1997 (11) TMI 480 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods under Customs Tariff.
2. Applicability of exemption notifications.
3. Distinction between basic customs duty and auxiliary duties of customs.
4. Judicial precedents and their relevance to the case.

Detailed Analysis:

1. Classification of Imported Goods under Customs Tariff:
The appellant imported a high-frequency induction melting furnace and claimed exemption under Notification No. 187/86-Cus., dated 1-3-1986, arguing that the goods should be classified under Chapter 84 or 85 of the Customs Tariff. However, the Assistant Collector classified the goods under Heading No. 98.01 of the Customs Tariff, which pertains to project imports. This classification was confirmed by the Collector of Customs on appeal. The Tribunal noted that Chapter 98 provides specific treatment for project imports, including machinery and equipment for initial setup or substantial expansion of units, and thus the goods were correctly classified under Heading No. 98.01.

2. Applicability of Exemption Notifications:
The appellant argued that they should be allowed to choose the more beneficial exemption notification. They cited the Madras High Court's decision in Tamil Nadu Newsprint Papers Ltd. v. Appraiser, Madras Customs, which was later overruled by the Division Bench. The Tribunal emphasized that Notification No. 132/85-Cus., dated 19-4-1985, provided a concessional rate of basic customs duty for goods under Heading No. 98.01 but did not extend to auxiliary duties. Notification No. 187/86-Cus., dated 1-3-1986, required goods to fall within Chapters 84 or 85, which was not applicable to goods classified under Chapter 98.

3. Distinction Between Basic Customs Duty and Auxiliary Duties of Customs:
The Tribunal highlighted that basic customs duty and auxiliary duties are distinct. Notification No. 132/85-Cus. only covered basic customs duty, not auxiliary duties. The Supreme Court's decision in C.C.E., Hyderabad v. Vazir Sultan Tobacco Co. Ltd. clarified that special excise duty is separate from duties under the Central Excise Act. Similarly, auxiliary duties of customs are independent and must be considered separately. The Tribunal concluded that once goods are classified under Heading No. 98.01, this classification applies for all purposes, including auxiliary duties.

4. Judicial Precedents and Their Relevance to the Case:
The appellant relied on the Tribunal's decision in Gujarat Steel Tubes Industries v. C.C., Bombay, which dealt with the classification of tools under Chapter 98.06 and their exclusion from certain notifications. However, the Tribunal found this precedent did not support the appellant's argument for dual classification for different duties. The Tribunal reiterated that the goods, once classified under Heading No. 98.01, could not be reclassified for auxiliary duties to benefit from Notification No. 187/86-Cus.

Conclusion:
The Tribunal concluded that the benefit of Notification No. 187/86-Cus. was rightly denied as the goods were classified under Chapter 98 and not Chapters 84 or 85. The appeal was rejected, affirming the classification and the non-applicability of the exemption for auxiliary duties.