Shah and Mahajan Chem. Pvt. Ltd. Vs. Collector of Customs - Court Judgment

Excerpt:
1. appellant has informed us that name of the appellant has been changed as m/s. essem catalyst ltd., 113, navratan building 69, p.d'mello road, mumbai - 400 009. the new name will be served in the appeal memorandum and in this order.2. the appellant imported goods described as "elements-metal fibre filter" of 187 units of usa origin from a supplier of usa, subsequently filed b/e dated 30-7-1991 for its ex-bond clearance claiming classification of the goods under heading 8421.99 of cta and the benefit of notification no. 169/90-cus., dated 3-5-1990 available in respect of the capital goods. show cause notice was waived, personal hearing was granted. asstt. collector of customs held that the imported goods cannot be regarded as capital goods as defined in the notification and are some parts of filters and as such not capital goods and therefore, the benefit of notification no. 169/90 was not applicable. he held the correct classification under customs tariff heading 8421.99 and this order has been confirmed by the collector (appeals). hence the present appeal has been filed.3. shri j.b. shah, managing director of the appellant appeared before us and made submission against the impugned orders. he contended that the restriction in the b/e is erroneous and the imported goods are actually metal fibres and not element of such filters; that filters by themselves constitute equipment which can be regarded as capital goods for purpose of notification. he explained that the appellant is engaged in the manufacture of nickel using heating nickel carbonate in the reactors. as a result of reaction, carbon monoxide and water are generated and nickel is separated. the imported filter is fitted at the top of reactor to allow the gas as to pass filtering of solid particles of nickel to retain inside the reactor. he, however, contended the filter by itself is an equipment not merely a part of equipment. he also contended that the purchase order and the correspondence would show that the order was placed for metal fibre filter and not element filter. he submits that this record was not placed before the lower authorities nor before us.4. shri s.n. ojha, jdr rebutted the above contention. he contended that on the basis of import documents the only conclusion is possible that the imported goods are element-metal fibre filter and not filter by itself. he referred to page 1183 of hsn to show that sub-heading 8421.99 in which it is stated that parts includes for many other filtering elements and to support his contention that the elements are not only parts, device or equipment by itself.5. notification no. 169/90 exempted capital goods when imported into india by an importer and in accordance with paragraph 197 of the relevant policy from so much of the portion of the duty of customs as is in excess the amount calculated @ 25% and the whole of duty is leviable under section 3 of the customs tariff act subject to two conditions prescribed therein. explanation - (1) the notification defines 'capital goods' thus -'capital goods' means any plant machinery, equipment or accessories required by an importer for manufacture of goods.the definition makes it clear that only plant and machinery, equipment or accessories required for manufacture of goods can be regarded as capital goods for purpose of notification. the inclusion of 'accessories' in the definition, capital goods is significant when considered along with the omission of any reference of part or component in the definition. it is thus clear that plant, machinery, equipment are accessories and not parts or components thereof are covered by the metal.6. there is no dispute that import document produced in the customs house described the imported goods as 'element-metal fibre filter' attracting classification under heading 8421.39. the specific sub-heading refers only to parts. the explanation offered by shri j.b.shah is that the appellant has indicated sub-heading 8421.39 originally and on the direction of the officer-in-charge i.e. appraiser, a fresh b/e showing suggested sub-heading 8421.99 was filed. they alleged that original ex-bond b/e has not produced before us. 'element' means one of the essential parts of anything or any ingredients (see page 542 of the chambers dictionary, new edition). in the light of the clear and specific description of the goods in the bill of entry as elements of metal fibre filter. it is futile for the appellant to contend that the goods are not elements but filters.7. shri j.b. shah produced before us a printed pamplet related to cpi automatic backwash filter system, he read out the various parts of the pamplet and invited our attention to diagram 'single housing system'.it shows that a filter element fitted inside the cylindrical using form parts of the system. he showed another parts of the pamplet to contend the picture of the filter which is in narrow cylindrical shape and stated that the narrow cylindrical goods are not the imported goods.assuming this to be correct, we cannot regard it as a plant or machinery or equipment; it is only something to be fitted to other things in order to create a plant or equipment or machinery. according to him, this filter or the element is an essential part of filtering system, that being so and it cannot be regarded as an accessory item.in this view, we do not agree with the appellants that the goods imported are capital goods attracting notification no. 169/90.8. no other contention has been alleged before us by shri j.b. shah. we find no ground to interfere and accordingly dismiss the appeal.

Judgment:
1. Appellant has informed us that name of the appellant has been changed as M/s. Essem Catalyst Ltd., 113, Navratan Building 69, P.D'mello Road, Mumbai - 400 009. The new name will be served in the appeal memorandum and in this order.

2. The appellant imported goods described as "elements-metal fibre filter" of 187 units of USA origin from a supplier of USA, subsequently filed B/E dated 30-7-1991 for its Ex-bond clearance claiming classification of the goods under Heading 8421.99 of CTA and the benefit of Notification No. 169/90-Cus., dated 3-5-1990 available in respect of the capital goods. Show cause notice was waived, personal hearing was granted. Asstt. Collector of Customs held that the imported goods cannot be regarded as capital goods as defined in the Notification and are some parts of filters and as such not capital goods and therefore, the benefit of Notification No. 169/90 was not applicable. He held the correct classification under Customs Tariff Heading 8421.99 and this order has been confirmed by the Collector (Appeals). Hence the present appeal has been filed.

3. Shri J.B. Shah, Managing Director of the appellant appeared before us and made submission against the impugned orders. He contended that the restriction in the B/E is erroneous and the imported goods are actually metal fibres and not element of such filters; that filters by themselves constitute equipment which can be regarded as capital goods for purpose of Notification. He explained that the appellant is engaged in the manufacture of nickel using heating nickel carbonate in the reactors. As a result of reaction, carbon monoxide and water are generated and nickel is separated. The imported filter is fitted at the top of reactor to allow the gas as to pass filtering of solid particles of nickel to retain inside the reactor. He, however, contended the filter by itself is an equipment not merely a part of equipment. He also contended that the purchase order and the correspondence would show that the order was placed for metal fibre filter and not element filter. He submits that this record was not placed before the lower authorities nor before us.

4. Shri S.N. Ojha, JDR rebutted the above contention. He contended that on the basis of import documents the only conclusion is possible that the imported goods are element-metal fibre filter and not filter by itself. He referred to page 1183 of HSN to show that sub-heading 8421.99 in which it is stated that parts includes for many other filtering elements and to support his contention that the elements are not only parts, device or equipment by itself.

5. Notification No. 169/90 exempted capital goods when imported into India by an importer and in accordance with paragraph 197 of the relevant Policy from so much of the portion of the duty of customs as is in excess the amount calculated @ 25% and the whole of duty is leviable under Section 3 of the Customs Tariff Act subject to two conditions prescribed therein.

Explanation - (1) The Notification defines 'capital goods' thus -'Capital goods' means any plant machinery, equipment or accessories required by an importer for manufacture of goods.

The definition makes it clear that only plant and machinery, equipment or accessories required for manufacture of goods can be regarded as capital goods for purpose of notification. The inclusion of 'accessories' in the definition, capital goods is significant when considered along with the omission of any reference of part or component in the definition. It is thus clear that plant, machinery, equipment are accessories and not parts or components thereof are covered by the metal.

6. There is no dispute that import document produced in the Customs House described the imported goods as 'element-metal fibre filter' attracting classification under Heading 8421.39. The specific sub-heading refers only to parts. The explanation offered by Shri J.B.Shah is that the appellant has indicated sub-heading 8421.39 originally and on the direction of the Officer-in-Charge i.e. Appraiser, a fresh B/E showing suggested sub-heading 8421.99 was filed. They alleged that original Ex-bond B/E has not produced before us. 'Element' means one of the essential parts of anything or any ingredients (see page 542 of the Chambers Dictionary, New Edition). In the light of the clear and specific description of the goods in the Bill of Entry as elements of metal fibre filter. It is futile for the appellant to contend that the goods are not elements but filters.

7. Shri J.B. Shah produced before us a printed pamplet related to CPI Automatic Backwash Filter System, He read out the various parts of the pamplet and invited our attention to diagram 'single housing system'.

It shows that a filter element fitted inside the cylindrical using form parts of the system. He showed another parts of the pamplet to contend the picture of the filter which is in narrow cylindrical shape and stated that the narrow cylindrical goods are not the imported goods.

Assuming this to be correct, we cannot regard it as a plant or machinery or equipment; it is only something to be fitted to other things in order to create a plant or equipment or machinery. According to him, this filter or the element is an essential part of filtering system, that being so and it cannot be regarded as an accessory item.

In this view, we do not agree with the appellants that the goods imported are capital goods attracting Notification No. 169/90.

8. No other contention has been alleged before us by Shri J.B. Shah. We find no ground to interfere and accordingly dismiss the appeal.