P.C. Jain, Member (T) -
(1.) QUESTION involved in this appeal filed by the department is regarding classification of the goods described in the bill of entry as "Mill Grinding Machinery (Air Attrition Mill Model 0808 -3 Jet -o -Mizer). The department assessed it in the first instance under Tariff Heading (TH) 84.59(1) CTA, 1975 although the respondents herein claimed its assessment under TH 84.56. The Assistant Collector of Customs, Bombay, who passed the order in assessment dated 2 -3 -1984 held after going through the leaflet produced by the appellants that the imported machine was designed for use in the grinding of (i) minerals (ii) plastics (iii) pharmaceuticals and (iv) chemicals. The said Asstt. Collector, therefore, observed that the imported machine finds application or is designed for use in various industries, namely, mineral, plastic, pharmaceutical, chemicals etc. It was also held that classification of machine did not depend upon the use to which importer put it but it depended upon its functioning, capabilities and various uses. Therefore, he assessed the machine under TH 84.59(1). In coming to this conclusion he also relied on CCCN Explanatory Notes Vol. 3 -page 1366 under Heading 84.59(i) (2) which reads as follows : -
"Presses, crushers, grinders, mixers, etc. not designed for particular goods or industries."
as covered under the said Heading pertaining to machinery and mechanical appliances for general use. He also disallowed a discount of 20% totalling U.S. 15675 as being a special discount not admissible Under Section 14 of the Customs Act, 1962.
1.1 The respondents herein thereafter filed an appeal before the Collector of Customs (Appeals) who allowed the appeal of the respondents on both the counts i.e. with regard to classification as well as with regard to allowing the discount. With regard to the classification the Collector observed that the machine was designed for crushing and grinding minerals and chemicals. He observed that if Rule 2 of the Interpretative Rules of the Customs Tariff is applied then it would be quite obvious that the imported machine is only designed to crush and grind minerals and chemicals. The fact that the imported machine is capable of crushing and grinding minerals, plastics, pharmaceuticals and chemicals and thus is capable of being used in the various industries, did not detract from the fact that the machine was designed specifically for grinding and crushing of minerals and chemicals. Therefore, he held that it was correctly classifiable under T.H. 84.56 of the CTA since the said Tariff Heading, as contended by the respondents herein and the appellants before the said Collector, covered all types of grinding machines. Hence this appeal by the department with regard to the question of classification only. It is observed from the appeal memo filed by the department that they had not challenged the finding of the Collector (Appeals) on the question of allowing the discount.
(2.) LEARNED SDR, Shri S.K. Roy has reiterated the grounds of appeal.
(3.) THE Appellant -Collector has observed that T.H. 84.56 is restricted, inter alia, to machine specifically designed for grinding of stones, ores or other mineral substances. The various types of machines included in T.H. 84.56 CTA are enumerated, according to him, on page 1355 of the Explanatory Notes to the CCCN Vol. 3. The machine under dispute is not similar to the one listed therein. The catalogue produced shows that the machine imported can be used for grinding of minerals as well as agricultural chemicals. Since it is not designed for production of a particular commodity, it is classifiable under Heading 84.59(I). Rule 2 of the Interpretative Rules of the Customs Import Tariff relied upon by the lower appellate authority, according to the Appellant -Collector, has no application in the instant case. It has thus been urged that the imported machine under consideration is basically meant for grinding of minerals as seen from catalogue. This particular Model 0808, according to the catalogue, submits the learned advocate, grinds Diatomogrous Earth, Shellac, Hyd Castor Oil, Anthracite Coal, Tremolite Hard Talc, Wollastonite Needles and Alumina Hydrate. The fact that it incidentally grinds agricultural chemicals like Lead Arsenate, Copper Oxychloride, 50% Tech Dieldrin and Sevin and should not alter the basic character of the machine and therefore, according to him, it falls under T.H. 84.56. Alternatively he urges that the TH 84.59(2) is suitable because it is a production machinery inasmuch as it mixes the shellac and soap stones. Catalogue also mentions the finished product. He relies in support of the alternative classification urged by him on (1) 1988 (36) ELT 367 (Tri.) [National Small Industries v. C.C. Bombay], (2) 1986 (26) ELT 341 (Tri.) [Collector of Customs v. Dura Foam Industries] and (3) 1980 ELT 735 [Hyderabad Asbestos].
We have carefully considered the pleas advanced on both sides. On the question of classification of the machine under T.H. 84.56 we are of the view that the said Heading, inter alia, covers the machines for sorting, screening, separating, washing, crushing, grinding or mixing earth, stones, ores or other mineral substances, in solid form. The underlined words, mentioned above, indicate that the machineries covered by this Heading are used mainly in the extractive industries for the various treatments like sorting etc. given above of solid mineral products. Explanatory Notes to Heading 84.56 at page 1353 clearly mention that "the Heading does not extend to machinery specially designed for carrying out similar operations on non -mineral materials (e.g. : for sorting or screening wood chips; for grinding wood flour; for grinding or mixing chemicals or organic colouring materials; for grinding bone, ivory, etc ; for agglomerating or moulding cork powder)". It is well settled that even though the Explanatory Notes have no statutory force, they do provide a valuable guidance for chemical and trade understanding of the entries mentioned in the Customs Tariff Act, if the particular Customs Tariff is aligned to the CCCN; this particular Heading 84.56 is aligned to the corresponding Heading 84.56 of the CCCN. Therefore, placing reliance on the Explanatory Notes as regards the commercial understanding of the Entry, it is observed that machinery designed for grinding or mixing of chemicals is specifically excluded from the said Tariff Heading. It is clear on the basis of catalogue and even in the finding of the Collector (Appeals) that the machine is designed for grinding both minerals and chemicals. Therefore, the first contention of the respondents is not tenable and the contention of the appellant -Collector is upheld that the machine under consideration would not fall under Tariff Heading 84.56. Reliance placed by the lower appellate authority on Interpretative Rule 2 is not at all understandable. This has no application, as rightly contended by the appellant -Collector, in the facts and circumstances of the present case.
4.1 We have next to consider the alternative contention of the Ld. Advocate for the respondents that the machine would fall under T.H. 84.59(2) because it is meant for production of a commodity. The appellant -Collector and the learned SDR representing him, have contended that the machine is not designed for the production of a commodity. It is merely meant for processing of the minerals and agricultural chemicals. Reliance has been placed in this connection on Explanatory Notes at page 1366, mentioned supra, under Heading 84.59. The learned advocate for the respondents, on the other hand, has stated that the product produced by the machine is a commodity and would, therefore, fall under T.H. 84.59(2).
4.2 We have carefully considered the pleas advanced on both sides. On a careful reading of T.H. 84.59 CTA 1975 and Entry 84.59 in the CCCN, we observe that both are not fully aligned. T.H. 84.59 is reproduced below : - "84.59 - Machines and mechanical appliances, having individual functions, not falling within any other Heading of this Chapter :
(1) Not elsewhere specified (2) Machines and mechanical appliances designed for the production of a commodity, machinery for treating metals, wood or similar materials, for stripping and cutting of tobacco leaf or for cutting or rolling tea leaves; machines for mounting card clothing, nuclear reactors."
Entry in the CCCN 84.59 is also reproduced below : - "84.59 - Machines and Mechanical Appliances, having individual functions, not falling within any other Heading of this Chapter."
It could thus be observed that while the main description under T.H. 84.59 CTA and Entry 84.59 of the CCCN tally, sub -headings (1) and (2) have been carved out separately out of the aforesaid general description of 84.59. For machines falling under sub -heading (2) a lower rate of duty has been provided. The Explanatory Notes at page 1366 relied upon by the original authority and reiterated in the grounds of appeal by the appellant -Collector includes, inter alia, the grinders not designed for particular goods or industries in the general description of Entry 84.59 of the CCCN it would, therefore follow that the grinding machine in the present case would fall under the general description of T.H. 84.59. Question now that arises is whether the product brought into existence by the machine after grinding of minerals or chemicals is a commodity produced or it is merely a processing of a chemical or a mineral. In our view, no evidence has been led by the department that the product brought into existence by the machine after pulverisation of a chemical or a mineral is merely a processing of that chemical or a mineral and not a commodity. No evidence has been placed by the respondents either except placing reliance on a column in the catalogue which mentions 'finished product'. Production of a commodity would mean as it is well -settled by now, bringing into existence a new commodity which can be brought to the market for being bought and sold having a different name, character and use. The expression 'finished product' mentioned in the catalogue is apparently related to the product brought into existence by the machine. This does not mean that a new commodity has been brought into existence having a different name, character and use. In the absence of any evidence from either side, we are unable to give any categorical finding whether the machine under consideration is meant for production of a commodity. We, therefore, remand the matter to the original authority to decide the matter on the aforesaid limited question whether the product brought into existence by the machine is a commodity having a different name, character and use or it is mere ly a machine which processes chemicals and minerals. Reliance on some citations placed by the learned advocate for the respondent is of no help because in those cases it had been held that the machine under consideration produced a commodity known to the market as such. ;