Full Judgment
Shri K.K. Jha, ld. SDR is present on behalf of the appellant. He pleaded that the respondent had imported 9 numbers Rupture Disks for explosion flaps to be used in their Sulphuric Acid Plants vide Bill of Entry No. AC 122, dated 6-12-1982 and were duly classified under Heading No. 73.33/40 CT and 68 CET based on the material of manufacture (stainless steel}. Thereafter, the respondent filed refund claim seeking re-classification either under Heading 84.14 or 84.17(1) CT. He pleaded that the assessment made by the adjudicating authority is correct and the appeal filed by the revenue be accepted. Shri Jha referred to exclusion note under Heading 84.61 on page 1378 of the Explanatory Notes on CCCN wherein it is mentioned that Bursting discs (thin discs of artificial plastic material or metal) are used in certain cases as safety devices instead of valves: they are mounted by means of a special carrier on pipe systems or pressure vessels and burst at a specific pressure. They fall to be classified according to the constituent material (Headings 39.07, 71.14, 73.40, 74.19, 75.06, 76.16, etc.). He pleaded for the acceptance of the appeal. Ms. Mukti Sinha, ld, Advocate has appeared on behalf of the respondent. She relied on the order passed by the Collector (Appeals). She referred to the letter dated 20-12-1982 written by the respondent to the Assistant Collector which contains the full details of the technical aspects of the goods imported. She pleaded that these discs are not supplied as plain sheets but according to dimensions and with necessary bolt holes for direct fitting into the combustion chamber of the Acid Plant. The rupture disc is specially fabricated to suit the explosion flap of the combustion furnace in respondent's plant and it is not manufactured indigenously. These are made of special acid and corrosion resistant alloy and according to German Specification DIN 1.4571. She pleaded that Heading No. 84.14 is 'Industrial and Laboratory Furnaces and Ovens, Non-electric.' She pleaded that in terms of Note 2 to Section XVI which is part of the tariff, it is to be assessed under Heading No.84.14 and not under 73.33/40. In support of her argument, she cited the recent decision of the Hon'ble Supreme Court in the case of Ballarpur Industries Limited v. Collector of Customs (Appeals), Customs House, Madras reported at JT 1995 (1) SC 164. She pleaded for dismissal of the appeal filed by the revenue.
2. We have heard both sides and have gone through the facts and circumstances of the case. The product in dispute are 9 number of Rupture Disks for explosion flaps used in the sulphuric acid plants under Bill of Entry No. AC 122, dated 6-12-1982. Revenue claimed assessment under Heading No. 73.33/40 whereas the respondent claimed the same under Heading No. 84.14 or 84.17 (I) CT. For the proper appreciation of the legal position, heading numbers are reproduced below :- "84.14- Industrial and Laboratory Furnaces and Ovens, Non- Electric." 84.17 Machinery, Plant and similar laboratory equipment, whether or not electrically heated, for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling evaporating, vapourising, condensing or cooling, not being "73.33 Needles for hand sewing (including embroidery), hand car- 3. The respondent vide their letter dated 20-12-1982 had written to Assistant Collector, Refund Section, Customs House, Madras which contains the full technical details of the product in dispute. This letter for refund written by the respondent to the Assistant Collector is reproduced below :"No. CD/Imp/SAP Spares/R. 171D 22-12-1982 Sub - One case containing six Nos. Rapture Discs Airway Bill No. 220 T205 -------------------------------------------------------------------- -------- We regret to note that the above consignment having assessable value of Rs. 25,304/- has been assessed for Customs Duty amounting to Rs. 92,207-77 under Customs Tariff head 73.33/40.
As indicated in our write-up, dated 5-11-1982 the Rupture disc for explosion flap is made up of metal alloy consisting of silicon, titanium and chromium. This discs are imported only as an integral part of the Sulphuric Acid Plant. The rupture disc is meant to protect the furnace from over-heating and pressure when the temperature of the furnace exceeds 1200C the rupture disc will give away automatically thereby giving the indication that the working temperature of the plant has gone up. This rupture disc is specially fabricated to suit the explosion flap of the combustion furnace in our Acid Plant and it is not manufactured indigenously. These are made of special acid and corrosion resistant alloy, according to German specification DIN 1.4571, composition of which are as under : Carbon 0.08 Such alloys are not made in India and hence do not attract C.V. duty.
Further these discs are not supplied as plain sheets but according to dimensions and with necessary bolt holes for direct fitting into the combustion chamber of the Acid Plant. It can in no way be used for any other purpose. Hence these discs should have been assessed as spare part for the Plant and machinery and not according to material of construction. Further the material of construction is a special kind of acid and corrosion resistant alloy and not an ordinary stainless steel as indicated in the Bill of Entry No. AC/22, dated 6-12-1982.
Taking into consideration the material of construction and end-use, these Rupture discs should have only been assessed under Customs Tariff Heading 84.14 or 84.17(1) attracting customs duty at 40% + 20% and not as stainless steel material under Heading 73.33/40 as per B/E No. 122, dated 6-12-1982.
In the circumstances, we would request you to refund the excess amount of Rs. 77,025-37 collected against the above Bill of Entry as per working sheet enclosed. If necessary we maybe heard in person to explain the matter further.
The perusal of the technical details shows that the rupture disc is meant to protect the furnace from overheating and pressure; when the temperature of the furnace exceeds 1200C the rupture disc will give away automatically thereby giving the indication that the working temperature of the plant has gone up. This rupture disc is specially fabricated to suit the explosion flap of the combustion furnace in respondent's acid plant and is not manufactured indigenously. Further these are not supplied as plain sheets but according to the dimensions and with necessary bolt holes for direct fitting into the combustion chamber of the acid plant. Section Note 2 to Section XVI is reproduced below :- "2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines not being parts of the articles described in heading No. 84.64 or parts of the following articles falling within Heading No. 85.18/27, namely (i) insulators or insulated electric wire and the like, (ii) carbon articles used for electrical purposes, (iii) electrical conduit tubing and joints thereof, are to be classified according to the following rules :- (a) 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 :- (b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines falling within the same Heading (including a machine falling within Heading No. 84.59 or electrical goods and apparatus falling within Heading No. 85.18/27) are to be classified with the machines of that kind.
However, goods which are equally suitable for use principally with the goods of Heading Nos. 85.13 and 85.15 are to be classified in Heading No. 85.13; It is a settled law that Chapter Notes and Sectional Notes are part of tariff. Hon'ble Supreme Court in the case of Ballarpur Industries Limited v. The Collector of Customs (Appeals), Customs House, Madras reported at 1995 (75) E.L.T. 6 (SC) - JT1995 (1) S.C. 164 had held as under :- 11. But, as rightly pointed out by the CEGAT itself, the rules which govern the classification of machine-part like 'Granite Press Roll' with which we are concerned, ought to be the rules contained in Note 2 of Section XVI under Chapter 84 or Chapter 85, which are already excerpted by us.
12. What, then, cannot be ignored is the requirement of the provision of Note 2 to Section XVI, that subject to Note 1 to Section XVI, Note 1 to Chapter 84 and Note 1 to Chapter 85 parts of machine (not being excepted items) are to be classified according to the rules given thereunder as (a), (b) and (c). What Note 2 to Section XVI says, in other words, is that machine parts in Section XVI, which are not covered by articles specified in Note 1 to Section XVI, Note 1 to Chapter 84 and Note 1 to Chapter 85, are to be classified according to rules given under Note 2 to Section XVI itself, that is, Rules (a), (b) and (c) thereof.
13. Coming to Rule (a) of Note 2 to Section XVI, which is also excerpted by us already, goods of a kind described in any of the Headings of Chapter 84 and 85 (other than Heading Nos. 84.65 and 85.28) are in all cases to be classified in their respective Headings. Then, coming to Rule (b) of Note 2 to Section XVI, which is also excerpted by us already, other part of goods of a kind described in any of the Headings of Chapter 84, if suitable for use solely or principally with a particular kind of machine (described in Chapter 84) is required to be classified with machine of that kind mentioned in Chapter 84. Therefore, what was now to be examined is, when Heading No. 84.31 describes the goods (article) classified thereunder as "machinery for making or finishing cellulosic pulp, paper or paper-board" whether the goods or article "Granite Press Roll", which is held by CEGAT itself, to be a part or component of paper making machinery, does warrant its classification thereunder.
In our view, when Note 2 to Section XVI requires classification of parts of machines to be made according to rules given thereunder and when rule (a) thereunder requires goods (part of machine) of a kind described in any of the Headings of Chapters 84 and 85 (other than Nos. 84.65 and 85.28) under respective Headings, every machinery for making or finishing cellulosic pulp, paper or paper-board, requires to be classified under Heading 84.31. Then, coming to 'Granite Press Roll' the imported article under consideration, being a part of machine of goods 'Machinery for making or finishing cellulosic pulp, paper or paper-board' which is suitable for use solely or principally as machinery for finishing paper, it requires to be classified with the machine described in the Heading 84.31, as required by rule (b) to Note 2 of Section XVI, inasmuch as, Granite Press Roll is described by CEGAT itself as part of machine of paper making machinery. Therefore, 'Granite Press Roll', the imported article, in our view, warrants its classification under Chapter Heading 84.31, as held by the Collector (Appeals). Thus, when classification of imported article - the Granite Press Roll - ought to have been made under Tariff Item No. 84.31 of Chapter 84, as is held by us, CEGAT has gone wholly wrong in classifying that article under import Tariff Item No. 68/16(1) of the 1st Schedule to the Customs Tariff Act, ' 1975, particularly when that article could not have been regarded as an article of stone; as such, to become an excepted item under Note 2 to Section XVI read with Note 1(a) to Chapter 84 warranting its classification under Heading in Chapter 68 and according to rules governing classification of materials or substances or their parts." In view of the above discussions, we are of the view that 9 number rupture discs are classifiable under Heading No. 84.17(I). We uphold the finding of the Collector (Appeals). The appeal filed by the revenue is dismissed.