1. By the impugned order, the Collector of Customs (Appeals) Calcutta, disposed of ten appeals filed by M/s. Track Parts Corporation. However, before the Tribunal only eight appeals have been filed. In response to a query by the Bench, it was clarified by Shri A.S. Sunder Rajan, Consultant for the appellant, that the present appeals were in respect of the matters covered by serial numbers 1 and 4 to 10 of para 1 of the impugned order. In other words, this order does not cover Asstt.
Collector's Order Nos. Section 107-827/89 ARS and Section 107-750/89 ARS, both dated 27-11-1989 appearing at serial Nos. 2 and 3 of para 1 of the impugned order.
2. The appeals involve a common issue and were, therefore, heard together and are disposed of by this common order. The appellants imported consignments of Hose Assemblies made of vulcanised rubber other than hardened rubber with end fittings. The goods were classified under heading 4009.50 of the First Schedule to the Customs Tariff Act, 1975 (hereinafter referred to as 'the Schedule'). After clearance of the goods on payment of duty as assessed the appellants filed claims for refund contending that the goods correctly fell under Heading 98.06 read with heading 8439.49 and Notification 69/87-Cus. The Assistant Collector held that heading 4009.10 was specific for the goods and so the refund claimed on the ground of alleged wrong classification of the goods was not tenable. In appeal, the Asstt. Collector's orders were upheld. Hence these appeals.
3. Before us there is no contention that the goods fell under Heading 98.06. The claim is with reference to heading 8431.49 read with heading 8429.59 as parts suitable for use solely or principally with leaders falling under Heading 84.29. There is also no dispute about the composition of the goods. Admittedly, they are made of vulcanised rubber other than hard rubber.
4. We have heard Shri A.S. Sunder Rajan, Consultant, for the appellant and Shri M. Jayaraman, SDR, for the respondent-Collector.
5. The learned Consultant for the appellant took us through the relevant headings, chapter notes and section notes. Note l(a) to Section XVI reads as follows : (a) Transmission or conveyor belts or belting, of plastics of Chapter 39, or of vulcanised rubber (Heading No. 40.10); or other articles of a kind used in machinery or mechanical or electrical appliances or for other technical uses, of vulcanised rubber other than hard rubber (Heading No. 40.16);" It was submitted that it was nobody's case that the goods fell under Heading No. 40.10 or 40.16. Therefore, according to Shri Sunder Rajan, the goods fell within Section XVI and Chapter 84 came into play. The Revenue has classified the goods under heading 4009.50 which reads as follows : -"40.09 Tubes, pipes and hoses, of vulcanised rubber other than hard rubber, with or without their This heading is not hit by the exclusion clause contained in Section Note l(a) to Section XVI. Another submission was that it is only if the goods are classified under Heading 40.16 as "Other articles of vulcanised rubber other than hard rubber" that they would remain classified under that heading even if they are identifiable parts of machinery because of the operation of the exclusion clause referred to above. Reference was also made to Section Note 2 to Section XVI which reads as follows: "2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of Heading No. 84.84, 85.44,85.45,85.46 or 85.47) are to be classified according to the following rules: (a) Parts which are goods included in any of the headings of Chapter 84 or 85 (other than Headings Nos. 84.85 and 85.48) are in all cases to be classified in their respective headings; (b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of Heading No. 84.79 or 85.43) are to be classified with the machines of that kind. However, parts which are equally suitable for use principally with the goods of Headings Nos. 85.17 and 85.25 to 85.28 are to be classified in Heading No. 85.17; (c) All other parts are to be classified in Heading No. 84.85 or 85.48." Hoses with fittings were not specified in Chapter 84 and, therefore, Section Note 2(a) was not applicable. By operation of Section Note 2(b), the present goods, which are designed solely or principally for use with leaders falling in Heading 84.29, are to be classified with leaders and, more specifically, under Heading 84.31, sub-heading 8431.49. In this context, attention was also drawn to the phraseology employed in Heading 84.31, namely, "Parts suitable for use solely or principally with the machinery" which was similar to that employed in Section Note 2(b). The appellant had produced catalogue before the lower authorities to show that the sole or principal use of the Hose Assemblies in question was with leaders and this was not in dispute.
The Collector has fallen in error in relying on Section Note 2(a) to Section XVI. The Collector has concluded that in terms of Section Note l(a) (reproduced earlier) the present Hose Assemblies made of vulcanised rubber other than hard rubber was excluded from Section XVI.He has further concluded that the provisions of Section Note 2(b) cannot prevail over those of Section Note l(a).
6. In reply to the above submissions, the learned SDR Shri Jayaraman submitted that the description of the goods in the bills of entry was Hose Assembly with end fittings. Turning to Chapter 40, Chapter Note 2(d) which reads as follows :- (d) Mechanical or electrical appliances or parts thereof of Section XVI (including electrical goods of all kinds), of hard rubber;" it was submitted that only machinery parts made of hard rubber were excluded from Chapter 40. The present goods being made of unhardened rubber were, therefore, covered by Chapter 40 and there was no need to consider any other chapter or heading for classification of the present goods. Heading 40.09 (reproduced earlier), sub-heading 4009.50 was specific for the subject goods. There was no dispute that the present goods were a part designed for use solely or principally with leaders.
That, however, would not mean that sub-heading 4009.50 which covered the goods specifically should be ignored and the general entry in Chapter 84 should be preferred. Turning to Section Note l(a) to Section XVI, Shri Jayaraman submitted that Heading 40.16 specified there-in was only by way of an example. It would not mean that the said section note would not serve to exclude the present goods from the scope of Section XVI. Shri Jayaraman further submitted that he was in agreement with Shri Sunder Rajan that the rules for interpretation of the Schedule should be resorted to only in the event of it not being possible to determine the classification of goods with reference to the headings, section notes and chapter notes. But, it is a well-settled proposition that a specific heading should be preferred to a general one. In this connection he placed reliance on Supreme Court's judgment in Commissioner of Sales Tax v. S.N. Brothers (1973) 31 STC 302 (SC) and in the case of Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India and Ors. 1983 (13) ELT 1566 (SC). We may straightaway note that there can be no dispute about the proposition that a specific heading is to be preferred to a general heading. While this is the golden rule in normal circumstances, we are faced here with a tariff schedule which has got chapter notes and section notes which are of legally binding nature and, therefore, the application of the said golden rule of construction has to be tempered with the 'effect of the chapter notes, section notes and, where necessary, the rules for interpretation of the Schedule). Shri Jayaraman further submitted that Section Note 2 to Section XVI could be invoked only after ruling out Section Note 1 [Note l(a) in this case].
7. In rejoinder, Shri Sunder Rajan stated that the impugned order did not rest the decision on Chapter Note 2(d) to Chapter 40. It was based on Section Note l(a) to Section XVI and the Departmental Representative should not be allowed to use his ingenuity in buttressing the Department's case. He placed reliance in this connection on the Bombay High Court's judgment in Cadbury Fry (India) Private Limited v. Union of India 1990 (46) ELT 7 (para 18). Shri Sunder Rajan also cited other authorities before us which we will refer to at the appropriate place.
8. We have considered the submissions of both sides and perused the record. There are certain basic facts or features which are not in dispute - one is that the hose assemblies in question are made of vulcanised rubber other than hard rubber. Another is that they are designed for use solely or principally with loaders.
9. Heading 40.09, sub-heading 4009.50, would appear on first blush to be quite specific for hoses of vulcanised rubber other than hard rubber with fittings. However, we have to consider the effect of Chapter Note 2(d) to Chapter 40 which excludes mechanical or electrical appliances or parts thereof of Section XVI (including electrical goods of all kinds) of hard rubber. The present hose assemblies are admittedly not made of hard rubber. But that, however, by itself does not clinch the issue. We have to see whether the goods fell within Section XVI. At this stage, we may note that Shri Sunder Rajan has taken exception to the reliance being sought to be placed on Chapter Note 2(d) in support of the classification of the goods by the lower authorities on the ground that the impugned order did not rest its conclusion on the said chapter note and the D.R. should not be allowed to support the impugned decision by reasons not disclosed therein. He has placed reliance, in this connection, on Bombay High Court's judgment in the case of Cadbury Fry (India) Private Ltd. (supra). On a perusal of the judgment, it is seen that the Collector in the order impugned before the High Court had set out three reasons for coming to his conclusion adverse to Cadbury Fry (India) Pvt. Ltd. The Collector's order was, however, sought to be buttressed by his Counsel by advancing a reason which was never the case of the Department and was never put to the assessee. This attempt at justification of the Collector's order across the Bar contrary to the ratio of the Supreme Court's judgment in Mohinder Singh Gill and Anr. v. The Chief Election Commissioner, New Delhi and Ors. - AIR 1978 S.C. 851 to the effect that an order cannot be justified on grounds other than those contained in the order itself, was frowned upon by the Bombay High Court. In the present instance, however, it is not as though the Departmental Representative is seeking to urge a new factual ground which did not find place in the Collector's order and justify that order on the basis of the new factual ground. He has merely drawn our attention to certain statutory section and chapter notes which have necessarily to be looked into to arrive at the proper classification of goods under the Customs Tariff Schedule. These notes and the rules for interpretation of the Schedule are part of the law. Submissions based on legal provisions are not the same thing as sub-missions made on new factual grounds. We do not accept Shri Sunder Rajan's objection to the reliance sought to be placed on certain chapter notes and section notes which the Collector did not take into account.
10. Chapter Note 2(d) of Chapter 40 has to be seen in the light of Section Note l(a) to Section XVI. Going by the latter note, Section XVI does not cover articles of a kind used in machinery or for technical uses, of vulcanised rubber other than hard rubber. However, in our view, this part of the section note excludes only such articles as fall under Heading 40.16. It is not the Revenue's case that the present goods fall under Heading 40.16. They have been classified under Heading 40.09, sub-heading 4009.50. However, this fact alone would not mean that the present goods fall under Section XVI. In this connection, it is also to be noted that the reliance placed by Shri Sunder Rajan on Section Note 2(b) in support of the appellant's claim for classification of the goods in Chapter 84 is, in our opinion, misplaced for the reason that the provisions of Section Note 2(b) are, as the opening phrase of that note shows, "subject to Note (1) to this section". And, according to Section Note l(a), there are certain specific exclusions including goods falling under Heading 40.16. This, however, would not lead to the inevitable result that articles of a kind used in machinery but which do not fall under Heading 40.16 would be classifiable within Section-XVI. This is for the reason that Heading 40.09, sub-heading 4009.50 specifically covers hoses of vulcanised rubber other than hard rubber. (There is no dispute that the said Hoses are made of vulcanised rubber other than hard rubber with fittings).
What is excluded from the purview of Chapter 40 by Chapter Note 2(d) are only parts of mechanical appliances of hard rubber. The present goods are made of rubber other than hard rubber. The net result, therefore, is that though the subject Hoses are, admittedly, used solely or principally with loaders, they would not be classifiable within Section XVI because of Section Note 2 read with Section Note l(a). Now, if we turn once again to Chapter Note 2(d) to Chapter 40, it becomes clear that parts, not made of hard rubber, of mechanical appliances falling in Section XVI, are not excluded from Chapter 40.
The assessment of the subject goods under Heading No. 40.09, sub-heading No. 4009.50 was, therefore, in our view, correct.
11. One of the submissions of Shri Sunder Rajan was that fittings of the subject hoses were not similar to joints, elbows, flanges, specified in Heading 40.09 [("40.09 Tubes, pipes and hoses, of vulcanised rubber other than hard rubber, with or without their fittings (for example, joints, elbows, flanges)" ] and if all hoses of vulcanised rubber other than hard rubber irrespective of the nature of their fittings were covered by Heading 40.09, Section Note l(a) to Section XVI would be rendered nugatory.
This is, we think, another way of saying that only goods falling under Heading Nos. 40.10 and 40.16 are excluded from Section-XVI by Note l(a). We have already dealt with this aspect.L.M. Van Moppes Diamond Tools India Ltd., Madras v. Collector of Customs, Madras -1986 (24) ELT 623 (Trib.) - para 16 was cited to show that it was not necessary to turn to the Rules of Interpretation of the Tariff Schedule if goods could be classified with the aid of headings, sub-headings, section notes and chapter notes. We agree and we have already discussed this aspect.Hindustan Aeronautics Limited, Bangalore v. Collector of Customs, Madras -1986 (25) ELT 200 (Trib.) para 5 - In that case, gear boxes were specifically mentioned in Heading 84.63. The contention for the appellant was that the gear boxes in question were not general purpose ones but designed for use solely or principally with a particular kind of machine and so ought to be classified along with the machine under Heading 85.45/48, by application of Section Note 2(b) to Section XVI. The Tribunal negatived this contention and upheld the classification of the goods under the specific heading for gear boxes i.e., 84.63. This decision, in our view, has no relevance to the present case for the reason Hose Assemblies are not specified in Chapter 84 unlike gear boxes.Saurashtra Chemicals, Porbandar v. Collector of Customs, Bombay -1986 (23) ELT 283 (Trib.) - paras 8 and 9. In that case, the goods were carbon rings and ring carbon seals for use as spare parts in turbo sets and compressors. The Department classified them under Heading 68.01/16(1) as articles of mineral substance (carbon) and the assessee's claim was for classification under Heading 84.65. The Tribunal noted that Chapter Note l(a) to Chapter 84 (which excluded from Chapter 84, articles falling within Chapter 68) had been given over-riding effect because of Section Note l(a) to Section XVI when it came to determining the classification of goods falling within Chapter 84. The Bench noted: "We find support in this finding of ours from the other exclusion Notes in the beginning of Chapter 84 wherein specific sub-headings have been cited wherever the intention was to restrict the exclusion to those specific sub-headings only. Therefore, giving Note l(a) "Millstones, grindstones and other articles falling within Chapter 68" its natural meaning, we hold that if any goods fall within Chapter 68, their classification under Chapter 84 is clearly forbidden by Note l(a) to that Chapter." In the instant case, we are not concerned with any notes to Chapter 84.
The combined effect of Section Note l(a) and Section Note 2 to,Section XVI in the light of Chapter Note 2(d) to Chapter 40 has been already discussed by us. Unlike Chapter 40, Chapter 68 does not have any exclusion note relevant to the classification of machinery parts made of carbon. Nor does Section XIII under which Chapter 68 fell. The cited decision, therefore, does not help the appellants' case.Tractors & Farm Equipments Ltd. and Ors. v. Collector of Customs, Madras and Ors. -1986 (25) ELT 235 (Trib.). In this decision, the Tribunal, following certain authorities, observed that one must arrive at the classification of goods having regard to the relative section notes, chapter notes and the rules for interpretation of the Schedule. The section notes and chapter notes have an overriding force on the headings. There can be no quarrel with this proposition. It has to be borne in mind that according to Rule 1 of the General Rules for the interpretation of the Tariff Schedule, for legal purposes, classification of goods shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the rules for interpretation. It may thus be seen that the rules for interpretation are to be invoked only if classification cannot be determined with reference to headings, chapter notes and section notes.Katrala Products (P) Ltd. v. Collector of Customs -1989 (44) ELT 160. In this case, the question was whether polycarbonate tubes (bottle guards) were classifiable under Heading 84.19 of the Schedule or Heading No. 39.01/06. The tubes were claimed to be made to precise specifications for the specific purpose of being used as component part of soda making machine. Therefore, they were claimed to fall under Heading No. 84.19 under which the machine fell. The Department's contention was that there was nothing to distinguish these tubes as parts of soda making machine and that they were merely tubes of plastic falling under Chapter 39. The Tribunal considered the evidence on record and concluded that the tubes were designed principally for use with soda making machines. This conclusion rested on the special characteristics of the tubes as also Note l(ij) to Chapter 39 which excluded from the Chapter articles falling within Section XVI (machines and mechanical or electrical appliances) though, in the normal course, the tubes may have been classifiable under Chapter 39. Reliance was also placed on Section Note 2(b) to. Section XVI.This decision, in our opinion, does not support the appellants' case.
Section XVI of the Schedule, as it stood during the period material to the katrala Products case, did not have, but for transmission, conveyor or elevation belts or belting, of artificial plastic material of Chapter 39, a section note excluding articles of plastics of a kind used on machines, appliances etc. as the section note in the instant case with respect to articles of unhardened vulcanised rubber, of a kind used on machines, etc. does. The circumstances not being similar, the ratio of the decision is not of direct application to the instant case.Assistant Collector of Central Excise v. Ramdev Tobacco Co. -1991 (51) ELT 631 (S.C.) - para 6. This para deals with the rule of ejusdem generis. This para reads thus: "6. The rule of ejusdem generis is generally invoked where the scope and ambit of the general words which follow certain specific words (which have some common characteristic and constitute a genus) is required to be determined. By the application of this rule the scope and ambit of the general words which follow certain specific words constituting a genus is restricted to things ejusdem generis with those preceding them, unless the context otherwise requires. General words must ordinarily bear their natural and larger meaning and need not be confined ejusdem generis to things previously enumerated unless the language of the statute spells out an intention to that effect. Courts have also limited the scope of the general words in cases where a larger meaning is likely to lead to absurd and unforeseen results. To put it differently, the general expression has to be read to comprehend things of the same kind as those referred to by the preceding specific things constituting a genus, unless of course from the language of the statute it can be inferred that the general words were not intended to be so limited and no absurdity or unintended and unforeseen complication is likely to result if they are allowed to take their natural meaning. The cardinal rule of interpretation is to allow the general words to take their natural wide meaning unless the language of the statute gives a different indication or such meaning is likely to lead to absurd results in which case their meaning can be restricted by the application of this rule and they may be required to fall in line with the specific things designated by the preceding words. But unless there is a genus which can be comprehended from the preceding words, there can be no question of invoking this rule. Nor can this rule have any application where the general words precede specific words." The Learned Consultant has called to aid this judgment in support of his contention that the fittings to the subject hoses were not of the genus of joints, elbows or flanges mentioned as examples of fittings in Heading 40.09 (reproduced earlier). The Supreme Court was construing Section 40(2) of the Central Excises & Salt Act prior to its amendment by Act 22 of 1973 and more particularly the expression "No suit, prosecution or other legal proceeding". The Court concluded that 'legal proceeding' should be read ejusdem generis with "suit" and "prosecution" as they constitute a genus and, therefore, the legal proceedings referred to would be those instituted in a Court of Law and not proceedings before statutory authorities. Now, the Supreme Court has held that the rule cannot have any application where the general words precede specific words. In the instant case, the general word "fittings" precede the specific words "joints, elbows, flanges".
Secondly, it must be shown that the specific words constitute a genus and no attempt has been made to do so. Thirdly, even if they are deemed to constitute a genus, it must be shown that the fittings of the subject hoses do not belong to that genus. Again, there has been no attempt in this direction. And, lastly, the three specific words are by way of examples and they do not evidently exhaust the types of fittings that are comprehended in the word "fittings".Collector of Central Excise v.Aerolex Hose Private Ltd. -1989 (39) ELT 681 is relevant to the instant case though that case was with reference to the Central Excise Tariff Schedule of 1985. (This Schedule, like the Customs Tariff Schedule, is broadly patterned on the lines of the Harmonised Commodity Description and Coding System (HSN) of the Customs Co-operation Council, Brussels).
The Revenue sought to classify the goods under sub-heading 4009.92 of the Schedule which reads as follows :-"40.09 - Tubes, pipes and hoses of vulcanised rubber other than hardened rubber, with or without their fittings (for example, joints, elbows, flanges).4009.92 - Designed to perform the function of conveying air, gas or liquid." The assessee's claim was for classification of the goods as parts of machinery under sub-heading 8431.00 or 8466.00. The assessee contended that Heading 40.09 was designed to cover inter alia hoses, whether with fittings or without fittings, which were in running length and that hoses cut to requisite sizes and subjected to further processes such as cutting, skiving, fitment of fittings, swaging and testing would be covered by Chapter 84 pertaining to mechanical appliances and apparatus and the hose assemblies being parts of specified machineries would be covered by Heading 84.31 or 84.66. The Revenue's contention, on the other hand, was that Chapter Note 2(d) to Chapter 40 made it clear that the Chapter did not cover mechanical or electrical appliances or parts thereof of Section XVI of hardened rubber and had the intention been to exclude parts of mechanical or electrical appliances falling under Section XVI, of vulcanised rubber, it would have been so mentioned specifically in Note 2 as had been done in the case of hardened rubber and of other goods. The description in Heading 40.09 read with sub-heading 4009.92 was more specific.
The Tribunal took the view that though the hose pipes in question were cut to specific sizes and subjected to further processes and fitted with fittings, their essential character remained as hoses with fittings, designed for the purpose of conveying air, gas or liquid. It might be true that the article was designed specifically for certain machines but this would not alter its character. The Tribunal also took note of the manufacturers' catalogue which described the goods as hoses. The Tribunal also noted that Chapter Note 2(d) excluded parts made of hardened rubber only and concluded that if the intention had been to exclude parts made of vulcanised rubber, it would have been specifically mentioned in the said note. By necessary implication, parts made of vulcanised rubber of mechanical and electrical appliances, would be covered by Chapter 40. Note was also taken of the Explanatory Notes to the HSN Heading 40.09 which clarified that the heading covered tubes of vulcanised rubber whether or not cut to length. Heading No. 40.09, being more specific, had to be preferred in view of Rule 3(a) of the Rules for Interpretation of the Schedule.
13. As noted earlier, the Central Excise Tariff Schedule considered in the Aerolex case was patterned more or less on the same lines as the Customs Tariff Schedule and both had been patterned on the lines of the HSN. The goods in the Aerolex case and the conflicting claims with reference to their classification, i.e., in Chapter 40 or Chapter 84, were the same as in the instant case. There is, therefore, no reason to differ from the decision in the Aerolex case.
14. During the course of the hearing, Shri Sunder Rajan had stated that the Supreme Court had set aside the Tribunal's decision in the Aerolex Hose Private Ltd. case (supra). However, he could not produce a copy of the Supreme Court's judgment. Accordingly, after due notice, the matter was taken up again today (27-5-1991) when Shri Sunder Rajan stated that he was mistaken in his understanding when he stated that the Supreme Court had set aside the Tribunal's decision. The Court had only admitted an appeal against the said decision. He produced for our perusal a report appearing on page A96 Volume 43 of E.L.T. 1989, from which it is clear that the Supreme Court had admitted an appeal filed by Aerolex Hose Private Ltd. against the Tribunal's order. The report does not state that the Supreme Court had stayed the Tribunal's order.
Shri Sunder Rajan was also not able to state whether the Supreme Court had since disposed of the matter. In these circumstances, we do not see any reason to take a different view in the present case.
15. In the light of the above discussion, we are of the view that the appeals have no merit and, accordingly, we dismiss the same.