1997 (2) TMI 322 - AT - Customs

Summary

Issues Involved:
1. Classification of the decorating unit.
2. Applicability of Notification No. 125/86-Cus.
3. Assessment of parts and accessories.

Detailed Analysis:

Classification of the Decorating Unit:
The primary issue in this case is whether the decorating unit type SD-3 should be classified under the same heading as the injection moulding machine (84.77.10) or separately under heading 84.43.30 as a flexographic printing machine.

The appellants argued that the decorating unit cannot be considered an independent machine since it is designed to operate in conjunction with the injection moulding machine. They contended that both machines together form a complete tube production line, as evidenced by the manufacturers' literature, which describes the continuous process of manufacturing and decorating plastic tubes.

However, the Collector of Customs (Appeals) ruled that the decorating unit is not a part of another machine and should be assessed separately under heading 84.43.30, as its primary function is printing design and lacquering. The Appellate Tribunal agreed with this assessment, noting that for customs purposes, the machines must satisfy the parameters laid down in Note (3) and (4) of Section XVI of the Tariff. These notes require that composite machines must be fitted together to form a whole by incorporation, mounting on a common base or frame, or in a common housing. Since the decorating unit and the injection moulding machine do not meet these criteria, they must be treated as distinct machines.

Applicability of Notification No. 125/86-Cus:
The appellants also claimed that the decorating unit should benefit from Notification No. 125/86-Cus, which provides a reduced rate of duty for certain machines. They argued that if the decorating unit is considered a printing machine, it would fall under Sl. No. 21 of the notification, which mentions "coding, marking, ink printing machine."

The Collector of Customs (Appeals) and the Appellate Tribunal rejected this claim, stating that the decorating unit does not perform coding or marking functions. The Tribunal upheld the Collector's observation that the decorating unit's principal function is flexographic printing, which does not qualify for the benefits under the specified notification.

Assessment of Parts and Accessories:
The appellants initially demanded that the accessories of the main machine be assessed at the same rate as the injection moulding machine, invoking the Accessories (Condition) Rules, 1963. However, this claim was withdrawn before the Assistant Collector of Customs.

The Appellate Tribunal noted that since the claim for assessment of parts and spares at the same rate as the main machine had been withdrawn, there was no need to address this issue further.

Conclusion:
The Appellate Tribunal upheld the order of the Collector of Customs (Appeals), confirming that the decorating unit type SD-3 should be classified separately under heading 84.43.30 as a flexographic printing machine. The Tribunal also agreed that the unit does not qualify for the benefits under Notification No. 125/86-Cus, as it does not perform coding or marking functions. The appeal was rejected in its entirety.