pleaded that in BTN motor vehicle parts fall under Heading 84.04 and in HSN under Heading 87.08. He pleaded that as per the appellants oil seal rings are not designed for any particular machine.
Shri Sohal has laid great emphasis on the words "subject to these conditions" mentioned in BTN on page 1388 and HSN page 1329. He pleaded that classification has to be done under Section 17 of the Customs Act, 1962. He argued that Section XVI covers Chapter 84 and Section XVII covers Chapter 87.
Shri Sohal, the learned JDR has pleaded that these oil seals are equally usable as a general machinery part under Chapter 84 or as a motor part under Chapter 87. He has referred to Interpretatory Rule 3(c) of the General Rules for the interpretation of the First Schedule and has argued that in terms of Rule 3(c), when goods cannot be classified by reference to (a) or (b), they shall be classified under the Heading which occurs latest among those which equally merit consideration and Interpretatory Rule 3(a) says that the Heading which provides the most specific description shall be preferred to Headings providing a more general description. He has referred to Rule 3(a) of the old as well as new Tariff. Shri Sohal argued that the oil seals imported by the appellants were clearly imported for motor vehicles and as such, the same should be assessed under Heading 87.04/06(2) of the old Tariff and under Heading 87.08 of the new Tariff. He has also referred to Note 1(k) of Section XVI of the old Tariff and Note 1(1) of the old Tariff. Shri Sohal has argued that as soon as it is established that the goods fall under Section XVII, these go out of the purview of Section XVI. Shri Sohal has also referred to Note 2 of Section XVII and has argued that the goods imported are classifiable under Chapter 87.
In support of his argument, he has referred to the following judgments :- 1986 (24) ELT 226 (Karnataka) in the case of ldeal Jawa (India) Pvt.
Ltd. v Assistant Collector of Central Excise, I.D.O., Mysore and Others where the Karnataka High Court had held that special type of bolts, nuts and rods specifically manufactured as per specifications and drawings for assembly of motor cycles are parts and accessories of motor cycles classifiable under Item 34A of Central Excise Tariff and the Hon'ble High Court had followed the judgment of the Supreme Court in 1985 (21) ELT 3 in the case of Indian Aluminium Cables Ltd. v. Union of India and Ors. where it was held that while determining the classification of a product under the Central Excise Tariff it is more important that the broad description of the article fits in with the expression used in the Tariff. He has referred to another judgment in the case of Sundaram Clayton Ltd. v. Collector of Customs, Madras reported in 1983 (13) ELT 966 where the Tribunal had held that "Guide plates used in the air brake system of commercial vehicles are classifiable under Heading No. 87.04/06 of the Customs Tariff as parts and accessories of motor vehicles and not under Heading No. 84.61(2) as parts of pressure reducing valves." He has also referred to a judgment in the case of Krishna & Company v. Collector of Customs, Bombay reported in 1983 (12) ELT 185 where the Tribunal had held that "Canter Shaft Splined, Sleeve main shaft gear, Clutch main shaft slinger, Gear main shaft low and Busing man shaft gear are classifiable under Heading 87.03 of the Customs Tariff. - Even though the parts in question may be for the purpose of transmission, yet they are to be treated as parts of special purpose motor vehicles, viz. fire tenders, which fall within the Heading No. 87.03 of the Customs Tariff Act and not under Heading 84.62 or 84.63. Shri Sohal has argued that the imported goods bear TELCO part numbers as given on the invoices and the invoices were issued by the supplier and some even Daimler-Benz part numbers are also there. Shri Sohal, the learned JDR in reply also argued that the judgment cited by the learned advocate as to the relevancy of end-use should be read as a whole and he has referred to para No. 42 of the judgment in the case of Dunlop India Ltd. and Madras Rubber Factory Ltd. v. Union of India and Ors. reported in 1983 (13) ELT 1566 (SC) which lays down that "We are clearly of opnion that in the state of the evidence before the revisional authority no reasonable person could come to the conclusion that V.P. Latex would not come under rubber raw. The basis of the reason with regard to the end-use of the article is absolutely irrelevant in the context of the entry where there is no reference to the use or adaptation of the article.
The orders of the authority are, therefore, set aside. In the result the appeals are allowed with costs." Shri Sohal has pleaded for the dismissal of the appeals.
7. Shri V. Sridharan, the learned advocate who has appeared on behalf of the appellant, in reply again referred to BTN and HSN Headings 84.65 and 84.85 pages 1388 and 1329, respectively. He has relied on the judgment in the case of Collector of Customs v. Bharat Sales Corporation reported in 1990 (46) ELT 480 (Tribunal), which covers the matter fully. He again argued that end-use is not relevant. In support of his argument, he referred to the judgment in the case of Dunlop India Ltd. and Madras Rubber Factory v. Union of India and Ors.
reported in 1983 (13) ELT 1566 (SC). Shri Sridharan, the learned advocate argued that part numbers given in the invoices as well as in SIMRIT and KACO catalogues tally. These seals are for general purpose.
Shri Sridharan has referred to Note 3 of Section XVII. He also argued that oil seals can also be used in the stationary engines. He has pleaded for the acceptance of the appeals.
8. We have heard both the sides and have gone through the facts and circumstances of the case. We have also taken into account the written synopsis filed by the learned advocate. The issue to be decided in these appeals is whether the oil seals imported by the appellants fall under Heading 84.65 of the old Tariff or 8485.90 of the new Tariff as machinery parts not falling under any other heading in Chapter 84 or parts of a motor vehicle under Heading 87.04/06(2) of the old Tariff and 87.08 of the new Tariff. The appellants' main plea is that the oil seals imported are to be used for general purposes including stationary engines and has laid heavy reliance on the SIMRIT and KACO oil seals.
Shri V. Sridharan, the learned advocate had argued that the sole purpose of a radial shaft seal was to seal and is not intended as a guide for machine components. The learned advocate has laid reliance on an earlier judgment of the Tribunal in the case of Collector of Customs v. Bharat Sales Corporation reported in 1990 (46) ELT 480. The detailed finding of the same has already been reproduced in para No. 5 on internal pages 10 and 11 of this order. Earlier the importation was made by Bharat Sales Corporation who was a retailer and a detailed perusal of the judgment shows that neither the appellant nor the respondent had made any reference to the Rules of Interpretation to the First Schedule and there was no reference to Section Notes and Chapter Notes by either side and as such it does not become a precedent. Para No. 11 from the judgment in the case of Motiram Tola Ram and Ors. v.Collector of Customs, Bombay reported in 1987 (29) ELT 278 (Tribunal) is reproduced below :- "11. During arguments the Bench referring to Pan Asia case put it to Shri Nankani that a reading of the Bombay High Court judgment showed that the High Court came to the conclusion that two conditions of the notification were fulfilled with respect to consignments relating to the matter. This finding was due to the state of respondents pleadings as also certain concession and failure to answer the query made by the High Court. This did not appear to be the case in the present set of appeals. Could it not be said that this conclusion or finding regarding conditions of the notification having been fulfilled would require examination with respect to every consignment of HDPE, Shri Nankani submitted that the High Court had laid down the law that for a new consignment the Customs authorities could only examine whether it was made from out of raw naphtha and not whether the raw naphtha or chemicals derived therefrom had discharged the excise duty liability." The Tribunal had also the occasion to deal with as to the binding force of its previous decision in the case of Collector of Central Excise, Rajkot v. Surgichem reported in 1987 (27) ELT 548 (Tribunal). Relevant extract from para No. 5 from the said judgment is reproduced below :- "5... We are not inclined to follow the earlier judgment of the Tribunal in the case of J.L. Morison, Son and Jones (India) Ltd., Bombay reported in 1984 (15) ELT 251 in which case the Tribunal had ordered the classification of adhesive plaster B.P.C. under Item 14E. The judgment was based on the statement of Shri D.B. Engineer Advocate. It was in the nature of the concession. In 'Salmond on Jurisprudence' 12th edition Section 27 page 153 it is opined that "a decision passed sub-silentio, in the techincal sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the Court or present to its mind. The Court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown however, that logically the Court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the Court.
In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub-silentio".
"A good illustration is Gerard v. Worth of Paries Ltd. (K). There, a discharged employee of a company, who had obtained damages against the company for wrongful dismissal, applied for a garnishee order on a bank account standing in the name of the liquidator of the company. The only point argued was on the question of the priority of the claimant's debt, and, on this argument being heard, the Court of appeal granted the order. No consideration was given to the question whether a garnishee order could properly be made on an account standing in the name of the liquidator. When, therefore this very point was argued in the subsequent case before the Court of appeal (No. 1), the Court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R. said that he could not help thinking that the point now raised had been deliberately passed sub-silentio by counsel in order that the point of substance might be decided. We went on to say that the point had to be decided by the earlier Court before it could make the order which it did; nevertheless, since it was decided "without argument, without reference to the crucial words of the rule, and without any citation of authority", it was not binding and would not be followed.
The rule that a precedent sub-silentio is not authoritative goes back at least to 1661 (m), when counsel said; "an hundred precedents sub-silentio are not material"; and Twisden, J., agreed : "precedents sub-silentio and without argument are of no moment". In view of the above discussion we are not inclined to follow the earlier judgment of the Tribunal in the case of J.L. Morison, Son and Jones Pvt. Ltd. Shri Sunder Rajan during the course of arguments has also argued that the revenue does not press its classification under Tariff Item 14E of the Central Excise Tariff and he leaves it to the Bench. The adhesive plastic BPC tape does not possess any medicinal or therapeutic properties. It is a surgical dressing in pharmaceutical and commercial parlance. Accordingly we hold that the adhesive plastic BPC manufactured by the respondents falls under Tariff Item 68. In the result the appeal filed by the revenue fails." As already observed earlier, in the matter before us neither side had referred to the Interpretatory Rules and the Section Notes and the Chapter Notes. Accordingly, we are not following our earlier decision.
We proceed to decide the same independently on the basis of the arguments advanced before us. The Larger Bench of the Tribunal had the occasion to deal with as to the provisions of Section Notes and Chapter Notes, in the case of Saurashtra Chemicals, Porbandar v. Collector of Customs, Bombay reported in 1986 (23) ELT 283 (Tribunal). The Tribunal had held that Section Notes and Chapter Notes are part of statutory tariff and the headings are to be interpreted and applied in the light of the Section Notes and Chapter Notes and boud by their over-riding force. Para Nos. 4 and 7 from the said judgment are reproduced below :- "4. The appeals first came up before a Special Bench comprising three Members, as usual, on 30-4-1984. During the hearing, it was brought to the notice of the said Bench that similar goods imported by the same appellants were earlier the subject-matter of a judgment by Special Bench 'D' (Order No. D-234/83 dated 18/28-4-1983 in appeal No. 245/78-D). This was a majority judgment. Two Members of that earlier Bench had held that the goods were classificable under Heading 84.65 and accordingly had allowed that appeal No. 245/78-D. The dissenting Member, relying on Note 1(a) to Chapter 84 of the Tariff, had upheld the Department's classification under Heading 68.01/16(1). During the hearing on 30-4-1984, the appellants relied on the earlier majority judgment of the Bench while the Department's representative relied on the dissenting judgment. After the hearing was over, the Bench reserved its orders. When members of the said Bench discussed the matter among themselves, they notice that the Section Notes and Chapter Notes in the Customs Tariff Act were a part of the statutory tariff and were thus relevant in the matter of classification of goods under the Customs Tariff. The Bench also noticed that in the earlier majority judgment there was no discussion on the relevant Section Notes and Chapter Notes. In the circumstances, the Bench felt that in the interests of justice to both sides, the two appeals should be heard afresh and decided by a Larger Special Bench. The matter was accordingly placed before the President who constituted the Larger Special Bench on 14-5-1984.
This is how these two appeals have come up before the present Larger Special Bench".
7. But we observe that the Customs Tariff Act has not left the matter to be decided just on that basis. The relevant headings in the tariff have to be interpreted and applied in the light of the Section Notes and Chapter Notes which are statutory and binding like the headings themselves. These Section Notes and Chapter Notes sometimes expand and sometimes restrict the scope of certain headings. In other words, the scheme of the Customs Tariff Act is to determine the coverage of the respective headings in the light of the Section Notes and Chapter Notes. In this sense, the Section Notes and Chapter Notes have an over-riding force on the respective headings." For the appreciation of the correct Tariff Heading 84.65 under the old Tariff and 84.85 under the new Tariff are reproduced below :- "84.65 (old Tariff) Machinery parts, not containing electrical connectors, insulators, coils, contacts or other electrical features and not falling within any other heading in this Chapter" 60%.
"84.85 (new Tariff) Machinery parts, not containing electrical connectors, insulators, coils, contacts or other electrical features, not specified or included elsewhere in this Chapter." 60%.
Revenue wants assessment under Heading 87.04/06(2) of the old Tariff and 87.08 of the new Tariff Heading. Both the headings are also reproduced below :- "87.04/06(2) (old Tariff). Parts designed for the articles covered by subheading No. (1) of Heading No. 87.01 and sub-heading No. (3) of Heading No. 87.02. 40%" "87.08 (new Tariff). Parts and accessories of the motor vehicles of Heading Nos. 87.01 to 87.05. 100%" A simple perusal and comparison of the headings shows that the appellant wants assessment as parts of general machinery whereas the revenue wants the same as parts of motor vehicles. Shri Sohal, the learned JDR had referred to Section XVI Note 1(g) and (1) which are reproduced below :- "1(g) (new Tariff) Parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39).
Section Note 2 of Section XV of the new Tariff is also reproduced below :- "2. Throughout this Schedule the expression "parts of general use" means : (a) Articles of Heading No. 73.07, 73.12, 73.15, 73.17 or 73.18 and similar articles of other base metal; (b) Springs and leaves for springs, of base metal, other than clock or watch springs (Heading No. 91.14); and (c) Articles of Heading Nos. 83.01, 83.02, 83.08, 83.10 and frames and mirrors, of base metal, of Heading No. 83.06." "2. The expressions "parts" and "parts and accessories" do not apply to the follwing articles, whether or not they are identifiable as for the goods of this Section: (a) Joints, washers or the like of any material (classified according to their constituent material or in Heading No. 84.84) or other articles of vulcanised rubber other than hard rubber (Heading No. 40.16); (b) Parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods to plastics (Chapter 39); (e) Machines or apparatus of Heading Nos. 84.01 to 84.79, or parts thereof; articles of Heading No. 84.81 or 84.82 or, provided they constitute integral parts of engines or motors, articles of Heading No. 84.83; (l) Brushes of a kind used as parts of vehicles (Heading No. 96.03)". Note 1(g) and (k) of Section XVI of the old Tariff are also reproduced below :- "1(g) parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of artificial plastic materials (which are generally classified in Heading No. 39.07); (a) goods described in Heading Nos. 73.20, 73.25, 73.29, 73.31 and 73.32 and similar goods of other base metals; (b) springs and leaves for springs, of base metal, other than clock and watch springs (Chapter 91); and "2. Throughout this Section, "parts" and "parts and accessories" are to be taken not to apply to the following articles, whether or not they are identifiable as for the goods of this Section : (a) joints, washers and the like (classified according to their constituent material or in Heading No. 84.64); (b) parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of artificial plastic materials (which are generally classified in Heading No. 39.07); (e) machines and mechanical appliances and other articles falling within Heading No. 84.01/02 to 84.59, 84.61 or 84.62 and parts of engines and motors falling within Heading No. 84.63; The appellant has also filed a chart having part numbers and the description in respect of 37 appeals which the appellant was able to compile. The said chart is reproduced below:---------------------------------------------------------------------------------S1. Appeal No. Part No. DescriptionNo.03. C/1812/90 9846 Bearing and Tail Pinion Oil Seals04. C/1813/90 9846 Elring Crank Shaft Oil Seals05. C/1670/90 6146 Elring Crank Shaft Oil Seals09. C/2835/90 4171410 Oil Seal 4113299 Oil Seal 40.1614. C/405/88 B1 U5 SLDRR Tail Pinion Oil Seals 011997984616. C/1651/88 0039972247 Oil Seal.
254619. C/390/86 0119979846 Tail Pinion Oil Seals DPS 6830. C/2351/87 9979846 Tail Pinion Oil Seals B1 USDRR It is not disputed before us that the imports are almost similar of the oil seals which are used by the appellant who is an automobile manufacturer. Some imports are under old Tariff and some are under the new Tariff. In respect of appeal No. C/1459/86-B2, the description in the bill of entry has been given as "Oil Seal (Oil Seal Ring of Composite Material for Truck)" and in the invoice the description has been given as "Part No. A 001 997 50 47 (A 000 997 66 47) Oil Seal." It is also a fact that Daimler Benz is also an automobile manufacturer and the appellant is also an automobile manufacturer. Some of the part numbers mentioned in Daimler Benz invoice and SIMRIT and KACO invoices are also the same. The oil seals imported by the appellant are used in assembling the motor vehicle and these are specially designed to be fitted in the motor vehicles. The Tribunal had the occasion to deal with a similar situation in the case of Bajaj Auto Limited v. Collector of Customs, Bombay reported in 1988 (33) ELT 367 (Tribunal). Para No. 6 from the said judgment is reproduced below :- "6. We find that the two representative import invoices described the goods as under: (i) "SEMI-FINISHED COMPONENTS FOR BAJAJ COMPONENTS FOR BAJAJ SCOOTERS: Cross Forgings as per your part drawing No. 40.0007.03 and old Part No. 3779/S/1/7".
We note that in the import invoices, the suppliers themselves described the goods as semi-finished components. We also note that the goods were forged to specific part drawings. On account of these facts, coupled with our visual inspection of the samples produced by the appellant, we are satisfied that the goods as imported had attained approximate shape and outline of the finshed article. We find further that the imported goods were not general purpose blanks that could be further machine for being fitted in any one of the several machines that may require complete article. On the contrary, the goods having been precisely shaped and forged to specific dimensions according to specified part drawings, they could be finished only into the connecting rod and cross, the two components which fitted the appellants' vehicles. We find also that the goods were made of special steel - EN 353 and EN 28. In the circumstances, we agree with the learned representative of the department that the goods as imported satisfied all the norms laid down by the Larger Bench. The post importation operations, though split up by the appellants into numerous steps, were essentially those of heat-treatment, smoothening operations, the goods as imported, could be deemed to be components of IC engines and scooters by virtue of the Interpretative Rule 2(a), as held by the lower authorities. We confirm the classification arrived at by the lower authorities so far as the basic customs duty is concerned." 9. We have looked into the Chapter Notes and Section Notes which have been reproduced in the above paras. Note 2 of Section XV defines parts of general use. We looked into Section Note 1(g) and (k) of Section XVI. Note 1(g) relates to parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of artificial plasitc materials (which are generally classified in Heading No.39.07). Note 2 of Section XV defines parts of general use in the Schedule. A simple perusal of Note 2 shows that the goods do not fall in Section XV, and Note 1(k) of Section XVI specifically states that vehicles, aircraft, ships or boats, of Section XVII do not fall under Note 1 of Section XVI. The above analysis clearly shows that once it is established that the goods fall under Section XVII, these go out of the purview of Section XVI. Note 2 of Section XVII clearly lays down that throughout the Section "parts" and "parts and accessories" are to be taken not to apply to the following articles, Whether or not they are identifiable as for the good of Section XVII: "(a) joints, washers and the like (classified according to their constituent material or in Heading No. 84.64); (b) Parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of artificial plastic materials (which are generally classified in Heading No. 39.07); (e) machines and mechanical appliances and other articles falling within Heading No. 84.01/02 to 84.59, 84.61 or 84.62 and parts of engines and motors falling within Heading No. 84.63; The oil seals do not fall under sub-notes (a) to (k) of Section XVII and as such, we are of the view that the goods imported, viz., oil seals fall under Chapter 87 read with Section Notes XVII. Shri Sridharan, the learned advocate during the course of arguments mentioned that oil seal is just a gasket. Heading 84.64 of the old Tariff relates to gaskets. This argument is not acceptable. The oil seals cannot be equated with gasket. We have also looked into the Rules for the Interpretation of the First Schedule. Rule 3 of the old Tariff as well as new Tariff are reproduced below :- "3. (old Tariff) When for any reason, goods are, prima facie, classifiable under two or more Headings, classification shall be effected as follows :- (a) The Heading which provides the most specific description shall be preferred to Headings providing a more general description.
(b) Mixtures and composite goods which consist of different materials or are made up of different components and which cannot be classfied by reference to (a) shall be classified as if they consisted of the material or component which gives the goods their essential character, insofar as this criterion is applicable.
(c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the Heading which occurs latest among those which equally merit consideration." "3. (new Tariff) When by application of Rule 2(b) or for any other reason, goods are, prima facie, classfiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description.
However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
(c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration." A comparative study of Rule 3(a) of old Tariff as well as new Tariff shows that in the old Rule 3(a) the Heading which provides the most specific description shall be preferred to Headings providing a more general description, whereas in the new Tariff Rule 3(a) there is a further clarification that, however, when two or more headings each refer to part only of the material or substances contained in mixed or composite goods or to part only of the items in a set up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. In the matters before us the goods have been imported with specific part numbers for motor vehicles and as such, we are of the view that the goods imported are for motor vehicles.
Interpretatory Rule 3(c) further states that when the goods cannot be classified by reference to (a) or (b), they shall be classified under the Heading which occurs latest among those which equally merit consideration. The goods imported do not fall under Interpretatory Rule 3(a) or (b). Accordingly, we are of the view that thay fall under Rule 3(c).
The learned advocate had also referred to page 1388 of BTN and page 1329 of HSN. A simple reading of the BTN Explanatory Note shows that :- "In general, therefore, the goods of the present heading are such as can be recognised as being parts of machineries but not parts of any particular machines subject to these conditions the heading includes - non-automatic lubricating pots; greasing nipples; oil seal rings; hand wheels; levers and hand grips; safety guards and baseplates." The learned JDR had laid great emphasis on the words "subject to these conditions." The goods imported by the appellant, viz., oil seals are specially designed to be fitted in the motor vehicle and as such we are of the view that the oil seals imported by the appellant fall under the old Tariff Heading 87.04/06 and new Tariff Heading 87.08 as parts of motor vehicle. Since the goods imported were specially designed for motor vehicles, the judgment cited by the learned advocate as to the end-use does not help him. We have given our due consideration and thought to the same.
10. In view of these observations, we do not find any merit in the appeals filed by the appellants. The above captioned 40 appeals are dismissed.
11. I agree with the findings of learned brother Shri Harish Chander and wish to add a few more points in support of the observations in the appeals. To establish that the oil seals here meant for the truck of the appellant, while perusing the case records, it is found that in one of the purchase orders No. 70068 dated 1-6-1981 the following is the description : "Oil Seal for R.A. Pinion to Part No. 003 997 4446 with serrations on Lip as per Drawing attached (CFW make only) Oils Seal for Timer Gear Housing to Part No. 000 997 01473 as per Drawing attached." "The Oils Seals must conform to the specifications and dimensions indicated in our drawings." 12. The above specific entries in the purchase order would indicate that the oil seals have to be according to a specific dimension in the cases where such purchase orders have been placed. The catalogues which have been adduced no doubt have the specifications and the numbers given, in order that consumers can place the orders for such type of seals required. No doubt, a particular part number indicated in the catalogue may conform to the specifications required for a particular type of vehicle, but it cannot be said that in all types of vehicles, it would be sufficient to indicate the type and part numbers, as from the purchase order it appears that certain vehicles would require specific designs and dimensons, otherwise there was no need to make such indication in the purchase order. Therefore, since these oil seals which no doubt may be of standard type for which orders might have been placed and in the case of the case law cited Collector of Customs v.Bharat Sales Corporation reported in 1990 (46) 480 (Tribunal) the importation has been made by a dealer, whereas in the present case the importation having been made by a particular vehicle manufacturer, the oil seal imported has to conform to specific dimensions and as such, therefore, the classification under Heading 87.04/06(2) of the old Tariff and 87.08 of the new Tariff would be more appropriate.
13. Further during the course of arguments, it was also pointed out by the learned advocate, Shri Sridharan that the Section Note XVII (3) will be relevant which is as follows: "3. References in Chapters 86 to 88 to "parts" or "accessories" do not apply to parts of accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under the heading which corresponds to the principal use of that part or accessory." and, therefore, to uphold the view that the part imported should be brought under the Heading 84.65 of the old Tariff or 8485.90 of the new Tariff as machinery parts. On perusal of this Chapter Note, it is seen that the references to parts or accessories under Chapters 86 to 88 do not apply to parts or accessories which are not suitable for use solely or principally with articles of those Chapters. The words "which are not suitable for use solely or principally" would indicate that if the parts are not meant for use solely or principally with the articles, they would go under the headings of the Chapter which corresponds to the principal use. In this case the parts are solely and principally suitable for use in motor vehicles. As such, therefore, there seems to be no controversy about the application of Note 3 of Section XVII.