Chandulal Mehta And Co. P. Ltd. And ... vs Union Of India (Uoi) And Anr.
2002 Latest Caselaw 913 Bom

JUDGMENT

V.C. Daga, J.

1. This petition is directed against the order dated 21st February 1989 passed by the Assistant Collector of Customs being Order No. S/3748/89 A.C.C. (Ex. 'M' page 69). The petitioner is engaged in business of import of several items including insulating material in accordance with the provisions of import-Export Policy for April 1985/March 1988. The 1st petitioners were inter alia importing multicable transit for Power Cable (Cable Sealing System, also known in trade as termination and jointing) (hereinafter referred to as "the said goods").

2. According to the petitioners the said goods were permissible for stock and sale in terms of the description given against Sr. No. 42 of Appendix 6, List 8, Part III of Import and Export Policy for 1985-1988 (Vol. I). The same position continued to exist under the New Import-Export Policy for April 1988 to March 1991. At all material times the said goods were classified for the purposes of basic and auxiliary customs duty by the Customs Authorities under heading 85.47 of Customs Tariff Act (hereinafter referred to as "CTA"). According to the petitioners, in the past the said goods have been imported by them and cleared by the respondents under heading 85.47 of the CTA. They had imported the said goods under Bills of Entry No. 10132 dated 29-3-1988 and Duty Cash No. 3689 dated 20-7-1988 under heading 85.47 of CTA. According to the petitioners, the practice of classifying the said goods under said heading 85.47 was also prevalent at the other ports and Customs Houses. According to the petitioners, at the time of assessment before warehousing, the said goods were classified under the said heading 85.47 (Sub- heading 8547.90) and by virtue of Notification No. 120/86 CUS dated 17-2-1986, the said goods were assessed @ 60% basic custom duty + 45% auxiliary duty + 15% as CVD, on advalorem basis. The petitioners also pointed out that sometime in the month of November 1988, the 1st petitioner required some of the goods kept in bond and consequently filed Bill of Entry for Ex-Bond Clearance, for Home Consumption in respect of 50 pieces out of the total of 100 pieces covered by Bill of Entry for warehousing No. 000128 dated 2-4-1988. The respondents allowed clearance under the said heading 85.47 on payment of duty @ 60% + 45% + 15%. Accordingly, the 1st petitioner paid duty vide Cash No. 2518 on 19-11-1988 and cleared the 50 pieces of the said goods. The first petitioner filed a Bill of Entry for Ex-Bond Clearance for Home Consumption dated 2-2-1989 in respect of 240 pieces out of the total of 740 pieces covered by the Bill of Entry for warehousing No. 10131 dated 29-3-1988.

3. It is further contended by the petitioners that disregarding the established past practice in respect of the said goods, the respondents, without any notice to the petitioners, classified the said goods under heading 39.26 (Sub-heading 3926.90) of Chapter 39 of CTA on the basis of some purported classifications ruling issued at the Tariff Conference held at Calcutta. Consequently, the respondents assessed the said goods to duty @ 100% + 45% + 15% as required under the said heading 39.26. The petitioners submit that heading 39.15 to 39.26 cover specified articles of plastics only. The said goods are used for insulating joints and ends of cables and are specifically designed for insulating purposes and manufactured wholly out of insulating material with minor components of other materials like metals which are incorporated for assembly purposes. The said goods therefore cannot be said to be covered under any of the headings from 39.15 to 39.25. The heading 39.25 of CTA is residuary entry, and the said goods are not covered by the description given thereunder. The expert opinion of Shri P.H. Padhya, Chartered Electrical Engineer confirming the insulating property and special characteristic of the said goods were also filed describing the said goods as insulating materials. The petitioners submit that the CTA contains General Rules for interpretation of the Entries in the first schedule thereof, and according to the said Rules, the correct classification of the said goods is under heading 85.47. The petitioners further submit that even the Explanatory Notes to the HSN at page 1407 (Vol. 4) provided that all fittings for electrical machinery, appliances or apparatus made wholly of insulating material (Ex. Plastics) apart from any minor components of metal incorporated for assembly purposes are covered under heading 85.47.

4. The petitioners also relied upon the certificate issued by the various consumers of the .said goods including M.S.E.B. and B.E.S.T. relating to nature of the said goods. The petitioners also claim to have submitted catalogue of the said goods under cover of letter dated 6-2-1989. In spite of producing all material before the Revenue, the petitioners submit that they suffered order dated 21-2-1989 (Ex.M), passed by the Assistant Collector of Customs. The aforesaid order is the subject matter of challenge in this petition.

5. The petitioners relied on judgment of this Court in the case of XL Telecom P. Ltd. v. Union of India, 1994(70) ELT 530 (Bombay), wherein this Court had occasion to deal with case having facts similar to the present case. The Division Bench while considering classification of cable jointing kits in the said judgment has observed as under:

"Chapter 39 of CTA covers "plastics and articles thereof. Heading 39.26 is an omninbus and generic entry. Chapter 85 covers, inter alia, Insulating Fittings, Heading 85.47 contains a specific description of insulating fitting. The principle of "Generalia Specialibus non Derogant" is well known and also applies to classifications of articles under the Customs Tariff. The thread of this principle runs all through even in the General Rules of Interpretation of Entries under the CTA.

The other test that can be applied for classification is how the article is identified by the class or section of people dealing with or using the same. In this connection, it may be noticed that the Mahanagar Telephone Nigam Limited, Bombay as well as Delhi Electric Supply Co. Ltd. have certified the Articles as being heatsrinkeble insulating material for cable jointing used by them only for that purpose.

In this context, the Customs Tariff Advice given by the Board by letter dated 17th November 1989 may also be noted. It states that Heat Shrinking material falls under Chapter 85 of CTA.

In most of the Bills of Entry the subject articles are described as components for cable jointing kits. We find that in one or two Bills, the articles have been described as "Raw material for manufacturing of components for cable jointing kits, Insulating materials - unexpanded sleeves". The Respondents contend that at least these items merit classification under Chapter 39. We do not agree. Even raw material for manufacture of components of cable jointing kits cannot be classified as general plastic articles under omnibus Heading 39.26. They are also insulating material capable of automatic shrinking to pre-determined diameters by a single operation of heating. Heading 85,47 is more akin to these articles than Heading 39.26."

The aforesaid judgment clearly answers the issue raised in the present petition and the challenge set up in the petition is unambiguously covered by the ratio of the said judgment. In para 8 of the said judgment it is specifically observed by the Division Bench that raw material for manufacturing of components for cable jointing kits is described sometimes as insulating materials and sometime as unexpanded sleeves. The fact remains that said material is used as insulating material. The aforesaid judgment of the Division Bench has been accepted by the Revenue which is evident from the circular issued by the Ministry of Finance, copy of which was produced before us (86 ELT, T48), wherein it is specifically mentioned that certain doubts have been expressed regarding the classification of Cable Jointing Kits assembled from duty paid components as to whether they are classifiable under Chapter Heading No. 8547.00. The said circular further makes it clear that the said judgment in the case of XL Telecom P. Ltd v. Union of India and Ors. (cited supra) it is observed that the said material has been uniformly classified at all departmental levels under (chapter Heading No. 85.47 of C.E.T.A. 1985. Thus, it is evident that the revenue has accepted the decision of this Court in the case of XL Telecom Pvt. Ltd. (supra). The only distinction sought to be made out by the revenue from the above case is that in the present case the goods have not been imported in the kit form. There is no merit in this contention because firstly Tariff heading 85.47 does not require the goods to be in the kit form and secondly, this Court in the case of XL Telecom Ltd., (supra) has held that the components for cable jointing kits are classifiable under chapter heading 85.47. Even the certificates obtained by the revenue from the actual users like M.S.E.B. and B.E.S.T. clearly show that the goods imported by the petitioners are for jointing and terminating the cables. Therefore, we have no hesitation in holding that the goods imported by the petitioners merit classification under chapter heading 85.47 of the CTA.

6. Under the circumstances, we are of the view that the impugned order cannot stand to the scrutiny of law as the same view has been accepted by the Revenue, through their aforementioned circular. In this view of the matter, the impugned order is liable to be quashed and set aside.

7. In the result, this petition is allowed. Rule is made absolute in terms of prayer Clause (a) with no order as to costs.