1996 (9) TMI 439 - AT - Customs

Summary

Issues: Classification of imported recycling equipment under Customs Tariff - Whether the components form a composite machine or individual items under different headings.

The judgment involves an appeal against the order of Collector (Appeals) regarding the classification of imported recycling equipment designed for the production of nylon chips. The appellants argued that all components should be classified under 85.59(2) as they form a composite machine. They contended that the components, including the screen changer, grinder, and force feed device, were integral parts of the recycling plant. The appellants highlighted Section Note 3 of Section XVI under which two or more machines adapted for complementary functions are classified as a composite machine based on the principal function.

The appellants emphasized that the components were interdependent and essential for converting nylon waste into nylon chips. They argued that the components should be classified under 84.59(2) as machines and mechanical appliances designed for production. The appellants referred to the scheme of CCCN, stating that components like screen changers and grinders were similar to machinery used in other classifications. The appellants contended that the components, although working together, were necessary for the production process but did not individually produce a commodity.

The judgment analyzed the appellants' descriptions of the imported items, noting the loose use of terms like "complete machine," "integrated unit," and "composite machine." It distinguished between a single machine and a composite machine or plant. The court acknowledged that the extruder was rightly classified under 84.59(2) as a single machine. However, it found that the remaining components, while essential for the process, did not constitute a single machine or a composite machine as per the criteria outlined in Section Note 3 of Section XVI and CCCN/HSN.

The court referred to the explanatory notes on composite machines, emphasizing that for items to be considered a composite machine, they must be fitted together to form a whole, which was not the case with the imported components. The judgment concluded that the set of items, while acting as an integrated unit for converting nylon waste into nylon chips, should be treated separately for classification. Each component, although crucial for the process, did not individually manufacture or produce a commodity. Consequently, the classification of the items under 84.59(1) was upheld, and the appeal was rejected.