Syed Shah Mohammed Quadri, J. (Chairman) - (1.) THE applicant, M/s. Sony (India) Private Limited, filed this application under Section 28H of the Customs Act, 1962 (for short "the Act") seeking advance ruling of the authority on the following question of law :- "Whether the concessional rate of customs duty of 5% would be applicable to the Panel AG Assembly in terms of Sl. No. 110 of Notification No. 25/99-Cus., dated 28-2-99, as amended."
(2.) The applicant is a wholly owned subsidiary of Sony Corporation, Japan. It proposes to manufacture coloured picture tubes, cathode ray tubes, (for short CRT) based on patented Trinitron Technology. It is stated that the components of CRT are as follows :- (a) Funnel, which is a glass item having the shape of the color picture tube; (b) Panel, which is also a glass shell item which is assembled in front of the funnel; (c) FAG and Frame. It is a metal item with a special coating based on Trinitron Technology. The frame is made of metal; and (d) The Electron gun. Out of these components, the applicant intends to procure (a) in India and import into India (b), (c) and (d); (b) and (c) are proposed to be imported in blended form termed as Panel AG Assembly (for short PAGA). The process of manufacturing CRT involves sealing the electron gun, (d), to the funnel (a) which will thereafter be fixed to PAGA. The applicant claims that PAGA is covered by Sl. No. 110 of the aforementioned Notification No. 25/99-Cus., dated 28-2-99 as such duty is leviable on it only at the concessional rate specified therein. We are informed at the bar that the specified concessional rate of duty has since been reduced to "nil". The claim of the applicant is opposed by the Commissioner of Customs (I & G). It is stated by the Revenue that parts (b) and (c) are deliberately clubbed in the form of PAGA to circumvent the liability of payment of higher duty on part (b) which is a glass part. The process of assemblying of two parts - a glass part and a metal part - is quite simple and they are assembled to lay claim erroneously that the composite assembly is dutiable only as a non-glass part. PAGA it is stated, is essentially a glass part and so the attempt is to avail the concessional rate of duty indirectly as indeed the benefit of the notification is not applicable to the glass part directly. Mr. V. Laxmikumaran, learned Advocate appearing for the applicant, contends that part (b) - a glass part is liable to duty under Chapter 70 under Heading 70.11 and part (c) is dutiable under Heading 85.40 but in the form of assembly, PAGA is liable to duty under Heading 8540.91 as it ceases to be a glass part and therefore the concessional rate of duty under Sl. No. 110 of the notification would apply. He relied upon the judgment of the Supreme Court in Dunlop India Ltd. v. Union of India and Ors. [1983 (13) E.L.T. 1566 (S.C.) = 1976 (2) SCC 241] in support of his contention that the form of goods in which it is imported is a relevant factor for purposes of classification. The learned Counsel has taken us through various notifications of the earlier years to impress upon us that there has been successive decrease in the rate of duty on the glass parts and ultimately in the notification under consideration, list "C" is omitted as the concessional rate of duty and the tariff rate are the same. From this, he would like us to infer that the benefit of concessional rate of duty under the notification will apply to PAGA. He has also relied upon the Explanatory Notes to the Chapters 70, 84 and 85. It is urged by the Revenue that the assembly is essentially a glass part and once the glass element is taken out there remains nothing in the assembly. It is submitted that though the assembly - PAGA would be liable to the Customs duty under Chapter 85, the same is not covered under the notification so as to avail the benefit under Sl. No. 110 of the notification.
(3.) TO appreciate the rival contentions of the parties, it would be apt to read the notification, insofar as it is relevant, here : Notification No. 25/99-Cus., dated 28-2-1999 Concessional rate of duty on goods imported for the manufacture of excisable goods. - In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in column (3) of Table below, and falling under the Chapters of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) specified in the corresponding entry in column (2) of the said Table, when imported into India for use in the manufacture of the finished goods specified in the corresponding entry in column (4) of the said Table, from so much of that portion of the duty of customs leviable thereon which is specified in the said First Schedule, as in excess of the amount calculated at the rate of, - (a) Nil in the case of the imported goods specified in List A; and (b) 5% ad valorem in the case the imported goods specified in List B; Provided that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. JUDGEMENT_61_TLAR0_20040.htm ;