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CASE NO.:

Appeal (civil) 11388 of 1995

PETITIONER:

COLLECTOR OF CUSTOMS, BOMBAY

Vs.

RESPONDENT:

M/S.GRASIM INDUSTRIES LIMITED

DATE OF JUDGMENT: 11/05/2000

BENCH:

S.V.Patil, S.S.M.Quadri, S.P.Bharucha

JUDGMENT:

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J U D G M E N T

SYED SHAH MOHAMMED QUADRI, J.

The short question that arises in this appeal is:

whether hydrochloric acid synthesis unit of combustion

chambers is classifiable under Heading 84.17(1) or Heading

68.01/16(1) of the Customs Tariff Act, 1975. The appeal

came up before us on reference by a Bench of two learned

judges, taking the view that the decision of this Court in

Ballarpur Industries Ltd. Vs. Collector of Customs, Madras

[1995 (75) E.L.T. 6 (S.C.)] holding that a part of paper

finishing machinery was classifiable under Heading 84.31 of

Customs Tariff Act, 1975 (for short, the CTA) and not

under Heading 68.01/16(1) of the CTA, is seemingly different

from what is stated in Saurashtra Chemicals Vs. Collector

of Customs [1997 (95) E.L.T. 455 (S.C.)]. The facts giving

rise to this appeal fall in a short compass. The respondent

imported four cases of hydrochloric acid synthesis unit of

combustion chambers and claimed that they are classifiable

under Heading 84.17(1) of the CTA. By order dated October

7, 1982, the Assistant Collector of Customs, Bombay,

rejected the claim and classified them under Heading

68.01/16(1) of the CTA. The Collector of Customs (Appeals),

Bombay, acceded to the contention of the respondent for

their classification under Heading 84.17(1) of the CTA. The

appellant appealed before the Customs Excise and Gold

(Control) Appellate Tribunal, New Delhi (for short, the

CEGAT). On November 11, 1991, the CEGAT confirmed the

order of the Collector of Customs (Appeals) and dismissed

the appeal. The appellant challenges the order of the CEGAT

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in this appeal. Mr.N.K. Bajpai, learned counsel appearing

for the appellant, has contended that the respondent

imported parts of machinery which are articles of graphite

falling within Heading 68.01/16(1) of the CTA and as Note

1(a) of Chapter 84 of the CTA specifically excluded articles

falling within Chapter 68 of the CTA, they were wrongly held

to be classifiable under Heading 84.17(1) of the CTA. He

submitted that in Saurashtra Chemicals, Porabandar Vs.

Collector of Customs, Bombay [1986 (23) E.L.T. 283], the

larger Bench of the Tribunal by majority held that the spare

parts of the machinery made of carbon were classifiable

under Heading 68.01/16 of the CTA which was approved by this

Court in Saurashtra Chemicals vs. Collector of Customs

(supra). Therefore, the order under appeal has to be set

aside.

In support of the order under appeal, Mr. Joseph

Vellapally, learned senior counsel appearing for the

respondent, drew our attention to title of Chapters 68 and

84 of the CTA to point out that plants and machinery fell

within Heading 84.17(1) of the CTA and not within Heading

68.01/16(1) of the CTA. According to the learned counsel,

Note 1(a) to Chapter 84 of the CTA has no application to

machinery or part of machinery covered by Heading 84.17(1)

of the CTA. As such the Collector of Customs (Appeals) as

well as the CEGAT rightly classified the goods under Heading

84.17(1) of the CTA.

Inasmuch as the controversy relates to the

interpretation of Headings 68.01/16(1) and 84.17(1) of the

CTA, it would be useful to quote them here:

CHAPTER 68 ARTICLES OF STONE, OF PLASTER, OF CEMENT,

OF ASBESTOS, OF MICA AND OF SIMILAR MATERIALS

NOTES This Chapter does not cover: (a) to (n) *** ***

***

_________________________________________________________

Heading Sub-heading No. Standard Central No. and

description Rate of Excise of article duty Tariff Item

_________________________________________________________

68.01/16 Articles of natural or 22F, artificial stone,

of 23C, agglomerated natural or 51 artificial abrasives, of

plastering material, of cement, of concrete, of asbestos, of

asbestos-cement or cellulose fibre cement, or of mica;

articles of vegetable materials agglomerated with mineral

binders; mineral wools; expanded mineral materials;

articles of other mineral substances, not elsewhere

specified or included :

(1) Not elsewhere 100% specified

(2) Grinding stones,grinding 40% wheels and the like,

of natural stone, of agglomerated natural or artificial

abrasives, and segments or other finished parts of such

stones and wheels but excluding hand polishing stones, whet

stones, oil stones, and hones.

A perusal of the title of Chapter 68 of the CTA and

the description of the sub-heading shows that what is

brought in thereunder are articles of stone, plaster,

cement, asbestos, mica or similar materials. There is no

scope to bring within that Chapter machinery and mechanical

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appliances and parts thereof.

CHAPTER 84

BOILERS, MACHINERY AND MECHANICAL APPLIANCES; PARTS

THEREOF

NOTES

1. This Chapter does not cover:

(a) millstones, grindstones and other articles falling

within Chapter 68;

2. to 5. *** *** ***

_________________________________________________________

Heading Sub-heading No. Standard Central No. and

description Rate of Excise of article duty Tariff Item

_________________________________________________________

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 sterlising, 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:

1. Not elsewhere specified 40%

2. Machinery and equipment 60% for food and drink

other than those used for treating milk, instantaneous or

storage water-heaters, non- electrical; machinery and

equipment imported for use in air conditioning.

The title of Chapter 84 of the CTA leaves no room for

doubt that the goods falling within it are boilers,

machinery, and mechanical appliances and parts thereof. The

description and the sub- headings enumerate various

categories of machinery and appliances falling thereunder.

At the beginning of the Chapter are Notes which specify what

articles are excluded from that Chapter. A reading of the

Note 1(a) on which reliance is placed by Mr.Bajpai, suggests

that it excludes millstones, grindstones and other articles

falling within Chapter 68 from being classified under

Heading 84.17(1) of the CTA. There can be no controversy

about the proposition that if the goods in question are

machinery, plant and similar laboratory equipment or parts

thereof, they fall within Chapter 84 of the CTA; but if

they are millstones, grindstones or other articles that fall

within Chapter 68 of the CTA, they get excluded from Chapter

84. A perusal of the order of the Tribunal shows that

though the combustion chamber of the goods in question is

made of graphite, they constitute a complete unit,

consisting of three parts fitted with burners and other

accessories forming part of synthesis unit of caustic soda

plant and thus an equipment. In that equipment hydrogen is

burnt with chlorine and thereby a new product hydrochloric

acid is produced. In the latter part of the judgment the

Tribunal recorded the following finding :

Further there is no dispute that what they have

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imported is for combustion chambers and drawing also

indicates that the combustion chamber consist of three

parts, that is, upper shell, intermediary shell and lower

shell alongwith fittings. Based upon the records and

functioning of the imported parts we are of the opinion that

they constitute a complete unit.

In view of this categorical finding, there can be no

hesitation in holding that the goods in question fall within

Heading 84.17(1) of the CTA unless it is shown they being

millstones, grindstones and other articles falling within

Chapter 68 have to be excluded from Heading 84.17(1) of the

CTA in view of Note 1(a) of Chapter 84. Obviously the

articles in question are not millstones, grindstones or the

like. We have carefully gone through various sub-headings

of Chapter 68 of the CTA and we are of the view the

contention that the goods in question fall within Chapter 68

has no substance. In the case of Saurashtra Chemicals,

Porbandar (supra), a larger Bench of the Tribunal by

majority took the view that carbon rings and carbon seals

which are used as spare parts in turbosets and compressors

fall within the Heading 68.01/16(1) of the CTA and the

minority held that they fall within Heading 84.65 of the

Customs Tariff Schedule. The view of the majority was

approved by this Court in Saurashtra Chemicals case

(supra). No reasons are given in that case. But a perusal

of the order of the Tribunal shows the question there

related to articles which were spare parts made of carbon

and not to a complete unit or an equipment, unlike in the

present case where the goods constitute a complete unit.

Also, the goods here are not made entirely of graphite;

only a part thereof is graphite. Further in Saurashtra

Chemicals case, there was agreement between the parties

that those articles would fall both within Heading

68.01/16(1) as well as within Heading 84.65.

In Ballarpur Industries Ltd.s case (supra), granite

press rolls fitted with mild steel shafts and end-plates and

its cavities filled with concrete were admitted to be a part

of the paper finishing machinery. Disagreeing with the

judgment of the Tribunal that parts of the machinery were

classifiable under Chapter 68 of the CTA, this Court held

that they were classifiable under Heading 84.31 of the CTA.

The distinction between the Saurashtra Chemicals case and

the Ballarpur Industries case is that in the former case

the articles made of carbon were conceded to fall both

within Heading 68.01/16(1) as well as within Heading 84.65

being spare parts of machines whereas in the latter case the

goods were part of machinery not falling within Chapter 68

and were not made entirely of granite. In the instant case,

in view of the finding recorded by the Tribunal that the

goods in question constitute a complete unit, an equipment,

and are not made only of graphite they are clearly

classifiable under Heading 84.17 (1) of the CTA. We,

therefore, find no illegality in the order of the Tribunal.

The appeal fails and it is accordingly dismissed with costs.