1. This is a Revision Application dated 24-3-1980 against order-in-appeal No. S/49-1168/79, dated 6-12-1969 passed by the Appellate Collector of Customs, Bombay which has been transferred by the Govt. of India to the Tribunal for disposal under Section 131B(2) of the Customs Act, 1962.
2. The appellants imported 3 Cases Plastic Cable Insulating Line under Bill of Entry No. 127, dated 9-4-1979 and claimed concessional assessment under Notfn. No. 40-Cus., dated 1-3-1978 as amended by Notification No. 109-Cus., dated 19-5-1978. By his order dated 3-7-1979, the Assistant Collector of Customs held that the goods mainly consist of items like Plastic Extruder above 150 mm Screwdia, pay off system, Liner Capston measuring machine, spark tester and take joint system etc. all imported as one complete line of equipment for the manufacture of insulated cables and the goods are, therefore, not a mere extruder but a Complete Cable Manufacturing unit of which the Extruder is a part. Notification No. 40/78 allows concessional rate of duty to Plastic Extruder above 150mm Screwdia only and not for other items. The importer has produced split up value for the Extruder and other items. Since only the Extruder is covered, the benefits can be extended to that item and not for the other parts of the cable insulating machine. He, therefore, ordered that the Extruder may be assessed at concessional rate of 25% and the remaining parts may be assessed on merits without the benefit of Notfn. No. 40/78. The Appellate Collector heard the appellants on 5-11-1979. They were given an opportunity to show with any photographs literature or technical note explaining the function of the plant such that it warrants assessment as a complete unit in terms of note 3 to Section XVI of the First Schedule to the CTA 1975. There is no responsible from them. A Plastic Extruder is an indispensable unit of every single industry engaged in formation of manufacture of plastic goods from synthetic resins. It is required for blow moulding operations as also injections moulding operation. There is nothing special between an extruder and cable manufacturing industry. There is no warrant for stretching the plain meaning of the words of the notification and extending its benefit to articles other than extruder. He accordingly rejected the appeal, 3. In the present appeal the appellants state that they are a Public Limited Co. manufacturing cables etc. and are also a Registered Export House. They have been importing machinery and export cables since 1969 and have not committed any infringement of Customs, Excise or Import Control requirements. They placed an order for Plastic Extruder of 200 mm diameter and were supplied this along with indispensable accessories. The Customs split the consignment into the two part Bs/E one for the extruder and some accessories and the other for only the remaining accessories. The order-in-appeal is in respect of Bill of Entry 3/127, dated 1-4-1979 covering Plastic Extruder 200 mm Screw diameter and accessories such as payoff system, linear Capstan Measuring Machine, Spark Tester and take joint system etc. The Group concerned separated the value of the extruder and gave the benefit of 25% and charged the remaining accessories to 40% A.V. duty and other additional duties. In spite of coming to a finding that the appellants did not provide the photographs etc. to warrant assessment in terms of note 3 to Section XVI, the Respondent came to a finding that there is no warrant for stretching the plain meaning of the notification. In fact that photographs were forwarded with a note describing the functioning of the component accessories to the Appellate Collector by a letter dated 14-12-1979 but the order-in-appeal was already issued by them and the aspect of pleadings taken was not looked into. The photographs and the explanatory notes are now furnished from which it will be appreciated that the payoff system etc. are complimentary parts of the machine (Extruder) which enable the main extruder to function and only on this ground the appeal should succeed. Secondly, the Extruder cannot function without the accessories supplied by the manufacturers and if the extruder mentioned in the notification is imported by itself at the concessional rate it would have to be on the shelf. The word "Extruder" at item 14 of the notification must include the accessories and they could not have been left out of the notification and are in fact there in the spirit. Thirdly, the values of the 'Extruder' and the accessories were clubbed by the suppliers and the Customs House Group has separated the values of the extruder and the accessories from the value of the extruder with the accessories.
This is a clear indication that the accessories should go along with the extruder even for the benefit of the notification. Fourthly, the order was for a complete 20 mm screw diameter Plastic Extruder and if the suppliers have supplied the accessories it is to complete the Extruder. The Invoice covering the goods is also for the complete Extruder. Copies of these documents are submitted. It is, therefore, pleaded that the accessories have been only legally separated to the prejudice of the appellants and the extruder and accessories deserve assessment together at the concessional rate.
4. The case was part heard on 7th February, 1984 and was adjourned as the learned Advocate, Shri Kochar desired to make a claim under the Accessories (Condition) Rules 1963 and to produce a supplier's catalogue, if possible. The learned Departmental Representative had no objection to concessional treatment being given if the conditions of the Rules were satisfied. Since the constitution of the Bench was different on 4th April, 1984, the case was re-heard.
5. Shri Kochar referred to para 8 of Order No. 925/80, dated 12-11-1980 by the Central Board of Excise and Customs quote (paras 8 & 9). He urged that this finding should have great persuasive value in deciding the present value which related to the same goods. He cited 1983 (14) E.L.T. 1822 Vegetable Oil Ltd. v. Collector of Central Excise, Bombay.
He referred to the Order for Complete 200 mm Screw Diameter Plastic Extruder placed on 11-11-1978 with M/s. John Royle & Sons and the supplier's Customers Invoice 35105 for the goods shipped on 28-2-1979 as also their letter dated 9-5-1979 expressing surprise at the request for the break-up value (required at the instance of customs according to Shri Kochar) and stating that the order was for the complete Extruder and not its parts and the guarantee was only in the event of purchase of the complete Extruder. However, an indicative and not binding break up was that item 2 of the invoice "Heavy Duty Extruder" accounts for about U.S. $ 2,95,000 of the total value ($ 353,533.72) to which 2% may be added to arrive at the FOB value. This, according to Shri Kochar proved that the accessories in question were in fact essential requirements of the extruder. He further produced letter IPC/35(4)79/752, dt. 5-5-1979 from the C&IE to the Collector giving the DGTD opinion that the accessories like pay-off, capstain, in line voltage tester, take up units from a complete extrusion line and an extruder is useful only when these are there otherwise it is of no use.
He cited 1983 (14) E.L.T. 2029 - Aaccunex v. Collector of Central Excise, Bombay where this Bench gave due weight to the opinion of the DGTD in assessment of a gear Eccentricity Tester. Shri Kochar relied on the notes to Section XVI and argued that (i) complementary machines are to be assessed as the machine performing the main function (Note 3 to Section XVI) (ii) parts recognisable as specialised for particular use with a machine are classified in the same Heading as the machine (iii) Accessories instruments are classified into the machine (iv) the Accessories (Condition) Rules 1963 make provision for assessment of accessories when imported with an article at the same rate if compulsorily supplied and no separate change is made and (v) composite machine consisting of two or more machines or appliances fitted together to form a whole are classified according to the main machine.
The Department had earlier contended that what was imported was a total cable sheathing line which is a system and not eligible to the concession granted to an Extruder, The Accessory Rules were not claimed and no catalogue was produced. The import licensing matter was different and benefit of doubt cannot be extended for duty purposes.
Shri Bhatia contended that the letter of John Royle was at the appellant request and there is no indication that purchase of the accessories was compulsory. Moreover, Notfn. No. 40/Cus. 1-3-1978 covers only plastic extruder and not the whole sheathing system. In reply, Counsel stated that they had all along been insisting that the Extruder and its attachments was a composite whole and the Customs had compelled them to furnish breakup values and now this was sought to be used against the appellants.
6. We are somewhat surprised that the appellants have not produced the catalogue or the operating manual for this expensive machinery. The invoice also shows that it is at the dictates of the importer (c.f.
reference to OGL scheme etc. on the body). At the same time, their plea that they sent the photos and technical write up on 15-12-1979 is not contested. The order-in-appeal relies more on a principle than on solid facts and the department has not shown which are the separable accessories with reference to the photos/write up. There is no doubt that by far the most, expensive part of the equipment is the extruder.
Subsequent to the order-in-appeal, the Board also decided the dispute for import licensing purposes in favour of the appellants holding that 'extruder' included the subject "accessories". This has to be given due regard. There is also evidence of compulsory supply and of no separate charge being made for "accessories". The goods may well have been entitled to the Accessories (Condition) Rules 1963. There is also force in Counsel's plea regarding classification of complementary machines with the main machine, though this may not necessarily apply to an exemption. However, even if the entire machinery is a cable insulating equipment, it is clear that the extruder is the main machine. On the facts and circumstances of the case, we do not find sufficient reason to deny the exemption to the so-called accessories. In the result, we set aside the order-in-appeal and allow this appeal with consequential relief.