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TMI Blog1999 (8) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... other than parts 10% 8479.90 Parts 15% Upto 15th March,1995 the rate of duty applicable to sub-heading 10 and sub-heading 90 in each of the heading was the same - 10%. With effect from that date, parts, classifiable under sub-heading 90 became liable to a higher rate of duty. Subsequent to this date, the appellant cleared rolling mills and galvanising lines under sub-heading 10 at the lower rate of duty. Notices were issued on the basis that what was cleared was parts liable to duty @ 15% and demanding their duty. Appellant took the stand that what it contracted to supply was a complete rolling mills and galvanising lines and not a part and it was only as a result of requirement of the transport and installation having regard to the heavy weight and complex nature of the machinery that these were separately cleared. The Commissioner however was not persuaded by these and he said that for the goods to be cleared under sub-heading 10 they must consist of the complete machine at the time of clearance which was not the case and held the goods to be assessable under sub-heading 90, confirmed the demand for differential duty and imposed penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of the Customs Co-operation Council, Brussels. Rule 2(a) of the Tariff is identical (except for one word) of Rule 2(a) of the General Rules for the Interpretation of the Harmonised System. The rule reads as follows: Any reference in a heading to article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, incomplete or unfinished articles it has essential character of the complete or finished article, which has also taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), removed unassembled or disassembled. The only difference in this rule and the rule in the Harmonised System is that the latter talks about the goods presented unassembled or disassembled, when the Excise tariff refer to goods cleared. The word presented is the word that is found in the Interpretative notes to the Customs Tariff. The difference obviously is on account of the fact that in the Excise Tariff we are concerned with the duty on goods removed and not presented for clearance. 5. The Explanatory Notes to Rule 2(a) explains that when goods are presented unass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s two sub-headings one for parts and other for goods other than parts. The heading for parts would clearly cover these goods which, either finished or in combination (assembling them to be cleared together) do not have the essential character of the finished rolling mill and remaining part. These goods therefore would be clearly classifiable as parts under sub-heading 10. To think of rolling mill being cleared complete, or complete and assembled, is well neigh inconceivable having regard to its size and weight, it would not be even possible to come into existence at the factory of manufacture, or to be assembled or transported in that form. It is difficult to conceive of a rolling mill or galvanising lines removed unassembled or disassembled that is all with parts that provides its essential character being present at one time, considering the weight and dimensions of the unit. The fact that installation of the mills takes time would also result in the parts being supplied by entailment. 10. This is true of a number of other items in the tariff, particularly in Section 16(1) of the tariff of machinery (Chapter 84), electrical and electronic machinery (Chapter 85). Thus, goods suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the main machine as such in that case is significant only academically, since payment of duty would be unaffected. However, the dispute arises in cases (like the present) where the rate of duty is different for part of a machine and the complete machine. 12. There was in fact provision even before the commencement of the present tariff based on the Harmonised System for clearance of an assembly of part of machine to be regarded as clearance of the complete machine. 13. We have by our research, been able to lay our hands on the Trade Notice No. 17/(MP) ALL OTHER GOODS (NES)/(2)/1983 issued by the Bombay Central Excise Collector. This trade notice issued in March, 1983, was with reference to Item 68 of the erstwhile tariff, for goods not elsewhere specified. It deals with the clearance of machinery items dispatched in piecemeal. 14. The trade notice provide with reference to earlier Trade Notice No. 204/79, which we, despite our efforts, have been unable to locate. The procedure was optional. The significance of this notice lies in the fact that, even prior to the coming into force of the new current tariff, the department itself recognised that complete machinery, transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titute complete machine, but removed in that guise in order to avail the benefit of a notification at a lower rate of duty? The answer is provided by the character of these goods themselves. They are, more often than not, tailor made to the requirement of the customer. They are in almost invariably sold in pursuance of a written contract. Examination of such a contract and of the processes involved in the manufacture of the machines and the parts required for its manufacture, would therefore be sufficient to satisfy the officer as to whether the parts in question when considered together constitute the complete machine or not. The practice in such cases is resort to provisional assessment and finalise the assessment on it being shown that all the parts required for assembly of the machine and refitted in the requisite number have been manufactured and cleared. 18. In the appeal with which we are concerned, the Commissioner does not dispute that the parts when assembled constitute a complete rolling mill, or galvanising line. He only says that these parts and components did not constitute such a mill or line at the time of clearance (emphasis ours). We have already dealt with this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving the essential character of the complete or finished article shall amount to manufacture. Let us consider the case of a rolling mill sufficient parts of which were cleared against an order for a complete mill, to give it essential character but lacked sufficient parts to render it a functional rolling mill? The provisions and fitment of these parts to render the goods functional rolling mill would attract the application of note 6 to Section XVI. This process therefore would amount to manufacture. In that case, would what was cleared from the factory be classifiable as a complete rolling mill or not? There appears to us exist, on the face of it, a contradiction between note 6 to Section XVI and Rule 2(a) of the Interpretative Rules. However, we make these observations in passing as matters of interest. These points were not argued before us by either side. 21. Appeals allowed. Impugned order set aside. 22. [Assent per : G.N. Srinivasan, Member (J)]. - I have seen the well considered order passed by my learned brother Member (Technical) with which I agree. Normally I would not have given a separate order but as I want to highlight certain aspect of the matter, I give this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aracteristic of rolling mill. Mr. Rao further argues that the goods for purpose of duty should be viewed in the manner in which it is cleared and that will determine the classification. He emphasized the fact that the product as parts which are removed therefore the impugned order items as such as provided under 8455.90 and 8479.00 respectively. He relies on the observations of the decision reported in Punjab Breweries Ltd. v. C.C.E. - 1985 (22) E.L.T. 513. Let us examine the above contention. In the show cause notice it is stated as follows :- The rolling mills and galvanising lines actually come into existence at site after adding the bought out items and therefore clearances of various parts from factory appears to be classifiable only as parts and components attracting duty of 15% under Heading 8455.90 and 8479.90. In the order-in-original the adjudicating authority has found as follows :- From the facts on record the assessee has been manufacturing 70% of the parts within their factory and purchasing remaining 30% parts from outside. The assessee has claimed that the bought out items had been used inside the factory in the manufacture of complete rolling mills etc. bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has been passed on 4-12-1996. What prevented the adjudicating officer from looking into the letter and giving a finding? Supposing the statement regarding bought out items and the other documents were not enclosed in the letter under consideration, namely the letter of 26th August, 1996 this could have been pointed out in the order. It is therefore not possible for us to accept the argument of the learned DR. 28. It is true that duty has to be levied on the form in which the goods are removed. However when there are artificial definitions as contained in note 2(a) of the Interpretative Rules and also para 4 of the Section notes under Chapter XVI, it is not possible for us to accept the argument of the department. Further, if DR s argument has to be accepted then it is not practicable to have the application of 2(a) of the Interpretative Rules in any case. 29. It is true that the learned DR has cited the judgment in the case of Punjab Breweries Ltd. v. C.C.E. - 1985 (22) E.L.T. 513 especially paragraph 5 thereof, but in our view it is not possible to accept the arguments because it was under earlier tariff. The Interpretative Rules did not come into existence at that time. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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