Full Judgment
It is submitted that the department had noticed that the two main and vital components viz. (a) Glass Covers, and (b) Water tube were not imported by the party. In absence of those components this can neither be considered as a whole/complete product, nor can it be functioned. It is submitted that the exemption under Notification 120/81-C.E. is applicable only for that which is a complete product as a Solar Collector and not for parts, assemblies or sub-assemblies thereof. It is stated that even if all the components would have been imported, the individual components would have been assessed on merits for the purpose of additional duly of Customs since there was no corresponding rules of interpretation in CET as those in CTA. It is stated that the original assessment was done in accordance with Section 19(b) of C.A.'62, since split up values are not known. The assessee [has] contended that the goods are classifiable for Customs under Heading 84.17(1) only. Therefore, the only question before us is with regard to the classification under the Customs Act. The assessee had not accepted the classification made under Heading 84.17(2) of CTA, 1975, as adopted by the Asstt. Collector in the order-in-original. Before the Collector, they had urged for classifying the product under Heading 84.17(1) of Customs Tariff. Since on their assembly, they would have been transformed to a concentrated type of solar collector. The ld.Collector has held that from the description in the catalogue it is apparent that the imported equipment was a solar collector, in which the incident solar radiation is concentrated 85 times by the parabolic reflector to form a narrow bear on which side of the 16 mm absorber tube. Therefore, he has held, from the description of the equipment imported in CKD condition, it is obvious that the product was a concentrated solar collector, whose sole function was to collect solar radiation for conversion of this to energy. He has held that the equipment was only a solar collector i.e. the equipment in which the solar radiation is not only concentrated but is multiplied. He has held that the equipment by itself does not treat materials by a process involving change of temperature etc. From the description of the imported equipment in CKD condition, the ld. Collector has observed that it is obvious that it is only designed to function as a source of solar energy, since it concentrates solar radiation and multiplies it 85 times. Therefore, its assessment under Heading 84.17(1) was not correct as contended by the importer, since by itself the equipment was not involved in changing the temperature, or was treated materials by a process of heating etc. He has held that the equipment was not falling under Heading 84.17 of the Customs Tariff and since it had no electrical connectors and since it was not covered in any of the heading of Chapter 84 of the C.T., it obviously Was classifiable under the residuary Heading 84.65 of the said Chapter.
2. The appellant contends in these appeals that Heading 84.65 is inappropriate and the claim is required to be accepted under Heading 84.17(1) of the Customs Tariff. It is stated by them that Concentrating Self Tracking Solar Collectors essentially focus sunlight on a tube which either carries water for conversion to steam or oil which can be heated to very high temperatures. It is stated that very frequently such collectors are referred to as solar boilers because basically they perform the same function as a coal/oil/gas based boiler which can either generate steam or like thermopacks, can heat oil to very high temperatures and the oil can then be used as a source of energy for running various process equipments in Industry. It is stated that such solar energy systems are now being used in various countries for supplying steam to Textile Mills, Dairies etc. Therefore, it is submitted that the machinery is used for treatment of materials by process involving a change of temperature namely heating and steaming and is not a machinery or plant of a kind used for domestic purposes; and instantaneous or storage water heaters, non-electrical.
3. We have heard Shri K.P. Hathi, ld. Advocate for the appellant and Shri K.K. Jha, ld. SDR for the department. Ld. Advocate submitted that protective glass cover is not an essential item as per the literature.
It is used only to protect dust which a party may procure or not.
Therefore, he submitted that the equipment functions even without water tube and glass cover as ld. Collector had submitted that the item is in CKD condition and hence, the rejection of the classification under Heading 84.17(1) is not justified. He submitted that the material is oil and water and hence the criteria of Heading 84.17(1) is satisfied, as it converts water into steam. Hence, there is treatment of materials, which is a requirement of the said heading. He submitted that the ld. Collector has changed the Heading to 84.65, without due notice to them. He submitted that the Heading 84 is inappropriate heading as the item is neither motor or pump and therefore, for CVD purpose also, it cannot be so classified. There is no separate value for the component and the valuation has been made for the entire product which is also not correct.
4. Ld. SDR Shri K.K. Jha submitted that the ld. Collector had proceeded to reclassify the heading and such re-classification done by him is sustainable as the Collector has got inherent power to correct and reclassify the classification. Ld. SDR has also relied on CCN's note appearing at page 1209 and 1210 and submitted that the rejection of claim under Heading 84.17(1) is justifiable. He submitted that the department's appeal was against the grant of the benefit of the said notification by the ld. Collector, which is not justifiable, as the importer had not imported the whole equipment and that the notification applied only to whole equipment; while in the present case, only components had been imported as per the bill of entry.
5. We have carefully considered the submissions made by both the sides and have perused the records. We notice that the invoice describes the item: (i) Components for solar energy equipment as per order M/s. Jyoti Ltd. No. 0-1531/82, dated 6-2-1983 and amendment dated 21-4-1983.
(ii) 50 sets Concentrated Self Tracking Solar Collector Components packed in Sea Worthy Containers.
(iii) Component for Solar Energy Equipment as per order of M/s.
Jyoti Ltd. No. 0-1531/82, dated 6-2-1983 and amendment dated 21-4-1983.
The department's plea in their appeal is that the goods imported were only component parts of solar equipment and the equipment is not a complete appliance. However, the Collector has held that the components were in CKD condition. This finding of the ld. Collector is not supported by the invoice and the order-in-original. Therefore, the finding of the ld. Collector on this aspect is not sustainable. The Asstt. Collector has held that two items which are required for completing the equipment namely glass covers and water tubes have not been imported. Therefore, the item has to be considered only as a component part of the solar equipment. On this aspect, the ld. Advocate has submitted that these two items are optional and the same is not required, as it only protects the "reflector and collector" from corrosive and abrasive elements and hence it does not conform to the basic components of solar collector. We are not agreeable on this submission. From the diagram of the equipment in the literature produced it clearly shows that the glass covers and water tubes are portions of the equipment itself. The literature further states "Water or a heat transfer oil is pumped through the absorber tube to the heat n ication (sic)".
"All reflective and absorptive surfaces are protected from dust and abrasion by a glass case. The glazing is standard window glass.
While low iron glass would increase "Instantaneous Efficiency" it is not economically justifiable".
"The Vulcan Solar Collector have a design life of twenty years.
Glass panels (3mm window glass) protect the reflector and collector from corrosive and abrasive elements" Therefore, on a reading of this portion of the literature, it makes it clear that these items have been incorporated in the item itself to give life as well as to protect from corrosive and abrasive elements.
Therefore, it cannot be said that the imported item is complete by itself. The importer has not placed any clarification from the supplier on this aspect of the matter nor any certificate of the Experts, who deals with this equipment in the field. Therefore, the item being in CKD condition is not correct, and hence we do not agree with the finding of the ld. Collector on this point.
6. Now coming to the classification, the appellants are claiming classification under sub-heading 84.17(1) and the department is under sub-heading 84.17(2) while Collector has classified under Heading 84.65 of the Customs Duty. The relevant tariff entries are noted hereinbelow :"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, rectifying, sterilising, pasteurising, steaming, drying, evaporating, vaporising, condensing or cooling, not being machinery or plant of a kind used for domestic purposes; instantaneous or storage water-heaters, non-electrical: (2) Machinery and equipment for food and drink other than those used for treating milk; instantaneous or storage water-heaters, non-electrical; machinery and equipment imported for the airconditioning.
sulators, coils, contacts or other electrical features [and] not falling within any other Heading in this Chapter".
The Heading 84.17 deals with machinery, plant etc. which would perform the function of treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilising, pasteurising, steaming, drying, evaporating, vaporising, condensing or cooling and it should not be of a kind used for domestic purposes; instantaneous or storage water-heaters, non-electrical. We notice that this item is not of a kind used for domestic purposes, instantaneous or storage water-heaters, nonelectrical now what we required to seize whether the materials are treated by a process involving a change of temperature. It is contended before us that the solar energy converts water and oil into steam which is used in the textile mills and dairies. We do not agree with the appellants that there is a treatment of materials involved in the present case. From the catalogue, the literature states that the "Vulcan Solar Collector" has been specially designed to efficiently generate energy at temperatures upto 300C. At 95"C three times more energy per square metre per annum is generated than selective surface plate collectors; at 135 C - five times. Therefore, as per the literature itself, the item has been designed to efficiently generate energy. There is no treatment of materials involving those processes as stated in the Heading 84.17. In that view of the matter, we hold that the item is not classifiable under Heading 84.17 of the Customs Tariff.
7. The ld. Collector has held that the item is classifiable under Heading 84.65. It deals with the machinery parts, not containing electrical connectors, insulators, coils, contacts or other electrical features and not felling within any other Heading in this Chapter. We notice that there are number of headings under Chapter 84 which classifies various items under various headings. The ld. Collector has straightaway adopted the residuary heading without examining the other headings and also without hearing the appellant on this aspect and we therefore, think it proper that this matter is remanded for considering the classification for Customs Duty purpose to the original authorities for de novo consideration.
8. The Revenue has contended that the notification in question applies to a full equipment. The department is seeking classification for the purpose of CVD under Heading 30A of CET instead of Tariff Item 68. We notice that 30A deals with power driven pumps (including mono pumps, turbo pumps). We think it proper for remanding the case to the original authorities to reconsider this aspect of the matter. Thus, the appeals are disposed of in the above terms.