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Swadeshi Mills Co. Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1184DTri(Delhi)
AppellantSwadeshi Mills Co. Ltd.
RespondentCollector of Customs
Excerpt:
.....the hearing of the case before us on 28-6-1983, the appellants showed a sample of the subject rubber diaphragm, and explained its function with reference to the catalogue of the textile printing machine. they stated that the subject rubber diaphragm had been exclusively designed to perform a specific function in the said machine and had been given a definite shape and size for that purpose. they added that note 3(c) to chapter 40 of the cta excluded "mechanical or electrical appliances or parts thereof (including electrical goods of all kinds), of hardened rubber, falling within section xvi;" from the purview of chapter 40 and, therefore, the goods were correctly assessable under heading 84.40. they invited our attention to the certificate dated 3-11-1976 of the indian rubber.....
Judgment:
1. In this case, the appellants imported rubber diaphragm of pressure cylinder for 8 colour printing machine for cotton textiles. The goods were assessed by the Department under heading 40.05/16(1) of the Customs Tariff Act, 1975, as a rubber manufacture. The appellants seek their re-assessment at a lower rate under heading 84.40 on the ground that the goods were an essential part of the textile printing machine.

During the hearing of the case before us on 28-6-1983, the appellants showed a sample of the subject rubber diaphragm, and explained its function with reference to the catalogue of the textile printing machine. They stated that the subject rubber diaphragm had been exclusively designed to perform a specific function in the said machine and had been given a definite shape and size for that purpose. They added that Note 3(c) to Chapter 40 of the CTA excluded "mechanical or electrical appliances or parts thereof (including electrical goods of all kinds), of hardened rubber, falling within Section XVI;" from the purview of Chapter 40 and, therefore, the goods were correctly assessable under heading 84.40. They invited our attention to the certificate dated 3-11-1976 of the Indian Rubber Manufacturers Research Association which stated, "Hardness I.R.H.D. : 74.0". The Bench noticed that this certificate did not describe the goods which had been subjected to testing of hardness and asked the appellants to prove that the said certificate was in relation to the subject rubber diaphragm.

The appellants stated that the certificate was in respect of rubber diaphragm but they did not have any evidence to prove it. Lastly, the appellants stated that the goods were cleared under their ITC licence issued for spare parts which also showed that the Department accepted the fact that the goods were spare parts.

2. The Department's representative stated that the Research Assistants certificate dated 3-11-76 could not be in relation to the subject rubber diaphragm since the subject goods were cleared from the Docks a month later than the date of issue of the certificate. He argued that the subject rubber diaphragm cannot be an article of hardened rubber since according to the appellants' own statement made in the course of explaining the functions of the diaphragm, the diaphragm was inflatable by air. He added that the CCCN treated only ebonite as hardened rubber.

Finally, he stated that the goods had been correctly assessed by the Department under heading 40.05/16(1) as they were excluded from the machinery chapter by virtue of Note l(a) to Section XVI of the Customs Tariff.

3. We have carefully considered the matter. It is not in dispute that the goods were made of rubber and that they were a part of the textile printing machine. The appellants' plea to assess the goods under the heading relating to textile printing machinery proceeds on the assumption that all parts of machinery have to be assessed under the appropriate machinery heading. But we find from the Customs Tariff that it contains no such golden rule of universal application. On the contrary, there are numerous section notes and chapter notes in the Tariff which specifically exclude certain parts of machinery from the scope of the machinery chapters and provide for their assessment on the basis of their material composition under other chapters. Note 2 to Section XVI which governs the classification of parts and components under various machinery headings is itself subject to the provisions of other notes which exclude certain parts and components from the scope of the machinery chapters. One such exclusion note is Note 1 (a) to Section XVI which says, inter alia, that articles of a kind used on machinery, mechanical or electrical appliances or for other industrial purposes, of un-hardened vulcanized rubber (for example, washers) are excluded from the scope of Section XVI (which encompasses all machinery chapters) and are to be assessed under heading 40.05/16. Section notes and chapter notes are a part of the Customs Tariff and they determine the scope of the respective chapters and headings. The appellants relied on exclusion Note 3(c) to Chapter 40. This note excludes mechanical or electrical appliances or parts thereof, of hardened rubber, from the scope of Chapter 40 and puts them in Section XVI of the Tariff. But the appellants have not been able to establish that the subject rubber diaphragm was made of hardened rubber. The Research Association's certificate does not describe the article of which it has given the hardness certificate. This certificate cannot, therefore, be connected to the subject goods. Further, this certificate is of no value since it is of a date earlier than clearance of the subject consignment and it could not have related to this consignment.

Furthermore, we ourselves saw the sample of the subject diaphragm produced before us by the appellants. The sample contained considerable elasticity. It had to be elastic because, according to the appellants' own statement, it functioned by being inflated through the injection of air into it. Such an article cannot be called as made of hardened rubber in the sense this term is normally understood. The exclusion Note 3(c) relied on by the appellants is, therefore, not applicable. We agree with the Department's representative that exclusion Note l(a) to Section XVI, which we have already discussed earlier, applies to the subject goods. In view of the specific provision of this Note, the subject rubber diaphragm, even though a part of the textile printing machine, has to be assessed under heading 40.05/16(1) only.

4. In the circumstances, we uphold the impugned order and reject this appeal.


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