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Mysore Lamp Works Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1984)(18)ELT639TriDel
AppellantMysore Lamp Works Ltd.
RespondentCollector of Customs
.....of the customs act, 1962.2. the first seven appeals relate to the question of classification of lead-in-wires and the last concerns classification of tungsten filament wires which have been imported by the appellants. the assistant collector held that lead-in-wires are identifiable parts of lamps with specific design suited to the particular type of lamp in which they are used and are accordingly assessable under the same heading, namely, 85.18/27(4). in view of note 2(b) to section xvi of the cta schedule, the appellate collector rejected the claim for assessment under heading 75, cta, as articles of nickel. since the lower authority had rejected the claim stating that the goods have been priced on the basis of number of pieces and are identifiable parts of electric filament lamps,.....
1. This is a group of revision applications, in respect of Lead-in-wires and tungsten filament wires imported by the Appellants, against order in Appeal Nos. C3/2981/1979, dated 25-2-80, C3/2982/1979, dated 25-2-80, C3/2468/1979, dated 27-5-80, C3/422/80, dated 27-3-80, C3/1129/79, dated 20-11-79, C3/1127/79, dated 20-11-79, C3/1130/79, dated 20-11-79, and C3/423 and 424/1980, dated 28-3-80 passed by the Appellate Collector of Customs, Madras, which have been transferred to the Tribunal for disposal under Section 131B(2) of the Customs Act, 1962.

2. The first seven appeals relate to the question of classification of lead-in-wires and the last concerns classification of tungsten filament wires which have been imported by the Appellants. The Assistant Collector held that lead-in-wires are identifiable parts of lamps with specific design suited to the particular type of lamp in which they are used and are accordingly assessable under the same heading, namely, 85.18/27(4). In view of Note 2(b) to Section XVI of the CTA Schedule, the Appellate Collector rejected the claim for assessment under Heading 75, CTA, as articles of nickel. Since the lower authority had rejected the claim stating that the goods have been priced on the basis of number of pieces and are identifiable parts of electric filament lamps, he held them to be correctly assessable under Heading 85.18/27(4) as parts of electric filament lamps. As regards tungsten filaments (cathodes and tungsten rods) the Assistant Collector relied on the invoices showing the goods as designed for specified wattage and the price being charged on unit basis, for giving the finding that the goods have evidently lost their identity as mere articles of tungsten, so as to merit assess- ment under Heading 81.01/04, as claimed, but are only identifiable components of lamps, assessable under Heading 85.18/27(4). The Appellate Collector also agreed that the goods have acquired the status of finished components and cannot be classified on the basis of material of manufacture as claimed. He upheld the rejection of the refund claim by the lower authority.

3. Shri Dholakia explained that lead-in-wires were classified under Item No. 70(1) of the ICT which is akin to TI No. 75 of the CTA, 1975 covering Nickel and Articles thereof, and up to 1978 they continued to be classified by the Customs authorities under Heading No. 75. These facts are not disputed by the Department. In 1978, a Collectors' Conference decided that these goods, being ready for use in electric filament lamps, should be classified as part of a lamp and duty levied accordingly. Consequently, the department began to charge duty under Heading 85.18/27(4). It is as a result of this that the impugned orders were passed. It is significant that the very same Appellate Collector has since passed orders upholding the contentions and allowing assessment of subsequent consignments under Heading No. 75. The appeal period has expired and the consequential refunds have been obtained by the Appellants. To support his plea, Shri Dholakia stated that the lead-in-wires consisting of three metals fused together in which nickel predominates by weight. Under Note 5 to Section XV, articles of base metal including articles of two or more base metals are to be treated as articles of the base metal predominating by weight. He also contended that Heading 75 is very specific whereas Heading 85 is more a general entry. He drew the attention of the Bench to the decision of the Delhi High Court in Civil Writ Petition No. 562/78 - Sylvania and Laxman Limited v. Union of India and Ors., where the Appellant was also one of the petitioners, that an article of metal is a more specific entry as compared to part of lamp, as tungsten filament was only one of the components of a lamp. Similarly, lead-in-wires are only one of the com- ponents of a lamp he argued. The Supreme Court did not even consider admission of the Department's appeal. In a similar case, the Calcutta High Court had also come to a decision that the goods (tungsten filament) should be assessed under Heading 81.01/04(1) and not under Heading 85.18/27(4).

4. Further, the learned Counsel argued that since the goods are not capable of being used without further process, they cannot be treated as parts of lamps. The word 'parts' means a section of a whole and must be such 'that it should be in ready to fitment' condition. He also relied on a decision of this Tribunal reported in 1983 ECR 1786-D.5. The evidence produced shows that "the most important lead-in- wire part, sealed into the glass, has to provide a completely vacuum tight, Resp gas-tight glass to metal seal". "The applied glass should adhere well to the metal surface/suitable wetting of the metal by the glass-the metal must not contain absorbed gases since bubbles will evolve during sealing, deteriorating the continuity of the glass-to-metal seal." Thus, the imported goods have to undergo processing, including encapsuling in glass before they can be used in the manufacture of electric lamps. These processes consist of degassing in an inert atmosphere (Argon gas) at a temperature around 1001 Centigrade ; bending and shaping to suit the burner size and weight, such that burners can be held securely; providing sleeve over dumet portion; and trimming the lead-in-wire to the proper size. For these reasons, it was urged that the lead-in-wires cannot be described as parts of electric lamp and cannot fall under Heading 85. These arguments are equally applicable to Appeal No. 5777-B relating to tungsten filament which is also squarely covered by the judgment of the Delhi High Court, as confirmed by the Supreme Court.

(i) The nickel content in the lead-in-wires is more than the content of other metals like copper, du-metal, monel, molybdenum, etc. and they have three or four distinct parts made of different metals ; the size of each part is also different from the other in diameter.

The parts are fused together and the whole has specific lengths, according to the need of the Importer ; the length is pre-determined to suit fitment (or to be welded) into the mercury vapour lamps being manufactured. The construction is so done as to suit a particular voltage and a specified wattage. They are supplied in numbers of pieces. All these would show that the lead-in-wire is a ready-made-up article for a specific purpose and not any raw material. While it may be true that the imported component has to be fitted in a rather complicated way, this cannot take away its character of a complete article or a part of lamp or bulb.

(ii) According to 2(a) of the Interpretative Rules, even incomplete articles are deemed to be finished articles for purposes of classifi- cation and applying this principle, the goods will fall squarely in Chapter 85. Moreover, Note 2(b) to Section XVI provides that parts for use mainly and particularly with an appliance, etc., are to be classified along with the main equipment. Besides, only sections of wires made of nickel are to be classified under Heading 75.02. "Nickel wire is a rolled, extruded or drawn product of a solid section." The imported goods are not of this type. They are made up of three different metal sections welded together in speci- fied sizes. By no stretch of imagination could this be called a rolled, extruded or drawn product. Further, miscellaneous articles of base metal fall under Chapter 83 but specifically excludes those falling under Chapter 85. Applying Rule 3(c), Heading 85.18/27(4) is attracted because the rate of duty is more and the Heading occurs later, apart from the fact that invoices show part numbers for each size and type of lead-in-wire. It is indisputable that a part is an identifiable constituent of a finished product and is a portion, whether it is a substantial part or not. There is no warrant for holding a part to be one which can be screwed or unscrewed for fitment, which is an old concept. Today electronic chips, printed circuit boards, etc., are instances where parts are fused to the equipment. For these reasons, the learned SDR urged that there is no doubt that the lead-in-wires are parts of lamps and covered by that Heading.

(iii) Regarding the appellants' contention that the very Appellate Collector subsequently allowed similar appeals, the answer was that the later orders are erroneous and would be brought to the notice of the Department for necessary action. As to the High Court decision, that related to tungsten filament/tungsten filament wires, which are articles of a single metal and not like lead-in-wires which are made up articles constituted or built up of two or three distinct portions of different metals.

7. For a decision of these appeals it is necessary to advert to the decision of the Delhi High Court. The contention of the Department that an article shall be taken to include a reference to that article as an incomplete or unfinished article in terms of Rule 2(a) and so it is immaterial whether the articles imported have to be further processed or not, was dealt with summarily by stating that Heading 81.01/04 is a very specific entry which deals with, inter alia, 'tungsten and articles thereof, i.e., articles made thereof and it is not disputed that tungsten filament is an article made of tungsten, and the Honourable Court could see no reason why this entry should not squarely cover the articles imported. On the other hand, Heading 85.18/27 (4) is electric filament lamps of which the tungsten filament is only one com- ponent. The argument that the tungsten filament should be covered by this Heading would have its force, if there was no article more specific covering in its description the articles imported. It is clear that Heading 81.01/04 is far more specific than the rival entry and it is settled law that the special prevails over the general. The Madras High Court also, in the case of Bengal Electric Lamp Works Limited v.Collector of Customs, Madras (1981 E.L.T. 233 Mad.) held that tungsten filaments are not electrical goods and being specifically mentioned in item 81.01/04(1) shall fall under that, item. Since these filaments cannot be straightaway used in electric lamps unless subjected to processing, they will not be classifiable under item 85.18/27(4). This judgment was supported by citing Matter No. 948/77 and Civil W.P 562 of 1978. The Court observed that it was unable to see how they can be called electric filament lamps or even an identifiable part or component thereof in order to come within the latter tariff item [85.18/27(4)] bearing a higher rate of duty.

8. On the ratio of the decisions of the three High Courts, there can be no doubt that Heading 81.01/04 will cover the tungsten filament wire in dispute and Appeal No. 577/80 has necessarily to be allowed.

9. As regards the lead-in-wires, they are made up of two or more wires fused together in which nickel wire predominates by weight. Chapter 75 which covers NICKEL AND ARTICLES THEREOF contains four different sub-headings. Since the lead-in-wires are specifically designed for use in filament lamps, even to the extent of bearing part numbers, it would be necessary to decide which of the competing entries in the Tariff would be more appropriate. In a similar case of tungsten filament wires, which require further processing before fitment into lamps, the High Courts have held them to be "articles of tungsten". Evidence has been led by the Appellants, and this has not been controverted by the Department, that these lead-in-wires also require similar processing, including de-gassing and encapsuling in glass, before they can be fitted into electric filament lamps. These are substantial and elaborate processes which the imported lead-in-wires have to be subjected to before they can be ready for use in the electric lamps. In this view, they would qualify more specifically as articles of nickel.

We, therefore, hold that these are covered more appropriately under the Heading 75.04/06 of the Tariff. In the circumstances, these seven appeals are also be allowed.

10. We accordingly set aside all the eight impugned orders and allow these appeals with consequential relief.

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