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CASE NO.: Appeal (civil) 11388  of  1995

PETITIONER: COLLECTOR OF CUSTOMS, BOMBAY

       Vs.

RESPONDENT: M/S.GRASIM INDUSTRIES LIMITED

DATE OF JUDGMENT:       11/05/2000

BENCH: S.V.Patil, S.S.M.Quadri, S.P.Bharucha

JUDGMENT:

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     J U D G M E N T

     SYED SHAH MOHAMMED QUADRI, J.

     The  short  question  that arises in this  appeal  is: whether  hydrochloric  acid  synthesis  unit  of  combustion chambers  is classifiable under Heading 84.17(1) or  Heading 68.01/16(1)  of  the Customs Tariff Act, 1975.   The  appeal came  up  before us on reference by a Bench of  two  learned judges,  taking the view that the decision of this Court  in Ballarpur Industries Ltd.  Vs.  Collector of Customs, Madras [1995  (75)  E.L.T.  6 (S.C.)] holding that a part of  paper finishing  machinery was classifiable under Heading 84.31 of Customs  Tariff  Act,  1975 (for short, the CTA)  and  not under Heading 68.01/16(1) of the CTA, is seemingly different from  what is stated in Saurashtra Chemicals Vs.   Collector of Customs [1997 (95) E.L.T.  455 (S.C.)].  The facts giving rise to this appeal fall in a short compass.  The respondent imported  four cases of hydrochloric acid synthesis unit  of combustion  chambers and claimed that they are  classifiable under  Heading 84.17(1) of the CTA.  By order dated  October 7,  1982,  the  Assistant   Collector  of  Customs,  Bombay, rejected  the  claim  and   classified  them  under  Heading 68.01/16(1) of the CTA.  The Collector of Customs (Appeals), Bombay,  acceded  to  the contention of the  respondent  for their classification under Heading 84.17(1) of the CTA.  The appellant  appealed  before  the  Customs  Excise  and  Gold (Control)  Appellate  Tribunal, New Delhi (for  short,  the CEGAT).   On  November  11, 1991, the CEGAT  confirmed  the order  of  the Collector of Customs (Appeals) and  dismissed the appeal.  The appellant challenges the order of the CEGAT

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in  this appeal.  Mr.N.K.  Bajpai, learned counsel appearing for  the  appellant,  has   contended  that  the  respondent imported  parts of machinery which are articles of  graphite falling  within  Heading 68.01/16(1) of the CTA and as  Note 1(a) of Chapter 84 of the CTA specifically excluded articles falling within Chapter 68 of the CTA, they were wrongly held to  be  classifiable under Heading 84.17(1) of the CTA.   He submitted  that  in  Saurashtra  Chemicals,  Porabandar  Vs. Collector  of  Customs, Bombay [1986 (23) E.L.T.  283],  the larger Bench of the Tribunal by majority held that the spare parts  of  the  machinery made of carbon  were  classifiable under Heading 68.01/16 of the CTA which was approved by this Court  in  Saurashtra  Chemicals vs.  Collector  of  Customs (supra).   Therefore,  the order under appeal has to be  set aside.

     In  support  of  the order under appeal,  Mr.   Joseph Vellapally,  learned  senior  counsel   appearing  for   the respondent,  drew our attention to title of Chapters 68  and 84  of  the CTA to point out that plants and machinery  fell within  Heading  84.17(1) of the CTA and not within  Heading 68.01/16(1)  of the CTA.  According to the learned  counsel, Note  1(a)  to Chapter 84 of the CTA has no  application  to machinery  or part of machinery covered by Heading  84.17(1) of  the CTA.  As such the Collector of Customs (Appeals)  as well as the CEGAT rightly classified the goods under Heading 84.17(1) of the CTA.

     Inasmuch   as   the  controversy    relates   to   the interpretation  of Headings 68.01/16(1) and 84.17(1) of  the CTA, it would be useful to quote them here:

     CHAPTER  68 ARTICLES OF STONE, OF PLASTER, OF CEMENT, OF ASBESTOS, OF MICA AND OF SIMILAR MATERIALS

     NOTES This Chapter does not cover:  (a) to (n) *** *** *** _________________________________________________________ Heading   Sub-heading  No.   Standard   Central   No.    and description  Rate  of  Excise of article  duty  Tariff  Item _________________________________________________________

     68.01/16 Articles of natural or 22F, artificial stone, of  23C, agglomerated natural or 51 artificial abrasives, of plastering material, of cement, of concrete, of asbestos, of asbestos-cement  or  cellulose  fibre cement,  or  of  mica; articles  of  vegetable materials agglomerated with  mineral binders;    mineral  wools;    expanded  mineral  materials; articles   of  other  mineral   substances,  not   elsewhere specified or included :

     (1) Not elsewhere 100% specified

     (2)  Grinding stones,grinding 40% wheels and the like, of  natural  stone,  of agglomerated natural  or  artificial abrasives,  and  segments  or other finished parts  of  such stones  and wheels but excluding hand polishing stones, whet stones, oil stones, and hones.

     A  perusal  of the title of Chapter 68 of the CTA  and the  description  of  the  sub-heading shows  that  what  is brought  in  thereunder  are  articles  of  stone,  plaster, cement,  asbestos,  mica or similar materials.  There is  no scope  to bring within that Chapter machinery and mechanical

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appliances and parts thereof.

     CHAPTER 84

     BOILERS,  MACHINERY AND MECHANICAL APPLIANCES;   PARTS THEREOF

     NOTES

     1.  This Chapter does not cover:

     (a) millstones, grindstones and other articles falling within Chapter 68;

     2.        to      5.            ***      ***       *** _________________________________________________________ Heading   Sub-heading  No.   Standard   Central   No.    and description  Rate  of  Excise of article  duty  Tariff  Item _________________________________________________________

     84.17   Machinery,   Plant   and  similar   laboratory equipment,  whether  or  not electrically  heated,  for  the treatment  of  materials by a process involving a change  of temperature  such as heating, cooking roasting,  distilling, rectifying   sterlising,  pasteurising    steaming   drying, evaporating,  vaporising,  condensing or cooling, not  being machinery  or  plant of a kind used for  domestic  purposes; instantaneous or storage water-heaters, non electrical:

     1.  Not elsewhere specified 40%

     2.   Machinery  and equipment 60% for food  and  drink other  than  those used for treating milk, instantaneous  or storage  water-heaters,  non-   electrical;   machinery  and equipment imported for use in air conditioning.

     The  title of Chapter 84 of the CTA leaves no room for doubt  that  the  goods  falling   within  it  are  boilers, machinery, and mechanical appliances and parts thereof.  The description   and  the  sub-   headings  enumerate   various categories  of machinery and appliances falling  thereunder. At the beginning of the Chapter are Notes which specify what articles  are excluded from that Chapter.  A reading of  the Note 1(a) on which reliance is placed by Mr.Bajpai, suggests that  it excludes millstones, grindstones and other articles falling  within  Chapter  68  from  being  classified  under Heading  84.17(1)  of the CTA.  There can be no  controversy about  the  proposition  that if the goods in  question  are machinery,  plant and similar laboratory equipment or  parts thereof,  they  fall within Chapter 84 of the CTA;   but  if they are millstones, grindstones or other articles that fall within Chapter 68 of the CTA, they get excluded from Chapter 84.   A  perusal  of the order of the  Tribunal  shows  that though  the  combustion chamber of the goods in question  is made   of  graphite,  they   constitute  a  complete   unit, consisting  of  three  parts fitted with burners  and  other accessories  forming part of synthesis unit of caustic  soda plant  and thus an equipment.  In that equipment hydrogen is burnt with chlorine and thereby a new product  hydrochloric acid   is produced.  In the latter part of the judgment the Tribunal recorded the following finding :

     Further  there  is  no dispute that  what  they  have

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imported  is  for  combustion   chambers  and  drawing  also indicates  that  the  combustion chamber  consist  of  three parts,  that  is, upper shell, intermediary shell and  lower shell  alongwith  fittings.   Based  upon  the  records  and functioning of the imported parts we are of the opinion that they constitute a complete unit.

     In  view of this categorical finding, there can be  no hesitation in holding that the goods in question fall within Heading  84.17(1)  of the CTA unless it is shown they  being millstones,  grindstones  and other articles falling  within Chapter  68 have to be excluded from Heading 84.17(1) of the CTA  in  view  of Note 1(a) of Chapter  84.   Obviously  the articles  in question are not millstones, grindstones or the like.   We have carefully gone through various  sub-headings of  Chapter  68  of  the  CTA and we are  of  the  view  the contention that the goods in question fall within Chapter 68 has  no  substance.   In the case of  Saurashtra  Chemicals, Porbandar  (supra),  a  larger  Bench  of  the  Tribunal  by majority  took  the view that carbon rings and carbon  seals which  are used as spare parts in turbosets and  compressors fall  within  the  Heading 68.01/16(1) of the  CTA  and  the minority  held  that they fall within Heading 84.65  of  the Customs  Tariff  Schedule.   The view of  the  majority  was approved  by  this  Court  in  Saurashtra  Chemicals   case (supra).   No reasons are given in that case.  But a perusal of  the  order  of  the Tribunal shows  the  question  there related  to  articles which were spare parts made of  carbon and  not  to a complete unit or an equipment, unlike in  the present  case  where the goods constitute a  complete  unit. Also,  the  goods  here are not made entirely  of  graphite; only  a  part  thereof is graphite.  Further  in  Saurashtra Chemicals  case,  there was agreement between  the  parties that   those  articles  would   fall  both  within   Heading 68.01/16(1) as well as within Heading 84.65.

     In  Ballarpur Industries Ltd.s case (supra),  granite press rolls fitted with mild steel shafts and end-plates and its cavities filled with concrete were admitted to be a part of  the  paper  finishing machinery.  Disagreeing  with  the judgment  of  the Tribunal that parts of the machinery  were classifiable  under  Chapter 68 of the CTA, this Court  held that  they were classifiable under Heading 84.31 of the CTA. The  distinction between the Saurashtra Chemicals case  and the  Ballarpur  Industries case is that in the former  case the  articles  made  of carbon were conceded  to  fall  both within  Heading 68.01/16(1) as well as within Heading  84.65 being spare parts of machines whereas in the latter case the goods  were part of machinery not falling within Chapter  68 and were not made entirely of granite.  In the instant case, in  view  of the finding recorded by the Tribunal  that  the goods  in question constitute a complete unit, an equipment, and  are  not  made  only  of  graphite  they  are   clearly classifiable  under  Heading  84.17  (1) of  the  CTA.   We, therefore,  find no illegality in the order of the Tribunal. The appeal fails and it is accordingly dismissed with costs.