ORDER
1. This is a Revision Application filed before Government of India which, under Section 131-B of the Customs Act, 1962, is to be proceeded with as if it were an appeal filed before the Tribunal.
2. The facts of the case in brief are that the Appellant firm imported in 1975, at the port of Bombay, 3 of what were described as “Stainless Steel Press Plates” from West Germany. The importers filed a Bill of Entry for clearance of the goods claiming classification of the goods under Item 72(3) read with 72(b) of the Indian Customs Tariff Schedule (ICT) as it stood then, i.e., prior to the introduction in August, 1976 of the revised Customs Tariff Schedule of 1975. The importers urged before the Deputy Collector of Customs that the Stainless Steel Press Sheets in question were of a special quality, were not meant for general purposes and that they had acquired certain characteristics which qualified them for classification as “component parts” of machinery falling under Item 72(3) of the ICT. The Deputy Collector did not accept the contention of the Appellants that these were “components parts of the hydraulic press” and held that the imported sheets fell squarely within the purview of item 63(20 A) of the ICT which specifically covered Stainless Steel Plates, sheets and strips. Aggrieved with the said order, the Appellants filed an appeal before the Appellate Collector of Customs, Bombay who, after considering the written and oral submissions of the Appellants, as also the note of opinion furnished by Dr. P.C. Mukherjee of the Indian Institute of Technology, Bombay held that the imported materials could not be said to have lost their identity as Stainless Steel Sheets and they fell within the purview of Item 63(20 A) which was specific for Stainless Steel Sheets. It is against this order that the Appellants filed a Revision Application before the Central Government which, as stated above, stands transferred to this Tribunal for disposal as if it were an appeal filed before it.
3. At the outset, Shri Narasimhan, the learned Counsel for the Appellants submitted that a hearing had already been given by Revisionary Bench of the Government of India on 11.8.1978 and in pursuance of the said hearing, the Appellants had furnished a note setting out in detail the submissions made during the hearing. He prayed that this note might be taken on record as part of the present proceedings. This request was allowed by the Bench.
4. Before we proceed to narrate and discuss the submissions of the Appellants and of the Respondent, it would be useful to set out in extenso the nomenclature of the competing items of the Indian Customs Tariff Schedule which are relevant in the present case:
Item 72(3)
Component parts of machinery as defined in Item Nos. 72, 72(1) and 72(2) and not otherwise specified, namely, such parts only as are essential for the working of the machine or apparatus and have been given for that purpose some special shape or quality which would not be essential for their use for any other purpose but excluding small tools like twist drills and reamers, dies and taps, gear cutters and hacksaw blades:
Provided that articles which do not satisfy this condition shall also be deemed to be component parts of the machine to which they belong if they are essential to its operation and are imported with it in such quantities as may appear to the Collector of Customs to be reasonable.
Item 63(20A)
Stainless Steel Plates, sheets and strips.
It may be mentioned that the Appellants’ claim is for classification of the subject goods under Item 72(3) ICT within the scope of its opening clause; the Counsel for the Appellants made it clear that their claim was not with reference to the proviso to the said clause. However, the Departmental Representative in the course of his argument, did refer to the proviso also to stress his point that the case did not at all fall within the scope of Item 72(3) ICT.
5. We may now consider the contentions of the Appellants. The Appellants had imported in or around 1961 a Hydraulic Press from M/s. Siempel Kamp of West Germany. It is stated that the said Hydraulic Press manufacturers were not fabricating all parts of the Press and that they were not making Press Plates. Along with the Hydraulic Press, the suppliers had sent 52 Nos. Press Plates made of brass. These Press Plates had to be replaced in the year 1967 with brass press plates suitably nickel chromium plated. These were assessed to duty under Item 72(3) of the ICT as component parts of machines. It appears these press plates did not give the required performance and, therefore, after consulting experts and the manufacturers of the Hydraulic Press, the Appellants placed an order for the subject stainless steel press plates with M/s Laue & Co. of West Germany. M/s Laue imported ordinary stainless steel sheets produced in USA and subjected them in West Germany to processes like honing, micro-grinding and micro-polishing. By these processes it was claimed the ordinary grade stainless steel sheets were converted into finished plates for the Hydraulic Press. The goods were imported into the country under a Capital Goods Licence issued by the Chief Controller of Imports and Exports and not under a licence issued by the Iron & Steel Controller who was the proper licensing authority for commercial grade stainless steel. It was not correct to say, as the Deputy Collector of Customs had held, that the impugned goods did not lose their identity as stainless steel sheets and that neither physical or chemical properties nor shape of the sheets were changed by the processing done subsequent to their rolling.
6. In support of their contention that the impugned goods had several outstanding characteristics which distinguished them from commercial quality stainless steel sheets, the Appellants made several submissions. Firstly, the Press Plates had been put to the precise required dimensions in length and breadth to fit to the specific “platten” of the Hydraulic Press, Secondly, the Press Plates had been finished to a thickness tolerance ±0.05 mm. whereas commercial grade stainless steel sheets had a thickness tolerance of ±0.3 mm. Thirdly, while the subject goods were made out of stainless steel of AISI type 410 steel commercial grade stainless steel was of AISI 304, 306 and 316 types. This particular type of steel had been chosen because of its resistance to Hydrochloric acid gas likely to be evolved during the processing of PVC. Fourthly, the working surfaces of the press plates had been honed and microground to provide dead parallel faces and subsequently mirror finished to impart bright untarnished surface to plastic sheets to be processed in the Hydraulic Press. Fifthly, stainless steel of AISI 410 type had been specially selected because the Press Plates were subject to temperatures in the vicinity of 250° C for prolonged periods, at which temperature commercial grade stainless steel was likely to be isothermally transformed. Lastly, while commercial grade stainless steel was available at Rs. 65/- per KG, the specially “fabricated” press plates were purchased at Rs. 320/- per KG which proved the extent of special processing to render them fit for specific use rather than as general purpose stainless steel sheets for further fabrication. The Appellants also relied upon the expert opinion of Dr. P.C. Mukherjee, Professor of Metallurgy in the Indian Institute of Technology, Bombay, in which he had stated that the stainless steel press plates inspected by him formed a part and parcel of the Hydraulic Press in the compounding and processing factory of the appellants’ chemicals, plastics and fibres division and a part of the processes used in the manufacture of PVC sheets and plates with high glass mirror finish surfaces. Shri Narasimhan, the learned Counsel for the Appellants, submitted that as between the 2 items of the ICT, namely 72(3) and 63(20A), the former was more specific in relation to the subject stainless steel press plates. He made it clear that there was no dispute in so far as the classification of the Hydraulic Press itself was concerned; it fell for classification under Item 72(b). He also made it clear that the Appellant’s claim for classification of the subject goods was not within the meaning of the proviso to Item 72(3) ICT, but as component parts falling within the purview of the opening clause of the said item. The Counsel submitted in this context that the words “not otherwise specified” in the main clause of Item 72(3) ICT qualified “machinery” and not “component parts”. In support of this argument, he relied upon the Supreme Court judgment in the case of Siemens Engineering and Manufacuring Co. Ltd. v. Union of India Anr. . In that case the competing items were 73(21) ICT which was specific for “Electric motors, all sorts” and parts thereof and item 72(3) ICT. The Court held that 72(3) would prevail in preference to 73(21) if the other requirement laid down in Item 72(3) were satisfied, i.e., the article should be essential for the working of the machine or apparatus and should have been given for that purpose some special shape or quality which would not be essential for its use for any other purpose. The Pot Motors in that case were held to fall under Item 72(3) ICT because of their special characteristics which made them essential for the working of the machine. Shri Narasimhan urged that the Deputy Collector and the Appellate Collector were in error in holding that Item 63(20A) was more specific to cover the subject stainless sheet press plates in preference to Item 72(3) ICT. Shri Narasimhan also referred to the consignment of brass plates, imported some years prior to the subject consignment and for the same purpose, which were rightly, according to him, classified under Item 72(3) I.C.T. as component parts of machinery. The present goods were on all fours with that consignment but for the fact that they were made of stainless steel sheets which had been put through a high degree of processing to make them suitable for the purpose in view.
7. Appearing on behalf of the respondent, Shri Raghavan Iyer submitted that the present goods were correctly classified under Item 63(20A) ICT, the item specified for. stainless steel sheets plates and strips and not under item 72(3) ICT as component parts of machinery. The gravamen of his contention was that the goods could not be deemed to be component parts of machinery within the meaning of item 72(3) ICT. According to Shri Iyer, if an article is to be held to be a component part of a machinery within the meaning of item item 72(3) ICT, it must satisfy the tests prescribed in the said item, viz., it must be essential for the working of the machine. (Here Shri Iyer emphasized on the word “working” and sought to draw a distinction between it and the word “operation” appearing in the proviso to the said item) and it must have been given for the purpose some special shape or quality which would not be essential for its use for any other purpose. The basic requirement was that the article must be essential for the working of the machine, that is, without the said article, the machine would be incomplete and just not work. The question was: could the hydraulic press, of which the present press plates were claimed to be parts, work without the press plates? The answer was in the affirmative. The press plates were not an integral part of the hydraulic press; they were in the nature of accessories which, though not of the status of component parts of the hydraulic press, were designed for operation with the press for the purpose in view, viz., imparting a high degree of gloss to decorative plastic laminates. If the press plates had been imported with the hydraulic press and in such quantities as appeared to the Collector of Customs to be reasonable, there might have been a case to consider their classification under the proviso to item 72(3) ICT not as component parts but as “deemed” component parts within the meaning of the said proviso. In the present case, however, the press plates had not been imported along with the hydraulic press nor was it the case of the appellants that the said proviso to item 72(3) 1CT was attracted in this case. Elaborating his point, Shri Iyer submitted that the substance of the article to be worked upon in the hydraulic press and the nature of the processes employed would determine the nature of the press plates to be employed. In the present case, the articles to be worked upon were PVC laminates which would, during the processing operation, give off Hydrochloric acid gas; the purpose of the operation was to impart a high degree of gloss to the decorative laminates. Stainless Steel Plates of special specifications were chosen having these considerations in view. Turning to the appellants’ contention that the press plates were tailor-made articles and such sheets were not available in running length and that, therefore, these were of a special shape as required under item 72(3) ICT. Shri Iyer submitted that, in the form in which the press plates were imported, they were nothing but sheets. The American specification AISI 410, to which the press plates conformed, was a specification for stainless steel sheets. The press plates had not lost the shape of sheets even though they had been subjected to certain special treatment processes in West Germany (to impart the required thickness tolerance, gloss etc.). Therefore, they could not be said to have acquired special shape. Replying to Shri Narasimhan’s contention that the press plates were of special quality, Shri Iyer submitted that the special quality of the press plates was not one which made the press plate essential for the working of the machine but was one designed to impart a special quality to the PVC decorative laminates which were to be worked upon by the hydraulic press. Dr. P.C. Mukherjee’s opinion also showed that the press plates were designed for the operation of the hydraulic press and not for its working as an integral part. In the present case, the starting material was stainless steel sheets made in the USA; the end-product, after treatment in West Germany, was also stainless steel sheets with certain desired characteristics imparted to it. The press plates were claimed to be made of “Martensitic steel”, This type of steel was known to the market. In this context, he referred to certain passages in “MCGRAW HILL” book on Technology and “Glossary of terms relating to Iron and Steel” published by the Indian Standards Institution.
8. The Supreme Court judgment in the Siemens case, relied upon by the appellants, Shri Iyer urged, was not relevant to the present appeal. In that case, the electric motors (“pot motors”) were designed to be integral parts of the machine which would be incomplete without the motors. Such was not the case here: the hydraulic press could work even without press plates made of stainless steel. In fact, it was working for a long time with press plates made of brass. Concluding, Shri Iyer submitted that item 63(20A) ICT was wide enough to cover the subject press plates.
9. We have given careful consideration to the submissions made by both the parties, The question which falls for decision m this case is the correct classification under the Indian Customs Tariff Schedule, as it stood in 1975 (i.e. prior to the enactment in August, 1976 of the Customs Tariff Act of 1975), of a consignment of what are described as “stainless steel press plates” imported by the Appellants from West Germany. The competing items of the ICT are-
(a) 63(20A) – “Stainless Steel plates, sheets and strips”; and
(b) 72(3) – “Component parts of mchinery….” (The text of the item
has been reproduced in para 4 of this order).
As already mentioned in para 4, with respect to Item 72(3) ICT, the Appellants have categorically submitted that they were not claiming benefit of the proviso to the said item since the goods did not fall within its scope. Shri Iyer has also submitted in the course of his arguments that the said proviso was not applicable in the instant case, The basis for the submissions made by both the parties would seem to be that the goods in question were not imported with the machine to which they belonged and, therefore, irrespective of the merits of any other argument, the proviso would clearly be inapplicable. Having regard to this common ground, we have to confine our consideration to the relative merits of Item 63(20A) ICT vis-a-vis Item 72(3) ICT (opening clause).
10. The Appellants have been at pains to establish that the stainless steel press plates in question would fall for classification under Item 72(3) ICT in preference to Item 63(20A) in view of the fact that commercial grade stainless sheets were subjected to specialised and expensive treatment and thereby the press plates lost their identity as mere stainless steel plates or sheets and acquired special qualities as “component parts” of the Hydraulic press for production of decorative laminates with a high degree of gloss. Shri Iyer, has equally been at pains to establish that despite the extensive and expensive processing to which commercial grade stainless steel sheets had been put which resulted in the subject goods, the latter continued to be stainless steel sheets or plates; they had not acquired the status of component parts of the Hydraulic Press. The evidence on record adequately establishes the point that the subject stainless steel press plates were made out of stainless steel sheet conforming to AIS1 Type 410. This particular type of steel would appear to have been chosen because of its resistance to hydrochloric acid gas which would arise during the processing of PVC. The evidence on record also establishes that stainless steel sheets of the above type were subjected in West Germany to a series of treatments and processes including honing, microgrinding and mirror finishing in order to provide dead parallel faces to the sheets with a view to impart bright untarnished glossy surface to PVC decorative laminate sheets with the aid of the Hydraulic Press. It is also established by evidence that there has been considerable value addition by the processes to which the stainless steel sheets were subjected and that the final product is only Press Plates, which were considerably more expensive than commercial grade stainless steel sheets. The question which now arises is whether the resultant products, namely, Press Plates have lost their identity as stainless steel plates or sheets and have acquired characteristics which would bring them within the meaning of the expression “component parts of machinery” in Item 72(3) 1CT. It may be noted that Item 63 (20A) ICT simply reads: “Stainless steel plates, sheets and strips” without any qualifying clause or words. Prima facie, therefore, stainless steel plates or sheets or strips would fall for classification under this item irrespective of the degree or extent of processing they have undergone so long as they are recognized as plates, sheets or strips. In this connection, reference may be made to the submissions of Shri N.Y. Chatterjee on behalf of the Appellants before the Revision Bench of the Government of India on 11.8. 1978 to the effect that the original stainless steel sheets were metallurgic ally and chemically a “solid solution” while the hardened sheets (press plates) were “martensitic”, that is, iron carbides were precipitated out by heat treatment. The question would arise whether martensitic steel is a recognised form of stainless steel known to the trade as such Shri Raghavan Iyer made a reference to the I ndian Standa rd (IS -1956-1962) -“Glossary of terms relating to Iron & Steel” and quoted the meaning of the expression “martensite” as the “hard microconstituent formed when a steel is cooled appropriately from above the transformation temperature, that is, cooled with a speed faster than its critical cooling rate” (page 32 of the IS Publication). This Standard, as the publication indicates on page 4, is intended to define the terms commonly used in the different production units of the iron and steel industry. In support of his contention that martensite steels are a well understood type of steel in steel technology and trade, Shri Iyer also referred to page 206 of the book “Materials and Technology” Volume 111 by J.N. Dc Bussy in which it is stated that martensite stainless steels can be made with a wide range of mechanical properties because they can be hardened by heat treatment. Shri Narasimhan, the learned Counsel for the Appellants had no specific submisssions to make on this point made by Shri Iyer.
10A. Considerable reliance was placed by Shri Narasimhan, the learned Counsel for the Appellants, on the technical opinion given by Prof. P.C. M ukherjee of the Metallurgical Engineering Department. Indian Institute of Technology, Bombay in support of his submission that the stainless steel sheets in question had acquired special properties and qualities to be termed us “component parts” of the Hydraulic Press. In his opinion. Prof. Mukherjee has dwelt at length on the special qualities that need to be imparted to the Press Plates so as to enable them to be put to the desired use. Some of the special qualities are resistance to corrosion arising out of Hydrochloric acid gas, hardness to avoid possibility of scratches, a certain amount of inherent toughness, a very low degree of thickness tolerance and the need to be parallel ground to high precision both the surfaces. He has, after inspection of the Hydraulic Press in the Appellant’s factory, gone on to state that specially prepared and treated special alloy steel with proper dimensions, tolerances, hardness and surface treatment should be used in order to obtain a high degree of gloss on the plastic laminates. These requirements automatically restricted the field of choice to “Marageing steels”(i.e. specially heat treated steel) vacuum-melted rolled to get close size tolerance. The Professor further states that it was necessary for the suppliers to shape the surface carefully through various stages of grinding, honing, etc. He has opined that right from the point of selection of steel, and through the rolling process, and specific heat treatment, and subsequent machining and grinding and polishing work, specialised work has been undertaken keeping the end use specifically in view and the whole process of fabrication is tailor made work. After discussing the physical and chemical properties of the starting product and the end product, he has come to the conclusion that the press plates inspected by him formed a part and parcel of the Hydraulic press and a part of the processes used in the manufacture of PVC sheets and plates with high gloss mirror finish surfaces.
11. While the Appellants have sought to draw the conclusion from the expert opinion of Prof. Mukherjee that the press plates in question were no longer stainless steel sheets but constituted component parts of Hydraulic Press, Shri Raghavan Iyer has submitted that the expert opinion only establishes the various specialised processes to which stainless steel sheets manufactured in USA were subjected in West Germany and that it cannot be taken as establishing that the press plates formed a component part of the Hydraulic Press.
12. In coming to a conclusion on the question whether the Press Plates constitute a component part of the Hydraulic Press, one has to go by the expression used in the tariff. Admittedly, the Press Plates in question are the result of specialised processes and treatments so as to make them fit for a particular end-use, namely, imparting a high degree gloss to PVC laminates. Before we go into the question whether the press plates constitute component parts of machinery within the meaning of Item 72(3) ICT, it seems expedient to refer to a submission made by the Appellants on the Appellate Collector’s finding that Item 72(3) ICT would cover only such component parts of machinery as are not specified elsewhere in the tariff. The Appellate Collector had held that since stainless steel plates, sheets and strips were specified in Item 63(20A) of the ICT, the press plates could not fall within the scope of Item 72(3) ICT by virtue of the exclusion from it of parts specified elsewhere. The learned Counsel for the Appellants had referred in this context to the Supreme Court judgment in the case of Siemens Engineering & Manufacturing Co. of India Ltd. v. Union of India AIR 1976 SC 1785 : 1976 Cen-Cus 65D. The goods in that case were “Pot Motors” which were held to be clearly component parts of Rayon Spinning machines and were specially designed for use in spinning frames for manufacturing rayon thread and, for that purpose had been given special shape and quality which were not only not essential for their use for any other purpose, but actually rendered them incapable of being used for any other purpose. The Customs authorities had sought to assess the Pot Motors in question to duty under Item No. 73(21) ICT which, according to them were specific for “Electric Motors, all sorts and parts thereof”. The Customs authorities interpreted Item 72(3) ICT to mean that component parts (in that case “Pot Motors”) which were specified elsewhere in the tariff would not fall within Item 72(3) ICT. The Supreme Court held that the words “not otherwise specified” in Item 72(3) ICT qualified “machinery”and not “component parts”. The Court held that what Item 72(3) contemplated were component parts of that machinery which in defined in Item Nos. 72, 72(1) and 72(2) which is not otherwise specified. On this basis, the Court held that these Pot Motors in question, which were specially designed for use in spinning frames for manufacturing rayon thread fell within the scope of Item 72(3) ICT even though they might have been specified elsewhere. It is seen that the Appellants in that case had represented to the Customs authorities that the “Pot Motors”, of which 4000 had been imported in 7 different consignments, were vital component parts of rayon spinning machines which had already been imported and that the “Pot Motors” were not in excess of the quantity required for the first installation of the said plant. The quantity of Pot Motors imported was justified having regard to the number of spinning frames and the number of motors required to be connected to the 2 sides of each of the spinning frames. It was also represented that having regard to the designed speed of operation, rate of voltage, etc. the “Pot Motors” could not be used for any purpose other than with spinning frames. The Appellants had claimed assessment to duty of the said “Pot Motors” under the proviso to Item 72(3) ICT. However, the Supreme Court held that these “Pot Motors” would clearly fall within the meaning of the expression, “component parts” occuring in the opening clause of the Item 72(3) ICT. The question which arises, therefore, in the present appeal is whether the press plates would fall within the meaning of the expression “component parts” in the opening clause of Item 72(3) ICT or its proviso. As we have already noted, the Appellants have clearly stated that their claim was not with reference to the Proviso, apparently because the consignment had not been imported along with the machine of which Press Plates arc claimed to be parts. The Departmental Representative also has made a submission that the goods would not fall within the meaning of the said Proviso. Having regard to this common position, we have to consider the Appellants’ claim only with reference to the opening clause of Item 72(3) ICT, It has already been noted that the stainless steel sheets conforming to A1S1 410 had been subjected to several processes and treatments with a view to impart certain desired properties and characteristics. It has also been noted that the resultant steel, namely, “martensitic” steel is a variety of steel known to industry and trade. It is also an admitted position that the subject press plates are required to be used in the Hydraulic press because of the end-object in view, namely, to impart high degree of gloss to PVC laminates. If a dull or matt surface were to be imparted to the laminates, a different set of plates would have to be used. In fact, the Appellants had produced before the Bench samples of PVC laminates with dull finish as well as glossy finish. It is also relevant to note that during the initial years of operation of the Hydraulic press, the Appellants had, on their own admission, used press plates of brass, nickel-chromium plated. It is, therefore, apparent that the subject stainless steel press plates are not the only type of press plates which can be used with the Hydraulic press. Other types of press plates could be and have been used. The nature of the press plates to be used is determined by the substance to be worked on and the end-result sought to be achieved. As such, the press plates in question can be described to be at best, accessories which improve the usefulness or versatility of the Hydraulic Press. A component part, on the other hand, would be something which not only has some special shape or quality as required in Item 72(3) ICT, but also must be something which is essential for the working of the machine. In other words, without the article, which is claimed to be a component part, the machine would not be completed. Such does not seem to be the case with the Hydraulic press in the sense that the Hydraulic press can work without the aid of the subject press plates but then press plates are required to be used with the machine as an essential accessory for its operation if the purpose is to impart a high degree of gloss to PVC laminates. In fact, a close reading of Item 72(3) ICT would make this distinction clear; the opening clause speaks of component parts essential for the working of the machine and the proviso speaks of articles which shall be deemed to be component parts if they are essential for the operation of the machine. It needs to be made clear again, even at the cost of repetition, that the proviso of the said Item is not attracted in the present case.
13. Support can be had for the view Which we have taken in the preceding paragraph from the judgment of Allahabad High Court in the case of Commissioner of Sales Tax v. Punjab Gramophone House (1979) 43 STC 141 (All.). I n that case it was held that “Gramophone needles” would not fall within the category of “Component parts of gramophones” as they do not constitute one of the integral parts which combine to make a gramophone. Gramophone needles may be required in order that records may be played on the gramophone, but neither the gramophone records nor the needles are integral constituents of the gramophone and as such, “gramophone needles” are not a “component part of a gramophone”. One of the simple tests to be applied in order to determine whether a particular part is a “component part” of the complete machine is to see as to whether in case the machine is disassembled, the part in question would be one of the parts found on disassembling. Support can also he had from the judgment of Supreme Court in the case of State of U.P. v. Kores (India) Ltd. (1977) 39 STC 8 (SC) : R.I.R/1977 SC 132 in which it was held that “Typewriter ribbon” is an “accessory” and not a “part” of typewriter (unlike pool) though it may not be possible to use the latter without the former, Just as aviation petrol is not a part of aeroplane nor diesel is a part of a bus, in the same way, “ribbon” is not a “part of typewriter” though it may not be possible to type out any matter without it.
14. In the present case, the claim of the subject press plates made of stainless steel to the status of “component parts” of the Hydraulic Press is, if anything, even weaker than that of gramophone needles in relation to gramophones and that of typewriter ribbons in relation to typewriters. In the case of gramophones, the needle is a must to produce sound; in the case of typewriter, the typewriter ribbon is a must if the machine is to type. In the present case, however, press plates of stainless steel are not a ‘must’ for the working of the machine; as we have seen earlier, other types of press plates could be and have been used depending upon the end-result in view. There can, therefore, be no doubt that the press plates of stainless steel cannot be termed “component parts” of the hydraulic press.
15. The Appellants have referred to an earlier consignment of press plates having been assessed to duty under Item 72(3) 1CT. No evidence has been let in as regards the merits of that assessment nor is it clear whether the classification was in terms of the opening clause of Item 72(3) ICT or the proviso thereto. The said assessment, therefore, does not throw light on the question we have to decide. The Appellants have also referred to certain tariff rulings issued by the Central Board of Excise & Customs, but the premises, the basis and reasoning which led to these rulings have not been argued before us. In any case, these rulings have no binding force.
16. Having regard to the foregoing discussions, we are of the view that the subject consignment of press plates made of stainless steel squarely falls for classification under Item 63(20A) and not Item 72(3) of the Customs Tariff Schedule. In the result, the orders of the lower authorities are upheld and the appeal is dismissed.
Sd/- (B.B. Gujral) Sd/- (G. Sankaran) Vice-President Member (Tech) F. No. CD(SB)Appeal No. 33/76-B I have carefully gone through the order proposed by brother Sankaran, Member (Technical). With greatest respect for him, I am unable to persuade myself into agreeing with the same. I have therefore decided to record a separate order, which I do. 2. The facts of the case, arguments advanced by the parties and the relevant items of the Tariff Schedule have been set out by brother Sankaran in his order and their further repetition appears unnecessary. I will, however, briefly refer to some of the arguments advanced by the parties and then take up the points in controversy in the case for discussion. 3. Shri K. Narasimhan, Advocate for the appellants, argued that the imported goods were the component parts of Hydraulic Press essential for the working of the machine. Shri N.V. Raghavan Iyer, Senior Departmental Representative for the Respondent argued that the imported goods are not the component parts essential for the working of the machine. Whether or not the imported goods are component part of the machine is a question of fact and is conceded by the concurrent order passed by the Deputy Collector of Customs in his order dated 28.6.1975 and Appellate Collector of Customs in his order dated 6.2.1976, as would be explained hereinafter: The appellants at the very outset inter alia contended that the imported goods were component parts of machinery. The Deputy Collector of Customs in his order said nothing about this contention of the appellants. The only portion in his order which could be said to have any relation with this contention is as follows: The sheets in question is not catalogue part of hydraulic press but is required during the operation pressing. From this sentence, reading the Deputy Collector of Customs' order as a whole it cannot be said that the Deputy Collector did not accept the appellants' contention that the imported goods were component part of the machinery. The reasoning which weighed with the D.C. for rejecting the appellants' claim mainly was "that polishing did not alter the physical or chemical properties or shape of the imported stainless steel".
4. The Appellate Collector of Customs also did not reject the appellants’ claim on the ground that the imported goods were not component parts of machinery. The main ground which weighed with him in rejecting the appellants’ claim was that the imported goods (Stainless Steel) have not lost their form and shape or identity as stainless steel sheets because of the processing after rolling of the material. The two orders did not give any finding regarding appellants’ claim regarding the imported goods being component parts of the machinery not being accepted by the Deputy Collector and the Appellate Collector of Customs. This would mean that this part of appellants’ contention was accepted. Support for this finding could be had from observations of the Supreme Court in Siemens Engineering and Manufacturing Co. v. Union of India AIR 1976 S.C. para-4 of the judgement where in similar circumstances the S.C. drew a similar conclusion.
5. In view of the concurrent findings of the Deputy Collector of Customs and the Appellate Collector of Customs as described above, the issue whether the imported goods were component parts of machinery essential for the working of the machine does not survive for consideration. While the Tribunal in appropriate cases certainly can enter into the question of facts, in the present case I feel when two authorities, viz., Deputy Collector of Customs and Appellate Collector of Customs have not negatived this contention of the appellants, the Tribunal is not the proper forum for appreciation of new evidence nor should it enter into this question of fact.
6. Now before the Tribunal, the learned Senior Departmental Representative cannot urge against the orders of the Deputy Collector and the Appellate Collector that the imported goods were not component parts of machinery. Allowing the Senior Departmental Representative to do so would be against rules of pleading and procedures. Besides, it has to be remembered that this is a transferred proceedings to be disposed of by the Tribunal as if it were an appeal presented before it. The appellants had filed revision before the Government of India which has been transferred to the Tribunal. If the revision were heard by the Government of India there would have been no occasion for the Departmental Representative to appeal before the Government of India and make the submission which he has now made before the Tribunal. It has to be further remembered that in respect of transferred proceeding, the Tribunal has in other cases taken a view that in such proceedings the Department has no right of filing cross-objection (except in limited class of cases viz. where the Department has a right of appeal on the day the Tribunal came into existence, which is not applicable in the present case). The learned Departmental Representative without filing a cross-objection (which he could not be allowed to do) wants to achieve the same purpose by raising the same grounds orally and thus challenge the findings of fact of the Appellate Collector and Deputy Collector. This to my mind, clearly appears unjustified. Even otherwise it is well settled that finding of fact by first appellate court is ordinarily final and unless perverse or based on illegal premise should not be interfered with.
7. Even on merits whether any goods are component parts of machinery essential for the working of the machine or apparatus or not is a question of fact. No inflexible uniform formula can be laid down for a decision of this question. The decision of the question must rest on facts and circumstances obtaining in each case. Now it is nobody’s case that Hydraulic Press can work without Press Plates. The fact that the Hydraulic Press has been working with Brass Press Plates or Nickel Chromium polished Press Plates would not mean that Press Plates were not component parts of the machinery. Whether or not a particular part is component part of machinery essential for working of the machine would not depend on the material or metal which goes to make the component part. The machinery for the purpose of laminating undoubtedly requires Press Plates. Press Plates (irrespective of the material or metal which make it) would appear to be component part essential for the working of the machine or apparatus. The diagrams produced before the Tribunal show that the Press Plates when fitted become integral component parts of the machinery and without these plates, the machinery would not be able to discharge functions for which it is set up. The analogy of Gramophone needles and Type-writer Ribbons with the Press Plates may not be apposite to the case because Gramophone needles and type-writer ribbons though neccessary for working of Gramophone and typewriters respectively are not integral parts of the same nor have these materials alternative uses. They are also ordinarily well understood not to be parts of Gramophone or Typewriters. The words used in item 72(3) pre-suppose that the component parts have alternative uses but they have been given some shape or quality which would not be essential for their alternative use. This would not be the case in case of Gramophone needles and typewriter-ribbons, which have no alternative uses. Reading item 72(3) as a whole I feel that the comparison would not be good in the case for decision on the question whether the imported goods are component parts of machinery or not.
8. The appellants imported the goods as capital goods and not as stainless steel on the strength of Import Licence granted by the Chief Controller of Imports & Exports and not by the Controller of Iron & Steel. Even though this may not be decisive for the purpose of Customs Tariff, taken along with other factors referred to above, this does have persuasive weight. It also appears that earlier in 1967, the appellants had imported Nickel chromium finish press plates, which were treated as component parts of the machinery. The learned Appellate Collector observed that as the goods imported in the earlier consignment were not identical to those under appeal, the analogy of that assessment cannot be applied to these goods. He added that an appellate authority deciding an appeal under Section 128 of the Customs Act, 1962 has to examine the matter independently and that an assessment made by a Customs Officer would not be binding on it. While the legal position stated by the learned Appellate Collector in his these observations may be correct, it cannot be that at one time imported chromium plated press plates are component parts essential for working of the machine and at another time similar press plates when made of stainless steel and imported, are not component parts essential for working of the machine. The Department cannot be permitted to change its factual stand regarding the Press plates being component parts of the machine on the basis of material used in the manufacture of Press Plates.
9. As to the test to determine whether a particular part is a component part of the complete machine pointed out by Allahabad High Court in Commissioner of Sales Tax v. Punjab Gramophone House (1979) 43 STC 141 (All.) referred to in paragraph 3 of Brother Sankaran’s order, in my view, for the reason already stated, the Tribunal is not appropriate place to apply this test. There is also no evidence on the point as to result of the test if applied. It may also be presumed that the lower authorities must have applied these tests while recording findings already referred to. During arguments, it was submitted by the appellants and not disputed by the Senior Departmental Representative that the imported goods had been fitted with the Hydraulic Press. We have already referred to the appellants’ arguments that imported goods after being fitted with the Press become integral part of the same.
10. For the foregoing reasons, in my view the Department cannot argue that the imported goods were not component parts of machinery essential for working of the machine or apparatus and thus challenge the implied finding of fact in appellants’ favour in the Appellate Collector’s order.
11. The Deputy Collector of Customs and Appellate Collector of Customs, as already pointed out above, rejected the appellants’ claim mainly for the reason that the imported goods consisting of stainless steel retained the form and shape as such steel and their identity as stainless steel sheets had not been lost. The appellants had filed in support opinion of Dr. P.C. Mukherjee of the Indian Institute of Technology, Bombay. The Appellate Collector of Customs inter alia remarked that Dr. Mukherjee had not given his opinion with reference to the working of various relevant items in 1CT and had not taken into consideration the facts that item 72(3) of ICT excludes articles specified elsewhere in the ICT, I do not think that an expert in Metallurgy is expected to give his opinion about interpretation of the Items in Customs Tariff or his opinion in this respect would in any way be relevant. Dr. Mukherjee in his opinion inter alia stated as under:
These sheets cannot be considered as primary product because the value of the work carried out on the primary rolled product far exceeds the value of the sheets in their rough rolled condition and also because use of these sheets in other purposes like utensils making, cladding chemical vessels would completely destroy all the specific proporties inducted into the steel at great labour and cost.
In my opinion it would also not be fair to say that the sheets have not lost their physical & chemical properties by the very special heat treatment. The properties of these sheets as in tapped or rolled conditions, have been fundamentally altered. Thus, the state of physical properties like tensile strength, hardness, toughness, ductility are different after the heat treatment than what they were before heat treatment was imparted.
I, therefore, come to the conclusion that these 60 plates inspected by me form a part and parcel of the Hydraulic Press inspected by me in the Compounding and Processing factory of Calico Chemicals, Plastics and Fibres Division and a part of the presses used in the manufacture of PVC sheets and plates with high gloss mirror finish surfaces.
The Appellate Collector of Customs did not give any reason for not accepting the un-challenged opinion of Dr. Mukherjce. On the other hand, he observed “that stainless steel sheets have a variety of applications and are consequenty supplied in polished finishes as well as un-polished finishes as per the requirements of an importer. Even mirror polished sheets are supplied by the manufacturers. The size supplied will also depend upon the requirements of an Importer.” This statement contradicted the opinion of Dr. Mukherjee extracted above. There was ho evidence before the Appellate Collector of Customs with regard to this finding to contradict the opinion of Dr. Mukherjee, In my view, the Appellate Collector was not justified in ignoring the opinion of Dr. Mukherjee.
12. The Appellants had also filed affidavits of S/Sh. Chhaganlal Indarmal Doshi and M. Ramakant, which would show that the imported goods would be of no use to the utensils manufacturer or for chemical and pharmaceutical and other process equipment or to vessel manufacturer because of its mechanical properties. As I have accepted the opinion of Dr. Mukherjee, an elaborate discussion of these two affidavits is un-necessary. But the statements of these two would further show that the imported goods had been given a quality which would not be necessary for their use for any other purposes. It is undisputed that the imported goods were cut to size so as to fit in the Hydraulic Press. The Tariff item does not speak of any particular shape. The statements of Shri Chagan Lal Indar Mal Doshi and M. Rama Kant would suggest that commercial stainless steel is not imported in the form in which the subject goods have been imported. This would show that the imported goods which I have found to be component parts essential for the working of machine had been given special shape.
13. Even if it be assumed that cutting the stainless steel to sizes so as to fit in Hydraulic Press does not constitute special shape, under Item 72(3), it is not necessary that special shape and quality should both have been imparted to the component parts. It is sufficient if either of them has been given. The statement/opinion of Dr. Mukherjee leaves no room for doubt that the imported goods which have been found component parts of machinery essential for working the machine or aparatus had been given special quality and it was not essential for their use for any other purpose.
14. Once it is held that the imported goods were component parts of machinery essential for working of the machine or apparatus and that they were given special quality which was not essential for their use in any other apparatus/purpose, the proposition of law enunciated in Siemens Engineering & Manufacturing Company’s case AIR 1976 SC 1785 would be squarely attracted in the case. I have, therefore, no hesitation in holding that the imported goods should have been classified under item 72(3) of the I.C.T. and not under 63(20A) of ICT. I would, therefore, allow the appeal and set aside the order of the Appellate Collector of Customs and direct consequential refund.
