ORDER
I.J. Rao, Member (T)
1. The appellants imported, under a Bill of Entry No. 1416 dated 24.2.83, two ‘Automatic Nut Making Machines Comprising one Blanking Press REMP 16N and one Finishing Press KP-16 & Accessories, etc.” The goods were assessed provisionally and allowed clearance against a bond. The benefit of Notification No. 40/78-Cus was extended. Subsequently, a show-cause notice was issued to the appellants threatening the denial of the benefit of Notification No. 40/78-Cus. After due process, which included personal hearing to the appellants, the Assistant Collector held that the Blanking Press (BP for short) would not be entitled to the concessional assessment under Notification No. 40/78-Cus. because the product manufactured by it is not a ‘Nut’. Benefit of the Notification was extended to the Finishing Press because the product manufactured by it was considered to be a ‘Nut’ (without threading).
2. Aggrieved, the appellants filed an appeal before the Collector of Customs (Appeals). The Collector rejected the appeal observing as follows:-
“I have carefully considered the submission of the appellants both written and oral, as well as the records of the case. The dispute in this case is regarding applicability or otherwise of the benefit . of Notification No. 40 Cus. dated 1.3.78 to the goods imported. The appellants have pleaded that they had imported two machines – one blanking press and one finishing press – both of which are essentially required in the manufacture of nuts for installation in their own factory as multi-station, nut making machines. They have further explained that these two machines, between themselves work seven stages from raw material stage to the finishing blank stage automatically in their nut making unit while the blanking press works the first five stages, the finishing press works the final two stages. But contrary to their expectation the blanking press-was not allowed the benefit of Notification No. 40 Cus. dated 1.3.78 which inter-alia’ is specific for multi-station Nut making machine. The adjudicating authority has, however, allowed the benefit of the said Notification 40/78 on the finishing press. But the blanking press has been denied the benefit on the ground that the blanking press merely produces blanks and, therefore, cannot be considered as a nut making machine. The appellants have contested the finding of the adjudicating authority by stating that since both the machines are essential for manufacture of nuts automatically and since both are complimentary to each other, both should get the benefit meant for multi-station Nut making machine. In support of their contention the appellants have also referred to a clarification by D.G.T.D. certifying that for the purpose of licensing both the machines are to be treated at par.
The certificate by D.G.T.D. cannot have any bearing on whether the goods imported would attract the benefits of a concessional notification or not. Though there is some prima facie merit in ‘the appellants’ contention that both the machines together go to make a complete multi-station automatic nut making machine, I am unable to accept their claim that for considering the benefit of notification to be allowed to certain goods also this has to be guiding factor. On the other hand, I find that in this case two machines of different functions were involved whereas the benefit of the Notification No. 40/78 is meant for a nut making machine only. Since both the machines have different functions from one another, only one machine can be logically held to produce nuts/finished blanks. Thus logically again only one machine may be entitled to the benefit of the notification in question. In view of the above, I am unable to find any fault with the findings of the adjudicating authority and to interfere with the order-in-original.
The appeal fails and is rejected.”
Hence the present appeal.
3. The learned Counsel for the appellants recalled the facts of the matter and submitted that the description in the indent placed by the appellants, that invoice and in the Bill of Entry, all, show that the appellants imported ‘one automatic multi-station nut making machine with accessories, toolings and spares’. The name of the machine was ‘NUTAP – Combiformer’ which comprised various parts. He argued that the appellants imported a machine which was split up into two parts, namely B.P. and Finishing Press. He explained that the BP produces blanks (for nuts), in five stages, which are semi-processed nuts, and the Finishing Press processes these in two stages, i.e., the blanks are produced which are finished and completed in all respects except threading. He argued that these two machines are fully integrated and are, for all purposes, only one machine intended to produce nut blanks. The seven steps of processing/manufacture are performed by the two machines together.
4. The learned Counsel further argued that a nut-blank comes into existence after sizing, which is a process done by the BP.
5. Shri B.B. Gujral further argued that Notification No. 40/79-Cus. gave partial exemption to ‘automatic multi-station bolt or nut making machine (Serial No. 12 of the Table)’. He invited our attention to the Import Policy for April 81 – March 82 and, particularly, to Appendix-2 (List of capital goods allowed under OGL Serial No. 41), where OGL was extended to ‘automatic multi-station bolt/nut making machine’. Shri Gujral argued that the Customs having extended the facility of OGL to the goods, there was an explicit acceptance on their part that the imported goods were ‘automatic multi-station bolt/nut making machine’ and invited our attention to the total similarity of this description with the description appearing at Serial No. 12 in the Table to the Notification No. 40/78-Cus. He argued that, in view of the identical description, the same treatment should be given to the goods for purposes of classification and assessment & licencing. Shri Gujral further invited our attention to a letter, dated 6.5.82, from the Director General of Technical Development, wherein it was stated that the entry in the Import Policy [No. 1(41) of Appendix-2 of Policy for 81-82] covered machines for the manufacture of nuts without threads. He emphasised that the Assistant Collector’s order was factually wrong and that both the machines produce blanks only. The learned Counsel argued that the order-in-appeal does not show any application of mind, in that it ignored the opinion of the DGTD, without giving any reasons, and recording only vague findings.
6. Shri Gujral emphasised that the goods were imported under a single importation and were manufactured by the same manufacturer, and were designed as complementary being sold and purchased together, and invoiced accordingly.
7. Another argument of the learned Counsel was that Note-3 to Section XVI of the First Schedule to the CTA, should be liberally interpreted to cover the present goods. He further submitted that ‘blanks’ were defined in Rule 2(a) of CCCN (Explaination to Interpretative Rules), and submitted that a ‘blank’ should be considered as a ‘finished article’ if it could ultimately be used only as such a finished article. Referring to Rule 3 of the Interpretative Rules, and to the Section Notes under Chapter XVI, Shri Gujral submitted that the same machine was dealt with in an order of the Tribunal (Order No., 485/84-B dated 19.6.84) in the case of M/s. Zunesh India Enterprises v. Collector of Customs, Calcutta, and under another order (Order No. 868 & 869/84-B dated 30.11.84) in the case of Collector of Customs, Bombay v. (i) Technological Centre, New Delhi, and (ii) Escorts Ltd., Faridabad. He also referred to a Government of India Order IN RE: TEAMS INDIA, reported in ‘1982 ELT 481 (G.O.I.). In support of his argument, that the Taxtile Commissioner was an expert and the expert’s opinion should, normally, be accepted, Shri Gujral placed reliance on a judgment in the matter of ‘K. Mohan And Company, Bombay v. Collector of Customs, Madras’, reported in ‘1984 (15) ELT 430V In support of his further argument, that technical evidence like Manufacturer’s Certificate, should be accepted and due regard paid to that, Shri Gujral cited ‘1984 ECR 1086’ and ‘1986 (6) ECR 334’.
8. Shri 3. Gopinath, the learned SDR, submitted that the facts of the matter are not in dispute and also agreed that in the Bill of Entry, there was only one item mentioned. He pointed out that the goods were classified under H. 84.45/48 of the CTA, and there is no dispute regarding the classification. The dispute is only regarding applicability of Notification No. 40/78-Cus. to the present goods.
9. Shri Gopinath submitted that, for purposes of this Notification the imported goods should be automatic; they should be multi-station; and they should be nut making machines. He emphasised that, according to the Notification, the imported goods should be ‘a machine’, that is to say, a single machine. Explaining the terms used in the Notification, Shri Gopinath submitted that the word ‘automatic’ would mean ‘without human effort’, and submitted that when a rod is inserted into the machine and a nut comes out, the operation would be called ‘automatic’ if no other human interference or effort is there. Explaining the word ‘multistation’, Shri Gopinath submitted that this would denote different stages of operation in the same machine. Shri Gopinath agreed that even without threading, a nut would be a nut, and submitted that he was not differing from the orders of the Tribunal in the case of Zunesh India Enterprises v. Collector of Customs, Calcutta (Order No. 485/84-B dated 19.6.84).
10. Shri Gopinath agreed that there is no machine in the world which would produce nuts with threads in a single multi-station unit, but submitted that there are machines which would produce nuts without threads in a single machine. In this connection, the learned SDR referred to the appellants’ letter dated 15.9.83, to the Assistant Collector of Customs, wherein the appellants themselves furnished information relating to other nut-making machines wherein all the operations were done in a single machine.
11. Referring to the learned Counsel’s argument, Shri J. Gopinath submitted “that the D.G.T.D. letter applied only to the licensing, and the interpretation of a Customs Notification cannot be based on the opinion of the DGTD. He further submitted that Section Note (b) in Section XVI was intended for classification only and not for the interpretation of a notification. Referring to Rule 1 of the Rules for Interpretation Shri Gopinath submitted that this Rule itself lays down that the Rules were to be applied only for the purposes of Notification under the Schedule.
12. Shri Gopinath further argued that five functions in the BP and two functions in the Finishing Press are automatic, but argued that the BP does not make nuts whereas the Finishing Press makes them except for threading. Shri Gopinath further argued that the suppliers of the equipment did, in their letter dated 8.9.83, give split values of the two machines and submitted that it is a plausible situation that a single machine out of the two can be supplied, depending on the exigencies.
13. Shri Gopinath further submitted that the scope of a notification cannot be enlarged by supplying intendment when the language is clear. He relied on the following case-law in support of his argument :-
(i) 1978 ELT 0350) M/s. Hemraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise & Customs, Surat and Ors.. (ii) 1981 ELT 128(Bom.) M/s. Jenson And Nicholson (India) Ltd. v. Union of India and Ors.. (iii) 1983 ELT 3'45(Mad.) M/s. Indian Organic Chemicals Ltd. v. Union of India and Ors.. (iv) 1983 ELT 345(Mad.) Witco Match Works, Kalugumalai And Another v. Union of India and Others.
14. Referring to the order of the Tribunal in the case -of M/s. Zunesh India Enterprises (supra), Shri Gopinath submitted that, in that appeal, the question was whether the imported goods could be considered as a ‘nut-making machine’ when threading was not done. The Tribunal held, in view of the evidence produced, that even if there was no threading, the imported machine could be called a ‘nut making machine’. Therefore, according to him, the ratio of the judgment is not applicable to the facts of the present case. Referring to the Government of India decision cited by the learned Counsel for the appellants, Shri Gopinath submitted that this decision can have only a persuasive value and is not binding on the Tribunal.
15. Shri Gujral, the learned Counsel, in his rejoinder, argued that the goods were described as ‘automatic nut making machine’ and the authorities below did not dismiss the claim. Therefore, the Revenue’s arguments should not be relied upon. Referring to the judgment of the Tribunal in the case of ‘K. Mohan And Company, Bombay v. Collector of Customs, Madras’ (supra), Shri Gujral argued that the machine would be considered ‘automatic’ even if at one stage manual transport is involved. He emphasised that in respect of the present machine, there was no manual process and the only manual thing involved was transport. He emphasised that the DGTD specifically stated that the heading in the OGL covered the machine and argued that to accept the imported goods as a “multistation automatic nut making machine” for purposes of OGL and not so for Customs, would not be logical or consistent. All seven processes together produced nuts and the machines do not do anything else but produce nuts. Referring to the Orders of the Tribunal (Order No. 868 & 869/84-B2 dated 30.11.84), with special reference to paragraph-6 thereof, Shri Gujral argued that it is not the Accessories (Condition) Rules but Rule 2(a) of the Rules for Interpretation of the Schedule which was invoked for interpretation of the Exemption Notification in that judgment. He further pointed out that Serial No. 9 in the Table to the Notification was singular but the consession was extended to machines. He reiterated that the Exemption Notification should be liberally interpreted and the two units imported should be considered as a ‘single machine’.
16. We have considered the arguments of both sides. Before proceeding to discuss the merits of these arguments, we are reproducing below Notification No. 40/78-Cus:-
“Notification No. 40-Cus., dated 1.3.1978 with subsequent amendments.
The machines specified in the table below and falling within Ch. 84 are exempt from so much of that portion of the duty of customs leviable thereon, which is specified in the First Schedule, to the Customs Tariff Act, 1975, as is in excess of 25 per cent, ad valorem.
THE TABLE
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Sl. No. Description -------------------------------------------------------------------------------- 1 to 11 xxxxx xxxxx xxxxx 12. Automatic Multi-Station Bolt or Nut Making Machine. 13. to 21. xxxxx xxxxx xxxxx -------------------------------------------------------------------------------- 17. The basic facts, necessary for a decision of this appeal, are clear enough and are not disputed. These facts are that there were two machines, namely, 'Blanking Press' and 'Finishing Press'. There are five processes undertaken in the Blanking Press, i.e. (a) flattening, (b) indenting, (c) cutoff, (d) chamfering, and (e) planishing, and two processes in the Finishing Press, namely, (a) calibrating, and (b) piercing. It is also admitted that at the end of the seventh process, nut blank, which is ready for threading, comes into existence. [The learned Counsel for the appellants argued that a nut blank comes into existence after sizing by the Blanking Press; we shall be dealing with this argument elsewhere.] The threading of this blank is done by another machine with which are not concerned as it is not the case of the Revenue that the absence of threading is a reason in favour of the Revenue. It is also admitted that both the machines have been ordered by a single order, despatched under a single consignment and invoiced accordingly. 18. The question before us is whether the imported goods are entitled to the exemption of the Notification in view of these facts. We have considered the argument of the learned Counsel for the appellants that the Customs have considered the imported goods as 'automatic multistation bolt or nut making machine' for purposes of granting it OGL. His argument was that having accepted the imported goods as such a machine for purposes of licensing, it is neither correct nor logical to hold otherwise for the purposes of classification under Customs Tariff and for the interpretation of the notification in question. On a careful consideration, we do not agree with this argument. Whatever may be the similarity in the wording in the Licensing Policy and in the Notification, the interpretation placed in connection with the licensing cannot be automatically applied for the purpose of interpreting the Notification. Besides, we note that the DGTD gave certain opinion in this regard. We do not agree with the arguments of the learned Counsel that the DGTD's opinion should also have persuaded the Customs authorities while they were interpreting the notification as the letter itself shows the advice of the DGTD related only to the licensing aspect. 'Licensing' and 'exemption from Customs duty' are entirely different, and the advice given in connection with one cannot be sought to be automatically extended to another. Thus, while agreeing to the similarity in the description given in the Licensing Policy and in the Notification, we do not agree with the submissions of the learned Counsel in this regard. 19. We note Shri Gujrals argument that the Collector of Customs (Appeals) did not record reasons for rejecting the opinion of the DGTD. While we agree that it would have been better if the Collector did so, we do not consider that the order is disqualified by the absence of reasons for not following the advice of the DGTD as that advice was not binding on the Collector.
20. Shri Gujral’s argument, that Notes to Section-XVI to the First Schedule of the CTA and the Rules of Interpretation should be applied to the Notification, has been considered by us. The Section Notes and the Rules of Interpretation are explicitly intended to be for the interpretation of the Tariff and its various headings. It would not be, therefore, proper to apply those Notes and Rules to the interpretation of the Notification.
21. Shri Gujral referred to Order No. 485/84-B dated 19.6.84, passed by the Tribunal. We have perused this order. In this case, the appellants imported ‘automatic multi-station nut making machine (the same description as of the machine before us). The concessional assessment under Notification No. 40/78 (the same notification as is before us) was denied on the ground that the machine imported was not a ‘nut making machine’ but only a ‘nut forming machine’. It was argued before the Tribunal that, technologically, a machine which could perform all the functions including threading did not exist. The Bench thereafter held that the machine imported was a ‘multi-station nut making machine’ even though threading was not done by this machine. This order does not show that the importation was in two parts as is the case here. The issues before the Bench were different. The ratio of the Tribunal’s judgment does not, therefore, apply to the present appeal.
22. The Tribunal’s order No. 868 & 869/84-B dated 30.11.8′-; (supra) was also perused by us. The question before the Bench was whether the imported, machines, referred to in the appeal, were designed for all operations indicated in Notification No. 49/78-Cus. The Tribunal, agreeing with the Appellate Collector, held that to decide the classification, what is important is to see whether the essential functions referred to in Serial No. 9 of the Notification are performed by the imported equipment, without going into the criteria of high or low accuracy of such functioning. The ratio is not relevant to the present appeal.
23. Shri Gujral argued that the Notification should be given a liberal interpretation. We have already declined to apply the opinion of the Licensing authority for the interpretation of the Notification. Shri Gujral brought to our notice a judgment of the Government of India in RE : TEAMS INDIA (supra) wherein the Government ordered that the goods concerned should be treated as marine engines both for purposes of classification as well as the Exemption Notification. There is no proposition laid down in this order. As argued by the learned SDR, it is an accepted position that a notification should be interpreted on the basis of the language used therein and not on the basis of intendment or by supplying words or ignoring them. We have also examined Shri Gujral’s argument that the opinion of the expert should be considered. He cited the case of ‘K. Mohan & Co., Bombay v. Collector of Customs, Madras’ reported in ‘1984 (15) ELT WO’, and also cited ‘1984 ECR 1086’ and ‘1986 (6) ECR 33V. While we agree that expert opinion should be considered, we observe that it is the language of the notification and the facts of the matter which should be examined. An expert’s opinion has to be given due respect but it cannot be the deciding, or binding factor.
24. Here, the Notification gives exemption to ‘Automatic Multi-station Bolt or Nut making Machine’. Admittedly, the imported goods are two machines. Shri Gujral’s argument, that the ‘singular’ should be interpreted as ‘plural’, does not appear to be correct inasmuch as both sides agree that, while there is no machine which makes bolts/nuts with threading automatically, both sides agree that there are machines which make nut blanks in a single unit. Infact, the appellants themselves, in their letter dated 15.9.83 to the Asstt. Collector, gave details of three such machines wherein all the seven operations are done in a single machine. During the course of hearing, it was explained that all these machines are costlier than the present importation. But, for the purposes of the Notification, we note that the three machines, details “of which were given by the appellants, are single units which perform all the seven functions. Therefore, it is not as if the Exemption Notification referred to a machine which does not exist.
25. We note, with approval, Shri Gopinath’s argument that the three qualifications, for an imported machine to qualify for the Notification, are that – (1) it should be automatic; (2) it should be multi-station; and that (3) it should be a nut-making machine. The language of the notification clearly shows that what is imported should be a ‘machine’. We do not agree that we should equate the two imported machines to a ‘machine’ or to machinery.
26. During the course of hearing, it came out that when the Blanking Press finishes the five processes, the nuts are manually moved to the Finishing Press for the final two operations. The machine, by requirement of the notification, should be automatic. The fact that manual interference has to be there between the final product of the Blanking Press and the first stage of the Finishing Press, shows that the operations are not fully automatic. The learned Counsel’s argument, that it is the process that should be automatic and not the movement, is not acceptable because in a fully-automatic machine, raw-material is inserted at one end and the finished product comes out at the other end. Any kind of manual interference reduces the nature of automatic operations. In this context, we have taken note of the judgment of the Tribunal in the case of K. Mohan & Co., Madras v. C.C. Madras'(supra). We note that the Tribunal therein considered whether an automatic cloth-cutting machine is covered by a certain notification and held that there was a fallacy in the view that because a certain amount of manual effort was required in cutting the garments, to appropriate pattern; the machine was not automatic. The Tribunal, in coming to the conclusion, took note that the concerned notification contemplated ‘automatic’ in respect of the process of cutting cloth. In the present notification, there is no such stipulation and this is an entirely different machine.
27. Much was said about the seeming absurdity of the impugned order, in that, it granted concession to the Finishing Press but not to the Blanking Press as, according to the appellants and their Counsel, the two machines are integrated and the seven steps of production are inbuilt into the two. The Customs authorities appear to have taken the view that while the first machine does not produce a nut, the second machine does. Shri Gujral’s argument, that a nut blank comes into existence after sizing done by the Blanking Press, is not acceptable because need for two more operations is quite apparent, and it is only after two more operations in the Finishing Press that- the nut is ready for threading. We, therefore, hold that the impugned order cannot be termed as ‘pervert’ in that it has granted concession to the Finishing Press and not to the Blanking Press.
28. In the light of these discussions, we hold that the language of the Exemption Notification No. 40/78-Cus. is quite clear. In view of this, any liberal interpretation, which would give unintended benefit to the appellants, is not justified. We further hold that the imported machines cannot be considered as one automatic machine. We also hold that the Rules of Interpretation and the Section Notes contained in the First Schedule to CTA, 1975, cannot be extended to the interpretation of Exemption Notifications. We further find that there is nothing pervert, or absurd, in the Appellate Collector’s order which gave exemption only to Finishing Machine. Therefore, we dismiss this appeal.