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PETITIONER: INARCO LIMITED

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE

DATE OF JUDGMENT:       20/09/1996

BENCH: BHARUCHA S.P. (J) BENCH: BHARUCHA S.P. (J) VENKATASWAMI K. (J)

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T BHARUCHA.J      This appeal  against the  judgment  and  order  of  the Customs,  Excise   &  Gold   (Control)  Appellate  Tribunal, concerns the classification of "aprons" and "cots’.      Aprons and  cots are  manufactured by  the  appellants. They are  components of  textile machinery. Synthetic rubber is  the  raw  material  for  their  manufacture  and  it  is subjected to  a series of processes, including extrusion and vulcanisation. At  one stage  of the  manufacturing  process unhardened tubes  emerge. These are cut to the small lengths ordered by  the appellants’  customers, and  are aprons  and cots.      The appellants  paid excise  duty on  aprons  and  cots under Tariff  Item 16  A. On 29th August, 1967, an exemption notification   was  issued,  whose  benefit  the  appellants claimed. Consequently, the appellants paid no excise duty on aprons and  cots until  the year  1980. On  24th  September, 1980, a  notice was  issued to the appellants which required them to  show cause  why  aprons  and  cots  should  not  be classified  under   the  residuary    Tariff  Item  68.  The appellants contention  to the contrary was accepted. On 18th January, 1982, the Collector of Central Excise issued to the appellants a  notice under  Section 35  A(2) of  the Central Excises and   Salt  Act, 1944,  requiring them to show cause why the  order of   the  Assistant Collector  should not  be reviewed and  set  aside.  The  appellants  contention  that aprons and  cots were classified under Item 16A was rejected and they  were classified  under  Item  68.  The  appellants carried the  matter in  appeal to the Tribunal. The Tribunal affirmed the  order of  the Collector,  but  restricted  the demand to the date of his show cause notice.           Item 16A reads thus : ------------------------------------------------------------ Item   Tariff Description           Rate of Duty No. ------------------------------------------------------------

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(1)          (2)                       (3) ------------------------------------------------------------ 16A   Rubber Products, the following namely :-      1) Latex foam sponge.           fifty-five per cent ad-                                      valorem Explanation :  This sub-item includes articles made of latex                foam sponge. 2)    Plates, sheets and strips      Thirty-five per cent       unhardened whether vulcanised  ad-valorem       or not, and whether combined       with any textile materials       or otherwise. 3)   Piping and tubing of unhardened  Twenty-five percent      vulcanised rubber.               ad-valorem 4)   Transmission, Conveyor or elevator      belts or belting of vulcanised rubber." ------------------------------------------------------------      Item 68, so far as it is relevant, reads thus : ------------------------------------------------------------ Item  Description of Goods             Rate of Duty No. ------------------------------------------------------------ 68    All other goods, not elsewhere   One per cent       specified, manufactured in a       factory but excluding - ------------------------------------------------------------      The relevant portion of the said Exemption Notification reads thus:      "In   exercise    of   the   powers      conferred by sub-rule (1) of rule 8      of the  Central Excise Rules, 1944,      the   Central   Government   hereby      exempts  piping   and   tubing   of      unhardened    vulcanised    rubber,      falling under  sub-item (30 of Item      No. 16A and specified in column 92)      of the  Table below  from the whole      of  the  duty  of  excise  leviable      thereon. :-                            TABLE ------------------------------------------------------------ Serial    Description No. ------------------------------------------------------------ 3.        Piping and  tubing designed  to be or converted in           the factory of its production into component parts           of  machinery   articles  (including  typewriters)           provided such  component parts  do not perform the           function of conveying air, gas or liquid. ------------------------------------------------------------      Mr. A.M.  Setalvad, learned counsel for the appellants, submitted that  aprons and cots were classifiable under Item 16A because  they were  "piping  and  tubing  of  unhardened vulcanised rubber".  Being specifically  covered under  this item, the residuary Item 68 had no application.      Reliance was  placed upon the judgment of this Court in Bharat Forge  & Press  Industries (P)  Ltd. vs. Collector of Central Excise,  1990 (45)  E.L.T. 525, where the appellants made pipe fittings such as elbows and bends by cutting steel pipes and  tubes into different sizes, giving them shape and turning them  into pipe  fittings by  heating in  a furnace, hammering  and   pressing.  They  claimed  that  these  pipe fittings fell within Item 26AA(iv) of the Tariff, which read as follows :      "Pipes and  tubes (including blanks

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    therefor)   all    sorts,   whether      rolled, forged,  spun, cast, drawn,      annealed, welded or extruded".      This Court  held that  unless  the  Excise  authorities could establish  that the pipe fittings could no conceivable process of  reasoning be  brought under  any of  the  tariff items, resort  could not  be had to the residuary item. Item 26AA(iv) encompassed  all sorts  of pipes  and tubes, and it was of  no consequence  how they were manufactured. In order to achieve  fully the purpose for which the  pipes and tubes were manufactured,  it was  necessary to manufacture smaller pieces of  pipes and  tubes and  also to manufacture them in such a  shape that they might be able to conduct liquids and gases, passing  them through  and across  angles,  turnings, corners and  curves or  regulating their  flow in the manner required. Smaller  pieces of  pipes  and  tubes  differently shaped were  manufactured for this purpose. They were merely intended as  accessories or  supplements to the larger pipes and tubes.  There was   no  change in  their basic  physical properties or  their end  use. There  was no reason why they could  not   be  described   as  pipes  and  tubes.  In  the circumstances, it  was different  to say that pipe fittings, though they  might have  a distinctive  name in  the market, were not  pipes and  tubes.  The  use  of  the  words  ‘‘all sorts’’and the  reference to  the various processes by which the excisable  item could be manufactured were comprehensive enough to sweep within their fold these goods.      Mr. Setalvad  submitted that  even if  it be found that aprons and  cots were  correctly classifiable under Item 68, the benefit  of the  said exemption  notification should  be extended to  them because   they  were  "piping  and  tubing designed to  be or  converted in  the factory  of production into component parts of machinery" and they did  not perform the function of conveying air, gas or liquids.      In that  behalf our attention was drawn to the judgment of this  Court in  Jain Engineering  co.  vs.  Collector  of Customs, Bombay,  1987 (32)  E.L.T. 3(S.C.). This was a case relating to  rod bushes and camshaft bushes and the question was whether  the appellants, who made them, were entitled to the benefit  of an  exemption notification. The notification provided that  articles specified in column (2) of the Table thereof and  falling under  Heading 84.06  were exempt  from payment of  a certain portion of customs duty. Column (2) of the Table  not only  mentioned  internal  combustion  piston engines, undoubtedly  forming the  only  subject  matter  of Heading 84.06,  but it  also mentioned  other parts thereof. Heading 84.06  did not  refer to  the parts of such engines. The non-mention  had given  rise to  the  controversy.  This Court said  that it was clear that the exemption to internal combustion piston   engines  but also to parts thereof. When the intention was clear and manifest, it was unreasonable to take a narrow view of the notification and not to extend its benefit to  parts of  the engines  referred  to  in  Heading 84.06. To  accept the  contention of  the Excise authorities that since  Heading 84.06  did not  mention the  parts,  the notification was inapplicable to the parts would be to amend the notification, which the Court would not do.      Mr. J.  Vellapally,  learned  counsel  for  the  Excise authorities, stressed  the phraseology of Item of piping and tubing of  unhardened vulcanised  rubber and  not  to  small parts thereof. He drew attention  to the fact that where the intention was  to refer  to  smaller  parts,  the  item  had specifically done  so; thus,  in sub-item (4) ’Transmission, Conveyor or  elevator belts or belting ...." were spoken of. Mr. Vellapally, drew attention in this behalf to judgment of

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this court  in Collector  of Customs  vs.  K.  Mohan  &  Co. Exports, 1989 (43) E.L.T 811, where the contention on behalf of the assessee that film rolls of indefinite length and not in  the     form   of  individual   cut  pieces   were  more appropriately described  as "sheetings",  not "sheets",  was accepted. Mr.  Vellapally submitted  that under the terms of the said  exemption notification  piping and  tubing covered by Item  16A was  exempt if  it was  designed to  be used or converted in  the factory  of its  production into component parts of machinery. The intention, in his submission, was to levy excise  duty on  the machinery  and exempt  from excise duty the  piping and tubing made into component parts of the machinery. Aprons and cots did not fall under Item 16A. They were also  not eligible  to the  exemption given by the said exemption notification.      In our  view, aprons  and cots being cut pieces of long lengths of tubes or pipes are outside the scope of Item 16A; "piping and  tubing", as  used therein, refers to lengths of pipes or tubes.      The judgment  in the  case  of  Bharat  Forge  &  Press Industries (P)  Ltd. dealt  with the  entry which  in  terms referred to  "all sorts"  of pipes  and tubes,  by  whatever means manufactured.  It was, therefore, that this Court held that the  item was  comprehensive enough  to take within its fold the pipe fittings made by the assessee.      The said  exemption notification  applies to piping and tubing of unhardened vulcanised rubber that falls under sub- Item  (3)   of  Item   16A.  The   sweep  of  the  exemption notification cannot be increased by the Court to cover goods that do not fall under Item 16A.      The Judgment  in the case of Jain Engineering Co. dealt with  an   exemption  notification  that  gave  to  articles mentioned in  column(2) of  the Table  thereof  and  falling under  Heading  84.06  exemption  from  payment  of  certain portion of  customs duty.  Column (2) of the Table mentioned internal  combustion   piston  engines  and  parts  thereof. Heading 84.06,  however,  referred  to  internal  combustion piston engines but not to parts thereof. The Courts declined to accept  the contention of authorities that the benefit of the exemption  notification could  not be  given to parts of internal combustion  piston engines  because parts  were not covered by  Heading 84.06.  To do  so, it  said, would be to amend the  exemption notification, which the Court would not do.      The Court  in the case of Jain Engineering Co. read the exemption notification  as it  stood. We  also read the said exemption Notification  as it stands may not amend it.      The appeal is dismissed with costs.