ORDER
V. Rajamanickam, Member (T)
1. The Appeal is for extending the benefit of Notification No. 125/86-Cus., dated 17-02-1986 for the Band Slicer imported as a set with the High Speed packing machines.
2. The appellants are engaged in the production and marketing of “Modern Bread”. They had imported 3 Sets of machinery consisting of Slicer, Bagger and Tyerbag along with spares and claimed assessment at the concessional rate under Notification No. 125/86 dated 17-02-1986 and as amended.
3. The Assistant Collector had given them the benefit of the Notification No. 125/86-Cus., dated 17-02-1986 to the Bread Bagger, and rejected the claim for the two other machines on the ground that they are capable of functioning independently and do not fulfil the requirements indicated in Sl. No. 23 of the Notification supra.
4. On appeal before the Collector of Customs (Appeals), he gave the benefit to the Twist Tyer meant to close the bags and not to the slicer, as the slicer cuts the bread into different slices and was capable of being hooked to any standard packing machine and cannot be classified as a packing or processing machine and the Notification was held not to be available to the slicer.
5. The reasoning adopted by the appellants is that Sl. No. 23 of the Notification No. 125/86-Cus. is for Aseptic packing machinery which may also perform one or more of the following processes in addition to packaging, presterilising, pasteurising, comprising, forming, filling, sealing, coding and marking, read with Notes 3 & 4 of the Section XVI of the Tariff and Note 7 of the Chapter 84, would cover the classification under Chapter 8422.40 and eligible for exemption under Notification No. 125/86-Cus. They further contend that slicing is a pre-requisite of packing, and in a single operation 45-90 loaves of bread are sliced, bagged and tied. That it is a composite machine whose function is for packing for commercial presentation of the product in the market.
6. Shri D.N. Mehta, the Ld. Advocate, who appeared for the appellant reiterated the grounds of appeal on the facts and the applicability of the notification along with the Section and Chapter Notes and held that the classification under Heading 8422.40, was correct and the machines related to packing machine and the benefit of the Notification should be extended. He referred to the following Case Laws in support of his arguments:-
(i) 1989 (21) E.C.C. 203 – Bombay Iron Foundry and 26 Ors. v. CCE, Hyderabad;
(ii) 1990 (28) ECC 187- Rohit Pulp and Paper Mills Ltd. v. CCE;
(iii) 1985 (5) ECC 222 (Mad.) – Precise Impex (P) Ltd., N/Delhi v. Collector of Customs;
(iv) 1990 (15) ETR 23 (CEGAT) – Escorts Limited, Faridabad v. Collector of Customs, N/Delhi;
(v) 1990 (26) ECC 56 (SB) – Universal Cans and Containers Ltd. v. Collector of Customs, Bombay;
(vi) 1990 (25) ECC 230 (CEGAT – SB) – Coates of India Ltd. v. Collector of Customs;
(vii) 1987 (32) E.L.T. 627 (Mad.) – George Tliangiah v. UOI and Ors;
(viii) 1990 (45) ELT 197 (S.C.) – Dunlop India Ltd. v. UOI and Ors.
Shri D.N. Mehta also pointed out that the Collector (Appeals) had not adverted to the appellants’ claim for lower rate of duty in respect of other items.
7. Shri M.K. Sohal, Ld. J.D.R. referred to the invoice and stated that three machines were imported and the Bread Slicer was classifiable under Heading 8479.89. The machine was not a composite machine and Section Note 3 of Section XVI was not applicable as each of the machines could work independently, although the prime mover was one. However, he stated that the slicer is not covered by the Notification No. 125/86Cus. Sl. No. 23 or 29 and Section Notes and Chapter Notes are not applicable for interpretation of notification. He cited the Case Law reported in 1987 (13) ECR 553 – Guest Keen Williams Ltd. v. Collector of Customs, Calcutta, para 20. He averred that Case Law cited by the Ld. Advocate were not applicable.
8. We have considered the submissions. The appellants have imported 3 sets of each of the following machines :-
(i) UBE Model 90-1 - Bread Bagger with Discharge Conveyor, (ii) UBE Hartman 90-75 - Band Slicer. (iii) Burford 55-8/55-9 - Bagtyer.
The machines have been assessed under Heading 8422.40 as “other packing or wrapping machinery”, the benefit of Notification has been given to the Bagger and Tyer, but rejected for Slicer. The Notification No. 125/86-Cus. Sl. No. 23 relates to :-
“Aseptic packaging machinery which may also perform one or more of the following processes in addition to packaging:- Pre-sterilising, pasteurising, comprising, forming, filling, sealing, coding, marking.”
The Wiley Encyclopaedia of Packaging Technology describes Aseptic Packaging as “Aseptic packaging is the independent sterilization of product and package, bringing them together in a sterile environment and sealing so that the contained food may be stored for prolonged periods at ambiet temperatures.” Therefore, an Aseptic packaging machinery conveys the meaning that it is a machine for packaging the food for purpose of preservation and to keep the product sterile. The UBE Model 90-75 Band Slicer is for slicing the bread, and the appellants contend that the functions of the three machines are closely synchronised to each other to perform the primary function of packing/bagging/wrapping at a specific speed of 45-90 loaves per minute in a single operation. Pausing here for a moment, the HSN page 1185 explains the Heading 84.22, relevant extract is abstracted :-
“Machines which in addition to packing, wrapping, etc., also perform other operations remain classified in the heading provided the additional operations are incidental to the packing, etc. Thus machines which pack or wrap goods into the forms or presentations in which they are normally distributed and sold in commerce, are classified in this heading, whether or not the machines also contain devices for weighing or measuring. Similarly the heading includes machines incorporating devices which, as a secondary function, cut, mould or press previously prepared products into purely presentational forms without affecting their essential character (e.g., machines for moulding butter or margarine into blocks, etc., and wrapping them). The heading does not, however, cover machines into whose primary function is not to pack, wrap, etc., but to manufacture raw or semi-finished materials into finished products (e.g., combined cigarette making and packaging machines).”
Therefore, while in the process of wrapping or packing, any secondary function like cutting butter or margarine into blocks would also get covered by this heading. Likewise, if the machine which undertakes the packing of bread, incidentally, has to slice the bread before packing, it has to be considered as an integrated unit, especially when the entire process, slicing, bagging and tieing is done in one single operation, and the “unusual loaf sizes are easily handled with minor adjustments” – as per the catalogue. The slicer which combines its operation with the packing of bread has to be taken as a part of the entire process. It is not a single machine imported but it is a set combined with the other machines which perform the operation of slicing, bagging and tieing. The slicing of the loaf is for the convenient presentation in the commercial market. The view held by the Revenue that each machine can function independently will not preclude the benefit of the exemption as, taken as it is, the entire operation is done by synchronising each of the machines to achieve the single object of aseptic packaging. Therefore, it has to be given the benefit of the concession under the notification.
The other points regarding the claim for lower assessment for the spare parts which the appellants claim that they had paid duty under protest under their letter to the Assistant Collector dated 4-5-1987 and was not considered by the original and the appellate authorities, we remand the claims for considering the appellants’ claim for issue of a speaking order.
9. The appeal consequently is allowed.