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PETITIONER: SPACO CARBURETTORS (INDIA) LTD.

       Vs.

RESPONDENT: COLLECTOR OF CUSTOMS, BOMBAY

DATE OF JUDGMENT24/02/1988

BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH DUTT, M.M. (J)

CITATION:  1988 SCR  (3)  37        1988 SCC  Supl.  156  JT 1988 (1)   441        1988 SCALE  (1)429

ACT:      Customs Tariff Act, 1975: First Schedule Entry 84.45/48 and Entry  84.59-’Special purpose  complex machine’-Relevant entry-Determination of-Customs duty-Levy of.      Customs Act,  1962: Section  130E-Customs duty-Levy of- ’Special purpose complex machine’.      Words and Phrases: ’Machine tool’- Meaning of.

HEADNOTE: %      The appellant-firm  imported "special  purpose  complex machine" and  claimed that  it was  classifiable under  item 84.45/48 of  the tariff schedule and duty was payable at the rate of 40 per cent.      The Assistant Collector took the view that the imported machine  was   not  manufacturing   carburettors   and   was discharging an  individual function of plugging holes in the carburettor body  with the  help of lead shots, and that the appropriate entry  was 84.59(1)  of the  Customs Tariff  and duty was payable at the rate of 60 per cent.      The  appellant   challenged  the   aforesaid  order  by preferring an appeal to the Collector (Appeals) who took the view that  the imported  machine by  plugging holes  on  the carburettor body  with the  help of lead shots was clearly a machine which  was fully  conforming to the description of a machine for  treating metals inasmuch as it was treating the carburettor body  and preparing  it for  being rivetted, and therefore it  was conforming to the description of a machine tool as  given under heading 84.45/48 of the Customs Tariff, and allowed the appeal.      On further  appeal, the Customs Excise and Gold Control Appellate Tribunal  came to the conclusion that the function of the imported machine was to plug the holes of carburettor body, that  none of  its functions  can be  considered to be treating metal  within the  meaning of  sub-heading  (2)  of Tariff Heading  84.59, that  classification as  machine tool under Tariff  Heading 84.45/48 has to be ruled out, and that the machine  does not  fall under  any  of  the  Heading  of Chapter 84 of the 38 Tariff  Schedule.  It  accordingly  reversed  the  appellate decision of the Collector of Customs (Appeals).

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    In the  appeal under  section 130-E of the Customs Act, 1962 to  this Court  on the  question: whether  the imported "special purpose  complex machine"  has  to  be  charged  to customs duty  under item  84.59(1) as claimed by the Revenue or under  84.45/48 of  the tariff  schedule as maintained by the appellant.      Allowing the Appeal, ^      HELD: l.  Entry 84.59  of Schedule I is a residuary one and indisputably  if any other entry applies, application of this entry is ruled out. [40F-G]      2. Machine  tools in  general remain  classified  under entry 84.45  even if  specialised for  a particular industry Machine tools include slotting machines, drilling and boring machines, tapping  machines, reaming  machines and rivetting machines. [41D-E]      Tool Engineers Handbook-Mc Graw Hills:      Mc Graw  Hill-Dictionary of  Scientific  and  Technical Terms referred to.      3. The  machine in the instant case, is indeed a multi- purpose one and keeping its performance in view, the machine has to  be held  as a  "machine tool  working on  metal" and should legitimately  find its  way into entry 84.45/48. Once it is  so identified,  it does  not get  into the  residuary entry  84.59.   The  Collector   has  reached   the  correct conclusion. The order of the Tribunal is vacated and that of the Collector is restored. [41F-G]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 571 of 1987.      From the  order dated  5.12.1986 of  the Customs Excise and Gold  (Control) Appellate  Tribunal, New Delhi in Appeal No. 424/86-B-2.      T.R. Andhyarujina, F.H.J. Talyarkhan, Shri Narain, R.K. Krishnamurthi and Sandeep Narain for the Appellants.      A.K. Ganguli,  P. Parmeswaran  and Ms. Radha Rangaswamy for the Respondents. 39      The Judgment of the Court was delivered by A      RANGANATH MISRA,  J. This appeal under section 130-E of the Customs  Act is  directed against  the decision  of  the Customs, Excise  & Gold  (Control) Appellate  Tribunal,  New Delhi, by  which the  Tribunal has  reversed  the  appellate decision of the Collector of Customs (Appeals), Bombay.      The short  point involves  in  this  appeal  is  as  to whether the  imported "special  purpose complex machine" has to be charged to customs duty under item 89.59(1) as claimed by the  Revenue or  under 84.45/48 of the tariff schedule as maintained by  the appellant.  If the  appellant’s claim  is accepted the duty is at the rate of 40 per cent while if the department’s stand is maintained it is at the rate of 60 per cent.  The  Assistant  Collector  took  the  view  that  the imported machine  was not manufacturing carburettors and was discharging an  individual function of plugging holes in the carburettor body with the help of lead shots. Therefore, the appropriate entry  was 84.59(1)  of the  Customs Tariff. The appellant challenged the order of the Assistant Collector by preferring an appeal to the Collector (Appeals). He took the view that  the imported  machine by  plugging holes  on  the carburettor body  with the  help of lead shots was clearly a machine which  was fully  conforming to the description of a machine for  treating metals  inasmuch as  it  was  treating

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carburettor body  and preparing  it for  being revetted. The plugging on  the carburettor  body, the Collector felt, was, therefore, in  the nature  of treatment  on the metalic body for making  it revetable  subsequently; even  otherwise also the machine  by plugging  holes on  the carburettor body was confirming to  the description  of a  machine tool  as given under heading  84.54/48 of the Customs Tariff. He therefore, accepted the appellant’s contention.      On further  appeal the  Tribunal after  discussing  the stand-point  of   the  two   sides  came  to  the  following conclusion:                "Our considered  view is that the function of           the machine  is to  plug the  holes of carburettor           body.  The   cutting  or   trimming  operation  is           incidental to  this function  as  it  removes  the           extruded portion  of the  lead shots. The function           of checking is also a part of the main function of           plugging as  the object  of checking  is to ensure           that the  plugging has been done perfectly to make           it air-tight.  None  of  these  functions  can  be           considered to be treating metal within the meaning           of sub-heading (2) of Tariff Heading 40           84.59. The  function  of  plugging  the  holes  of           carburettor body does not amount to working metal.           It does not change the shape or form of the metal.           The portion of the machine which cuts the extruded           portion of  lead shot  is not  a  reaming  machine           working the  internal surface  of an existing hole           to  exact   dimension  within   the   meaning   of           Explanatory Note  84.45(A)(5) of the CCC N (Volume           3),  Chapter   84.45.  The   imported  machine  in           question does  not fall  within the  definition of           machine tool  given in MC. Graw Hill Dictionary of           Scientific and  Technical Term  as  cited  by  the           learned  S.D.R.  Classification  of  the  impugned           machine  under   Tariff   Heading   84.45/48   is,           therefore, ruled  out.  Even  by  taking  all  the           functions of  the machine  into consideration, the           classification for  the purpose  of  customs  duty           will have to be determined keeping in view Section           Note 3  in Section  XVI  and  Chapter  Note  5  of           Chapter 84  of the  First Schedule  to the Customs           Tariff Act, 1975, according to which the principal           function will be determining factor. The principal           function of  this machine  is to plug the holes of           carburettor body.  The machine does not fall under           any of the heading of Chapter 84 of the Tariff." 84.59 of Schedule I provides:                "Machines and  mechanical  appliances  having           individual functions, not falling within any other           heading of this Chapter:                (1)...............                (2)..... ......... 60%." The entry is, therefore, a residuary one and indisputably if any other entry applies, application of entry 84.59 is ruled out. The  appellant maintains  that the appropriate entry to apply to its case is 84.45/48. That provides:                "Machine tools for working metal .. 40%." Machine tool, according to Tool Engineers Handbook published by Mc  Graw Hills means "any machine operating other than by man power  which employs  a contact tool for working natural or synthetic 41 material.  Mc.   Graw  Hill  Dictionary  of  Scientific  and

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Technical Terms A gives the following meaning:                "A stationary  power driven  machine for  the           shaping,  cutting,   turning,  boring,   drilling,           grinding or  polishing of  solid parts, especially           metals." Even according to the Department, machine tools coming under entry 84.45 are machines used for shaping or surface working metal or metal carbides by either:           (i) cutting  away or  otherwise removing  metal or      metal carbides (for example, lathes, drilling, planing,      slotting, milling or grinding machines).           (ii) changing  the shape  or  form  of  the  metal      without removing any of it. The note  indicates that  machine tools  in  general  remain classified under  this heading  even if  specialised  for  a particular  industry.   Machine   tools   include   slotting machines, drilling  and boring  machines, tapping  machines, reaming machines and riveting machines.      Counsel  for   the  appellant   produced  before  us  a carburettor without being treated by the machine and another which has already been treated. He also produced a lead shot as also  a nozle and indicated the drilling process which is carried on by the machine on the carburettor.      We are  of the  view that  the machine  in question  is indeed a  multy-purpose one  and keeping  its performance in view we  are inclined  to agree  with the  submission of the counsel for  the appellant  that the  machine is  a "machine tool working  on metal" and should legitimately find its way into entry  84.45/48. Once  it is  so identified it does not get into  the residuary entry. In our view the Collector had reached the correct conclusion.      The appeal  is allowed.  The order  of the  Tribunal is vacated and  that of  the Collector is restored. Parties are directed to bear their own costs. N.V.K.                                  Appeal allowed. 42