1. The question for decision in this appeal, originally filed as revision application to the government of India, is classification of High Frequency Speaker Unit imported by the appellants by B.E. No.Cash-1229 dated 9-4-1975 whether for the purpose of countervailing duty the goods should not have been classified under Tariff Item 37A(ii) of the Central Excise Tariff, as done by the lower authorities.
2. The appellants are manufacturers of Cinematograph Projectors falling under Item No. 37B of the Central Excise Tariff. They contend that they do not manufacture Gramophones, Record Players, Record laying decks, Record changer decks or parts and accessories thereof falling under T.I. No. 37A. The appellants obtained an Import Licence bearing No.P/S/1789414 dated 4-12-1972 for import of components for the manufacture of sound projection and audio-visual equipment. Pursuant to this licence, the appellants imported 128 High Frequency Speakers Units as component parts of the said equipment, commonly known as 'Theatre Equipment'. The Customs authorities for the purpose of countervailing duty assessed the goods under T.I. 37A(ii) and realised Rs. 47,637.87 paise as countervailing duty from the appellants. The Assistant Collector of Customs by his order dated 17-2-1976, rejected the appellants' claim for refund holding that the subject goods "had multiple uses such as "record players changer", the assessment therefore being in order. The Appellate Collector of Customs, Bombay also by his order dated 22-4-1977 rejected the appeal. Hence the present appeal.
3. In the grounds of appeal, the appellants have urged that the goods speaker units imported by them are components/accessories of Cinematograph Audio Visual and Sound Projection equipment and not speakers which are parts and accessories of Gamophones, Record players, Record playing decks or Record changer decks. Countervailing duty under T.I. 37A(ii) could not therefore be leviable on their import. In support of their contention they have also relied on Bombay Central Excise Trade Notice No. 125CMP)/ Gramophones (819)75 dated 14-7-1975.
It is further urged that the speaker units imported by the appellants are of above 14 Kilo cycles upper frequency range while the frequency range of speakers used in gramophones etc. is limited to 8 kilo cycles.
During the arguments, the appellants produced literature from Vitavox-S3 Pressure Unit from M/s Vitavox. They also filed a Catalogue Photophone-Contenental Theatre, Sound & Projection Machinery showing goods manufactured by them. Perusal of the same shows that the machinery manufactured by the appellants is used in theatre and auditoriums ; a copy of Bombay Central Excise Collectorate Trade Notice No. 125(MP)/Gramophones (3)/1975 dated 14-7-1975 and a copy of the Appellate order, passed by Shri N.K. Bajpai, Collector of Customs (Appeals), Bombay, wherein their goods for assessment of countervailing duty were classified under T.I. 68 of the Central Excise Tariff, were also filed. In addition, they placed a letter dated 15-5-1975 from M/s Philips India Ltd., Bombay addressed to the appellants. In this letter it is given out that Philips India would be refunding Excise duty out of 30% charged after retaining 1% which is applicable on Speakers.
4. At the hearing of the appeal, Shri J.J. Shah, Accounts Manager of the appellants, reiterated the grounds set out in the Memo, of appeal.
In particular, he made out that the speaker units imported by the appellants could not at all be used in gramophones, record changers decks etc. because they were of a very high frequency. They could not be used for rooms. They were intended for theatres. These Units therefore could not be assessed as parts of record changers, gramophones, record players etc. He also gave out that Philips India, who manufactured such goods in India were not charged Excise duty at the rate of 30%-countervailing charged from the appellants. He, therefore, submitted that the goods imported were not correctly classifiable under Item 37A(ii).
5. On behalf of the Department, Shri K.V. Kunhikrishnan, D.R. submitted that the speaker units imported by the Appellants were sound equipment and could be used in gramophones, record changers, tape decks etc. He relied on an order of the Tribunal reported in 1983 E.L.T. 828 (CEGAT) and submitted that the speaker units imported by the appellants were correctly classifiable under Item 37A(ii) of C.E.T. for the purpose of countervailing duty.
6. We have carefully considered the matter. The Assistant Collector of Customs in his order observed that the goods had multiple uses such as in record players and record changers, but from the record it is not possible to make out on what basis this observation was made. The Appellate Collector for his findings relied on Notification No.14/75-C.E. dated 1-3-1975. This notification amended the original Notification No. 112/66-C.E., dated 9-7-1966 and added two items to the list excepting the goods to which the exemption notification was not to apply, namely, (viii) Amplification devices, whether acoustical or electrical and designed for room listening whether having single or multiple input channels.
7. We are, however, of the view that in order that the speaker units imported by the appellants fall under the excepted item (viii) & (ix) introduced by Notification No. 14/75-C.E., they had first to be parts and accessories of mechanically or electrically operated gramophones, record players, playing decks or record changer decks, falling under sub-item (ii) of Item 37A, because the notification was issued with reference to this item. The appellants have all along been contending that the speaker units imported by them cannot be used in gramophones, record players etc. and have given good reasons why this is not possible. We have already observed that there is no evidence on record to show that these goods can be used in gramophones, record players etc. We see no reason to disbelieve the appellant when they contend that the imported goods cannot be used in gramophones, record players etc. listed under sub-item (ii) of Item 37A. It may by pointed out that the Appellate Collector of Customs did not uphold the order of the Assistant Collector on the ground that the goods can be used in gramophones, record players etc. His reasoning was different and was based on C.E. Notification No. 14/75. The learned Collector also did not negate appellats' contention that Philips India were not levied Central Excise duty in respect of speakers manufactured by them.Murphy India Ltd. v. Collector of Central Excise & Customs, Bombay-1983-E.L.T. 828-on which the learned Department Representative has relied in his arguments, we have gone through the case. In that case the question was whether parts of accessories of gramophones, and record players would fall under T.I.37A of C.E.T. The Bench held that the speaker system in the case was an essential part of gramophone and record players and not just accessories. In the instant case we have found that speaker units imported by the appellants cannot be used with gramophones, record players etc. The decision would, therefore, not be applicable to the facts of the present case.
9. Considering the foregoing, we are of the view that the speaker Units imported by the appellants were not parts and accessories of gramophones, record players, record changers etc. listed under sub-item (ii) of Item 37A. The exception (viii) & (ix) in the original notification No. 112/66-C.E., introduced by Notification No.14/75-C.E., dated 1-3-1975 would not therefore, be applicable to the appellants' goods. The appellants' goods therefore, could not be held assessable under sub-item (ii) of Item 37A of the CET nor could Notification No. 112/66-C.E., dated 9-7-1966 as amended by Notification No. 14/75-C.E. dated 1-3-1975 be applied to it. The goods would therefore be properly assessable under T.I. 68 at the material time.
The appeal is thus allowed in the light of observation made above with consequential refund to the appellants.