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Commercial Ahmedabad Mills Co. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1175DTri(Delhi)
AppellantCommercial Ahmedabad Mills Co.
RespondentCollector of Customs
Excerpt:
.....nature of the goods :- "the versaprint blankets basically consist of a carcass and an embossed rubber printing face. the carcass consists of various layers of strong cotton fabric bonded together with rubber. the carcass has excellent resiliency properties so that no distortion takes place. the printing face made with a unique synthetic rubber, is embossed to carry away the excess colour and to reduce edge flushing. the printing face, because of its special constructions, will not distort under pressures so that the embossing stay open to pick up colours in excess." "the specially formulated rubber printing surface provides maximum solvent resistance while providing the degree of cushion essential for the broadest range of textile printing requirements." in the light of what the.....
Judgment:
1. In this case, the Appellants imported Darex Versaprint Blankets for use in textile printing machinery. The goods were assessed to customs duty under heading 40.05/16(1) of the Customs Tariff Act, 1975 as a rubber manufacture,. The appellants filed a refund claim on the ground that the goods were correctly assessable under heading 59.16/17 as a textile article of a kind commonly used in machinery. The Assistant Collector rejected their claim on the ground that the goods were predominantly rubber manufacture. In their appeal to the Appellate Collector, the appellants sought re-assessment of the goods under heading 84.40 as a spare part of textile printing machinery. The Appellate Collector rejected this claim also on the ground that Note 1 (a) to Section XVI of the Customs Tariff excluded articles of unhardened vulcanized rubber used on machinery. In their revision application to the Central Government (since transferred to this Tribunal and taken up as the subject appeal), the appellants pleaded that the goods were an essential part of textile printing machinery correctly falling under heading 84.40. They reiterated this argument before us during the hearing on 28-6-83 and added that since the goods were not entirely made of rubber, they did not fall under Chapter 40 and that Note 2(e) to Chapter 40 excluded these goods from the scope of that Chapter. They made an alternative plea to classify the goods under heading 59.16/17 as originally put forth before the Assistant Co Hector. In reply to queries from the Bench, the appellants stated that they did not know the respective percentage content of textiles and rubber in the goods and that they had no evidence to corroborate their statement made before the Appellate Collector that the goods were not made of unhardened vulcanized rubber.

2. The Department's representative relied on Note 1 (a) to Section XVI of the Customs Tariff to say that the goods did not fall in the machinery chapters. He added that the appellants had no evidence to show that the goods were not made of unhardened vulcanized rubber, that the catalogue and the foreign supplier's letter dated 20-11-79 showed that the essential character of the goods came from rubber and that textile fabric was used in the goods only for reinforcement of rubber.

He contended that Note 2(e) to Chapter 40 was not applicable to the goods and that instead the Proviso below Note 2(f) to that Chapter applied which retained the subject goods within the scope of Chapter 3. We have carefully considered the matter. We find that the goods were a composite material made of rubber and textile fabrics. We quote below from the catalogue and the foreign supplier's letter on record in order to get an idea of the true nature of the goods :- "The Versaprint Blankets basically consist of a carcass and an embossed rubber printing face. The carcass consists of various layers of strong cotton fabric bonded together with rubber. The carcass has excellent resiliency properties so that no distortion takes place. The printing face made with a unique synthetic rubber, is embossed to carry away the excess colour and to reduce edge flushing. The printing face, because of its special constructions, will not distort under pressures so that the embossing stay open to pick up colours in excess." "The specially formulated rubber printing surface provides maximum solvent resistance while providing the degree of cushion essential for the broadest range of textile printing requirements." In the light of what the catalogue and the foreign supplier's letter say, we agree with the Department's representative that the essential character of the goods comes from rubber. The appellants have also failed to controvert the Assistant Collector's finding that the goods were predominantly made of rubber. In the circumstances, by virtue of Rule 3(b) of the Rules for Interpretation of the Customs Tariff, the subject goods have to be deemed to be an article of rubber and not an article of textiles falling under heading 59.16/17. The question now before us is whether the goods should properly be classified under heading 40.05/16(1) or under heading 84.40. It is not seriously in dispute that the goods were a part of the textile printing machinery.

From this, the appellants seem to proceed on the assumption that being a part of the textile printing machinery, the goods should be classified under heading 84.40, relating to textile printing machinery.

However, we find that there is no golden rule in the Customs Tariff that all parts and components of a machine should be classified along with the machine. 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 l(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 unhardened 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. While the Department relies on exclusion Note l(a) to Section XVI and the Proviso below Note 2(f) to Chapter 40, the appellants relied on exclusion Note 2(e) to Chapter 40. This Note 2(e) reads as under :- "(e) bonded fibre fabrics and similar bonded yarn fabrics, impregnated or coated with rubber, or in which rubber forms the bonding substance, irrespective of their weight per square metre, and articles thereof." 4. Since the above note relates to bonded fibre fabrics and similar bonded yarn fabrics and since the appellants stated before the Appellate Collector that the subject goods were manufactured from canvas cloth, this note is not applicable to the subject goods. The Proviso below Note 2 (f) relied on by the Department reads as under :- "However, plates, sheets and strip, of expanded, foam or sponge rubber, combined with textile fabric, and articles thereof, are to be classified in Chapter 40, provided that the textile fabric is present merely for reinforcing purposes." We find that the above Proviso or exception relates to certain articles of expanded, foam or sponge rubber. From the material on record, we do not find that the subject goods were made of expanded, foam or sponge rubber. This Proviso or exception is also, therefore, not applicable to the subject goods. The appellants contended that since the goods were not entirely made of rubber, they could not fall under Chapter 40. We find no such stipulation in Chapter 40. On the contrary, heading 40.05/16 specifically covers "manufactures of natural or synthetic rubber, whether or not vulcanized or hardened, not elsewhere specified; vulcanized rubber thread and cord, whether or not textile covered and textile thread covered or impregnated with vulcanized rubber;". The appellants also made a statement before the Appellate Collector that the goods were not made of unhardened vulcanized rubber. They have not corroborated this statement. On the contrary, the foreign supplier's letter dated 20-11-1979 talks of the goods possessing excellent resiliency properties. If the goods were made of hardened rubber, they could not have possessed such resiliency properties. Further, the goods must have been vulcanized; otherwise, they would be tacky or gummy and hence quite useless to serve as a support base to the textile fabric under print. In the circumstances, the goods clearly answer the description "...other articles of a kind used on machinery, mechanical or electrical appliances or for other industrial purposes, of unhardened vulcanized rubber (for example, washers) (heading No.1005/16)" given in the exclusion Note l(a) to Section XVI. The effect of this note is that the goods, even though a part of the textile printing machinery, are not classified in Chapter 84 but are to be classified in heading 40.05/16.


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