ORDER
P.C. Jain, Member (T)
1. Facts of the case are as follows :
The appellants herein are engaged in the manufacture of various automobile parts. They imported ‘Counterface Seals’ made out of ceramic. The goods were initially assessed under Notification 117/78 under the Duty Exemption Entitlement Scheme and Advance Licensing Scheme. The Department, thereafter, issued an alleged less charge demand under Section 28 of the Customs Act on the ground that the seals made of ceramic are classifiable under Chapter 69 and not under Chapter 84 of the CTA 1975. Therefore, the benefit of Notification under 117/78 would not be available since Chapter 69 is not mentioned in the First Schedule to the said Notification 117/78. Both the lower authorities have found against the appellants and hence this appeal before the Tribunal.
2. The learned Consultant, Shri K.V. Kunhikrishnan, appearing for the appellants has urged that it is not denied that the ceramic seals are component parts to be used in the manufacture of water pumps assembly, which is exported outside the country. They were allowed to import these components under the Advance Licensing Scheme and Duty Exemption Entitlement Certificate. Accordingly, there can be no doubt about their assessment under Chapter 84 under Serial No. 47 of the First Schedule to the said Notification 117/78. In support of his submission, the learned Consultant has relied upon Supreme Court’s judgment in the case of Jain Engineering Company v. CC, Bombay, reported in 1987 (32) ELT 3 (SC). He relied with particular emphasis on paragraphs 9 and 10 of the said judgment of the Supreme Court. For proper appreciation, paragraph 10 of the judgment is reprodcued below :-
” 10. In view of our finding that the Notification exempts also parts of the engines mentioned in paragraph 2 of Column (2) of the Table, in order to avail of the benefit of the exemption granted by the Notification, it has to be proved that the parts in respect of which the exemption is claimed, are parts of the internal combustion piston engine, as mentioned under Heading No. 84.06. Some of such parts may have been included under Heading No. 84.63. In other words, as soon as it is proved that the parts are of the engines, mentioned in Heading No. 84.06, such parts will get the benefit of exemption as provided by the Notification, irrespective of the fact that they or any or some of them have already been included under Heading No. 84.63 or under any other heading. Therefore, even if bushings are the same as bearings, still they would come within the purview of the Notification, provided they are parts of the engines mentioned under Heading No. 84.06. The contention of the Customs authorities that the article, which is provided under another heading other than Heading No. 84.06, will not get the exemption as provided in the Notification, is not readily understandable. When the Notification grants exemption to the parts of the engines, as mentioned under Heading No. 84.06, we find no reason to exclude any of such parts simply because it is included under another heading. The intention of the Notification is clear enough to provide that the parts of the engines, mentioned under Heading No. 84.06, will get the exemption under the Notification and in the absence of any provision to the contrary, we are unable to hold that the parts of the engines, which are included under a heading other than Heading No. 84.06, are excluded from the benefit of the Notification.”
Applying the analogy of the said judgment, he submits that the Serial No. 47 of the First Schedule to Notification 117/78 which reads as follows :-
"47. (a) Parts and accessories of 84.01/02 to
Boilers machinery and 84.60 and
mechanical appliances 84.65
(b) Internal Combustion Piston Engines 84.06"
should be constructed to include ceramic seals as falling under Chapter 84, being the parts of water pump assembly - the mechanical appliance - irrespective of the fact that the ceramic seals may not strictly speaking fall under the said Chapter 84 of CTA 1975 in view of Chapter Note 1(b) of the said CTA 1975.
3. His next submission is that even if it is assumed that the benefit of the Notification 117/78 would not be applicable to the ceramic seals in question, the Department admits that these were utilised in the manufacture of water pump assembly, which have since been exported. Therefore, the benefit of duty drawback under Section 75 of the Customs Act, 1962 should not be denied.
4. Opposing the contention of the appellants’ learned Consultant, Shri J. N. Nair, learned JDR for the Revenue has urged that Notification 117/78 and Serial No. 47 thereof is very clear that only parts and accessories of mechanical appliances falling under Headings 84.01/02 to 84.60 and under Heading 84.65 alone are eligible for the benefit of the said Notification. Mere grant of Duty Exemption Entitlement Certificate or Advance Licence does not entitle the appellants to claim exemption where there is none in terms of the said Notification. Chapter Note 1(b) reads as follows :
“(1) This Chapter does not cover :
(a) ... (b) appliances and machinery (for example, pumps) and parts thereof, of ceramic material (Chapter 69); (c) ..."
As regards the submission for benefit under Section 75 of the Customs Act, the learned Jr. Departmental Representative for the Revenue has stated that there was no such claim before the lower authorities and it is a matter of enquiry into facts whether the ceramic seals have been utilised in the manufacture of water pump assemblies which have been exported outside the country.
5. We have carefully considered the pleas advanced on both the sides. Notification 117/78, being an export promotion measure grants exemption to certain materials specified in the First Schedule to the said Notification which are “required to be imported for the purpose of manufacture of goods, or replacement of the materials used in the manufacture of goods, or both, for execution of one or more export order”. It is, therefore, apparent that exemption under Serial No. 47 of the First Schedule to the Notification 117/78, which has already been reproduced above is applicable only to parts and accessories of mechanical appliances and it is the parts and accessories which should fall under the Headings 84.01/02 to 84.60 and 84.65 and not the mechanical appliances which should fall under the said headings, because as said earlier, the Notification 117/78 grants exemption to the materials and not to the complete appliances. As such, the analogy of the judgment of the Supreme Court in Jain Engineering case mentioned supra is not applicable in the instant case. In that case, the Notification 281-Cus., dated 2nd August 1976 granted exemption to inter alia internal combustion piston engines and parts thereof falling under Heading 84.06. Internal combustion engines definitely fell under Heading 84.06 and there was no dispute about that. The Departmental authorities and the Appellate Tribunal had held that bushings which perform the function of bearings fell under Tariff Heading 84.63(2) and therefore, the benefit of the Notification 281-Cus., dated 2nd August, 1976 was denied to the appellants, Jain Engineering, in that case. There was no dispute on facts that the bushings imported therein were parts of internal combustion piston engines falling under Tariff Heading 84.06. It is, therefore, in the light of the peculiar wordings of paragraph 2 of column (2) of the Table to the Notification 281-Cus., dated 2nd August, 1976 that the Hon’ble Supreme Court held that bushings were entitled to the benefit of the said Notification. It also observed that bushings could not be treated as bearings merely for the reason that bushings and bearings perform the same function. The two things, namely, bushings and bearings were known differently in the market. In other words, the Apex Court held that bushings of internal combustion piston engines fell under Heading 84.06. Serial No. 47 of the First Schedule to Notification 117/78 is in no manner pari materia the paragraph 2 of column (2) of the Table to the Notification 281-Cus., dated 2nd August, 1976. Grant of Duty Exemption Certificate by itself does not entitle the appellants to the benefit of Notification 117/78. Before the benefit of said Notification can be granted, the goods imported must be covered within the four corners of the said Notification. Accordingly, we hold that the benefit of this said Notification 117/78 has been rightly denied by the lower authorities to the ceramic seals inasmuch as they do not fall under Chapter 84 in view of Chapter Note 1(b) of CTA 1975.
6. As regards the submission that their claim may be considered in terms of Section 75 of the Customs Act, we do not find any material on record that these ceramic seals were used in water pump assemblies and which in turn have been exported outside the country. There is only a letter, dated 29-1-1983 (at page 20 of the paper book) from the office of the Joint Chief Controller of Exports and Imports, Ministry of Commerce to the appellants indicating that they have fulfilled the export obligation and, therefore, their undertaking given to that office has been cancelled. The DEEC forwarded by the appellants to the office of the JCCI & E was retained in the said office. Copy of the DEEC has not been brought on record by the appellants which could substantiate their submission. In any case, as pointed out by the learned Departmental Representative for the Department, this is a new claim which was never before the lower authorities and it would, therefore, not be desirable for us to grant that benefit at this stage which requires enquiry into new facts. The appellants would, however, be at liberty to file their claim under Section 75 of the Customs Act before the concerned Customs authorities who may then decide their claim in accordance with law.
7. In the light of our findings on the main issue involved whether these ceramic seals are entitled to the benefit of Notification 117/78, we reject the appeal.