Arphi Electronics (P) Ltd. vs Collector Of Central Excise, Mumbai

1. The appellant is in appeal against the order of the Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as the 'Tribunal'). The Tribunal's finding relates to hearing-aid earphones and stands equated to micro phones and earphones in terms of Tariff Item No. 85.18 of the Central Excise Tariff.

2. The matter came up for consideration before the Tribunal by reason of the levy of countervailing duty which has been challenged on the ground that hearing aids fall under Tariff Item 90.21 read with the Notification No. 71/86 dated 10-2-1986 providing concessional rate of duty which excludes payment of another countervailing duty.

3. As noticed above the Notification No. 71 /86 issued under the Central Excises and Salt Act pertains to Tariff Item 90.21 but in the matter of imposition of countervailing duty the Tribunal has taken recourse to Tariff Item 85.18 of the Central Excise Tariff. Mr. Dayan Krishnan, learned Counsel for the appellant, in support of the appeal strongly contended that the same goods cannot be classified under two different heads, one for the ordinary rate of duty in terms of the Act and another for the countervailing duty and the Tribunal has committed a grave error of law in so attributing to the applicability of Tariff Item 85.18 of the Central Excise Tariff. We do find some substance in such contention.

4. The appellants imported various types of hearing aid earphones which are in common trade parlance as also in audio logical parlance called "receiver" being specifically designed to match the specific types of hearing losses from the company known as Oticon Export A/S. Copenhagen, Denmark. The invoices dated 23rd Sept. 1988 issued by the foreign suppliers clearly mentioned the imported goods as component parts of hearing aids/miniature earphones/receivers and in terms therewith bill entry was filed classifying the said goods under Tariff Item 90.21 upon claiming the benefit of concessional rate of customs duty in terms of Notification No. 114/77 dated 1-7-1977.

5. As a matter of fact there is no dispute that the imported items are being used as a component of hearing aids only and it is in this perspective the Central Government thought it expedient in public interest to exempt component parts being receivers of hearing aids falling under Tariff Item 90.21 in the First Schedule to the Customs Tariff Act, 1975, being imported solely for the manufacture of such aids from so much, of that portion of customs duty leviable thereon as is in excess of 10 per cent ad valorem. The proviso laying down the conditions stands amply complied with and no exception can be taken in that regard neither at any stage of the proceeding there was any grievance.

6. There being no dispute that these earphones are for hearing aids, the same thus is to be classified under Tariff Item 90.21 and it would be otherwise wrong to take recourse to Tariff Item 85.18. The imported items are specifically imported as components for the manufacture of hearing aids and as such falls under 90.21 and thus exemption cannot be denied and it is in this perspective we do feel it expedient that the order of the Tribunal cannot be sustained.

7. The appeal, therefore, succeeds, order of the Tribunal is therefore, set aside and the order of the Collector of Customs (Appeals) Bombay stand restored. No order as to costs.