1. This is an appeal filed by the Collector of Customs, Bombay against Order No. 1474/89 passed by the Collector of Customs (Appeals).
2. The facts of the case are that the respondents filed a Bill of Entry for the clearance of 30,000 pieces of Tungsten Carbide Twist Drills.
The goods were declared in the Bill of Entry as spares for machine tool parts falling under Heading 8207.90. The Assistant Collector passed an order in which he held that the goods were classifiable under Heading 98.06 of the Customs Tariff which covers parts of machinery, equipments, appliances, instruments and articles of Chapters 84, 85, 86, 89 and 90. The arguments that by virtue of Section Note l(k) of Section XVI of the Customs Tariff the imported tools falling under Chapter 82 were excluded from the purview of Chapter 84 and the goods being interchangeable tools were specifically covered by Heading 8207 of the Customs Tariff were rejected by the Assistant Collector on the grounds that in terms of Note 1 of Chapter 98 of the Tariff, the Chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein even though they may be covered by a more specific heading elsewhere. In the appeal filed by the respondents, the Collector (Appeals) set aside the order passed by the Assistant Collector and held the goods as classifiable under Heading 8207.90 of the Customs Tariff on the grounds that the tools in question could not be deemed as parts of machinery covered by Chapter 84.
3. On behalf of the Appellant the learned JDR Shri M.S. Arora stated that in terms of Note 1 to Chapter 98 of the Customs Tariff, parts of machinery, equipments, appliances, instruments and articles, covered by Chapters 84,85,86,89 and 90 even when specifically covered by any Heading would be classified under Heading 98.06. In support of his contention that Section Notes and Chapter Notes form a part of the Customs Tariff, he placed reliance on the Tribunal's decision in the case of Saurashtra Chemicals, Porbander v. Collector of Customs, Bombay reported in 1986 (23) ELT 283. He stated that even though in terms of Note l(k) of Section XVI of the Tariff, items of Chapters 82 and 83 were excluded from the purview of Chapter 84, the imported drills being parts of Drilling Machines falling under Chapter 84 would be classifiable under Heading 98.06 in terms of Note 1 to Chapter 98. He argued that the Collector (Appeals) had erred in holding that the imported drills were not parts of Machine tools merely on the ground that the operator of the machine has a choice in regard to the use of drilling tool, depending upon the job to be performed. Relying upon the Tribunal's decision in the case of Collector of Customs v. Jolly Exports (P) Limited - 1990 (45) ELT 612. Shri Arora contended that the imported drilling tools being essential for the working of Drilling Machines have to be treated as parts of such machines.
4. On behalf of the respondents the learned Advocate Dr. Nitin Kantawala contended that Heading 9806 of the Customs Tariff essentially coveres parts of machinery, equipments, appliances, instruments and articles of Chapters 84, 85, 86, 89 and 90. He argued that imported drills being interchangeable tools which are specifically covered by Chapter 82 they would not be classifiable under Heading 9806 of the Customs Tariff since by virtue of Note l(k) of Section XVI of the Customs Tariff articles of Chapters 82 and 83 were excluded from the purview of Chapter 84. Dr. Kantawala stated that apart from the decision in the case of Saurashtra Chemicals, Porbander v. Collector of Customs, Bombay which had been quoted on behalf of the appellants, he would also place reliance on the decision of the Supreme Court in the case of Dunlop India Ltd. and Madras Rubber Factory Ltd. v. Union of India and Ors -1983 (13) ELT 1566 in which it was held that once an article was classified and put under a distinct entry, the basis for classification does not remain open to question and in the absence of any reference to use or adaption of the article, the basis of end-use for classification under a Tariff Entry would be irrelevant.
5. We have examined the records of the case and considered the arguments on behalf of both the sides. The appellants case is that the imported Tungsten Carbide Twist Drills being component parts of Drilling Machines falling under Chapter 84 of the Customs Tariff would be classifiable under Heading 98.06 in terms of Note 1 to Chapter 98.
In order to facilitate reference we consider it desirable to reproduce below the Note 1 to Chapter 98 and also the Heading 98.06 : 1. This Chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein, even though they may be covered by a more specific heading elsewhere in this Schedule.____________________________________________________________________Heading Sub-heading Description of Articleing____________________________________________________________________98.06 9806.00 Parts of machinery, equipments, appliances, instruments and articles of Chapters According to the appellants the imported twist drills being parts of machine tools falling under Chapter 84 would be classifiable under Heading 98.06 in preference to any other specific Heading under which they may be classifiable since in terms of Rule 1 of the General Rules for the Interpretation of the Customs Tariff, classification of goods under the Schedule has to be determined in accordance with the terms of the headings and any relative Section or Chapter Notes.
6. On the other hand the respondents have contended that in terms of Note l(k) of Section XVI of the Customs Tariff, the imported goods, namely, twist drills, are excluded from purview of the headings of Chapter 84 and being interchangeable tools for drilling, in terms of Rule 3(a) of the Rules for Interpretation of the Customs Tariff Act, 1985, they will be classifiable under the specific Heading 82.07 in preference to any other general heading which may also be found to be applicable for their classification.Bharal Forge and Press Industries (P) Ltd. v. Collector of Central Excise reported in 1990 (45) ELT 525 (SC), for the classification of goods under the Tariff a specific entry is to be preferred and only when the goods cannot be brought under any of the specific entries in the Tariff can an attempt be made to place them under the residuary heading.
However, as a measure of simplification and to facilitate classification of goods under the Customs Tariff, the legislature in their wisdom have provided an unique provision in the Customs Tariff in the shape of Chapter 98 which applies to all goods which satisfy the conditions prescribed therein, even though they may be covered by a more specific heading in the Schedule. In terms of Rule 1, of the General Rules for the Interpretation of Customs Tariff, the Section Notes and Chapter Notes are statutory and binding like the headings themselves. Hence, in terms of Note 1 to Chapter 98, twist drills even though specifically covered by Heading 8207, would be classifiable under Heading 98.06 if they can be deemed as parts of any of the machinery, equipments, appliances, instruments and articles of Chapters 84, 86, 89 and 90.
8. In view of the foregoing, the only point to be determined in this case is whether the imported Tungsten Carbide Twist Drills constitute parts of Drilling Machines or Machine Tools falling under Heading 84.59 of the Customs Tariff. In this regard we find that according to the McGraw Hill Dictionary of Scientific and Technical Terms, a drilling machine is : "A device usually motor-driven, fitted with an end cutting tool that is rotated with sufficient power either to create a hole or to enlarge an existing hole in a solid material. Also known as driller." It is also seen that according to the Chambers Twentieth Century Dictionary the term 'part' means - something less than the whole : a portion : that which along with others makes up, has made up, or may at some time make up, a whole : a constituent:" 9. It follows from these definitions that even though a drill or drilling tool has necessarily to be attached to a drilling machine for any drilling operation, yet it does not form an integral part or a constituent of the drilling machine, which in itself is a complete item designed simply for holding and rotating the drill at a high speed.
10. It is common knowledge that drilling machines are not bought and sold with drills fitted to them. Drills are generally sold in the market as tools in the form of sets comprising of drill bits of different sizes and diameters. The choice of the drilling tool for a particular operation depends mainly on the size of the hole to be made and the nature of the solid material in which the hole is required to be drilled. According to McGraw Hill Dictionary of Scientific and Technical Terms, a drill is "a rotating end cutting tool for creating or enlarging holes in a solid material. Also known as a drill bit." 11. It is also seen that in the Explanatory Notes to the Harmonised Commodity description and Coding system (HSN) under Heading 82.07, the items listed as covered by the Heading include "tools for drilling other than for rock drilling including drills (Spiral or Twist drills, Centre bits etc.), brace bits etc." 12. From the above discussions it follows that in common parlance drills or drill bits are known as "tools" and not as parts of drilling machines. Hence, we are of the view that in accordance with the accepted principles of classification laid down by the Hon'ble Supreme Court Indo-International Industries v. Commissioner of Sales Tax, U.P.1981 (3) SCR 294 and Dunlop India Ltd. v. U.O.I. -1983 (13) ELT 1566 (SC) - that goods should be classified according to their popular meaning or as they are understood in their commercial sense and not as per their scientific or technical meaning, the disputed Tungsten Carbide drills would be classifiable as tools under the specific Heading 82.07 and not under the General Heading 98.06 as parts of machine tools falling under Chapter 84.