9911796707
TMI Blog1997 (11) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... that the case was fully covered in their favour by the decision of the Hon'ble Supreme Court in the case of Ballarpur Industries Limited [1995 (75) E.L.T. 6 (S.C.)]. 5.The issue for decision before the Apex Court was `Whether there was justification for the CEGAT to classify the article "Graphite Press Roll" under import Tariff Item No. 68.01/16 (1) of the 1st Schedule to the Customs Tariff Act, 1975 as it stood prior to its amendment on 28-2-1986, as against its classification made by the Collector (Appeals) under Import Tariff No. 84.31 thereof.' 6.In this case the Hon'ble Supreme Court was examining applicability of Rule (a) of Note 2 to Section XVI and Rule (a) (b) of Note 2 to Section XVI as to suitability of the imported goods for use solely and principally with a particular kind of machine (described in Chapter 84) and observed that "What has now to be examined is, when Heading No. 84.31 describes the goods (article) classified thereunder as `machinery for making or finishing cellulosic pulp, paper or paper board', whether the goods or article `Granite Press Roll', which is held by CEGAT itself, to be a part or a component of paper making machinery, does warrant its cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) E.L.T. 1047], it was argued that the admitted position was that the appellants imported spare parts of furnace burner and claimed classification thereof under chapter sub-heading 8416.90. The contention of the appellants was that the imported goods were of artificial graphite. This Tribunal observed viz. if the question whether these would fall under sub-heading 6815.10 CTA is answered in the affirmative then, they are ipso facto excluded from classification under sub-heading 8416.90 CTA as parts of furnace burners because of Chapter Note 1(a) to Chapter 84 CTA which says that the Chapter excludes mill stones, grind-stones and other articles of Chapter 68. Heading 68.15 with the relevant sub-heading reads as follows :- "68.15 Articles of stone or of other mineral substances (including articles of peat), not elsewhere specified or included. 6815.10 Non-electrical articles of graphite or other carbon." 9.The Tribunal observed that Chapter sub-heading 6815.10 has necessarily to be construed and takes it colour with reference to Heading 68.15. This heading covers articles of stone or of other mineral substances. Accordingly, when it is seen that the spares imported herein are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in the case of Durametallic India Ltd. where the issue was whether carbon tubes made of resin-impregnated artificial graphite are classifiable under Chapter sub-heading 38.01/19 (4) or 68.01/16 (1). This Tribunal held that the subject goods are correctly classifiable under Chapter sub-heading 38.01/19. 15.A reference was also made to the decision of this Tribunal in the case of Albright Pandit Ltd. [1988 (33) E.L.T. 488]. In this case a consignment of `Graphilor Blocks' was imported and the importer claimed re-classification thereof under Chapter Heading 84.17 (1) whereas the department had assessed it under Chapter Heading 68.01/16 (1). This Tribunal held that appropriate classification of the goods is Heading 84.17 (1). It was submitted that this decision was followed by the Tribunal in the case of Graphite Vicarb India Ltd. [1997 (93) E.L.T. 710]. 16.On behalf of the Revenue, it was submitted that graphite may be natural or artificial; that the source material for both was carbon which is a mineral; that the Chapter Heading 68.15 reads as `Articles of stone or of other mineral substances (including articles of peat) not elsewhere specified or included', that Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture of small articles of delicate design (e.g. coins, medals, lead soldiers for collections)". It was submitted that Customs Tariff is fully aligned to HSN; that the heading in the Customs Tariff is pari materia with this heading in the HSN Explanatory Notes and, therefore, they have persuasive value. 20.Explaining the scope of HSN notes vis-a-vis the persuasive value, it was submitted that the Apex Court in the case of Bakelite Hylam Limited [1997 (91) E.L.T. 13 (S.C.)] following the ratio of its judgment in the case of Wood Craft Products Ltd. [1995 (77) E.L.T. 23] held that for resolving any dispute relating to Tariff Classification, the internationally accepted nomenclature emerging from the HSN is a safe guide, this being the expressly acknowledged basis of the structure of Central Excise Tariff in the 1985 Act and the Tariff Classification made thereon. 21.In the case of Woodcraft Products Limited [1995 (77) E.L.T. 23 (S.C.)], the Apex Court observed that when Tariff Entry is patterned on Explanatory Notes to HSN, then HSN will be preferable to ISI Glossary in case of a conflict, unless a different intention is indicated in the Tariff itself. 22.It was argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading 8419.50 whereas the department held it classifiable under Chapter sub-heading 6815.10. For examining description of the goods against these Chapter Headings, we have already reproduced Customs Tariff Heading 68.15 and 6815.10. We are now reproducing HSN Tariff headings below : "68.15. Articles of stone or other mineral substances (including Articles of peat), not elsewhere specified or included, 6815.10. Non-electrical articles of graphite or other carbon." 27.In the notes below it, it has been provided that this heading covers, inter alia, (1) Non-electrical articles of natural or artificial graphite (including nuclear grade), or other carbons for example : filters; discs; bearings tubes and sheaths; worked bricks and tiles; moulds for the manufacture of small articles of delicate design (e.g. coins, medals lead soldiers for collections). 28.Chapter Heading 84.19 covers Machinery, plant or laboratory equipment, whether or not electrically heated, for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilising, pasteurising, steaming, drying, evaporating, vaporising, condensing or co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tubes of artificial graphite, the nearest classification will be under Chapter Heading 68.15 and sub-heading 6815.10 of the CTA, 1975 as amended. The plea that 68.15 covers only natural graphite does note survive. 34.The second set of the decisions are either on Central Excise Tariff or the Explanatory Notes under HSN, 68.15 was not brought to the notice of the Tribunal or the court. We note that Central Excise Tariff is not fully aligned to HSN or its Explanatory Notes and hence insofar as classification of the goods under the Central Excise Tariff is concerned, HSN Explanatory Notes have persuasive value, but the same cannot be so said in regard to Customs Tariff which is fully aligned to HSN and its Explanatory Notes unless the intention is otherwise made clear in the Tariff. 35.It was brought to our notice that the Apex Court in the case of Woodcraft Products Limited held : "We are of the view that the Tribunal as well as the High Court fell into error by overlooking the fact that the structure of Central Excise Tariff is based on the internationally accepted nomenclature found in the HSN and, therefore, any dispute relating to tariff classification must, as far as poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced in 1985. One of the obligations of the contracting parties stated in Article 3 of the Convention was that each contracting party should use headings and subheadings of the Harmonised System without addition or modification and shall apply the general rules for the interpretation and follow the numerical sequence of the Harmonised System. The developing countries were allowed to omit the sub-headings, that is the last two digits of the six digit headings. Since the Government of India has declared the adoption of that system, it is binding on the department. Even otherwise, unless there is any conflict, the interpretation consistent with the international convention and treaties has to be adopted, as pointed out by the Supreme Court in Gramophone Co. of India Limited v. Birendra Bahadur Pandey - AIR 1984 Supreme Court 667. `This is currently of a great significance at a time when India seeks globalisation of its markets. Unless the classification of goods is in accord with international system and is clear and certain to the trade, the very purpose of adopting the international standards would be defeated'." 38.On careful perusal of the submissions made and the case law cite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. 42.The import was made in 1992, after the new Customs Tariff came into force with effect from 28-2-1986. The imported consignment was of "Karbate Tubes of artificial graphite impregnated with phenolic resin" with trade name "Graphilor", admittedly designed for use as parts of Heat Exchangers. The contest in this appeal is between Chapter sub-heading 6815.90 and 8419.50. Chapter 68 of the Tariff deals with "Articles of stone, plaster, cement, asbestos, mica or similar materials etc." Chapter 84 deals with Machinery and Mechanical Appliances, etc. and parts thereof. Heading 68.15 takes in Articles of stone or of other mineral substances (including articles of peat), not elsewhere specified or included. Sub-heading 6815.10 takes in non-electrical articles of graphite or other carbon. There is no dispute that the imported goods are non-electrical articles of artificial graphite. The Chapter and Heading refer to "mineral substances" and sub-heading while referring to graphite does not indicate that artificial graphite is taken in and since only natural Graphite can be regarded as mineral and artificial graphite is not mineral, Heading 68.15 and sub-heading 6815.10 are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and its explanatory notes are relevant." In Lakshmi Cement - 1996 (84) E.L.T. 271 (Tribunal), the Tribunal, noting that Indian Customs Tariff is fully aligned with HSN, relied on the clarification in HSN to decide the dispute about classification. 45.In Durametallic India Ltd. - 1983 (12) E.L.T. 609 (T), the Tribunal was guided by the Explanatory Notes to CCCN in deciding a dispute about classification under the 1975 Customs Tariff. So also in Albright, Morarji and Pandit Ltd. - 1988 (33) E.L.T. 488 (T). In Hindustan Thermo Prints - 1989 (43) E.L.T. 121 (T), it was observed that Customs Cooperation Council Nomenclature (CCCN), though not binding, has persuasive value in interpreting the entries in the Customs Tariff Schedule which is patterned on the CCCN. The analogy of CCCN was not followed in Madhu Chemicals - 1986 (23) E.L.T. 166 (T) while interpreting a customs exemption notification. We notice that there is difference between HSN and CCCN in their relationship with Indian Tariff Schedule. The tariff schedule which came into force in 1986 is fully aligned with HSN while the earlier tariff schedule was not fully aligned with CCCN. Therefore the decisions in relation to CC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natural silica (Heading 25.05). The Tribunal observed what is good for CCCN may not be good for Central Excise Tariff and, in any event, it has no relevance in interpreting a notification which referred only to `Silica' without referring to any Chapter or Chapter Heading. 48.In my view, in interpreting entries in 1986 Tariff which is fully aligned with HSN which specifically refers to "non-electrical articles of natural or artificial graphite", the above decisions under 1975 tariff prior to HSN cannot be useful. Neither side has been able to place before us any decision on this question under 1985 Tariff after taking into consideration the classification in HSN. In interpreting the nomenclature in 1985 tariff it will be appropriate to be guided by HSN, except to the extent 1985 tariff contains any contrary provision. The Tariff refers to "graphite" in sub-heading 6815.10. If what is specified is "articles of natural graphite", that would be a clear provision contrary to HSN. In the absence of the qualifying word "natural" and in the context of HSN description "artificial or natural graphite", it has to be concluded that sub-heading 6815.10 takes in articles of natural or artifici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made of artificial graphite is a non-electrical article of graphite falling under Chapter sub-heading 6815.10. It is no doubt a part of machinery which may otherwise attract sub-heading 8419.50, but the same is not applicable in view of the exclusion in Note 1(a) to Chapter 84. The classification made by the lower authority is correct. 51.[Assent per : K. Sankararaman, Member (T)]. - I agree with the finding reached in both the preceding orders that the goods in question merit classification under sub-heading 6815.10. 52.[Assent per : G.A. Brahma Deva, Member (J)]. - I agree with the view that item in question is classifiable under sub-heading 6815.10. 53.[Assent per : J.H. Joglekar, Member (T)]. - I have had the benefit of perusing the judgment proposed by my learned Brother G.R. Sharma and I agree with the conclusion reached. However, since the matter had been argued at length, I consider it appropriate to record a separate order. 54.Reliance has been placed on a number of judgments by the appellants to support their claim that articles of artificial graphite could not be classified under Chapter 68. The first judgment in the series is that in the case of Albright Morarji ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
