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Dharangadhra Chemical Works Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC543DTri(Delhi)
AppellantDharangadhra Chemical Works Ltd.
RespondentCollector of Customs
Excerpt:
.....very careful consideration to the matter. we find that the manufacturer's catalogue describes the subject goods as "pipe and fittings" and not as parts of machinery. to quote from the catalogue, "haveg piping is tough, durable, lightweight and easily installed. since haveg is a homogeneous material having the same degree of corrosion resistance throughout its wall thickness, it may be used successfully in handling abrasive environments which tend to erode protective coatings on lined pipe. it may also be used in a submerged state or in areas having severe atmospheric corrosion problems. available in the united states for over 35 years. haveg piping has been used extensively in the chemical process and related industries in handling such corrosive materials as hydrochloric acid, sulfuric.....
Judgment:
1. The question involved in this case is whether pipes and fittings of Haveg 41 material (a combination of asbestos and synthetic resins) should be assessed as articles of asbestos under heading 68.01/16(1) of the Customs Tariff Act, 1975, as done by the Department, or as spare parts of machinery (Digestors for beneficiation of ilmenite ore) under heading 84.17(1), as urged by the appellants. According to the appellant's written statement made in the revision application (since transferred to this Tribunal and dealt with as the subject appeal), these pipes are made of 60% asbestos and 40% phenobic resin and are used to convey a fluid consisting of 33% hydrochloric acid and fines of titanium dioxide under 125 pounds pressure per square inch and at 230C temperature. The pipes were imported in standard length of 10 feet each.

2. The case was heard by us on 28-2-83. The appellants showed a cut piece of the subject pipe by way of sample and produced photo copies of the manufacturer's catalogue, the supplier's certificate dated 16-10-78 and past proceedings before the Departmental authorities in connection with classification of similar goods under the erstwhile Indian Customs Tariff.

3. We have given a very careful consideration to the matter. We find that the manufacturer's catalogue describes the subject goods as "Pipe and Fittings" and not as parts of machinery. To quote from the catalogue, "Haveg piping is tough, durable, lightweight and easily installed.

Since Haveg is a homogeneous material having the same degree of corrosion resistance throughout its wall thickness, it may be used successfully in handling abrasive environments which tend to erode protective coatings on lined pipe. It may also be used in a submerged state or in areas having severe atmospheric corrosion problems.

Available in the United States for over 35 years. Haveg piping has been used extensively in the chemical process and related industries in handling such corrosive materials as hydrochloric acid, sulfuric acid, phosphoric acid, a wide variety of chlorinated organic compounds, organic solvents and inorganic salts." "Haveg piping may be installed quickly and easily using essentially the same installation techniques that apply to other piping materials. Although Haveg pipe and fittings are very tough and resilient under normal conditions, care must be exercised during handling to prevent mechanical abuse that might cause chipping or cracking.

The assembly of Haveg pipelines and fittings should proceed from the originating point of a system to the terminal point. Cut the pipes or fittings to the exact length required unless expansion joints are used, allowing space for the expansion joints. Avoid spring fits which cause mechani' cal stress," The technical write-up furnished by the appellants themselves says that- "The only operation involved in item Nos. 1, 6 and 7 (termed as Pipes) is only cutting (which is minor operation) at site and assembling the same as Stuffing Box with acid resisting cement along with the other above items. Since the internal diameter varies in almost all 23 digestors due to brick-to lining, it is not possible to get the pipes in required lengths and that is why we have got the pipes in convenient lengths. These above items are very costly and we cannot use it anywhere else except in this particular machinery in our Ilmenite Plants." It is evident from the above statements of the manufacturer and the appellants laid before us that the subject goods, in the form imported, are not component parts of machinery but are only pipes and fittings made of specialised materials out of which the required pipeline or part would be fabricated. We hold, therefore, that they cannot be classified as parts of machinery under heading 84.17(i).

4. The question then arises whether the subject goods-made of composite material-should be classified as articles of asbestos under heading 68.01/16(1) or as articles of plastic/synthetic resin under heading 39.07. This question has to be decided in accordance with the provisions of the statutory Rules for the Interpretation of the Customs Tariff. The appellants' objection that unlike heading 68.13 of the CCCN, heading 68.01/16 of the CTA does not cover "Mixtures with a basis of asbestos and articles of such mixtures" js not tenable because the Interpretative Rule 2(b) provides that any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances and that any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. Rule 3(b) further provides that mixtures and composite goods shall be classified as if they consisted of the material or component which gives the goods their essential character. The question, therefore, is to decide whether plastic/synthetic resins give the subject goods their essential character, or it is the asbestos which does so. We find from the records that in 1973, when a classification dispute arose in respect of similar goods imported under Bill of Entry No. D-1902 dated 27-3-73, the appellants produced a certificate to the Assistant Collector that the material composition of the goods consisted of 60% asbestos and 40% resin. The appellants maintained this stand throughout before the Appellate Collector and the Government of India and also repeated it in the subject revision application (now deemed appeal under consideration before us). But during the hearing before us, the appellants chose to challenge this composition which had been relied upon by the Department in holding that the subject goods were articles of asbestos falling under chapter 68 of the Tariff, and, therefore expressly excluded from the scope of chapter 84 by virtue of note 1 (a) to chapter 84. But in spite of our repeated asking, the appellants were unable to give the correct composition, maintaining that it was a trade secret which the manufacturer was unwilling to disclose. However, they produced a certificate dated 16-10-78 from the supplier (not the manufacturer, but perhaps a trader) to the effect that Haveg 41 material, of which the goods were made, was a thermosettling plastic based on a composition of phenol-formaldehyde resin and an acid-digested asbestos filler. The Haveg catalogue produced by the appellants also states that "Haveg is the registered trade name of Haveg industries, Inc., for a plastic construction material consisting of combinations of phenolic and furan resins and various inert reinforcing agents". During the hearing before us, the appellants stated that it was plastic or synthetic resin which gave the goods their essential character but their case was that the goods were parts of machinery and not articles of plastic. Since we have already held that the goods, in the form impoited, were not parts of machinery, they have, on the appellants' own showing, to be held as articles of plastic/ synthetic resin, falling under heading 39.07. In coming to this conclusion, we are conscious of the fact that in the past another Appellate Collector and also the Government of India, while considering the classification of similar goods imported earlier, held that the goods were not articles of plastic falling under item 82(3) of the erstwhile Indian Customs Tariff but were parts of machinery falling under item 72(3) ICT. But we find that the tariff law under Which the aforesaid two authorities took their particular decision was different from the present one under which we are called upon to consider the subject appeal. The present tariff under the Customs Tariff Act, 1975 is not only differently worded but also has an elaborate scheme of Rules for interpretation, section notes and chapter notes all of which have statutory force and collectively they affect the scope of the individual headings. It may not, therefore, be appropriate to draw analogies from cases dealt with under a different tariff law. Secondly, the evidence now laid before us-the manufacturer's catalogue, the suppliers' certificate and the appellants' own statement that it was synthetic resin or plastic which gave the goods their essential character-was not produced before the earlier Departmental authorities. All that these authorities had before them was the composition then given by the appellants, namely, 60% asbestos and 40% resin.

5. While we hold that the subject goods are articles of plastic/synthetic resin falling under heading 39.07 CTA, we do not consider it fair or correct to call upon the appellants to pay the higher duty leviable under that heading in respect of the present importation. This is so because it has never been the Department's case to re-classify the subject goods under heading 39.07 and, therefore, any fresh plea to that effect is not entertainable now after 4 years of importation. We dispose of the present appeal on the short point that the appellants' claim for the re-assessment of the subject pipes and fittings as parts of machinery under heading 84.17(1) is not maintainable. The appeal is rejected accordingly.


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