ORDER
Shri S.S. Sekhon
1. These appeals have been filed by the appellants against the order of the Commissioner(Appeals) who vide, the impugned, confirmed the order of the Assistant Commissioner who had classified the subject Entity `filter paper packs’ under heading 4823.90 of CETA, 1985 and accordingly confirmed the demand of duty.
2. The appellants were heard when Shri G.Sampath, learned Advocate appeared for them.Smt Radha Arun, SDR appeared for the Department.After hearing both sides and considering the matter, we find-
(a) The Entity under classification dispute were used in the manufacturing of filtering machines and have been submitted by the appellants to be assigned a specific part number.They are claimed to become an integral part of the filtering machine and would thus merit classification under 2421.90 for CETA, 1985.
(b) The process of manufacture given in the paper book and not contested is as follows-
“The filter paper bought is subcontracted to make it into the form of disc and this is treated with acetone to make the paper impervious to the moisture int he transformer oil which is being filtered by these filter paper packs by means of edge of filtration principle. The edges of the filter paper discs are then lacquered at the edges to provide stiffness to the edges of the filter paper discs.The whole filter paper packs are then boiled in transformer oil for 48 hours to make it compatible to the transformer oil which is being filtered through the filter paper packs on edge type filtration principle explained above. The paper packs are then dried in gas chamber to drain out oil from paper packs. The filter paper packs after undergoing the process explained above are assigned a product code No 310294.
These filter paper packs are fitted in the filter chamber of the transformer oil filter machine as shown in the catalogue enclosed. The filter paper packs cannot be used as such for filtration purpose unless they are fitted in a filter chamber as shown in the catalogue enclosed. These filter paper packs are sold to customers directly as well as to dealers.”
(c)The classification is claimed under heading 8421, on the following grounds-
(i) The specific Entity under 8421 should be considered as against the general heading under 4821 as per rule 3A of the Rule of the Interpretation.
(ii) Heading under 4823 does not envisage classification of paper products forming parts of the filter machines.
(iii) As per Section Note 1(d), perforated cards for jacquared or similar machines are also excluded from the scope of Section XVI
(iv)They also relied on case law of Commercial and trade parlance understanding and submit that marketability should be the determining factor for classification of the products.
(v)The order of the lower authority is incorrect in as much as they are classifying the products under two different heading depending upon the clearance with the filtering machines and its replacement part.Since the department is giving two headings, the benefit of doubt should go in favour of the appellants.
(d) We find that from the process of manufacture as submitted by the appellants, the product is made fro paper pulp which is made into `filter paper’, such filter paper which is cut to shape or size and father processed the product “filtering element” emerges “which is placed in stacks and fitted into the filter chamber of JTM & BHM series machineries being manufactured by the appellants or supplied in ‘mounted stacks’ as replacement for filter elements which have lost their strength to each as filters.
(e) The two conflicting headings read as follows-
48-23 – “Other paper, paper board, cellulose wadding and webs of cellulose fibre, cut to size or shapes, other articles of paper pulp, paper board, cellose wadding or webs of cellulose fibre”
-other paper, paper board, cellulose wadding and webs of cellulose fibres, cut to size of shape 48.23.90 = other.
The tariff description of Chapter No 8421.00 is also reproduced for purifying machinery and appearance for liquids or gases.”
And we find that parts of machinery, have to be classified as prescribed by Section Note XVI of CETA, 1985. For parts, heading 84.21 of HSN Notes prescribed at page 1183/1184 thereof as follows-
“PARTS”
“Subject to the general provision regarding the classification of parts (see the General Explanatory Note to Section XVI), the heading covers parts for the above mentioned types of filters and purifiers. Such parts include, inter alia:
“Leave for intermittent vacuum filters; chassis, frames and plates for filter presses; rotary drums for liquid or gas filters;baffled and perforated plates, for gas filters.
It should be noted, however, that filter blocks of paper pulp fall in heading 48.12 and that many other filtering elements (ceramics, textiles, felts, etc.) are classified according to their constituent material.”
Therefore, when no material has been produced to show that the Entity under classification dispute in this case would be covered by the words-
“Leaves for intermittent vacuum filters; chassis, frames and plates for filter presses; rotary drums for liquid for gas filters; baffles and perforated plates, for gas filters.”
Therefore, we have to follow and the exclusion clause in the HSN Notes for subject parts used vide the following words-
“It should be noted, however, that filter blocks of paper pulp fall in heading 48.12 and that many other filtering elements(ceramics, textiles, felts, etc.) are classified according to their constituent material.”
We find perusal of notes under heading 8421 of the HSN Notes does not support, the plea being made for, classification of subject entity as parts under heading 8421 of CETA, 1985. The entity is admittedly ‘filtering element’ made of papers and would be exclude as per HSN Notes under heading 8421. No evidence has been brought forth, that the Chapter 84 of CETA and HSN Notes are not aligned to over look this exclusion clause for ‘filtering elements’ from heading 84.21.HSN Notes can be ignored only if the headings and the chapters are not aligned.Otherwise they are binding as statutory rules of interpretations. Therefore, we would confirm the exclusion of ‘filtering elements’ made from `filter paper ‘from heading 84.21.We find that heading 48.23 would be covering the subject entity, since they are admittedly paper cut to size or shape & processed and would become other articles of paper which would be covered under this heading.We therefore confirm the classification under 48.23.
(f)Commercial Trade Parlance tests are `non statutory principles’ for classification and cannot take precedence over the ‘Statutory Rules of Interpretation in CETA 1985′. Rule 1 of the these rules, prescribed that the classification shall be determined according to the terms of heading and any relative Section of chapter Notes.Therefore, when we find that heading 84.21 of HSN and CETA 1985 are aligned, the heading notes under 8421 of HSN could be read.The fact of jacquard cards being exclude by Section Note 1(d) of Section XVI as pleaded by the appellants, induces us, to conclude, that `all parts’ of machineries are not covered by note 20 of Section XCI of CETA, 1985 which govern the classification of Parts of Machines.In any case `filter elements
even if they are parts of a ` machine’ stand excluded from the heading 84.21 by HSN Notes threrunder.Thereafter applying these statutory principals of interpretations, we cannot classified the entity under dispute i.e. filter elements made of paper under 84.21 of CETA 1985, The plea of the appellant of Commercial Parlance & usage tests and case law relied does not help them.
(g) Merely, because `filtering elements’ have been given a part number, or the plea that, as parts of filtering machine of which it becomes an integral part, would entitled classification as machinery parts. We find, that admittedly the filter elements are first coming into existence, thereafter, they are placed in the machinery, to become an integral part of the `filtering machine’. They levy of duty would be at the time of manufacture and its recovery is only differed till its removal.In that view of the matter, `filter elements’ of paper `being cut to shape or size after processing, when removed even while within the factory, would become exigible and would have to be classified under heading 48.23. Their subsequent removal and use for captive consumption or supply as replacement part will not change their classification.We would therefore, strike down any order of the Assistant Collector which classifies the said goods differently, depending on removal, as is being pleaded.From the perusal of the order of the Assistant Collector bearing No 102/95 dated 29.9.95 and placed in the paper book we find it reads as follows-
“I classify the product, “Filter Paper Packs” under 1823.90 of Central Excise Tariff Act, 1985 and accordingly, I demand the duty of Rs 1,13,031.25 from June ’94 to November 94 and Rs 90,108.00 from December 94 to May 95 and the pending Classification Lists are approved accordingly.”
This order to over reading, does not indicate any duality of the classification, as submitted by the learned Advocate.Therefore this plea also does not help the appellant.
7. In view of our findings, we find no merits in the appeal and same is dismissed.
(Pronounced in the court on 8/5/2001)