ORDER
S.S. Kang, Member (J)
1. The appellants filed this appeal against the Order-in-Appeal dated 27.5.88 passed by the Collector of Customs (Appeals), Calcutta.
2. In this case the benefit of Notification No. 155/86-Cus. dated 1.3.86 was denied to the appellant is respect of two stamp charging and pushing machines and one Gas cleaning car on the ground that the goods in question were complete machines and parts of the machines.
3. Learned Counsel appearing on behalf of the appellants submits that appellants are engaged in the manufacture of Iron and Steel. The coke of high grade is required for the manufacture of Iron and Steel and this coke is known as metallurgical coke. The said metallurgical coke is obtained after coking coal is charged into the coke oven plant known as Coke Oven Battery which are situated in the appellants plant. The appellants constructed a new Coke Oven Battery and for setting up for the new coke oven battery two stamp charging and pushing machines and one gas charging cleaning car was required. He submits that the functions of the stamp charging and pushing machine is to take coal from the bunker and to prepare a coal cake stamped to the precise size for being charged in the oven. The packing is essential to obtain the desired productivity. The stamp charging and pushing machines apart from charging the cakes into the oven also pushes out the cake from the oven.
4. In respect of charging gas cleaning car, he submits that this is fitted on the top of the oven and its function is to prevent the hazard of emanating smoke and fumes which come out of the doors of the hot oven when the door of the oven is opened for charging the same.
5. He submits that most of the components and parts of the new coke over battery were procured or manufactured indigenously and some of the parts were imported.
6. He submits that the lower authorities wrongly held that stamp charging machine charging gas cleaning car were imported by the appellant. He submits that the stamp charging and pushing machine consists of machine hopper, plate feeder, stamping system and stamping box. These four items make one complete stamp charging and pushing machine. He submits that only the equipment for stamping was imported. The rest of the items were manufactured indigenously. In respect of the charging gas cleaning car, he submits that this car was of 80 tonnes which moves on rails over the top of the Coke Oven Battery performs the function of sucking gas from the oven battery. He submits that only gas pressure control device, lifting device, the separator flue conditioning duct and two roto-vent de-dusters were imported. He submits that the appellant made import of only these parts which is evidence from the weight of materials imported inasmuch as the total weight of two stamp charging and pushing machine and charging gas cleaning car should have 1480 metric tonnes. Whereas the items imported only weight 100 tonnes. In respect of cost of the imported goods, learned Counsel submits that the total estimated cost for the complete machine is 44.94 million DMs whereas the value of the imported components amounts only 4.54 million DMs. He, therefore, submits that the goods in question were parts of stamping charging and pushing machine and of charging gas cleaning car are entitled for the benefit of Notification No. 155/86-Cus which exempts parts required for initial setting up or for the assembling of manufacture of any articles specified therein.
7. Learned JDR appearing on behalf of the Revenue submits that from the Bill of Lading and Bill of Entry and from the Insurance Certificate in respect of goods in question it is clear that the appellants made import of two numbers of stamp charging and pushing machines and one gas cleaning car complete with accessories. He submits that as the appellants made import of the complete machine, therefore, they are not entitled for the benefit of Notification No. 155/86-Cus.
Heard both sides.
8. In this case the appellant claimed the benefit of Notification No. 155/86-Cus. to the goods in question. The contention of the appellants is that they imported only equipment for stamping which is part of stamp charging and pushing machines and only some parts of charging gas cleaning car. Whereas, the contention of the Revenue is that appellants have imported complete machine.
9. We have perused a copy of the invoice produced by the appellant where the goods in question were described “Two numbers stamp charging and pushing machines and one number charging gas cleaning car complete with accessories”. In the Bill of Entry the same description was given by the appellant. The Insurance Certificate of New Indian Insurance Company Ltd. also describes the goods in the same way. As the appellants describes the goods in Bill of Entry and in the relevant and the accompanying documents as the stamp charging and pushing machines and one charging gas cleaning car complete with accessories, we do not find any merit in the contention of the appellant that the goods were part of these machines and not the complete machine. As the appellant made import of the complete machines, they are not entitled for the benefit of Notification No. 155/86-Cus dated 1.3.86 as it provides concessional rate of duty to the parts falling under Chapter 84-85 of the Customs Tariff required for purpose of initial setting or for assembling or manufacture of any article specified therein.
In view of the above discussions, we do not find any merit in this appeal. The appeal is rejected.
P.C. Jain, Vice President
10. I have perused the order proposed by my learned Brother Shri S.S. Kang, Member Judicial. I regret, however, that I am unable to pursuade myself to agree to the conclusion reached by him. I pass the following order:
11. In this appeal we are concerned with whether the goods imported and described in the invoice as “Two Nos. SCP Machine and one No. charge gas cleaning car complete with accessories coke oven battery No. 7 as per Order No. 8230/PRJ-67201/T.018 are complete machines or parts. A similar description has also been given in the relevant Bill of Lading. Determination of this question whether the goods imported are parts of machines will determine whether the goods are entitled to the benefit of Notification No. 105/86-Cus.
12. It is, however, the contention of the appellants that though the goods had been described as machines they are parts of machines and not complete machines by themselves. It is further urged that the machines in which the goods imported will be assembled into would again be complementary to the coke oven battery No. 7 setp initially at Jamshedpur steel plant of the appellants.
13. In order to support the aforesaid contention, learned Advocate for the appellants relies on a number of documents such as (1) catalogue for the goods (2) appellants’ import licence application covering letter dated 23.1.85 (3) Tata Robbin Fraser’s (TRF) quotation dated 15.11.84 to TISCO to import some components of proprietary nature for SCP machines and CGC Car, (4) appellant’s letter dated 1.6.85 to DGTD explaining that components to be imported by them would be handed over to TRF so that complete machine can be fabricated by them and supplied to the appellants. In this respect reference has been made to the Technical Note and lastly but not the least, (5) Ministry of Steel and Mines letter dated 1.1.86 to Collector of Customs, Calcutta recommending that the imports be attested as ‘protect imports’.
14. A Technical Note was also submitted by the appellants to the Assistant Collector of Customs concerned during the processing of Bill of Entry. It is stated therein that coke oven battery No. 7 will have 54 ovens and in each oven, in a rotation of cycle tasting for about 20 hours, a stamped coke of coal will be charged. On completion of the heating cycle at the end of about 20 hours, the red hot coke will be pushed out by the same stamp charging and pushing machine on to the quenching car which in turn will cool the red hot coke at the quenching tower. Thereafter it will discharge coke on coke wharf for onward transmission to blast furnace. It was further pointed out that one SCP machine weighs a total of about 700 tonnes and moves on rails in front of the oven battery. The various functions which the machine can do are briefly as follows:
Travelling in front of the Battery and precisely positioning. Taking coal from stationary Coal Bunker. Opening and Closing Oven doors. Cleaning Oven door and door frame. Preparing a Coal cake stamped to the precise dimension. Charging the Coal Cake into the Oven. Pushing coke out of the Oven.
15.lt was further pointed out that in the stamping of coal cake, various equipments for the process of making coal cake are required. Sketches of the various equipments were also given, namely–
(1) Machine Hopper
(2) Plate feeders
(3) Stamping System
(4) Stamping box
All these four parts comprise equipment for stamping function. Of all these, only item (3) i.e. stamping system with description in the invoice and Bill of Lading, as above, is being imported and the rest of the items are all being manufactured indigenously.
16. Likewise for CGC car weighing about 80 tonnes moving on rails over the top of the battery only certain equipments of the said CGC car have been imported–
(1) 2 Nos. Roto Vent dedusters–5
(2) 1 No. Gas pressure control device and lifting device for the covers which
form part of in-take telescopic pipes.–1
Flue conditioning Dust–4
Deviation Separator–3
17. Learned Advocate has also drawn attention to the fact that for indigenous supply by TRF of equipments for two Nos. SCP Machine and CGC Car, TRF are bringing their own requirements of imports under the list attestation procedure as per ITC Policy. It was also pointed out that for indigenous supply electrical items order for a total value of Rs. 1.31 crores on M/s. Siemens India and order for Rs. 76 lakhs on Rexroth Industries Bombay for hydraulic systems had already been placed by TISCO. It was thus argued that the parts of SCP machine imported by the appellants are to a minor extent, in addition to the major fabrication work by TRF as well as their other requirements and supplies from Siemens and Rexroth Industries, Bombay.
18. Drawing attention to the appellants’ import application dated 23.1.85 it was made amply clear to the licensing authorities that the stamp charging facilities would consist of parts to be imported in combination with a major portion of equipments being procured indigenously. This was further clarified, submits the learned Advocate, in the appellants’ letter dated 1.6.86 to DGTD on a query raised by the latter. In view of the aforesaid foregoing material, learned Advocate has submitted that there can be no doubt that the goods imported are only parts of the SCP machines and CGC car, which in turn are to be used in the coke oven battery No. 7 of the appellants. Coke oven batteries, it was further submitted fall under TH 84.17 in the category of industrial furnaces, SCP. In the Explanatory Notes to HSN Heading 84.17 (which corresponds to the CTA Heading 84.17) itself it is clearly stated that “many industrial furnaces incorporate equipment for charging or dischaging, for manipulating the doors, covers, hearths or other moving parts, or for tilting the furnace, etc. Such lifting or handling equipment is to be classified with the furnace or oven provided it forms an integral part thereof; otherwise it is to be classified in heading 84.28”. Learned Advocate relying on these Notes clearly points out that the goods imported would fall under TH 84.28 which is also a specified item under Notification No. 155/86-Cus.
19. On the other hand, the authorities below have merely gone by the nomenclature given in the invoice or the Bill of Lading without examining the details of the goods imported, as given in the packing list alongwith invoice.
20. In my considered view the authorities below have erred in denying the benefit of Notification No. 155/86-Cus. to the goods imported by the appellants, as mentioned above. Either for the purpose of classification or for the purpose of determining the benefit of a notification, one is not required to go merely on the description of the goods in the invoice or Bill of Lading. One has to see the nature of the goods imported. The material brought on record, as discussed above by the learned Advocate for the appellants clearly shows that the goods imported are parts of SCP or CGC car which in turn are required for coke oven battery No. 7. These cannot be called complete machines by themselves. It is, therefore, not correct to deny the benefit of the notification to the said goods. The two authorities below have taken a very narrow view of the Notification No. 155/86-Cus. Definition of’part’ relied by the original authority, is for the purpose of ITC Policy. It cannot be taken for the purpose of the said notification. The goods imported by themselves cannot do any useful function unless they are used with the coke oven battery for which the goods are meant. It is not disputed that the goods imported are designed for coke oven battery. It is also not averred by the authorities below that the imported goods serve any independent function and can be used independently of the coke-oven battery. SCP machines and CGC car are merely performing complementary functions to the principal function of production of coke in the coke oven battery set up by the appellants. Viewed in the above light both SCP machines and CGC cars could be treated as part and accessory of coke oven battery.
21. Lower authorities have held that other parts such as hopper and feeder plate cannot be considered as part of the stamping machines. These are merely for the purpose of guiding and feeding the coal to the stamping machine. But they forget that stamping box has also not been imported. There cannot be stamping of coal cake without the stamping box. Apart from this, approach of the lower authorities has been to look at individual functions stamping, charging, pushing, cleaning the gas in isolation without looking at the entire composite system of production of coke. This is not a correct approach in determining the benefit of Notification No. 155/86-CE. The notification gives benefit to ‘parts’ for the purpose of initial setting up, or for the assembly or manufacture, of any article specified in the table to the notification. It is not disputed that all these goods imported by the appellants are to be used for setting up the coke oven battery in the appellants premises. These would, therefore, become parts for the setting up, or for assembly or manufacture of coke oven battery.
22. Viewed from any angle, I am of the view that the benefit of notification requires to be extended to the goods in question. Hence, I set aside the impugned order and allow the appeal with consequential relief to the appellants.
23. In view of the difference of opinion between Hon’ble Member (Judicial) and Hon’ble Vice-President, the matter is submitted to Hon’ble President for reference to a 3rd Member on the following points:
Whenever the goods in question are parts of Stamp charging and Pushing machines and Gas cleaning car or of Coke oven battery and are entitled for the benefit of Notification No. 155/85-Cus. dated 1.3.86 as held by the Hon’ble Vice-President or the items in question are complete machine and are not entitled for the benefit of Notification No. 155/86-Cus. dated 1.3.86 as held by the Hon’ble Member (Judicial).
ORDER
G.R. Brahmadeva
25. In view of the difference of opinion between Member (Judicial) and the then Hon’ble Vice-President, the matter was referred to me to express my views as third Member on the following points.
Whether the goods in question are parts of Stamp charging and Pushing machines and Gas cleaning car or of Coke oven battery and are entitled for the benefit of Notification No. 155/85-Cus. dated 1.3.86 as held by the Hon’ble Vice President or the item in question are complete machine and are not entitled for the benefit of Notification No. 155/86-Cus. dated 1.3.86 as held by the Hon’ble Member (Judicial).
26. Heard both sides with reference to the difference of opinion.
27. The learned Counsel appearing for the appellants submitted that both the authorities below as well as Hon’ble Member (Judicial) have held imported items were not parts of the machine but the complete machines by themselves based upon the bill of entry and the bill of lading. On the other hand based upon the technical literature, catalogue for goods and other relevant documents placed before the bench the Hon’ble Vice-President has arrived at the right conclusion holding that both the imported items i.e. SCP machines and CGC car could be treated as parts and accessories coke oven battery. Further it was held that all the goods imported by the appellant are to be used for setting up the coke oven battery in the appellants premises and as such these parts are entitled to benefit of notification in terms of Notification No. 155/86-Cus. dated 1.3.86.
It was submitted by him that mistake has crept in describing the imported items as machines though they are parts of machine and not complete machine by themselves. Description in the bill of entry is not conclusive proof to hold the items as complete machines and the description made in the bill of entry do not operate as an estoppel because bill of entry does not create any liability. Bill of entry is only a document meant for facilitating clearance of goods for home consumption. In support of his contention that description in the bill of entry is not a conclusive proof to treat them item as described, he referred to the following decisions:
1. Sva Udyog Viniyog Ltd.
2. Susumo Engg. v. CCE Nagpur
3. Union Carbide India Ltd. v. CC, Bombay 1996 (24) ELT 325
He contended that since beginning the plea was taken by the appellants that imported items are not complete machines by themselves but they are only parts and even requested for examination of the goods by an independent expert at the time of clearance but the request was not acceded too by the department. He urged that the imported items were to be assembled in the machine which would be complementary to the coke oven battery No. 7 set up initially at Jamshedpur Steel Plant. He said that stamping machine consists of (1) Machine Hopper, (2) Plate feeders, (3) Stamping system and (4) Stamping box. Elaborating his arguments on the process and functioning of the machine and the items in particular he referred to the technical note which was submitted to the Assistant Commissioner of Customs during the processing of bill of entry. It is stated therein that coke oven bearing No. 7 will have 54 ovens and each oven, in a rotation of cycle lasting for about 29 hours, a stamped coke of coal will be charged and on completion of the heating cycle at the end of about 20 hours, the red hot coke will be pushed out by the same stamp charging and pushing machine on to the quenching car which in turn will cool the red hot coke at the quenching tower. Thereafter it will discharge coke on coke wharf for onward transmission to blast furnace. It was further pointed out that one SCP machine weights a total of about 700 tonnes and moves on rails in front of the oven battery. The various functions which the machine can do are briefly as follows:
Travelling in front of the Battery and precisely positioning. Taking coal from stationary Coal Bunker. Opening and closing oven doors. Cleaning oven door and door frame. Preparing a coal cake stamped to the precise dimension. Charging the coal cake into the Oven. Pushing coke out of the Oven.
28. He submitted that as can be seen from the technical note one SCP machine weighs a total of about 700 tonnes whereas the imported items i.e. SCP System weighs at 100 tonnes and further total estimated cost for the complete machine is 44.94 million DMs whereas the value of the imported components amounts only 4.54 million DMs. He further clarified that in stamping of coal coke stamping machine plays an important role with reference to the stamping and the stamping machine consists of 4 parts as stated above and out of that only item i.e. stamping system with the description in the invoice and bill of lading is being Imported and the rest of the items are being manufactured indigenously.
29. He submitted that likewise for CGC car weighing about 80 tonnes moving on rails over the top of the battery only certain equipments of the said CGC car have been imported.
30. Referring to the import application dated 23.1.85, he said that in the application it was made clear to the authorities that the stamp charging facilities would consist of parts to be imported in combination as a major portion of equipments being procured indigenously. He said that further this was clarified by the appellants’ letter dated 1.6.86 to DGTD on a query raised by the letter.
31. He justified the view taken by the Hon’ble Vice-President in holding that imported items are only parts of the machine and not complete machines by themselves based upon the material evidence available on record viz. (1) Catalogue for the goods (2) appellants’ import licence application covering letter dated 23.1.85 (3) Tata Robbin Fraser’s (TRF) quotation dated 15.11.84 to TISCO to import some components of proprietary nature for SCP machines and CGC Car, (4) appellant’s letter dated 1.6.85 to DGTD explaining that components to be imported by them would be handed over to TRF so that complete machine can be fabricated by them and supplied to the appellants. Technical note and Ministry of Steel and Mines letter dated 9.1.86 to Collector of Customs, Calcutta recommending that the imports be attested as ‘project imports’.
32. Learned JDR referred to the relevant invoice dated 19.5.87 wherein it was described as “Commodities: Two Nos. SCP Machine & One No. Charge Gas Cleaning Car complete with accessories as per Tata Ltd. Order No. 8230/PRJ-67201/T.018 and spares”. He said that stamping system may be part of the stamping machine and stamping machine may be part of the huge plant, but that is not the question to be considered herein. Whether part imported by the appellant is a complete machine by itself or not. According to him the items are complete by themselves since they are having essential/basic characteristics of the main machine. Referring to the page 1200 of the HSN (Harmonised System) he said that coke oven discharging machine and machine used for inserting or removing the objects to be treated in the ovens are to be classified under same entry and according to section notes to Section XVI of HSN on page 1133 it has been classified that composite machines consisting of two or more machines or different kinds which have separate function, which are generally complementary and are described in different headings of section XVI are all to be classified according to principal function of the composite machine. He said that the stamp charging and pushing machine and principally designed for functions like manipulating the doors and charging and discharging and accordingly the item as such is to be treated as complete item and benefit in terms of Notification No. 155/96-Cus. cannot be extended. He said that since the invoice describing the item complete with accessory, it is clear that they are complete machine and the Commissioner (Appeals) has rightly observed that how there could be ‘accessory’ without the main equipment as indicated in the invoice. He also submitted that no material evidence such as manufacturer catalogue, price list and correspondence were placed before the authorities below to substantiate their claim that items are only parts and not complete machine. For the first time the additional evidence was placed before the Tribunal and the Tribunal was not right in admitting such additional evidence since the same has not been considered by the authorities below. Further, he contended that the licence is only for importing capital goods and that strengthens the view that imported items are capital goods and not part of the machine. He justified the view taken by the authorities below as well as the Hon’ble Member (Judicial) holding that imported items were not parts but complete machine by themselves.
33. It was replied on behalf of the appellant that capital goods does not mean complete by themselves and in fact it may be part or an accessory in the form of goods essential for proper working of machine referring to the decision of the Tribunal in the case of Grasim Cement . He also submitted that it is not a question to be considered herein whether item is having an essential characteristic of the main item or not but whether the imported item is a complete machine by itself or not,
34. I have carefully considered the matter. It was contended on behalf of the Revenue that the authorities below had no occasion to go into the additional evidence placed before the bench and the Tribunal should not have admitted such an additional evidence in deciding the issue. As a third member I cannot go into the question of admissibility of additional evidence or otherwise at this stage. Having referred the matter and on reference I am concerned and confined to the views expressed by the respective Members on material evidence available on record. As can be seen from the record the appellants have taken a plea from the beginning that the items were not complete machine by themselves but they were only parts and requested for inspection of the goods by an independent expert. The department should have acceded the request made by the party to inspect the goods by an independent authority to arrive at the proper conclusion whether the items were parts or complete machine by themselves. Description and bill of entry by importers itself is not a determining factor in deciding the issue that goods were complete machine by themselves. Generally burden lies on the department in determining the classification of the product. Since the appellants themselves have described the product as complete machine in the invoice/bill of entry etc. the burden shifts on them to prove that items are not complete machine but parts. In this context, it was the case of the party from the beginning that these are not complete machine and accordingly requested for examination by an independent authority. In support of their contention technical note was also placed before the concerned Assistant Commissioner to substantiate their claim that imported item was only a part of stamping machine in respect of weight, value and function wise. Apart from that sufficient material evidence was placed before the bench at the time of regular hearing in support of their claim that what they have ordered and what they have imported was only a part of SCP machine and CGC car and they are performing complementary function to the principal function of the production of coke in the coke oven battery set up by the appellant. Admittedly, stamping machine consists of 4 items and what the party had imported was only stamping system which was one of the equipments of the stamping machine. It appears that the authorities below have merely gone by the description given in the invoice and the bill of lading without examining the details of the goods imported as rightly observed by the Hon’ble Vice President in the impugned order. The Hon’ble Vice President has further observed that either for the purpose of classification or for the purpose of determining the benefit of notification one is not required to go merely on the description of the goods in the invoice or bill of lading. The appellant have substantiated their claim that the goods imported by themselves cannot do any useful function unless they are used that the coke oven battery for which the goods are meant. No evidence has been placed by the department to establish that the imported goods serve any independent function and can be used independently. In the facts and circumstances and in view of the evidence placed on record the view expressed by the Hon’ble Vice-President is concurred with. The file is returned to the original bench to pass an appropriate order accordingly.
MAJORITY OPINION
In view of the majority opinion, the impugned order is set aside and the appeal is allowed.