Case: Ballarpur Industries Limited Vs. Collector of Customs (Appeals), Customs House, Madras

made of these metals", required classification under the respective material composition heading. It is this assumed situation, which has made it (CEGAT) reproduce the Rules 2(b) and 3(a), (b) and (c) requiring classification of materials or substances, or parts of materials like mineral products, glass, plastics etc. and parts of general use made of base metals and apply the same to the classification of machine part "Granite Press Roll" under consideration, as could be seen from the said discussion itself. Once again, as becomes obvious from its aforesaid discussion at para 5, it is its (CEGATs) assumption that Rule 1 in para 4 relating to materials and substances, given by it is applicable to machine part (part of machinery) in Section XVI, which has made it proceed to hold that "Granite Press Roll" falls in Chapter 68 by reason of Note 1(a) to Chapter 84 9. As rightly pointed out on behalf of the appellant here (respondent before the CEGAT) which was not, rightly, denied on behalf of the respondent here (appellant before the CEGAT) that the rules referred to in the discussion above by the CEGAT at para 4 of its order were rules which were non-existent in Statutory Notes 1 and 2 in Section XVI, Note 1 in Chapter 84 and Note 1 in Chapter 85, although the same were assumed to exist. When the basic rules which formed the foundation for CEGAT to reach the conclusion that "Granite Press Roll" which was admittedly an imported machine part, was that which fell under Heading No. 68.01/16(1) and not under Heading No. 84.31, are found not to exist, the reasoning adopted by it in reaching that conclusion also cannot stand. Consequently, we have to hold that CEGATs conclusion reached in its order under appeal that the imported article "Granite Press Roll" falls under tariff item in Chapter 68 is wholly wrong 10. But, as rightly pointed out by CEGAT itself, the rules which govern the classification of machine part like the "Granite Press Roll" with which we are concerned, ought to be the rules contained in Note 2 of Section XVI under Chapter 84 or Chapter 85, which are already excerpted by us 11. What, then, cannot be ignored is the requirement of the provision in Note 2 to Section XVI, that subject to Note 1 to Section XVI, Note 1 to Chapter 84 and Note 1 to Chapter 85 parts of machine (not being excepted items) are to be classified according to the rules given thereunder as (a), (b) and (c). What Note 2 to Section XVI says, in other words, is that machine parts in Section XVI, which are not covered by articles specified in Note 1 to Section XVI, Note 1 to Chapter 84 and Note 1 to Chapter 85, are to be classified according to rules given under Note 2 to Section XVI itself, that is, Rules (a), (b) and (c) thereof 12. Coming to Rule (a) of Note 2 to Section XVI, which is also excerpted by us, already, goods of a kind described in any of the headings of Chapters 84 and 85 (other than Heading Nos. 84.65 and 85.28) are in all cases to be classified in their respective headings. Then, coming to Rule (b) of Note 2 to Section XVI, which is also excerpted by us, already, other part of goods of a kind described in any of the headings of Chapter 84, if suitable for use solely or principally with a particular kind of machine (described in Chapter 84) is required to be classified with machine of that kind mentioned in Chapter 84. Therefore, 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 component of paper-making machinery, does warrant its classification thereunder. In our view, when Note 2 to Section XVI requires classification of parts of machines to be made according to rules given thereunder and when Rule (a) thereunder requires goods (part of machine) of a kind described in any of the headings of Chapters 84 and 85 (other than Nos. 84.65 and 85.28) under respective headings, every machinery for making or finishing cellulosic pulp, paper or paper board, requires to be classified under Heading 84.31. Then, coming to "Granite Press Roll" the imported article under consideration, being a part of machine of goods "Machinery for making or finishing cellulosic pulp, paper or paper board" which is suitable for use solely or principally as machinery for finishing paper, it requires to be classified with the machine described in the Heading 84.31, as required by Rule (b) to Note 2 of Section XVI, inasmuch as, Granite Press Roll is described by CEGAT itself as part of machine of paper-making machinery. Therefore, "Granite Press Roll", the imported article, in our view, warrants its classification under Chapter Heading 84.31, as held by the Collector (Appeals). Thus, when classification of imported article -the Granite Press Roll - ought to have been made under Tariff Item No. 84.31 of Chapter 84, as is held by us, CEGAT has gone wholly wrong in classifying that article under import Tariff Item No. 68.01/16(1) of the First Schedule to the Customs Tariff Act, 1975, particularly when that article could not have been regarded as an article of stone, as such, to become an excepted item under Note 2 to Section XVI read with Note 1(a) to Chapter 84, warranting its classification under heading in Chapter 68 and according to rules governing classification of materials or substances or their parts 13. Since "Granite Press Roll" is an imported article, which is classified by us as Tariff Item No. 84.31 of the First Schedule to the Customs Tariff Act, 1975 as it stood prior to its amendment on 28-2-1986, the import duty payable thereon is only 40% as provided thereunder

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. But, as rightly pointed out by CEGAT itself, the rules which govern the classification of machine part like the "Granite Press Roll" with which we are concerned, ought to be the rules contained in Note 2 of Section XVI under Chapter 84 or Chapter 85, which are already excerpted by us11. What, then, cannot be ignored is the requirement of the provision in Note 2 to Section XVI, that subject to Note 1 to Section XVI, Note 1 to Chapter 84 and Note 1 to Chapter 85 parts of machine (not being excepted items) are to be classified according to the rules given thereunder as (a), (b) and (c). What Note 2 to Section XVI says, in other words, is that machine parts in Section XVI, which are not covered by articles specified in Note 1 to Section XVI, Note 1 to Chapter 84 and Note 1 to Chapter 85, are to be classified according to rules given under Note 2 to Section XVI itself, that is, Rules (a), (b) and (c) thereof12. Coming to Rule (a) of Note 2 to Section XVI, which is also excerpted by us, already, goods of a kind described in any of the headings of Chapters 84 and 85 (other than Heading Nos. 84.65 and 85.28) are in all cases to be classified in their respective headings. Then, coming to Rule (b) of Note 2 to Section XVI, which is also excerpted by us, already, other part of goods of a kind described in any of the headings of Chapter 84, if suitable for use solely or principally with a particular kind of machine (described in Chapter 84) is required to be classified with machine of that kind mentioned in Chapter 84. Therefore, 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 component of paper-making machinery, does warrant its classification thereunder. In our view, when Note 2 to Section XVI requires classification of parts of machines to be made according to rules given thereunder and when Rule (a) thereunder requires goods (part of machine) of a kind described in any of the headings of Chapters 84 and 85 (other than Nos. 84.65 and 85.28) under respective headings, every machinery for making or finishing cellulosic pulp, paper or paper board, requires to be classified under Heading 84.31. Then, coming to "Granite Press Roll" the imported article under consideration, being a part of machine of goods "Machinery for making or finishing cellulosic pulp, paper or paper board" which is suitable for use solely or principally as machinery for finishing paper, it requires to be classified with the machine described in the Heading 84.31, as required by Rule (b) to Note 2 of Section XVI, inasmuch as, Granite Press Roll is described by CEGAT itself as part of machine of paper-making machinery. Therefore, "Granite Press Roll", the imported article, in our view, warrants its classification under Chapter Heading 84.31, as held by the Collector (Appeals). Thus, when classification of imported article -the Granite Press Roll - ought to have been made under Tariff Item No. 84.31 of Chapter 84, as is held by us, CEGAT has gone wholly wrong in classifying that article under import Tariff Item No. 68.01/16(1) of the First Schedule to the Customs Tariff Act, 1975, particularly when that article could not have been regarded as an article of stone, as such, to become an excepted item under Note 2 to Section XVI read with Note 1(a) to Chapter 84, warranting its classification under heading in Chapter 68 and according to rules governing classification of materials or substances or their parts13. Since "Granite Press Roll" is an imported article, which is classified by us as Tariff Item No. 84.31 of the First Schedule to the Customs Tariff Act, 1975 as it stood prior to its amendment on 28-2-1986, the import duty payable thereon is only 40% as provided thereunder