Hind Lamps Limited Vs. Collector of Customs - Court Judgment

Excerpt:
1. the appellants herein imported goods namely "electrocast refractories with zirconia" contents at 40% or above in standard dimensions. they claimed the benefit of notification 242/76-cus. for basic customs duty and of 112/87-cus. for auxiliary customs duty. the said benefit was denied by the original authority on the ground that the appellants herein are actual users of the furnaces and not the manufacturers of the furnaces. therefore, the imported refractory bricks cannot be called component parts of industrial furnaces, implying thereby that 'components' are understood to be meant only for initial assembly of a machine.2. on appeal the appellants herein did not succeed. lower appellate authority has found that the appellants have not brought any evidence on record to show that the bricks are of special shape or quality. they are standard bricks as mentioned in the invoice and the bill of entry.therefore the benefit of notification 242/76 is not admissible. hence this appeal before us.3. ld. advocate ms. reena khair, submits that 'spares' for use in furnaces are also 'components' as held by larger bench of the tribunal in the case of jindal strips ltd. reported in 1997 (94) e.l.t. 234. the notification does not say that the benefit would be available only when the imported components are used for assembly of industrial furnaces.4. as regards the second condition that the refractory bricks should be of special shape or quality ld. advocate has drawn our attention to the grounds of appeal. from there, it is observed that these bricks are not the general routine types of refractory bricks used in industrial furnaces, normally available for furnaces for cement & porcelain/pottery industry. in those furnaces it has been explained, production is made in batches, result is that, the furnaces are to be cooled before a fresh batch is once again charged. it is again heated up to high temperature. the normal bricks, therefore, are required to withstand sudden shocks of heat and sudden cooling. the imported bricks, it is therefore explained, imported by the appellants are for glass furnaces which work round the clock for specified number of days or specified number of hours continuously. these bricks are exposed to high temperature continuously round the clock. it is further stated zirconium silicate bricks are expensive when compared to bauxite bonded bricks or other standard type of bricks used in other industry. the cost factor in the glass industry is compensated by the quality of refractories used for long life of the furnace and the production output gained out of continuous production instead of discrete production in batch system. ld. advocate, therefore, submits that the benefit of notifications should be extended. she very fairly earlier brought to our notice the various judgments on the refractory 'bricks' and 'blocks' used in furnaces, for example in the case of - 2. in their own case, vide tribunals final order no. 426/95-d [1996(82) e.l.t. 383 (t)].5. we, however, find that both these judgments do not deal with the controversy which we are required to deal here in this appeal.6. opposing the contention of ld. jdr shri v.m. udhoji reiterates the findings of the lower authorities. he has also drawn attention of the bench to the judgment of the tribunal in the case of hind lamps ltd. as mentioned above, wherein the matter has been decided against the appellants herein. but we note at this stage that the controversy in the case was whether the goods imported were blocks to which the benefit of notification 242/76-cus. was not available or they were refractory bricks. therefore, this judgment does not help the revenue.7. we have carefully considered the pleas advanced from both sides. on the submissions made by the ld. advocate, which have been set out in detail above, we are satisfied that the benefit of the notification 242/76-cus. and of 112/87-cus. would be available to the refractory bricks because these are used as components in an industrial furnaces and these are of special shape and quality. accordingly we set aside the impugned order and allow the appeal with consequential relief to the appellants.8. at this stage our attention has been drawn by the ld. advocate to the fact that the matter originated as refund claim. therefore, the question of refund to be dealt with by the original authority, in accordance with law and on the basis of the present provisions of section 27 of the customs act.

Judgment:
1. The appellants herein imported goods namely "Electrocast Refractories with Zirconia" contents at 40% or above in standard dimensions. They claimed the benefit of Notification 242/76-Cus. for Basic Customs Duty and of 112/87-Cus. for Auxiliary Customs Duty. The said benefit was denied by the original authority on the ground that the appellants herein are actual users of the furnaces and not the manufacturers of the furnaces. Therefore, the imported refractory bricks cannot be called component parts of industrial furnaces, implying thereby that 'components' are understood to be meant only for initial assembly of a machine.

2. On appeal the appellants herein did not succeed. Lower appellate authority has found that the appellants have not brought any evidence on record to show that the bricks are of special shape or quality. They are standard bricks as mentioned in the invoice and the Bill of Entry.

Therefore the benefit of Notification 242/76 is not admissible. Hence this appeal before us.

3. Ld. Advocate Ms. Reena Khair, submits that 'spares' for use in furnaces are also 'components' as held by Larger Bench of the Tribunal in the case of Jindal Strips Ltd. reported in 1997 (94) E.L.T. 234. The Notification does not say that the benefit would be available only when the imported components are used for assembly of industrial furnaces.

4. As regards the second condition that the refractory bricks should be of special shape or quality ld. Advocate has drawn our attention to the grounds of Appeal. From there, it is observed that these bricks are not the general routine types of refractory bricks used in industrial furnaces, normally available for furnaces for cement & porcelain/Pottery Industry. In those furnaces it has been explained, production is made in batches, result is that, the furnaces are to be cooled before a fresh batch is once again charged. It is again heated up to high temperature. The normal bricks, therefore, are required to withstand sudden shocks of heat and sudden cooling. The imported bricks, it is therefore explained, imported by the appellants are for glass furnaces which work round the clock for specified number of days or specified number of hours continuously. These bricks are exposed to high temperature continuously round the clock. It is further stated Zirconium Silicate bricks are expensive when compared to Bauxite bonded bricks or other standard type of bricks used in other industry. The cost factor in the glass industry is compensated by the quality of refractories used for long life of the furnace and the production output gained out of continuous production instead of discrete production in batch system. Ld. Advocate, therefore, submits that the benefit of Notifications should be extended. She very fairly earlier brought to our notice the various judgments on the refractory 'bricks' and 'blocks' used in furnaces, for example in the case of - 2. In their own case, vide Tribunals Final Order No. 426/95-D [1996(82) E.L.T. 383 (T)].

5. We, however, find that both these judgments do not deal with the controversy which we are required to deal here in this appeal.

6. Opposing the contention of ld. JDR Shri V.M. Udhoji reiterates the findings of the lower authorities. He has also drawn attention of the Bench to the judgment of the Tribunal in the case of Hind Lamps Ltd. as mentioned above, wherein the matter has been decided against the appellants herein. But we note at this stage that the controversy in the case was whether the goods imported were blocks to which the benefit of Notification 242/76-Cus. was not available or they were refractory bricks. Therefore, this judgment does not help the Revenue.

7. We have carefully considered the pleas advanced from both sides. On the submissions made by the ld. Advocate, which have been set out in detail above, we are satisfied that the benefit of the Notification 242/76-Cus. and of 112/87-Cus. would be available to the refractory bricks because these are used as components in an Industrial Furnaces and these are of special shape and quality. Accordingly we set aside the impugned order and allow the appeal with consequential relief to the appellants.

8. At this stage our attention has been drawn by the ld. Advocate to the fact that the matter originated as refund claim. Therefore, the question of refund to be dealt with by the original authority, in accordance with law and on the basis of the present provisions of Section 27 of the Customs Act.