ORDER
S.V. Maruthi, Member (J)
1. The dispute related to the eligibility of the ‘Distance Measuring Equipment (DME)’ for exemption under Notification 284/76.
2. The appellants imported 46 boxes DME in April 1983. The Customs authorities classified the goods under Heading 85.18/27-1 and assessed to duty at Rs. 1,02,59,249-11. The duty was paid on 14th July 1983. Thereafter on 3rd Oct. 83 they filed a claim for refund of duty amounting to Rs. 54,29,411-71 claiming concessional rate of duty under Notification No. 284/76. The claim was rejected by the Asst. Collector. On appeal the Collector (Appeals) confirmed the order of the Asstt. Collector. Hence the appeal before us.
3. The main contention of the appellants is that the authorities below mis-read the notification i.e. they proceeded on an assumption that clause 1 of the notification is applicable, while the goods imported fall under clause 2 of the notification. He further submitted that clause 2 reads:
“Apparatus for wireless reception incorporated in a single unit with transmitting apparatus and components thereof.”
He submitted that DME answers to the description mentioned in clause 2. It is further his case that DME works on the principle of wireless transmitter, and therefore, falls within the meaning of the apparatus mentioned in clause 2. He submitted that the system consists of pulse transmitter and receiver (called the interrogator) carried in the craft and a pulse receiver transmitter system (called the transponder) at a fixed position on the ground. The interrogator transmit pulses identically at a frequency, say fj. These are received by the receiver of the transponder, amplified, demodulated and made to trigger transmitter, generally after a small fixed delay….In the craft, the receiver which is tuned to f2 receives these pulses and the delay between the transmitter is measured to obtain the distance of the transponder from the craft. Therefore, he submitted that the system satisfied the description of the apparatus mentioned in clause 2 of the notification. He also relied on the following extract from the McGraw-Hill Encyclopedia of Science & Technology, Vol. 4 – 5th Edition at page 339 :
“Distance-measuring equipment
An international standardised navigation system which allows an aircraft to measure its distance from a selected ground based….
The airborne equipment, called an interrogator, transmits pulses of 1 kw peaks power on 1 of 126 frequencies….
The beacon on the ground, called a transponder, receives these pulses, delays them by 50 us, and then retransmits them usually with a power of 1 kw, on 252 frequencies lying between 962 and 1213 MHz….
The transponder transmission is called the reply. The frequency difference between interrogation and reply is always 63 MHz. This arrangement allows each transmitter frequency to act as the local oscillator for its associated superheterodyne receiver, the intermediate frequency of which is 63 MHz. For landing purposes, some transponders have powers as low as 100VV.”
3A. He also relied on an extract from the New Encyclopedia Britannica, XVth Edition, Vol. 24 at page 758; according to which DME uses pulses that are transmitted from the aircraft, received by a DME beacon on the ground, and transmited back to the craft. The time taken for the pulse to make the round trip is measured by a very precise electronic clock; distance is displayed automatically on counters similar to the odometer in an automobile. DME beacons are located with VOR beacons to provide simultaneous bearing and distance information to an approaching aircraft thus giving its position.
4. He, therefore, submitted that the principle on which DME functions is receiving and transmitting the signals which is incorporated in a single unit and qualifies for exemption under clause 2.
4A. Shri Tayal appearing on behalf of the respondent submitted that clause 2 of the notification applies only for a simple receiving and transmitting equipment incorporated in a single unit. The emphasis in the notification is on wireless apparatus whereas the equipment imported is radar equipment, and nowhere it is defined as a wireless apparatus. The basic function of the equipment in the notification is broadcasting. There-, fore, the appellants are not entitled to the notification.
5. The question, therefore, is whether the DME is qualified for exemption under clause 2 of the notification. The relevant notification is as follows:
“Apparatus for wireless reception incorporated in a single unit with transmitting apparatus and components thereof.”
6. A reading of the above shows that it applies to a single apparatus incorporating both the receiving and transmitting units. The emphasis appears to be on an apparatus which functions as the receiving and transmitting signals whereas the DME is used for determining the position of an aircraft. It allows an aircraft to measure its distance from a selected ground based beacon.
According to McGraw-Hill Encyclopedia of Science & Technology, (Vol.4 – 5th Edition at page 256) DME is described as a Navigation instrument. According to the author, Navigation instrument primarily relate to the position of the aircraft with respect to specific locations on the earth. Navigational aids include :…distance measuring equipment (DME) that indicates the distance to radio…or near airports or…. The same author at page 339 describes DME as “An internationally standardised navigation system which allows an aircraft to measure its distance from a selected ground based beacon”.
Similarly, Elements of Electronic Navigation by Prof. Nagaraja describe the DME as “Secondary radar system”.
Therefore, primarily DME is a Navigation system. It may be true that the principle on which it is designed and works is that of wireless transmitter and receiving apparatus. However, merely because the design and the principle of the DME is based on the wireless transmitting and receiving system it cannot automatically be said that it is a wireless reception incorporated in a single unit with transmitting apparatus. Therefore, we arc of the view that the appellants are not entitled for the benefit of the notification.
7. We found that the lower authorities have not considered the claim of the appellants for classification of DME under chapter 85.15(1) or 90.14. We direct the Collector to consider the classification of DME under 85.15(1) or 90.14 as the case may be. The appeal is remanded to the Collector accordingly.
We dispose of the appeal in the above terms.
S.L.Peeran, Member (J)
8. The main question in this appeal is as to whether the ‘Distance Measuring Equipment (DME)’ imported by the National Airport Authority would qualify for the exemption under Notification No. 284/76-Cus., dated 2.8.76 and alternatively, whether the said DME would be classified under heading 90.14 as ‘Navigational Instrument’? Learned Sister S.V.Marulhi,Member(Judicial) has rejected the first prayer and for the second prayer, she has observed that the question has not been looked into by the lower authorities and for proper determination, she has remanded the case for considering the question of proper classification of the imported product ‘DME’.
9. Shri V. Lakshmi Kumaran, learned Counsel appearing for the appellants, had argued the case on the basis of the product DME to be classifiable only under Chapter 85.15 and not under Chapter 85.18/27.1 as had been done by the Customs authorities. Although in para 1 of the statement of facts, the appellants have raised the question of alternative classification under Heading 90.14 as Navigational Instruments but in para 6 of the Statement of facts, they have stated that “the correct classification of the DME is under Chapter 85.15 and not Chapter 85.18/27.1 as decided by the Customs authorities. In this view of the matter, the DME would qualify for exemption under Notification No. 284/76 (Sl. No. 2 of the Table)”. In the Grounds of Appeal, the appellants have not set out any ground for classification under Heading 90.14 as Navigational Instrument nor in the prayer column of the Appeal Memo, such a prayer has been made. The Bill of entry dated 13.4.1983 produced before us shows that the appellants had sought for classification of (I) ‘Duel Transponder Complete with Monitor, automatic charge over unit, antenna system and RF Cable under Heading 85.18/27(1). Sr. No. (II) Oscilloscope, Tektronics Model under Heading 90.28(i). Sr. No. (III) Technical Operation, Installation and Maintenance Manuals under Heading 49.01 and Sr. No. (IV) Pulse Frequency Counter under Heading 90.28 (4). Another Bill of Entry dated 13.4.83, marked Annexure 1 has one item namely, DMK Koyer under Heading 83.
10. In Form No. CA-1 of appeal to the Collector (Appeals), in column 7 the reliefs claimed are – Refund of excess customs duty of Rs. 53,29,249.11 P. recovered in excess as a result of higher rate of customs duty @ 100% + 35% + 10% instead of 30% + 20% + 10%. The Statement of facts, Annexure I, to Form No. CA-1, in para 1 and 2 states “The rate of customs duty in respect of item 1 of Bill of entry viz. Dual Transpopnder complete with monitor, automatic charge over unit, antenna system and RF cables was as follows-
Basic custom duty - 100% Auxiliary duty - 35% Additional duty - 10%
11. Custom duty charged by the Customs authorities at the above rate was in excess since under item No. 85 of Customs Tariff Act, 1976, custom duty should have been levied @ 40% + 20% +10%.
12. In Grounds of Appeal, Annexure II, also discloses the appellants have sought for exemption under Notification No. 284/76-Cus., dated 2.8.76 as amended by Notification No. 412/76-Cus., dated 18.9.76. These notifications have been issued under Chapter 85.
13. The appellants have produced Refund application filed by their Agent Nav Bharat Corporation wherein they have submitted that “item 1 of the subject B/E viz. 773-1029/-Dual Transponder complete with monitor, automatic change over unit, antnna system and RF cables is a navigational aid equipment and accordingly the rate of assessment for customs duty should have been 40% 4 + 20% + CVD 10%. You are requested to please scrutinise the claim and let us have the necessary refund order for the same”. On the top of this Annexure 2 is written 8558-com PE/10.10.83.
14. The Chapter 83 deals with Miscellaneous articles of base metal.
The Heading 85.15 deals with Rate of duty "Radio-telegraphic and radio-telephonic transmission 100% and reception apparatus; radio-broadcasting and television transmission and reception apparatus (includ- ing receivers incorporating sound recorders or reproducers) and television cameras; radio navigational aid apparatus, radar apparatus and radio remote control apparatus:" Heading 85.18/27 deals with - "Electrical capacitor; electrical apparatus for making and breaking electrical circuits, for the protection of electrical circuits etc. etc. (1) Not elsewhere specified" 100% Heading 90.14 deals with - "Surveying (including photogrammetrical surveying) 60% hydrographic navigational, meteorological, hydrological and geophysical instruments; compasses; range finders"
From the reading of the above Chapter Headings and Rate of duty as well as what is sought by the appellants, it is clear that the appellants had accepted the classification under Chapter 85. Therefore, it is observed that the appellants had not sought for classification under Heading 90.14 as Navigational Instruments instead they have been agitating under Heading 85.15 and not Heading 85.18/27(1). What has been typed as question for consideration in para 1 of the statement of facts to the Appeal Memo appears to be incorrect reading in line with the other materials discussed on record. The question of classification of imported items under Chapter 90.14 was therefore, never raised by the appellants but instead admitted the classification under Heading 85 but only sought for concessional duty under exemption Notification No. 284/76 as amended by Notification No. 412/76, dated 18-9-1976 under Heading 85. The appellants had not raised any classification dispute and as such the lower authorities had not gone into it and besides the duty had not been paid under protest also. But only they have sought for refund under exemption notification under Heading 85 under which the imported items were sought to be classified. Hence, the question of remand on this ground to lower authorities is not necessitated and no remand is called for.
15. As regards the applicability of the Notification No. 284/76, the learned Sister Smt. Maruthi has rightly held that the notification is not attracted in the instant case. But however I wish to add that the learned Sister Smt. Maruthi in the order has held that the appellants are not entitled to the exemption to Sr. No. 2 of the Notification No. 284/76-Cus., dated 2-8-1976. Sr. No. 2 is an exclusion item of the notification. The items falling under Sr. No. 2 are excluded from the benefit of the notification as can be seen from the reading of the notification itself –
“TABLE
S. No. Wireless Apparatus
1. Apparatus for wireless reception excluding apparatus
specially designed for the reception of broadcast wireless
and apparatus of the description specified in Sl. No. 2 and
component parts of such apparatus, when covered by a
certificate relating to the importation –
(a) issued by the Ministry of Transport and Communication
to the effect that it is satisfied that the apparatus will
not be used for the reception of broadcast wireless, or
(b) to the same effect issued by –
(i) to (ix) x x x x
2. Apparatus for wireless reception incorporated in a single
unit with transmitting apparatus and component parts
thereof."
The Notification also reads as "exemption to wireless apparatus. Hence, it is clear that the description of the item in Sr. No. 2 is excluded from the benefit.
16. The appellants seem to have also been under a mistaken notion that the items described in Sr. No. 2 are also included for the benefit of notification. The Collector (Appeals) has rightly held that “it has become an established practice, not to allow the benefit of this notification to any wireless transmitter-cum-receiver apparatus, even though the duty concession certificate is produced from the specified authority”.
17. In simple terms the benefit of the notification applies only to wireless apparatus and not to apparatus for wireless reception incorporated in a single unit with transmitting apparatus and component parts thereof.
18. I agree with the finding of learned Sister Ms. Maruthi that DME is not a wireless reception apparatus incorporated in a single unit with transmitting apparatus. The appeal has no merits and it is dismissed.
In accordance with the majority opinion the matter is remanded to the Collector in terms of paragraph 7 of the majority Order.