1991 (4) TMI 249 - AT - Customs

Summary

Issues Involved:

1. Classification of imported goods under the appropriate Customs Tariff Heading.
2. Interpretation of "interchangeable tools" under Tariff Heading 82.05.
3. Applicability of countervailing duty under CET Item No. 51A.
4. Import under OGL (Open General License) and the imposition of redemption fine on confiscation.

Issue-Wise Detailed Analysis:

1. Classification of Imported Goods:

The appellants imported flashing plates for Koehlar machines and claimed assessment under CTA Tariff Heading No. 84.45/48, which attracts a lower duty rate. The Department assessed the goods under CTA Tariff Heading No. 82.05, which pertains to interchangeable tools for machine tools, and imposed countervailing duty under CET Item No. 51A. The appellants argued that the flashing plates should be classified under the heading for machine-tools and their parts, as they are essential for the manufacturing process of the Koehlar machines.

2. Interpretation of "Interchangeable Tools":

The Department classified the flashing plates as interchangeable tools under Tariff Heading 82.05, arguing that these plates perform grinding, shaping, and smoothening operations and can be replaced with other plates of different groove sizes for specific jobs. The appellants contended that "interchangeable tools" should mean tools that are interchangeable between different types of machines, not just within the same machine. They relied on the Tribunal's decision in Purewall & Associates Ltd. v. C.C. Bombay, which emphasized that interchangeability should mean the suitability of a product to replace another product to fulfill relevant requirements.

3. Applicability of Countervailing Duty:

The Tribunal agreed with the Department's interpretation that the flashing plates are interchangeable tools for machine tools and therefore fall under Tariff Heading 82.05. Consequently, the countervailing duty would be chargeable under CET Item No. 51A, which is aligned with Tariff Heading 82.05.

4. Import Under OGL and Redemption Fine:

The appellants admitted that the flashing plates perform the functions of grinding, shaping, and smoothening steel balls, and thus, cannot be strictly considered spares under the OGL. However, they argued that the imposed redemption fine of Rs. 45,000/- was too harsh. The Department maintained that the fine was appropriate, considering the appellants' status as actual users. The Tribunal, considering the value of the goods and the appellants' actual user status, reduced the redemption fine to Rs. 15,000/-.

Conclusion:

The Tribunal concluded that the flashing plates are classifiable under Tariff Heading 82.05 as interchangeable tools for machine tools. The appeal was rejected, but the redemption fine was reduced to Rs. 15,000/-. The countervailing duty would be chargeable under CET Item No. 51A, as it aligns with Tariff Heading 82.05.