Collr. of Customs Vs. Travancore CochIn Chemicals Ltd. - Court Judgment

Excerpt:
1. this is an, appeal against the order of the collector (appeals), madras dated 29-8-1986 filed by the department.2. "learned dr stated that the respondents had imported spare parts for short circuit elimination system. after clearance of the goods, a demand notice was issued on the ground that the imported printed circuit boards were popti-lated; and hence the benefit of notification 74/85 was not available, as a result they were leviable to cvd.3. the importers appealed against the order to the collector (appeals), who accepted their petition holding that notification 74/85 does not give any precise definition or scope of the terms printed circuits and unpopulated printed circuit boards. however, in common parlance, the moment active/passive components are mounted on a base printed circuit board it is normally termed as a printed circuit. hence the notification should be deemed printed circuit boards ... also these passive components. the goods are, therefore, covered by the notification no. 74/85-c.e.".4. the department has come up in appeal against this order as the notification distinguishes between printed circuits and unpopulated printed circuit boards and does not allow benefit to populated pcbs. in this connection, he would like to draw attention to the mcgraw hill dictionary of scientific and technical terms, fifth edition which mentions as follows : (a) printed circuit: a conductive pattern that may or may not include printed components, formed in a predetermined design on the surface of an insulating base in an accurately repeatable manner. (b) printed circuit boards : a flat board whose front contains slots for integrated circuit chips and connections for a variety of electronic components and whose back is printed with electrically conductive pathways between the components. (c) active component : in the phasor representation of quantities in an alternating-currrent circuit, the component of current, voltage, or apparent power which contributes power, namely, the active current, active voltage or active power. (d) passive component : an element of an electric circuit that is not a source of energy, such as a resistor, inductor, or capacitor. also known as passive component.5. he would like to draw attention to the submissions made by the respondents themselves before the learned collector (appeals) and narrated by him in his order which shows that the respondents/importers had themselves contended before the collector that they had imported "printed circuit boards as integral spares for the short circuit eliminating system for their caustic soda/chlorine plant. the pcbs consists of a board with transistors, potentiometers, capacitors, etc.the number of active elements is negligible when compared to the composition of the passive elements." it was on this ground they had claimed the benefit of 74/85. it was, however, the department's contention that the preparation of active and passive components was immaterial is not relevant for the purpose of notification and the learned collector has erred in treating the imported items as printed circuits and extending the benefit of the notification.6. learned counsel for the respondents stated that the learned collector has rightly taken into account the common parlance. it was their contention that a printed circuit is necessarily to be on a board and these components are part of a printed circuit, therefore, in spite of the circuit of these components being on the board, the item has been rightly held by the collector (appeals) as printed circuits and consequentially the benefit has been rightly extended to them and the order was required to be upheld.7. we have considered the above, submissions. we observe that the arguments of the learned dr have a strong force. in this connection he has rightly drawn our attention to the description of the relevant circuits in the mcgraw hill dictionary of scientific and technical terms. that apart, printed circuits have been explained in detail in the cccn vol. 3 under heading ... (sic) page 1449-1450.8. the explanatory notes also indicate that circuits on which mechanical elements or electrical components have been mounted or connected are not regarded as printed circuits within the meaning of the present heading.9. before proceeding further in the matter we also take note of the fact that according to the respondents/importers themselves pcbs imported by them were spare parts for the short circuit eliminating system of their caustic soda/chlorine plant. this aspect has also been emphasised by the learned counsel. and we find that heading 85.80/27 specifically includes articles of electrical apparatus for making circuit boards for the production of electrical circuit or for making connection of electrical circuit and printed circuit etc. however, in the bill of entry, the items have been classified under heading 90.29(2). the reasons for such a classification in view of the admitted facts has not been explained by either sides. however, as the classification of the articles is not in dispute we are not entering into this arena and are confining ourselves to the eligibility or otherwise to the exemption notification.10. it is evident that undisputedly what has been imported are pcbs which consists of a board, resistors, capacitors, etc. in other words, they are populated pcbs. learned dr is correct in pointing out that we are not concerned with the proportion of active or passive elements. in view of these admitted facts regarding the imported items, the learned collector appears to have erred in treating the items as printed circuits.11. since the goods are populated pcbs and the exemption is allowed by the notification only to the unpopulated pcbs (and not to the populated ones), therefore, the benefit of the notification was not available in respect of the item in question. we, therefore, set aside the order of the collector (appeals) and restore the order-in-original.

Judgment:
1. This is an, appeal against the order of the Collector (Appeals), Madras dated 29-8-1986 filed by the Department.

2. "Learned DR stated that the respondents had imported spare parts for short circuit elimination system. After clearance of the goods, a demand notice was issued on the ground that the imported printed circuit boards were popti-lated; and hence the benefit of Notification 74/85 was not available, as a result they were leviable to CVD.3. The importers appealed against the order to the Collector (Appeals), who accepted their petition holding that Notification 74/85 does not give any precise definition or scope of the terms printed circuits and unpopulated printed circuit boards. However, in common parlance, the moment active/passive components are mounted on a base printed circuit board it is normally termed as a printed circuit. Hence the Notification should be deemed printed circuit boards ... also these passive components. The goods are, therefore, covered by the Notification No. 74/85-C.E.".

4. The Department has come up in appeal against this order as the Notification distinguishes between printed circuits and unpopulated printed circuit boards and does not allow benefit to populated PCBs. In this connection, he would like to draw attention to the McGraw Hill Dictionary of Scientific and Technical Terms, Fifth Edition which mentions as follows : (a) Printed Circuit: A conductive pattern that may or may not include printed components, formed in a predetermined design on the surface of an insulating base in an accurately repeatable manner.

(b) Printed Circuit Boards : A flat board whose front contains slots for integrated circuit chips and connections for a variety of electronic components and whose back is printed with electrically conductive pathways between the components.

(c) Active Component : In the phasor representation of quantities in an alternating-currrent circuit, the component of current, voltage, or apparent power which contributes power, namely, the active current, active voltage or active power.

(d) Passive Component : An element of an electric circuit that is not a source of energy, such as a resistor, inductor, or capacitor.

Also known as passive component.

5. He would like to draw attention to the submissions made by the respondents themselves before the learned Collector (Appeals) and narrated by him in his order which shows that the respondents/importers had themselves contended before the Collector that they had imported "printed circuit boards as integral spares for the short circuit eliminating system for their Caustic Soda/Chlorine Plant. The PCBs consists of a board with transistors, potentiometers, capacitors, etc.

The number of active elements is negligible when compared to the composition of the passive elements." It was on this ground they had claimed the benefit of 74/85. It was, however, the Department's contention that the preparation of active and passive components was immaterial is not relevant for the purpose of Notification and the learned Collector has erred in treating the imported items as printed circuits and extending the benefit of the Notification.

6. Learned Counsel for the respondents stated that the learned Collector has rightly taken into account the common parlance. It was their contention that a printed circuit is necessarily to be on a board and these components are part of a printed circuit, therefore, in spite of the circuit of these components being on the board, the item has been rightly held by the Collector (Appeals) as printed circuits and consequentially the benefit has been rightly extended to them and the order was required to be upheld.7. We have considered the above, submissions. We observe that the arguments of the learned DR have a strong force. In this connection he has rightly drawn our attention to the description of the relevant circuits in the McGraw Hill Dictionary of Scientific and Technical Terms. That apart, printed circuits have been explained in detail in the CCCN Vol. 3 under Heading ... (sic) page 1449-1450.

8. The explanatory notes also indicate that circuits on which mechanical elements or electrical components have been mounted or connected are not regarded as printed circuits within the meaning of the present heading.

9. Before proceeding further in the matter we also take note of the fact that according to the respondents/importers themselves PCBs imported by them were spare parts for the short circuit eliminating system of their Caustic Soda/Chlorine Plant. This aspect has also been emphasised by the learned Counsel. And we find that Heading 85.80/27 specifically includes articles of electrical apparatus for making circuit boards for the production of electrical circuit or for making connection of electrical circuit and printed circuit etc. However, in the bill of entry, the items have been classified under Heading 90.29(2). The reasons for such a classification in view of the admitted facts has not been explained by either sides. However, as the classification of the articles is not in dispute we are not entering into this arena and are confining ourselves to the eligibility or otherwise to the exemption Notification.

10. It is evident that undisputedly what has been imported are PCBs which consists of a board, resistors, capacitors, etc. In other words, they are populated PCBs. Learned DR is correct in pointing out that we are not concerned with the proportion of active or passive elements. In view of these admitted facts regarding the imported items, the learned Collector appears to have erred in treating the items as printed circuits.

11. Since the goods are populated PCBs and the exemption is allowed by the Notification only to the unpopulated PCBs (and not to the populated ones), therefore, the benefit of the Notification was not available in respect of the item in question. We, therefore, set aside the order of the Collector (Appeals) and restore the Order-in-Original.