1990 (6) TMI 175 - AT - Customs

Summary

Issues Involved:
1. Classification of rolling mills under Customs and ITC schedules.
2. Interpretation of rolling mills as machine tools under the Import Trade Control (ITC) policy.
3. Applicability of the Brussels Tariff Nomenclature (BTN) classification to rolling mills.
4. Confiscation and penal action under the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Classification of Rolling Mills under Customs and ITC Schedules:
The appellant imported various cylindrical roller bearings and pillow block units and claimed clearance under O.G.L. Appendix 6, Item No. 46(2) of the ITC policy 1985-88, asserting that these items were spares for rolling mills, which they argued were machine tools. The department contested this, stating that rolling mills do not qualify as machine tools and are specifically classified under Heading 84.44, whereas machine tools are classified under Heading 84.45/48. The learned Collector of Customs supported this view, leading to the confiscation of the goods and imposition of a fine.

2. Interpretation of Rolling Mills as Machine Tools under the ITC Policy:
The appellant's counsel argued that rolling mills should be considered machine tools based on historical classifications and the Brussels Tariff Nomenclature (BTN). He cited past definitions and policies, including a 1961 Central Board of Excise & Customs (C.B.R.) notification and the explanatory notes to the CCCN, which suggested that rolling mills, although classified under Heading 84.44, are still machine tools. The appellant contended that the Customs Department's interpretation was flawed as it failed to recognize that not all machine tools fall under Heading 84.45/48.

3. Applicability of the Brussels Tariff Nomenclature (BTN) Classification to Rolling Mills:
The appellant emphasized that the ITC policy and Customs classification are based on the BTN, which includes rolling mills under machine tools in its explanatory notes. The counsel pointed out that the exclusion clause in Heading 84.45 of the CCCN clarifies that certain machine tools are classified under other headings, including rolling mills under Heading 84.44. The appellant argued that this alignment should be recognized in the current ITC policy.

4. Confiscation and Penal Action under the Customs Act, 1962:
The department issued a show cause notice to the appellant, proposing confiscation under Section 111(d) of the Customs Act, 1962, and penal action under Section 112 for contravening the Import Control Order 1955. The appellant maintained that their goods were permissible under the OGL as spares for machine tools, challenging the department's classification.

Judgment Analysis:
The Tribunal examined the explanatory notes to the CCCN and the historical context provided by the appellant. It noted that rolling mills are included in the category of machine tools in the exclusion clause of Heading 84.45, despite being specifically classified under Heading 84.44. The Tribunal rejected the department's argument that the exclusion clause was merely for clarification and not for classification purposes. It acknowledged that the Customs and ITC classifications are aligned and that rolling mills have historically been considered machine tools for both tariff and licensing purposes.

The Tribunal concluded that rolling mills should be treated as machine tools under the ITC policy for the year 1985-88. Consequently, the appeal was allowed, and the appellant was entitled to the consequential relief, overturning the confiscation and penal actions imposed by the department.