Cce Vs. Hindustan Platinum Ltd. - Court Judgment

Excerpt:
1. the question for consideration in this appeal is the classification of the product that the respondent manufactured, sputter targets, made from gold. the goods are in fact nothing other than plates of gold of varying dimensions approximately 488mm x 87.9 x 3 mm. these, except the goods of the targets supplied lo timex watches ltd., have holes drilled at the top to enable them to be mounted on the side wall of deposition machine, coating machine. the target supplied to timex watches ltd. is mounted on copper plate which has holes on it for being mounted on the machine.2. the assessee had claimed classification of these goods under heading 71.01. this heading is for articles of precious metal. the assessee has also claimed the exemption available to the goods of this heading as articles of gold, contained in entry 191 of the table to notification 5/99 and the corresponding exemption in notification 5/98. by issue of notice, the department proposed classification in heading 85.43 as parts of electrical machinery not elsewhere specified. the assistant commissioner confirmed the proposal in the notice. the assessee appealed this order. the commissioner (appeals) concluded that the goods were rightly classifiable under heading 71.15 and allowed the assessee's appeal. hence this appeal by the department.3. we were explained the use of these targets and for which purpose an affidavit (as drafted by the counsel for the respondent) has been filed by ashish choksi, director of the respondent and extracts from the encyclopaedia of chemical technology by kirk and othmer were also produced. the latter book describes sputter deposition, also called sputtering, to be "the deposition on surface (sputtering target) by physical sputtering. physical sputtering is a non thermal vaporisation process where various atoms are physically ejected by transfer from an atomic size energetic bombarding. this particle is usually a gaseous ion accelerated from the plasma or an ion gun." counsel for the respondent also produced a brochure of the multi-arc vacuum system inc., st. paul, mn, usa. this describes the process also referred to as physical vapour deposition as follows: pvd is a low temperature process used to hard coal tools and wear parts in a vacuum. clean tools prepared to finished tolerances are fixtured in the vacuum chamber then heated from 400f to 900f (200c to 485c). next, titanium ions are evaporated from cathodes by a highly localized electric arc. the titanium ions are associated with nitrogen gas to produce a self-sustaining arc that generates a concentrated high energy plasma that is directed at the workpiece. coating thickness can be controlled from 0001" to 0002" (2 to 4 microns). following cool down, tools are ready for service with no further processing.4. from this write up and diagram, it appears that the metal whose deposition is required on the workpiece, also referred to as substrate, forms the cathodes of a vacuum tube. the processes employed results in atoms of this metal being removed from the control, transported to the substrate and deposited on it. the condensed chemical dictionary also explains sputtering, also known as cathode sputtering, 'the ejection of atoms or groups of atoms from the surface of the cathode of a vacuum lube as the result of heavy-ion impact, and use of this process to deposit a thin layer of metal on a glass, plastic, metal, or other surface in vacuum." 5. the commissioner has relied upon the contents of the explanatory notes in the harmonized system of nomenclature to heading 71.15 which provide that gold, silver or platinum anodes and electroplating anodes are classifiable under this heading. he had also noted that on importation, such goods were classified in this heading. the department's appeal proceeds on the footing that these cathodes are parts of the machine in which the physical vapour deposition takes place. it is claimed that the notes to distinguish the heading 71.15 on the ground that they applied to gold used for "electroplating by the process of electrolysis" and are specially designed and fabricated for fitment in any particular machine. they also emphasise the fact that they are not anodes but cathodes. the departmental representative emphasises these grounds.6. we are not satisfied that these factors justify the classification claimed in the appeal. the department has not advanced any specific evidence in support of it to say clearly that the targets are parts of a machine. the anodes referred to in the notes to heading 71.15 are connected to terminal of the electric circuit. the other forms the substrate which is to be electroplated. the electroplating process results in atoms of the metal being removed by the process from the anode and being deposited on the cathode. this however does not render the anode (or the cathode) being liable to be considered as part of the electroplating machine. as we have noted, notes 71.04 specifically include anodes and precious metal. heading 85.15 excludes from classification in that heading for such goods as electrical apparatus, ultrasonic etc., soldering brace or welding machines, consumable electrodes made of base metal or metal crafted on graphite which are classifiable in the respective chapters. no doubt in the case before us there is a difference in that the article to be coated is the anode and the gold is the cathode. we do not see how the reversal of the electric circuit by itself renders the notes to heading 71.15 and others that we have referred to incapable of application. except for this difference, the use to which the metal is put, in both these cases, one under consideration and the one referred to note 71.15, is identical and it follows the basic principle that removal of metal from one terminal for deposit in the other.7. while the appeal does not make the distinction, we have noted that the targets supplied to timex watches ltd. mounted on a copper plate.it was explained to us that this is for convenience of mounting and there is no difference in the application. we are thus of the view that no interference with the commissioner's finding is called for.

Judgment:
1. The question for consideration in this appeal is the classification of the product that the respondent manufactured, sputter targets, made from gold. The goods are in fact nothing other than plates of gold of varying dimensions approximately 488mm x 87.9 x 3 mm. These, except the goods of the targets supplied lo Timex Watches Ltd., have holes drilled at the top to enable them to be mounted on the side wall of deposition machine, coating machine. The target supplied to Timex Watches Ltd. is mounted on copper plate which has holes on it for being mounted on the machine.

2. The assessee had claimed classification of these goods under heading 71.01. This heading is for articles of precious metal. The assessee has also claimed the exemption available to the goods of this heading as articles of gold, contained in entry 191 of the table to notification 5/99 and the corresponding exemption in notification 5/98. By issue of notice, the department proposed classification in heading 85.43 as parts of electrical machinery not elsewhere specified. The Assistant Commissioner confirmed the proposal in the notice. The assessee appealed this order. The Commissioner (Appeals) concluded that the goods were rightly classifiable under heading 71.15 and allowed the assessee's appeal. Hence this appeal by the department.

3. We were explained the use of these targets and for which purpose an affidavit (as drafted by the counsel for the respondent) has been filed by Ashish Choksi, director of the respondent and extracts from the Encyclopaedia of Chemical Technology by Kirk and Othmer were also produced. The latter book describes sputter deposition, also called sputtering, to be "the deposition on surface (sputtering target) by physical sputtering. Physical sputtering is a non thermal vaporisation process where various atoms are physically ejected by transfer from an atomic size energetic bombarding. This particle is usually a gaseous ion accelerated from the plasma or an ion gun." Counsel for the respondent also produced a brochure of the Multi-Arc Vacuum System Inc., St. Paul, MN, USA. This describes the process also referred to as physical vapour deposition as follows: PVD is a low temperature process used to hard coal tools and wear parts in a vacuum. Clean tools prepared to finished tolerances are fixtured in the vacuum chamber then heated from 400F to 900F (200C to 485C). Next, titanium ions are evaporated from cathodes by a highly localized electric arc. The titanium ions are associated with nitrogen gas to produce a self-sustaining arc that generates a concentrated high energy plasma that is directed at the workpiece.

Coating thickness can be controlled from 0001" to 0002" (2 to 4 microns). Following cool down, tools are ready for service with no further processing.

4. From this write up and diagram, it appears that the metal whose deposition is required on the workpiece, also referred to as substrate, forms the cathodes of a vacuum tube. The processes employed results in atoms of this metal being removed from the control, transported to the substrate and deposited on it. The Condensed Chemical Dictionary also explains sputtering, also known as cathode sputtering, 'The ejection of atoms or groups of atoms from the surface of the cathode of a vacuum lube as the result of heavy-ion impact, and use of this process to deposit a thin layer of metal on a glass, plastic, metal, or other surface in vacuum." 5. The Commissioner has relied upon the contents of the explanatory notes in the Harmonized System of Nomenclature to heading 71.15 which provide that gold, silver or platinum anodes and electroplating anodes are classifiable under this heading. He had also noted that on importation, such goods were classified in this heading. The department's appeal proceeds on the footing that these cathodes are parts of the machine in which the physical vapour deposition takes place. It is claimed that the notes to distinguish the heading 71.15 on the ground that they applied to gold used for "electroplating by the process of electrolysis" and are specially designed and fabricated for fitment in any particular machine. They also emphasise the fact that they are not anodes but cathodes. The departmental representative emphasises these grounds.

6. We are not satisfied that these factors justify the classification claimed in the appeal. The department has not advanced any specific evidence in support of it to say clearly that the targets are parts of a machine. The anodes referred to in the notes to heading 71.15 are connected to terminal of the electric circuit. The other forms the substrate which is to be electroplated. The electroplating process results in atoms of the metal being removed by the process from the anode and being deposited on the cathode. This however does not render the anode (or the cathode) being liable to be considered as part of the electroplating machine. As we have noted, notes 71.04 specifically include anodes and precious metal. Heading 85.15 excludes from classification in that heading for such goods as electrical apparatus, ultrasonic etc., soldering brace or welding machines, consumable electrodes made of base metal or metal crafted on graphite which are classifiable in the respective chapters. No doubt in the case before us there is a difference in that the article to be coated is the anode and the gold is the cathode. We do not see how the reversal of the electric circuit by itself renders the notes to heading 71.15 and others that we have referred to incapable of application. Except for this difference, the use to which the metal is put, in both these cases, one under consideration and the one referred to note 71.15, is identical and it follows the basic principle that removal of metal from one terminal for deposit in the other.

7. While the appeal does not make the distinction, we have noted that the targets supplied to Timex Watches Ltd. mounted on a copper plate.

It was explained to us that this is for convenience of mounting and there is no difference in the application. We are thus of the view that no interference with the Commissioner's finding is called for.