ORDER
K.S. Venkataramani, Member (T)
1. This appeal is directed against the order dated 30-5-1989 passed by the Collector of Customs (Appeals), Bombay by which he had upheld the order dated 11-10-1988 passed by the Assistant Collector of Customs, Group 6 (A), Bombay Custom House. Briefly, the facts are as follows :
The appellants imported Knitting Machine Needles and the same were classified under Heading 9806 and the benefit of Notification No. 68/87-Cus., dated 1-3-1987 was extended to these goods. The appellants, however, claimed the benefit of Notification No. 69/87-Cus. which was denied by the Assistant Collector on the ground that these are Needles of Domestic Hand Knitting Machines and not Industrial Knitting Machines. The appeal against the Assistant Collector’s order was rejected leading to the present appeal.
2. Appearing for the appellants, Shri Madhav Rao, Id. Counsel, contended that the knitting machines for which the needles were imported are not domestic knitting machines. He referred to the catalogue for the various models on record and pointed out that the machines are designed for use non-stop for 10 hours and are being used in cottage industry for knitting garments. The ld. Counsel urged that Collector (Appeals) reliance on the Cegat decision in the case of Collector of
Customs v. Simac Group (India) – 1985 (22) E.L.T. 115
was misplaced as in that case the relevant leaflet had described the product as designed for use by housewife at home. On the other hand, the learned Counsel cited and relied upon the Cegat decision in the case of
K. Mohan & Co. (Expo/Is) v. Collector of Customs -1989 (42) E.L.T. 468
in which Simac decision (supra) was also considered. The Tribunal there also was considering classification of hand-operated knitting machine and held that the criterion to apply should be based on the features and capabilities of the machine to say whether they are domestic or industrial. The ld. Counsel submitted that the features and capabilities of the machines manufactured by them would show that they are to be considered only as industrial machines and that, therefore, the needles imported arc eligible for exemption under Notification 69/87. The ld. D.R., Sh. Jainarayanan Nair contended that the machines are designed for continuous use would only indicate their durability due to rugged construction and not necessarily their industrial use. The ld. D.R. referred to the Collector’s (Appeals) reasoning and urged that in the Simac case (supra), the Tribunal had held such machines as domestic type as cottage industry is one carried on wholly or partly at home. The criterion to be adopted is whether the machine is of a kind generally used at home and the Collector (Appeals) had found that it is so in this case. As to what would constitute domestic appliance, the ld. D.R. cited the Supreme Court decision in the case of
Nat Steel Corporation v. Collector of Central Excise -1988 (34) E.L.T. 8 (S.C.)
.
3. On a careful consideration of the submissions made, it is seen that the question for decision, herein, is whether the needles imported can be considered as needles for knitting machines other than domestic so as to be eligible for exemption under Notification 69/87 under Heading 98.06 CTA ’75. This notification grants exemption to goods falling under Heading 98.06 specified in the Table thereto. Serial No. 14 of the Table covers goods classifiable under Heading “84.47 and 84.48 (excluding domestic knitting machines and auxiliary machinery for use with domestic knitting machines)”. The invoice description of the goods imported is “knitting machine needles”. The literature relating to the machines for which these needles are meant says, inter alia, “Being used for knitting garments in cottage industry, the machines have to be rugged and reliable”. It is, further, seen therefrom that these machines can knit patterns upto 36 needles width, can knit two or more colours, can use 2-6 ply cotton, wool or acrylic yarns, and are capable of knitting plain, tuck, holding, fairsle, zig-zag, and plating designs, and are capable of knitting various patterns. The Collector (Appeals), however, has held that the catalogue showed that the appellants are manufacturing hand-knitting and semiautomatic knitting machines and observed that hand-knitting machines are generally used in households and not in any industry and he also observed that in many households in North and North-East Indian housewifes operated this machine to supplement family income and also that use of the machines in cottage industry would not take them away from the category of domestic machines because cottage industry refers to an industry which is partly or wholly run at home. Collector (Appeals) also drew support from the Cegat decision in the case of
Collector of Customs v. Simac Group (India) – 1985 (22) E.L.T. 115
. As against this, the appellants, herein, place reliance on a subsequent decision of the Cegat in the case of
K. Mohan & Co. (Exports) v. Collector of Customs -1989 (42) E.L.T. 468
. On a perusal of these two decisions, it is seen that in the Simac ease, the question was classification of certain parts imported for Model DX 2000 knitting machines being manufactured by the respondents, therein, who had claimed that model was an industrial knitting machine. The Tribunal perused the catalogues of the various models manufactured and observed, “It is significant that in this leaflet Model DX 4000 is described as “the perfect machine for semi-professionals and cottage industries”. Now, if the respondent’s contention that Model 2000 is an industrial machine or for cottage industry were correct, one would expect a similar description. Its absence taken alongwith the fact in the description of DX 2000, it is said “the automatic hand-knitter the household wife is seeking ‘knit today – wear tomorrow’ acquires special importance. We realise that classification of goods should not be on the basis of catchy slogans but we are only comparing the description of the machines in the leaflets… If the machines were really industrial, the respondents would not have failed to describe it as such when it did so in case of other machines.” The Tribunal, further, observed in that order in para 23 thereof, “Considerable arguments were advanced that the machine is used in cottage industry. On this point, except reference in Collector’s order to Ludhiana to which we have already referred, there is no evidence on either side. Cottage industry only means an industry partly or wholly carried on at home. If with the machine, a housewife at her home is able to produce something more than the requirement of the family to supplement the family income, this would not take out the machine from the purview of domestic, if it is really so. We have already said above that the machine to us appears to be domestic”. That view was taken, it may be noted, based on the description of the model of the machine in that case in the manufacturers’ leaflet that it was meant for use by the housewife as against the description of the other models which were said to be meant for semi-professionals and cottage industries. In the present case before us, the leaflet describes the knitting machine as being used for knitting garments in the cottage industry. There is nothing in the leaflet to indicate its domestic use which was the case in respect of the model of knitting machine considered in the Simac case (supra) by the Tribunal. Further, a perusal of the leaflet also shows separate reference to domestic appliances produced by them after the reference to the manufacture of complete range of hand-knitting machine. It is staled in the leaflet,”… the company has introduced a range of revolutionary new products in the field of domestic appliances. These include food processors, electrically operated mixer grinders, toasters…”. The Simac decision (supra) of the Tribunal was cited before it in the case of
K. Mohan & Co. (Exports) v. Collector of Customs – 1989 (42) E.L.T. 468
. The Tribunal, therein, was considering the classification of Hand-Operated Knitting Machines with Punch Cards Model 840. It was observed, therein, that the criterion to distinguish domestic and industrial knitting machine is the capability of the machine and found, “A perusal of the catalogue shows that the knitting machine, in question, is capable of turning out a variety of designs some of them of particularly complicated and sophisticated nature. The operation of this machine is by hand. It works with the aid of punch cards. It does appear from the evidence produced by the appellants that industrial use is being made of it. We may observe that even with its existent features, this machine can be used for domestic use but in our opinion in features and capacities this machine cannot be classified as domestic machines.” The leaflet of the models of knitting machines produced by the appellants, herein, also shows that these are similar machines as above and include automatic punch card operated Model 1K 924 and the machines have similar capabilities. Therefore, on an application of the ratio of the above Cegat decisions to the facts of the present case, it is seen that the description of the machines for which the needles are imported is as machines being used in cottage industries without any indication in the leaflet of them being designed for household use. The features and capability of the machines are versatile enough for them to be considered as industrial machines. Therefore, it cannot be held that these machines fall under the excluded category at Serial No. 14 in the Table to the Notification 69/87, and, accordingly, the needles imported for these machines will be eligible for exemption under Notification 69/87. In the result, the appeal is allowed.