ORDER
S.V. Maruthi, Member (J)
1. The dispute relates to the eligibility of the imported goods namely, one unit BS 8000 Master and II unit Store Cassette Slave Recorders for concessional rate of duty under Notification No. 315/83-Cus., dated 26-11-1983. The appellants imported a consignment of one unit BS 8000 Master and II unit Store Cassette Recorder (amplified as main machine in the Bill of Entry). The appellants claimed registration of the goods imported, under project Import Regulations for the purpose of assessment at concessional rate in terms of notification No. 315/83-Cus., dated 26th Nov., 1983. The adjudicating authority rejected the claim of the appellants on the ground that the impugned goods are meant for service industry and therefore, fall outside the scope of Project Import Regulations. On appeal the Collector confirmed the order of the Asstt. Collector. Hence the appeal before us.
2. The Collector while rejecting the claim of the appellants observed that the function of the impugned goods is primarily to transfer of the music from the mother cassette to the blank cassette by imprinting the same though with higher speed. This activity of sound duplication is more in the nature of service industry than of a manufacturing industry as the appellants are providing a service to the artists by not only recording their music on the mother tape, but making copies of it and selling them in market and paying royalties to the artists. Furthermore by exclusion clause of 3 (a) (i) of the Project Import Regulations, 1986, Service Industries are not entitled for the benefit of Project Import Regulations, 1986. He also held that these goods fall under the term “Composite Machine” within the meaning note 3 of Section XVI of the first schedule to CTA 1975.
3. The appellants challenging the above order contended that the imports are made for substantial expansion of its undertakings. The equipment is one in series of operations of continuous nature, serves to imprint at high speed music on ‘Pan Cake’. The machine is, therefore, called High Speed Master Reproducer with two slave units in series. It is next contended that the appellants do not render any service to any artists. It manufactures and sells music cassettes. The entire operation of manufacture and sale of music cassette is an industrial activity. It is next contended that since the appellants’ existing capacity is limited they have gone into a project of substantial expansion. Oncethe project is completed the manufacturing capacity of recorded cassettes will go up from present level to 30 million pieces in a year.
4. That a recording of cassette is completely distinct from an ordinary blank cassette. When a recorded cassette is manufactured the blank cassette acquires a distinct and different identity and for purposes of tariff it becomes classifiable under a heading different from the one under which the blank cassette is classified. It is also submitted that the industry cannot be called as service industry.
5. It is next contended that the machine in present is not a ‘single’ or ‘composite machine’ since it does not produce a commodity by its own function which can be sold in the market, but it is one of the multistage manufacturing unit. The concept envisaged under note 3 of the Section XVI is only for classification with reference to the primary function of a machine for a group.
6. In support of his contention that the imports do not fall within the meaning of service industry he relied on the order of this Tribunal in M/s. Saraswati Stores v. Collector of Customs (1985 ECR P. 1899) wherein it was held that transfer of recorded matter from one tape to another is an industrial process and machinery required for the same is assessable” an item of machine, instruments, apparatus etc. relating to Project Import.
7. He brought to our notice the licence given to them under Industries (Development and Regulation) Act, 1951 for effecting substantial expansion to the industrial undertakings and the certificate dated 9th January, 1990 issued by the Department of Electronics recommending for the concessional rate of duty under notification No. 315/83-Cus., dated 26-11-1983. He also relied on the proceedings before BIFR in respect of the appellants and contended that unless it is an industrial undertaking other than a service industry the provisions of BIFR are not applicable to them.
8. The appellants also exhibited a video of the machines and the actual process involved in the production of pre-recorded cassettes.
9. Shri Arora appearing for the respondent contended that there is no contract, and that there is no catalogue of the machine. From the exhibition of the video before the Tribunal it cannot be inferred that the items imported are the same as shown in the video. No written contract is available and only a purchase order is available. Mere offer and acceptance do not make it a proforma invoice. The appellants’ is not a specified industry. Every industrial plant does not get benefit of Project Import Regulation. He relied on M/s. Sourashtra Chemicals v. CC, Ahmedabad [1983 (12) ELT page 829]. He also submitted relying on Photo Visual v. CC [1984 (17) ELT 443], that industrial plant envisages production, manufacturing activities, and the activity which is the subject matter of appeal does result in the production of any goods. He also contended that in order to attract Tariff Item 98.01 it should be relatable to a specified industry. Since the industry is not specified tariff Item 98.01 is not applicable. If Tariff Item 98.01 is not applicable the question of application of notification does not arise. In support of his contention he relied on Punjab State Electricity Board, Patiala v. Collector of Customs [1987 (27) ELT page 432 (Tribunal)]. According to him the endorsement made by the department of Electronics is not binding on the Custom deptt. [1989 (40) ELT page 115]. He also submitted that the case relied upon by the appellants is not relevant as on the date of the imports Tariff Item 98.01 excludes photographic film processing laboratories, therefore, the sound reproducing equipment should also be excluded. Shri Asthana supported the arguments of Shri Arora that the imports are composite machine, and therefore, are excluded by virtue of Note 3 to Section XVI. According to him industrial plant do not cover composite machine.
10. The question that arises for consideration is whether the imported equipment is entitled for concessional rate of duty under notification 315/83-Cus., dated 26th November, 1983.
11. The relevant portion of notification reads as folows:-
“98.01 – Initial or Expansion Goods for Electronics: Basic 35%
… In exercise of the powers … the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts goods falling under Heading No. 98.01 … when imported into India for the initial setting up of an industrial unit for the manufacture of electronics items or the substantial expansion of an existing industrial unit manufacturing electronic items, from so much of that portion of the duty of customs leviable thereon … as is in excess of the amount calculated at the rate of 35% ad-valorem, subject to the condition that an officer not lower in rank than Director in the Department of Electronics of the Government of India or an Industrial Advisor in the Directorate General of Technical Development of the Government of India is satisfied that the goods in question are required for the purpose specified above and certifies to this effect and recommends grant of the above exemption.”
12. From the above it is clear that under the notification the exemption is given to the goods falling under Tariff Item 98.01. The relevnt portion of Tariff Item 98.01 reads as follows:-
“98.01 All items of machinery including prime movers, instruments, apparatus and appliances control gear and transmission, equipment, auxiliary equipment (including those required for research and development purposes, testing and quality control), as well as all components (whether finished or not)or raw materials for the manufacture of the aforesaid items and their components, required for the initial setting up of a unit, or the substantial expansion of an existing unit, of a specified:
(1) industrial plant, … (3) power project.
13. If the goods fall under Tariff Item 98.01 the appellants have to pay duty at the rates specified therein. But the appellants are claiming the registration of the contract under Project Import Regulations, 1986. The relevant portion of Project Import Regulation reads as follows:-
3. Definitions. – For the purposes of these regulations, –
(a) “industrial plants” means an industrial system designed to be employed directly in the performance of any process or series of processes necessary for manufacture, production or extraction of a commodity, but does not include –
(i) establishments designed to offer services of any description such as hotels, hospitals, photographic studios, photographic film processing laboratories, photocopying studios, laundries, garages and workshops; or
(ii) a single machine or a composite machine, within the meaning assigned to it, in Notes 3 & 4 to Section XVI of the said First Schedule;
4. Eligibility – The assessment under the said Heading No. 98.01 shall be available only to those goods which are imported (whether in one or more than one consignment) against one or more specific contracts, which have been registered with the appropriate Customs House in the manner specified in regulation 5 and such contract or contracts has or have been so registered.
5. Registration of Contracts. – (1) Every importer claiming assessment of the goods falling under the said Heading No. 98.01 on or before their importation shall apply in writing to the proper officer at the port where the goods are to be imported or where the duty is to be paid for registration of the contract or contracts as the case may be:”
14. From a reading of the regulation it is clear that industrial plant is defined as an industrial system for manufacture, production, or extraction of commodity, but exeludes establishments designed to offer services of any description such as hotels, hospitals, photographic studios, photographic film processing laboratories, photocopying studios, laundries, garages, workshops. It also excludes a single machine or a composite machine within the meaning assigned to it.
15. The expression service industry is not defined but the language used is services of any description such as hotels etc. The expression ‘such as’ used is illustrative and the enumeration following the expression ‘such as’ is not exhaustive. [Jalal Plastic Inds. & Co.v. U.O.I. – 1981 (8) ELT page 663 (Gujarat)]. The industry in dispute namely duplicating music system is similar to photo processing industry. Photo processing industry is excluded from the purview of Project Import Regulations. It follows from the above that duplicating music system is also a service industry, therefore, it also gets excluded from the purview of Project Import Regulations. Therefore, the appellants are not entitled for registration of their contract under the relevant regulations.
16. The appeal therefore fails and is accordingly dismissed.
