Manugraph India Ltd vs Commissioner Of Customs, Mumbai

(Arising out of Order-in-Appeal No. 37/2004/AP TE (Air) passed by the Commissioner of Customs (Airport), Mumbai)

For approval and signature: Honble Mr. P.S.Pruthi, Member (Technical)

Honble Mr. Ramesh Nair, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Manugraph India Ltd. : Appellant

VS

Commissioner of Customs, Mumbai : Respondent

Appearance

Shri S.N. Kantawala, Advocate for Appellant

Shri M.K. Mall, Assistant Commissioner (A.R) for respondent

CORAM:

Mr. P.S.Pruthi, Member (Technical) Mr. Ramesh Nair, Member (Judicial)

Date of hearing : 07/08/2015 Date of decision :07/08/2015

ORDER NO.

Per : P.S. Pruthi

Dispute arises out of the impugned Order-in-Appeal dt. 16.3.2004 in which the Commissioner (Appeals) has upheld the classification of the impugned goods under Chapter Heading 8419 instead of 8443 claimed by the appellant.

2. The appellant imported goods described as IVT compact Dryer Components Parts of Web Offset Printing Machine Model 66III Zirkon (having speed of more than 30,000 copies per hour) and sought classification under Sub-heading 8443.90 as parts of printing machine. Exemption was claimed on auxiliary duty (CVD) under Notification No. 213/1987 dated 12.5.1987, 207/1987 dt. 12.5.1987 read with Notification No. 114/80 dt. 19.6.1980. The goods imported by the appellant are Dryer whose specific features are mentioned in the catalogue submitted by the appellant. The two competing headings are 8443 which covers printing machinery and 8419 which covers dryers. The dryers are covered under Sub-heading 8419.31 to 8419.39. According to Revenue, the printing machine can work without the dryer which is used only for the purpose of quality printing as well as to facilitate drying. Therefore it is used as an ancillary. Revenues contention is that the Tariff Heading 8419 provides a more specific description than 8443 which provides a general description. The adjudicating authority as well as Commissioner (Appeals) viewed that the correct heading is 84.19 in view of Section Note 2 of Section XVI which states that parts of machines if suitable for use solely or principally with a particular kind of machines are to be classified with the machine of that kind, which is Heading 8409 in the present case

3. The Ld. Counsel for the appellant draws our attention to the license granted by the DGTD for their goods in terms of Appendix  6, Sr. No.1 of Import Trade Control Policy 85-86 under Chapter Sub-heading 8443.90 endorsing the exemption in terms of Customs Notification No. 114/80. He also took us through the catalogue for the goods which indicates that the goods are a compact unit with Dryer and Chiller combine meant for the high speed printing machine used by them. He also showed the certificate from the manufacturer certifying that the goods, that is IVT Dryer, is designed specifically as a component for drying paper on web in a printing press and cannot be used for anything else. The Ld. Counsel stated that these parts are meant for specific use with the printing machine. And therefore, should be classified under Heading 8443 which is a more specific heading. He also drew our attention to the HSN Explanatory Notes under Heading 84.19 which excludes machinery and plant in which the heating, cooling, even if essential, is merely a secondary function designed to facilitate the main mechanical function. The Ld. AR appearing for Revenue reiterated the reasoning adopted by the lower authorities.

4. We have carefully considered the submissions made by both sides. At the outset, we note that in the days of License Raj licenses were issued for import of most items by the DGTD. The Policy for grant of exemption was recommended by the DGTD and on such recommendation a Customs Notification was issued for grant of exemption. In this particular case the DGTD have recommended exemption in terms of Appendix  6 Sr. No.1 of Policy for 85-86. This recommendation is specifically for the goods imported by the appellant that is IVT Compact Dryer and the Chapter Sub-heading is indicated as 8443.90. The Customs Notification No. 213/87 dt. 12.5.1987 exempts parts falling under inter alia headings 8419 as well as 8443. Reading the DGTD Certificate and the Customs Notification harmoniously, it is clear that the intention of the Government was to exempt such parts of printing machines.

5. The adjudicating authority and the Commissioner (Appeals) considered that in terms of Rule 3A of the General Rules for the Interpretation of the Customs Tariff Act, the Heading 8419 which covers Dryers is a more specific heading and will therefore prevail. We observe that the certificate of the supplier indicates that the goods are specifically designed as a component for drying paper on web in a printing press and cannot be used for anything else.

Classification under Heading 8443 finds support in the HSN Explanatory Notes under Heading 8419 which state that  But the heading excludes machinery and plant in which the heating or cooling, even if essential is merely a secondary function designed to facilitate the main mechanical function of the machine or plant e.g. machines for coating biscuits, etc., with chocolate, and conches (heading 84.38) washing machines (heading 84.50 or 84.51) machines for spreading and tamping bituminous road-surfacing materials (heading 84.79). Thus the Dryer whose function is only secondary to the main function of printing is ruled out for classification under Heading 84.19.

6. It is seen that the Commissioner (Appeals) went beyond the findings of the adjudicating authority and held that the exemption was applicable only to parts imported for initial installation/assembly or manufacture of machines when imported in complete form. We find that facts on record speak otherwise. The DGFT certificate endorses eligibility specifically to the parts imported. Even otherwise, there is no evidence forthcoming that the parts were not required for the initial setting up of the printing machine even if the parts were imported later. We also note that Notification No. 213/87 covered Headings 8419 as well as Heading 8443. However, this aspect has not been discussed by the authorities below. Nevertheless, without basing our decision on this fact, we have held above that the classification under Heading 8443 is more appropriate.

7. In view of the above, appeal is allowed.

(Pronounced in court)

(Ramesh Nair) Member (Judicial)

(P.S.Pruthi) Member (Technical)

SM.

5 Appeal No. C/552/2004-Mum