HARISH CHANDER,VICE PRESIDENT -
(1.) M /s. Lucas -TVS, Padi, Madras -600050 has filed an appeal being aggrieved from the order passed by Collector of Customs (Appeals), Madras.
(2.) BRIEFLY the facts of the case are that M/s. Lucas -TVS Limited, Madras had imported various parts of Hitachi Vacuum Housing Assembly, Rotor Assembly, Centre Plate, O Ring (A), O Ring (B), Oil Seal and Ball Bearings, vide Bill of Entry G.M. No. 809/90 Line No. 93 dated 27th July, 1990. The appellants had claimed the benefit of Notification No. 33/88 -Cus. and had sought clearance and wanted the goods to be assessed at the rate of 10% + 30% + C.V. nil. The appellants had contended that the goods were covered under Serial No. 2 (ii) of the said notification. The relevant entry in the said Notification No. 33/88 -Cus. reads as under: -
Sl. No. 2 : Auto Electricals, viz., (i) Starter Motor and (ii) Alternator/Generator. It was contended by the appellants before the Assistant Collector that the vacuum pump alternator is used on the fuel efficient light commercial vehicles and it was a new design and the vacuum pump works in congruence with Alternators. It was also contended that the design of the Alternator was such that the extended shaft of the Alternator drove the vacuum pump mechanism. This vacuum source was used by the vacuum assisted brake system of the vehicle. It was further contended by the appellants in the write -up dated 22nd August, 1990 that the design of 3 HA 15 alternator helps in eliminating a separate drive mechanism for the pump by using alternator as the prime mover. The Assistant Collector had observed that entry in Sl. No. 2 of the said Notification No. 33/88 extended the benefit only to the electrical parts. Admittedly, alternator is an electrical part and its function is to generate alternative current. He had further observed that it was admitted by the appellants themselves that the function of the vacuum pump was to create vacuum and to facilitate effective braking. The vacuum pump drives mechanical power from the extended shaft of the alternator for its functioning. It did not aid or improve the working of the functioning of the alternator. The alternator and the vacuum pump have got two different functions; the alternator belongs to electrical part whereas the vacuum pump belongs to mechanical part. When interpreting the notification, the notification had to be interpreted strictly. The notification extended the benefit only to the electrical part, viz., alternator and not to mechanical part. He had observed that the goods are to be assessed on merits without extending the benefit of Notification No. 33/88 -Cus., dated 1st March, 1988 as amended. Being aggrieved from the aforesaid order, an appeal was filed before the Collector of Customs (Appeals), Madras.
(3.) AT the instance of Collector (Appeals) the appellant had produced samples of assembled and split alternator with vacuum pump, and during examination of the samples it was found that vacuum pump portion was detachable component which was attached to generator with the help of its extended shaft. The appellants had contended before the Collector (Appeals) that apart from the shaft being common to both the alternator and vacuum pump, oilseals as well as bearings, housed inside SRE were also common to both. It was also contended that even though the generator could function without the vacuum pump attached to it, such operation would be contrary to the basic design for this model of Alternator, and as such, it became an integrated unit only after the vacuum portion was attached to it. The appellants had contended that the benefit of Notification No. 33/88 -Cus. was extendable to the parts imported by the appellants. Collector (Appeals) had observed that he had examined the samples as well as printed catalogue for 3HA 15 -40 alternator with vacuum pump. He had observed that literature itself shows that it was an alternator with vacuum pump, and according to the literature, alternator with vacuum pump was designed as a battery charging unit for light commercial vehicles, and the vacuum pump was attached with the alternator to produce vacuum, to assist braking system. There are two models of such pumps which are available to suit individual requirements. To accommodate the vacuum pump, the electrical terminations of the alternator have been re -located on the SRE bracket. He had further observed that while describing the vacuum pump, the literature mentioned that it was a unit mounted on to the SRE bracket. The rotor of the vacuum pump was driven by the alternator shaft. It has 4 slots to accommodate the vanes. By varying the volume enclosed between the two vanes, air flows from the suction to delivery. Engine oil is supplied to the pump, for lubrication at a specified pressure and flow rate, through the oil inlet connector and the resultant vacuum is piped to the slump of the vehicle braking system. He had observed that it was clear that the vacuum pump was provided as a back -up for the braking system and the literature also gave necessary technical data separately for alternator and vacuum pump. He had further observed that issue for determination was whether parts required for the manufacture of such vacuum pump could be treated as parts required for the manufacture of alternators. He had observed that during the demonstrations of sample of alternator without the pump portion attached to it, it was evident that such alternator can be fitted into a vehicle and made functional. The vacuum pump when attached to such alternator in no way even remotely assisted in the functioning of the alternator. It was the extended shaft of the alternator which was used for driving the rotor of the vacuum pump. He was of the view that the pump portion was dependent on functioning of the generator/alternator and the alternator was in no way dependent on the functioning of the vacuum pump. With these observations the Collector (Appeals) had held that the parts required for the manufacture of vacuum pump were not eligible for concessional rate of duty in terms of Notification No. 33/88. He had further observed that specially designed bearings and oil -seals which were housed inside the alternator which were common to both vacuum pump as well as alternator were entitled to the benefit of Notification No. 33/88. Being aggrieved from the aforesaid order, the appellant has come in appeal before the Tribunal.
Shri V. Lakshmi Kumaran, the learned advocate, has appeared on behalf of the appellant. He reiterated the facts. He pleaded that the appellant had imported integrated alternator with vacuum pump. He laid special emphasis on para No. 5 of the Collector (Appeals) Order where the Collector had made observations as to examination of samples of assembled and split of alternator with vacuum pump. Shri Lakshmi Kumaran pleaded that the order passed by the Collector (Appeals) is not correct in law. He referred to DGTD Certificate and laid special emphasis on Serial Nos. 6, 7 and 16 of the list of items proposed to be imported by the appellants at concessional rate of duty with the DGTD certificate. Shri Lakshmi Kumaran referred to a Bombay High Court decision in the case of Bombay Chemicals Pvt. Ltd. v. Union of India and Ors. reported in 1982 (10) ELT 171 where the Bombay High Court had held that certificate issued by DGTD was binding on Customs authorities and the Customs authorities could not ignore or by -pass it on the ground that it was issued under mistake or misrepresentation. Shri Lakshmi Kumaran also referred to another decision of the Supreme Court in the case of M.G. Abrol, Addl. Collector of Customs, Bombay and Anr. v. Shantilal Chhotelal
& Co. and Ors. reported in AIR 1966 Supreme Court 197 where it was held in para 10 that we are not concerned in this case with sheet cuttings but only with other ferrous scrap. The Exports (Control) Order, the Schedule annexed thereto and the statement of Export Licensing Policy do not define skull scrap at all; skull scrap is what the officer thinks it is. The only restriction on the Controller giving a licence for export of scrap is that in his opinion is not usable in India; his opinion is final. For the purpose of his opinion he may describe or categorize the scrap in the manner convenient to him; but that does not make it anytheless an exportable scrap. In the circumstances it must be held that the licence covers only the scrap not usable in India. The description of the scrap has no relevance to its exportability. Shri Lakshmi Kumaran referred to another decision of the Bombay High Court in the case of Bombay Chemicals Pvt. Ltd. v. Appellate Collector of Customs reported in 1990 (49) ELT 190 where the Hon'ble High Court had held that where the certificates were granted by Director General of Technical Development or Director of Industries under the Notification, the same were binding and conclusive, and the Department was not empowered to question such certificates. Shri Lakshmi Kumaran referred to Section Note (II) of Section 16 where it provides that unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified only as a consisting of that component or as if that machine which performs the principal function. Shri Lakshmi Kumaran referred to other decision in the case of Collector of Customs v. Blue Star reported in [1990 (50) ELT 186 (Tri.) where this Tribunal had held that merely because a machine can perform other functions, the exemption could not be denied. The learned Advocate referred to another decision in the case of Escorts Ltd. v. Collector of Customs reported in 1990 (47) ELT 68 where the Tribunal had held that the concessional rate of duty not deniable merely because equipment in addition to its use for testing purpose in the automobile motor industry is also usable for general purposes. Shri Lakshmi Kumaran, learned Advocate, pleaded that in case the appellants' plea for treating as part of auto electricals alternator/generator is not accepted, then the same may be treated as part of brake assembly which falls under Sr. No. 5 of the Notification No. 33/88. He pleaded that vacuum pump is an essential part of brake assembly and its pneumatic or pressure pumps. Shri Lakshmi Kumaran, learned Advocate, has pleaded for the acceptance of the appeal.;