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TMI Blog1986 (4) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... r, there is no need to record all the different names which these articles have been given, because one fact is uncontradicted and this is that the goods are flat rectangular pieces of stainless steel whose technical description can be given thus: 2.5 mm thickness, 3110 x 1270 mm length and width, made of martensitic steel, hardness 40-45 Rockwell C and used in forming or shaping or pressing plastic laminates and laminated sheets. The ground of dissension between the Custom House and the importers is the fact that the department says that the goods are nothing but stainless steel sheets/plates, while the importers say that they are not stainless sheets and plates but are forming/shaping moulds which give shape and form to the plastic laminates and, therefore, should be classed as moulds. The different parties i.e. the importers and the Custom House, were heard one after another and they presented long and elaborate arguments. 2. The counsel for M/s. Bakelite Hylam, Hyderabad [appeal Nos. CD(SB) (T)A No. 140/79-B2 and CD(SB)(T)A.No. 151/79-B2] began the arguments and stated that reference to sections XV and XVI of the Customs Tariff would disprove the contention of the department. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial plastic materials. The learned counsel asked that the words artificial plastic materials be noted. 5. The department says that this is not a mould, but a look at heading 84.34 will show that even a plate can be a machinery or an apparatus, as its heading covers printing plates and plate for printing purposes. Heading 84.59 can cover these goods because their moulds though flat in surface have definite individual functions since they help in shaping the laminates by pressure. A mould is an apparatus or an appliance for the purpose of Note 5 Section XVI: there is no basis for the department s argument that a .flat surface cannot be a mould. There are plenty of evidences and supports for saying that even a plate can be a mould if it functions and works and has the same application as a mould. Chapter 84 which covers machinery and machinery parts itself refers to plates as parts of machines, for example, in heading 84.34. 6. The learned counsel referred to the words in rule 1 of the Rules for the interpretation of the Customs tariff. He said the words classification shall be determined according to the terms of the headings and in relative section of Chapter notes and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to perform. The Collector (Appeals) himself accepts that it is a sheet that has acquired special characteristics. He said that the Collector was wrong to hold that the flat moulds imported by them were only sheets and plates of special alloy steel classifiable under heading 73.50(2). He failed to appreciate that the mechanical properties of the flat moulds were different from those of rolled and annealed sheets of ordinary stainless steel and of rolled annealed sheets of steel type AISI 410. The tensile strength of the flat moulds is in the region of 1,70,000 pounds per square inch, whereas other stainless steels do not have that strength above 1,10,000. The elongation of these flat moulds is nil, whereas other types of stainless steel sheets have certain values of elongation. The hardness number of these articles is Rockwell 40 to 45 C, whereas flat ordinary sheets even of the special variety do not have hardness number of more than Rockwell 20C. These so-called sheets were useful for nothing else but the purpose for which they were imported as can be seen from a certificate dated 21st February, 1978 given by ITADAL saying that the steel is of no use for the manufacture of kitche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of moulds. A reference was made to a decision of the Income-Tax Appellate Tribunal, Hyderabad dated 28th February, 1977, in which the Tribunal treated these stainless steel sheets as moulds and so did the Appellate Assistant Commissioner according to the findings of the Tribunal. Rockwell hardner is not used on ordinary stainless steel plates. The learned counsel emphasised that the entire argument of the department was completely baseless. 14. The learned counsel for M/s. Wood Polymer then began his arguments. [Appeal No. 253/84-B2 by Wood Polymer and appeal No. 1587(A)/81-B2, by the collector of Customs, Bombay against M/s. Wood Polymer], The learned counsel for M/s. Wood Polymer said that moulds fall under heading 84.60 and what is true of a mould is true also in a broad sense of their steel plates. These so-called steel plates are not steel plates in the sense people understand steel plates; they have no use as steel plates and have not been manufactured so that they can play the role of steel plates. Their design, manufacture and several other properties are meant to give them characteristics that no steel plate is given or needs to have. The special treatment they have rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cles nor are they meant for such cutting or working. Their cost alone would prohibit their use as raw material for the manufacture of other steel articles. The point to be remembered is that these stainless steel flat moulds are understood by the Chief Controller of Imports as moulds. They were imported as capital goods and the Director General of Technical Development certified that the stainless steel sheets which they wanted to import would be categorised as capital goods and not as raw material. Furthermore, the latter also asked them to approach the customs authorities to explain to them that the polished stainless steel sheets were used as flat moulds. The Technical Officer would not have written such a letter unless that office understood the stainless steel sheets to be moulds i.e. flat moulds. 18. The counsel said that if heading 84.60 cannot be applied, they should alternatively be given heading 84.59. These are mechanical appliances and have individual functions and are designed for the production of a commodity by treating a material similar to metal and wood and they do not fall within any other heading of this Chapter. Thus, they .are qualified for 84.59. But it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of machinery. They are, therefore, not covered by Entry 10(4) of Appendix 10. Since stainless steel sheets are included in Appendix 8, they cannot be imported under OGL as entry 10(2) would apply to iron and steel items other than those included in appendices 4,6,7 and 8. The same is reproduced in the Import Trade Control Order No.3/83 with regard to import of spares and components. Since no licence has been produced for the clearance of the goods, they are liable to confiscation under Section 111 read with Section 3(2) of the Import and Control Act, 1947." Strangely enough, the authority who is entitled to issue the import licences said that no licence was necessary, but the customs said otherwise. He referred to the letter dated 28-2-1984 from the Joint Chief Controller of Imports and Exports to that effect. He read from a book PLASTIC PRODUCT AND DESIGN by Ronald Beck and quoted a few pages of the book to support his contention that pressing is also a process of moulding. It can be seen that larger hydraulic presses are used as moulding presses for the formation of plastic sheets and the sheets are understood to have been moulded during the manufacture. These press moulds ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngth and thickness which would not be given to just a sheet or a plate. 24. The letter dated 30th October, 1979 written by Mr. J.H. Hoguet, Director, Customs Co-operation Council to the Director, Ministry of Finance, Government of India, in which he stated that in his opinion and in the light of the information and samples provided, the plates did not have any feature that would warrant their being classified in a heading other than heading 73.15 should not be relied upon. The counsel argued that this was the writer s personal opinion. The JCCI clarified in his letter dated 28.2.1984, that the stainless press moulds used in the hydraulic press could be imported under OGL serial No. 6 of appendix 10 of April/March, 1984 policy. 25. On behalf of Weldeker, the learned counsel, Mr. Nankani read the show cause notice dated 26.9.1981, issued by the Government of India in terms of Section 131(3) of the Customs Act, 1962, seeking to set aside the order of the Appellate Collector dated 15.10.1980 in respect of flat moulds imported under bill of entry cash No. 316 dated 2.4.1979 and bill of entry No. 2623 dated 16.3.1979 through the part of Bombay. The learned counsel pointed to the lang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He pointed out that the Government s notice does not challenge the Appellate Collector s finding. The findings of the Tribunal must be only in the context of the Appellate Collector s findings and orders. For this, the counsel quoted IAR 1977 S.C. 2050. The Tribunal s decision must be given only on the basis of the review notice. It can annul or modify the Appellate Collector s order: no other order is permissible. The Mill s certificate was read by the learned counsel in which the mill confirms that every press plate had been thoroughly inspected and had passed the final control in respect of surface finish, tolerance on length/width/ thickness and parallelity. All the press plates were up to standard mirror polished, surface and tolerance. He stated that the opinion given by the CCCN Director was not acceptable, and that this person was not competent to give this opinion; only the Nomenclature Committee was empowered to give such clarification. He also referred to the CCCN published Classification Opinions and said that this publication does not carry this classification. He referred to 1984 E.L.T. 564. He pointed out to the technical data given by CAP and said that it would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can fall under heading 84.34; this cannot support their case, because these plates are assessed under Chapter 84 by virtue of their specific inclusion. If any article is specifically included in a chapter or heading, then regardless of any reasons to the contrary that might appear in the imported material itself, assessment must be made under the heading under which that article or material is placed. This is the primary rule of assessment and, therefore, the assessment of printing plates in 84 is not a reason for assessing these flat plates under the same heading. Unlike the CCCN which specifically provides for accessories, the Indian Customs tariff, 1975 will not cover accessories except when so specifically included. He mentioned that this is not a part of the machine; this is proved by the fact that the pack in which the sheets/laminates are stacked and placed before they are put in the hydraulic press for pressing, are assembled outside the hydraulic press. This can be gathered from a perusal of PLASTIC COATING AND LAMINATION by R.K. Gupta page 221. 32. German Customs are said to have opined to the effect that these are moulds and are to be regarded as such for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the equipment, tools and jigs, namely, flat mould specially hardened. Even when they speak of moulds, they speak of flat moulds as can be seen from a letter written by CAP on 22nd August, 1977 to M/s. Bakelite Hylam. Now the importers claim that the goods are moulds. In all the technical papers and literature given by the manufacturers/suppliers all the goods are shown as being flat. The supplier was the same for M/s. Weldekor and M/s. Wood Polymer, the patent number is also the same. 34. The letter to the Customs from the Brussels nomenclature directorate/ director was a correct interpretation of the tariff headings. It is not the personal opinion of the director. Being a letter, it was in the form of a demi official letter. The directorate committee gave reply only after making enquiries with the manufacturers. A demi official letter is always in the first person. 35. The learned counsel read the rule of interpretation 1 and Note 1(n) of Chapter 73. The chapter note provides that even if a sheet or plate has been polished, coated etc., it will still be assessable in Chapter 73 if it has not taken the character or disposition of an article of another chapter. These sheet p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court ruled, that the Court must interpret the statute as it stands and in case of doubt, the decision should go in favour of the tax-payer. This holds true if there is a doubt in the assessment of these goods which is not perhaps borne out. There may have perhaps been a dispute before the lower authorities; but this cannot amount to a doubt in their minds in coming to a decision. The second judgment is the case of Orient Paper Mills v. Union of India, 1978 E.L.T. J 382. In this famous judgment, the Supreme Court laid down that assessing authorities which exercise quasi-judicial functions should act in a judicial and independent manner and not allow their judgements to be controlled or influenced by a superior authority. Another judgment quoted is Nivedita Chemicals v. Collector of Customs, Bombay, 1985 (20) E.L.T. 382 when this Tribunal gave a decision on glass reaction vessels imported for use in research and development. The Tribunal decided that the glass reaction vessels meant for use as reaction vessels should be assessable as laboratory glassware under heading 70.17/18 of the Customs Tariff, 1975. What we have before us are not glass reaction vessels but steel press plates w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of a mould, because it is under their influence when the impregnated sheets are pressed between them, that the thicker sheet, whether decorative or utilitarious, is moulded, formed and produced. They play the same role that a conventional mould plays, because without the mould, the finished part cannot take its final form; and without these press plate moulds the finished plastic sheet cannot take the shape it does. The forming and shaping is possible only through the direct use of the press plates. 43. To be sure, there is some material that would appear to support the argument that the laminating process is a moulding process. At page 58 Chapter 3 of AN INTRODUCTION TO PLASTICS (Lionel K. Arnold) runs this passage under LAMINATING It has been customary to speak of laminates moulded at less than 100 psi as low-pressure laminates as opposed to high-pressure laminates molded at higher pressures. It seems that the book recognises that lamination process is a process of molding. In PLASTIC MOLDING TECHNIQUE (by D.A. Dearle) there is this sentence at page 93 The process of molding laminated phenolic sheets, rods, and tubes is a study in itself, differing from compound mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot very well be contours or hollow or give shapes other than flat shapes to the finished product. It cannot, however, mean that there is no molding because the finished product has a flat surface and is, so to speak, shapeless. The shape is its flat surface, a required character in the product just like a contour product may be required in another application. It is all a question what shape the product to be produced is required to have. 46. It is not possible to accept the argument of the importers that the goods are moulds or that they form part of the machine. When we speak of a mould, we understand it to be a hollow or a cavity or a recess into which the subject to be formed is poured or injected. Final shape is obtained from the mould, frequently with the help of pressure and heat. Quite frequently too, there are two counter-parts of a mould, the male and the female, the male taking the function of pressing the liquid or melt in the female cavity so that it flows, forms and takes the desired shape or contour. Thus, one reads of casting metal in the mould in which the molten metal is poured and in which it is allowed to cool, taking the shape of the mould permanently. We als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cut into convenient sizes and stacked together in numbers sufficient to make up the thickness of the final sheet. Each group is assembled between polished metal plates at top and bottom and is then stacked in a hydraulic press. Under the action of heat and pressure, a hard rigid plate is obtained." 47. METALLURGY PLASTICS FOR ENGINEERS (Merle C. Nutt) writes at page 504 Lamination of Plastics is a favourable method of processing casein, most of the aldehydes, and some of the other resins by dissolving them in organic solvents and subsequently using them as varnish for coatings and for impregnating sheets of paper, cloth or other fabrics. Layers of these sheets may then be cemented into a unit mass by pressing. Flat laminates can be produced very rapidly and inexpensively. The casein solution may be applied at room temperature by dipping, spraying or brushing and then the pressure applied either hot or cold. Although case in laminates are strongly bonded, they have a very poor resistance to moisture. The aldehyde laminates, while overcoming this disadvantage, require heat and close temperature control. The flat laminates may be sawed or cut to shape to produce such items as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut any danger of marring of scratching." It is very significant for our purpose that what the flat platen presses can do can be done by rotary presses. It is argued by the importers that their flat platen presses are moulds. As we have seen the forming is done by means of the pressure exerted by the plates upon the impregnated paper, and with the help of heat to form the laminate sheets/plates. It turns out, however, that the same work can be done by rotary presses whose arrangement is given in the book as follows:- Its chief functioning elements are two large-diameter rolls, nearly always rubber-covered, one of which is positioned precisely above the other. Sometimes, these rolls are driven by a single-speed motor, which provides a feed of about 30 fpm, but more often a variable-speed drive is employed, which allows any feed speed from 10 to 60 fpm. [fpm stands for feet per minute] It cannot be claimed by any means that a rotary press consisting of two reciprocating rollers qualify to be called a mould, even though the rollers do much the same as the flat press plates or at least closely similar work and produce goods closely akin to what the plates do. The application o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheets afterwards but with the difference that after the pressing/laminating process they have integrated into a thicker flat surface stiff sheet called a laminate; it would be useful to bear in mind that the products are called laminates or laminated plastics, a name that describes not only the manner of the structure but also the manner in which such structure was formed. One of the meanings given to the word mould in the Shorter Oxford English Dictionary is to create, produce, or form out of certain elements or materials, or upon a certain pattern; also, to plan, design. Also with up. This word, as a verb is used to mean create or form and all the books where plastic laminates are said to be molded, use the word as a verb, or as a verbal noun molding to signify, create or the process of molding i.e. creating. The thick sheets/plates are created or formed and this is all the meaning the books invest the word mould/moulding with. But to understand this use of the word mould" as giving to the plates the quality of being moulds in the technological meaning would distort the texts and the language. 50. A mould is a recess or hollow or a cavity into which material soft, molten, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and then forces the charge into the cavity by means of a smaller cylinder. Injection molding makes this process automatically by adding a hopper to maintain a supply of power, a controlled injection stroke to meter the correct amount of powder, a controlled heating zone to bring the charge up to temperature before it is injected into the mold cavities, an ejecting means, and automatic cycle timing. Laminating of plastic bonded sheet materials uses steam or electrically heated plates or platens in hydraulic presses. Where more than one set of hot plates is used, the method of suspension opens the plate spacing for removal and reloading. Thus a dozen or more sheets of plywood can be cured at once, using sheet Tago glue interleaved between wood plies. Layers of fabric or other filler material are also cured in sheet or other forms, the curing times depending upon thermal conductivity and reaction time and, temperatures required. Different materials may be bonded together, e.g. plywood, metal foil, and patterned plastics for table tops." The clear distinction can be seen that - authority does not speak of laminating as a process of moulding. It only speaks of bending and curing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter 19 under the article Ingots, the book describes how the ladle is moved to a pouring platform where the liquid is poured or teemed into a series of molds of the desired dimensions and the steel solidifies in the molds to form a casting called ingot. In another article on Type of ingot molds, one reads that ingot mould that are in common use are tall box-like containers made of cast iron and the mould cavity for receiving the molten steel is usually tapered from the top to the bottom of the mold. There are big-end-down, and big-end-up molds and open-top and bottom-top, open bottom, closed-bottom and plug-bottom molds as well as open-top molds. There is not one word in this authoritative work that will support the view that moulds can be flat, plane-surface-like structures of the kind imported. They are all described and written about as cavities, recesses and hollows, sometimes open, sometimes closed, of various sizes and shapes, all designed to hold and form the plastic material. At page 714 on the subject of Casting of blooms, slabs and billets, there are paragraphs that describe how the metal is funneled into the moulds where it sets, the cast takes the shape of the mould ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps, whether of the lined-metal-casting or hollow-tile type. are now inserted into the top of the mold and are supported at various heights depending on the length and required weight of the main body of the ingot. Chapter 19 describes the effect of a hot top." The following paragraphs describe the thickness of mold walls:- Mold wall thickness ranges from about 4 inches for a 20-inch ingot to about 6 inches for a 32-inches ingot. For molds used to cast large ingots for slabbing mills, the wall thickness may be made somewhat greater for optimum mold life. The life of ingot molds has been found to be a function of the ratio of mold weight to ingot weight. Evidently an enclosed space like a mold must have walls to hold the material under forming. 55. It is not necessary to labour the point any further. Sufficient material has been recorded above to disprove the contention that the flat press plates can be classified as molds; they are not moulds even though they have been called so by their manufacturers. 56. Another argument advanced by some importers is that these are component parts of machinery and should be assessed under heading 84.59. The difficulty with this assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out their being fitted the work will not be complete and the product will not be produced by the hydraulic press is not really an argument, because the principle of a hydraulic press has nothing to do with the presence or the absence of the platen plates. The final work to make the plastic sheet may be given by the flat plates and without them the laminates cannot be created but that is not to say that they are part of the hydraulic press. The platen press is undoubtedly an accessory that has to be fitted to the hydraulic press if it is to do its work, but this will not make the platen press a component part of the press. It would be like saying that the thread is a component part of the sewing machine, because without the thread the machine cannot sew or stitch the cloth and hence cannot produce the final product; or like saying that the wick is a component part of the kerosine oil lamp, because without it the lamp will be do its work of shedding light in the dark, or like saying that the blade is a component part of the safety razor, because without it the razor will not shave. Instances can be multiplied but these few will do to prove the point. 59. A number of court decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellate Collector made is to be rejected. For reasons already discussed above, the assessment ordered by the Appellate Collector cannot be supported and needs to be set aside. The dispute in M/s. Weldekor involved only the question of assessment. There appears to be not any other dispute from the order of the Appellate Collector. Therefore, we need not go into any other point that may arise. 62. On behalf of M/s. Bakelite Hylam it was argued that they did not receive any notice for review in respect of the cases which the Government of India wanted to review. This is quite true, but the notice carries an anne-xure of the orders-in-appeal which the Government of India sought to review and two orders-in-appeal relating to the importations by M/s. Bakelite Hylam are listed, namely, S/49-1477/80R and S/49-122/80R. There has been an omission in not addressing the notice to M/s. Bakelite Hylam and not calling upon them by name in the notice to show cause why the orders of the Appellate Collector respective to them should not be reversed or set aside. The omission is not such that the annexure does not remedy. After all, the anne-xure shows clearly that the cases concerning M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue. 66. I would, however, agree with the finding in para 62 that the review notice issued by the Government of India also related to imports made by M/s. Bakelite Hylam Ltd. 67. [per: S. Duggal, Member (Judicial)]. - I have respectfully gone through the order recorded by Vice President (J), and also the elaborate order recorded by my Learned Brother Shri H.R. Syiem. On a cumulative consideration of the material on the subject, as reproduced in the order of Learned Brother Syiem, I am inclined to say that the issue of classification is not wholly free from doubt, and that much can be said in support of the plea of the importers, for assessment of the subject goods under Tariff heading 84.60. While, therefore, agreeing with the conclusion of the Learned Vice President (J), I wish to add following observations. 68. It has to be borne in mind that the issue is plainly that of classification . It is an accepted proposition by now that the burden of establishing classification, in a specified category of goods, is sguarely on the Revenue. It is, therefore, on the Department to show beyond a shadow of doubt, that these goods, which are described as press plates or flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s-plates , also called; flat moulds or press moulds by the manufacturers as well as the importers in most of the papers dating back to from 1978, 1979 (Reference: Paper-book in Appeal No. 1.40/79-B2 - pages 15, 18 19), perform the function of moulding. It appears that as to whether these are flat or in the form of cavities or other profiles will depend upon the shape the end-product is intended to take. In case the final product is to be made in sheet form as plastic laminates, then the moulding could also be, rather has to be, done by flat-moulds. There could, of course, be products with other shapes, even made of plastics, for which moulds of a conventional shape would be required. 73. The process of manufacture, as detailed in para 42 of the fore-going order, shows unmistakably that the products, which emerge as plastic laminates, come into being only as a result of the constituent material being put under pressure in the hydraulic-press, sandwitched or interleaved between these press-plates, placed on the top and the bottom. The dictionary meaning of the term mould , as understood in generic terms, when used as a verbal noun is the process of shaping or an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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