1986 (2) TMI 183 - AT - Central Excise

Summary

Issues: Classification of imported Copper-Nickel Tubes under Customs Tariff Act, 1975.

In the judgment by the Appellate Tribunal CEGAT, New Delhi, the common issue involved in both appeals was the classification of imported 70/30 Copper-Nickel Tubes under the Customs Tariff Act, 1975. The appellants imported these tubes for use in heat exchangers in their petroleum refinery and sought re-assessment under Heading 84.17, arguing that the tubes were specifically designed for this purpose and imported under an Actual User Licence for refinery equipment and spares. The lower authorities initially considered the tubes as "parts of general use" but later abandoned this stance. Instead, they argued that Heading No. 75.04/06 for "other articles of nickel" was more specific to cover the goods, as the imported tubes were in straight length and not identifiable as spare parts of any machinery. Both sides agreed that despite containing 30% nickel and 70% copper, the tubes would be treated as "nickel tubes" under Note 3(a) in Section XV of the Customs Tariff Act.

Upon careful consideration, the Tribunal noted that the imported tubes were straight length tubes made of base metal, and their physical appearance did not immediately associate them with specific machinery components. The appellants contended that the tubes should be classified as machinery parts due to their special physical standards and chemical composition conforming to industry standards. However, the Tribunal highlighted that the Customs Tariff Act does not universally classify all spare parts under machinery chapters, as specific material composition headings may be more appropriate. The statutory scheme of the Tariff, including Section Notes, Chapter Notes, and Interpretative Rules, guides the classification process, emphasizing that spare parts made of certain materials should be classified accordingly.

Regarding the specific classification, the Tribunal analyzed Heading 84.17 for heat exchangers and condensers, noting that it pertains to complete machines or systems rather than parts. The department invoked Heading 75.04/06 for "other articles of nickel," supported by Note 2 to Chapter 75, which specifies the application of the heading to tubes and fittings that have been worked upon. This transformed the heading into a specific one for nickel tubes, both worked and unworked. The Tribunal agreed with the department's argument, emphasizing that the exclusion Note 1(f) to Section XV did not apply to straight length nickel tubes, leading to the rejection of the appeals and upholding of the lower orders.