ORDER
S.L. Peeran, Member (J)
1. The appellants have sought for an order on merits on the basis of the grounds of appeal annexed to form CA-3. The appeal arose from the order in appeal dated 5-8-1988 in C3-492/88 passed by the Collector of Customs (Appeals) Madras who has upheld the order in original dated 5-3-1988 passed by the Assistant Collector of Customs (Refunds).
2. The appellant imported a consignment of Heat Exchanger tubes from M/S Toyo Engineering Corporation, Tokyo, Japan under BE 1429/20-12-1985 by vessel JURINA. The supplier along with the consignment sent a package of anti-corrosive coating compound free of charge. The appellants have contended that this was supplied to touch up the tubes at the time of assemblying. As the invoice was separately raised a separate BED 837/12-12-1985 was filed. The goods though declared as of no commercial value was classified under Heading 32.04/12(i) and assessed to duty at 150% + 40% (20% + 5% of 20%). The appellants have submitted that consignment was sent free of charge as it was not indented by them. Hence they claimed assessment as per Accessories (Condition) Rules and filed refund claim by their letter dated 28-5-1986 seeking relief under Accessories (Condition) Rules, 1963. They sought for refund of excise duty collected against surface condenser tubes under Tariff 73.17/19 (i).The appellants have submitted that anti-corrosive compound is also assessable under Tariff 73.17/19(i) (iii) at 45% plus 30% C.V. duty at Rs 335/- M.T. as accessories spare parts and maintenance or repairing implements for any article. The Assistant Collector by her Order-in-Original has rejected the refund claim of the appellant on the ground that the documentary evidence/details called for by their office letter dated 13-11-1986 in support of claim was not furnished. The appellants filed appeal before the Collector of Customs (Appeals), Madras, who has rejected the prayer of the appellant on the ground that impugned goods do not satisfy provisions of Rule 2(i) and (ii) of the Accessories (Condition) Rules, 1963. He held that the question of extending benefit of Accessories (Condition) Rules, 1963 can be considered only if the Accessories and the main equipment are covered by one invoice and one bill of entry. As regards the reclassification of the imported goods the Collector (Appeals) held that the reclassification under Heading No. 38.01/19(i) C.T.A. is barred by limitation as laid down under Section 27 of the Customs Act, 1962. He has also held that the appellants have not produced Technical Literature and Analysis Tests Certificate to facilitate determination of correct classification.
3. In the grounds of appeal the appellants have submitted that package of anticorrosive coating compound was supplied free of charge along with condenser tube which were imported by them from Japan. The bill of entry was separately filed in respect of these items only at the instance of the Department. While in fact the import of these materials under one consignment is reflected in the documents of imports, they have stated that anti-corrosive coating compound has been supplied by the supplier along with condenser tube for coating the tubes after they had been fitted in. They have submitted that the Accessories (Condition) Rules, 1963 do not lay down any condition that Rules are applicable only if there is one invoice and one bill of entry. The Rules merely say that the goods should be imported along with the article. In this case goods accompanied the consignment in the same steamer. Instead of including impugned goods in the main invoice, the supplier had raised a second invoice of no commercial value for customs purposes only. They have submitted that impugned goods were imported along with the article viz. Condenser pipes, and they are covered under Accessories (Condition) Rules, 1963. They have submitted that the Rules not only covered Accessories but also spare parts and maintenance and repairing implements. Impugned goods serve as maintenance implements and hence they are covered within the rules. They further submitted that Collector (Appeals) has wrongly rejected the refund claim on the ground that the same is barred under Section 27 of Customs Act, 1962 for reclassification under Heading 38.01/19 (i) CTA. They have submitted that they had sought for reclassification in their original refund claim. It is their case that if a wrong classification has been made even then the same can be corrected by the Appellate Authority. There is continuity in the proceedings and no fresh refund claim has been filed by them to make their claim barred by limitation under Section 27 of the Customs Act.
4. Shri S. Chakraborti, learned JDR for the revenue submitted that the impugned order was not assailable. He submitted that the appellants had not made any claim for reclassification under Tariff Item No. 38.01/19 (i) C.T.A. Therefore, he submitted that their claim for re-classification has been made beyond the time limit of 6 months and therefore is time barred as laid down under Section 27 of the Customs Act. He has submitted that the appellants have made a new ground and hence it requires to be rejected. He relied upon the following citations:-
(1) Madras Rubber Factory v. Collector of Customs, Madras -1984 (18) E.L.T 390.
(2) Food Corporation of India v. Collector of Customs Madras – 1984 (15) E.L.T 417.
(3) Oil & Natural Gas Commission v. Collector of Customs Calcutta 1988 (34) E.L.T 248.
As regards the applicability of the Accessories (Condition) Rules, 1963 he submitted that the impugned product is consumable goods and therefore it will not come under Rule 2(i) (ii) of the said Rules.
5. We have gone through the grounds of appeal, considered submission made by learned JDR and also perused the citations relied upon by the party.
The Accessories (Condition) Rules, 1963 reads:-
“Accessories of and spare parts and maintenance or repairing implements for any article, when imported along with that article shall be chargeable at the same rate of duty as that article if the proper officer is satisfied that in the ordinary course of trade;
(i) Such accessories, parts and implements are compulsorily supplied along with that article and
(ii) No separate charge is made of such supply, then price being included in the price of the article”.
The Rules cover only accessories, parts and implements. Therefore, consumable items such as resin and hardener are not included in the Rules. The appellants have submitted that the impugned goods, namely, anti-corrosive coating compound has been supplied to them free of charge along with the article namely, condenser tubes and that they are not consumable goods. They have stated that the impugned goods are maintenance implement for the article condenser tube, imported by them and supplied by the same supplier in one consignment free of charge. The documents, namely, invoice and bill of entry were submitted by them separately mere for the convenience of the Customs Department. They have submitted that the Rules do not provide for importing both the articles and its accessories in the same bill of entry and invoice. On a careful perusal of the Rules, this objection raised by the appellant is well founded. The proper officer has to be satisfied with regard to the accessories, parts and implements and as to its compulsory supply along with that article and with regard to no separate charge being made by supplier for such supply. There is no finding given on this ground by the Assistant Collector in the order in original. The Collector (Appeals) has not examined this issue regarding applicability of the Rules. He has rejected only on the ground that accessories and main article will have to be covered in one bill of entry and one invoice.
6. In Chowgule & Co. Pvt. Ltd. v. Union of India and Ors. as reported in 1990 (27) ECC (Bom) 203 (Para 23 & 37 refer), the Bombay High Court has held while examining Section 46 of the Customs Act that “a careful reading of Section 46 shows that the essence of provision is the making of the entry of the imported goods, the manner in which the entry is made being merely a question of procedure. The presentation of the bill of entry in the prescribed form is thus a pure procedural aspect of the making of the entry of the imported goods, a matter of form. For these reasons, the intention of the Legislature appears clear and therefore, on the strength of the above mentioned rulings of the Supreme Court it follows that Section 46 is merely directory and not mandatory”. Therefore Collector’s finding that the Accessories (Conditions) Rules, 1963 cover only if they are covered by one invoice and one bill of entry is not a correct reading of the Rules. As the matter has not been considered on merit, the same requires to be reconsidered by the original authority with regard to the applicability of the Rules to the imported items.
7. As regards the second question of reclassification under Heading No. 38.01/19 (i) C.T.A it is to be observed that refund claim application has been filed well within 6 months as provided in Section 27. It is well settled that the authorities can always correct the orginal classification. Hence we do not find much force in the learned DR’s contention. The citations relied on by the Revenue are not on this point. The appellants have produced the relevant documents in support of their claims. But these documents were not placed before the original authority for consideration. The matter requires re-consideration as the original authority has rejected the refund application as unsubstantiated. The impugned order is set aside and the matter is remitted to the Assistant Collector (Refunds), Madras for de novo adjudication and the same shall be disposed of after giving notice to the appellants and hearing them in the matter.