1997 (10) TMI 140 - AT - Customs

Summary

Issues: Classification of components for a power plant under Customs Tariff - Whether classifiable as Electric Generating sets and Rotary Convertors under Heading 85.02 or under Heading 85.03 and 84.06 as parts suitable for use with machines.

In this case, M/s. Lloyds Steel Industries Ltd. appealed regarding the classification of components for a power plant, specifically an Alternator with Controls, Steam turbine 6250 KW, and Lube Oil Condensing System. The main issue was whether these components should be classified under Heading 85.02 as Electric Generating sets and Rotary Convertors or under Heading 85.03 as parts suitable for use with machines under Heading 85.02, and under Heading 84.06 for the steam turbine. The Adjudicating authority initially viewed the imported goods as a complete power plant, but the Tribunal disagreed, noting that only three specific components were imported, not an entire power plant.

The Tribunal considered Note 4 under Section XVI of the Tariff, which states that if a machine consists of individual components intended to contribute to a defined function under Chapter 84 or 85, the whole is classified based on that function. However, in this case, only three separate components were imported without evidence of interconnection. The components were invoiced separately with distinct prices, indicating they were not part of a single machine. Therefore, the Tribunal concluded that the components should be classified based on their individual merits rather than as a complete machine.

After reviewing the goods' descriptions and considering the nature of the components, the Tribunal determined that the Alternator and Lube Oil Condensing System were correctly classifiable under Heading 85.03 as parts suitable for Electric Generating sets. As for the steam turbine, it fell under Heading 84.06, specifically covering steam turbines. Consequently, the Tribunal disagreed with the Adjudicating authority's classification and allowed the appeal. However, any potential refund was subject to the law on unjust enrichment as established by the Supreme Court in previous cases. The appeal was allowed with these observations.