Holding

The goods are a complete unit of machinery and therefore fall within Heading 84.17(1) of the Customs Tariff Act, 1975.

Summary

The respondent imported four cases of hydrochloric acid synthesis unit combustion chambers, claiming classification under Heading 84.17(1) of the Customs Tariff Act, 1975 as machinery and plant. The Assistant Collector classified them under Heading 68.01/16(1) (articles of stone, plaster, etc.), but the Collector (Appeals) and the CEGAT re‑classified them under Heading 84.17(1). The appellant challenged this, arguing that the graphite parts fell within Chapter 68 and that Note 1(a) to Chapter 84 excluded such articles. The Supreme Court held that the goods constitute a complete unit – a combustion chamber equipment – and are not millstones or grindstones; therefore they fall within Chapter 84 and specifically Heading 84.17(1). The Court distinguished the earlier Saurashtra Chemicals decision (which dealt with spare carbon parts) and affirmed the earlier classification. The appeal was dismissed with costs.

Issues considered

Whether the imported combustion chambers for a hydrochloric acid synthesis unit should be classified under Heading 84.17(1) or Heading 68.01/16(1) of the Customs Tariff Act, 1975.
Whether Note 1(a) to Chapter 84 excludes the graphite combustion chambers from Heading 84.17(1).
Whether the goods constitute machinery/equipment or merely articles of stone/plaster falling within Chapter 68.

Legislation cited

Customs Tariff Act, 1975s. Heading 68.01/16(1), s. Heading 84.17(1), s. Note 1(a) to Chapter 84

Subjects

customs classificationheading 84heading 68machinery and plantgraphite combustion chamberhydrochloric acid synthesisNote 1(a)complete unitspare parts

Judgment

COLLECTORS OF CUSTOMS, BOMBAY A
v.
MIS GRASIM INDUSTRIES LTD.

MAY 11, 2000

[S.P. BHARUCHA, S.S. MOHAMMED QUADRI AND B
SHIVARAJ V. PATIL, JJ.]

Customs Tariff Act, 1975-Heading 84.17(/) and 68.0I/16(1)-
Classification under-Held, if the goods in question are machinery, plant
and similar laboratory equipment or parts thereof. they fall within Chapter C
84 of the Act; but if they are millstones, grindstones or other articles that fall
within Chapter 68, they get excluded from Chapter 84-lmport offour cases
of hydrochloric acid synthesis unit of combustion chambers by the
respondent-Classification of-Held, though the combustion chamber of the
goods in question is made of graphite, the goods constitute a complete unit D
and an equipment and thus there can be no hesitation in holding that the
goods in question fall within Heading 84.17(1).

The respondent imported four cases of hydrochloric acid synthesis unit
of combustion chambers and claimed that they are classifiable under Heading
84.17(1) of the Customs Tariff Act, 1975 being in the category of plants and E
machinery. The Assistant Collector of Customs rejected the claim and
classified them under Heading 68.01/16(1) of the Act. In appeal, the Collector
of Customs (Appeals) classified the same under Heading 84.17(1) of the
Customs Tariff Act thereby upholding the claim of the respondent. The
appellant appealed before the Customs Excise and Gold (Control) Appellate F
Tribunal which dismissed the appeal while confirming the order of the
Collector of Customs (Appeals). Hence the present appeal

On behalf of the appellant, it was contended that the respondent imported
parts of machinery which were articles of graphite falling within Heading
68.01/16(1) of the Act and as Note l(a) of Chapter 84 of the Act specifically G
excluded articles falling within Chapter 68, they were wrongly held to be
classifiable under Heading 84.17(1).

On behalf of the respondent, it was contended that plants and machinery
fell within Heading 84.17(1) of the Customs Tariff Act, 1975 and not within H
261
262 SUPREME COURT REPORTS (2000] SUPP. I S.C.R.

A Heading 68.01/16(1); that Note l(a) to Chapter 84 had no application to
machinery or part of machinery covered by Heading 84.17(1) of the Act

Dismissing the appeal, this Court

HELD : 1.1. Though the combustion chamber of the goods in question
B is made of graphite, they constitute a complete unit, consisting of three parts
fitted with burners and other accessories forming part of synthesis unit of
caustic soda plant and thus an equipment In that equipment hydrogen is burnt
with chlorine and thereby a new product - hydrochloric acid - is produced. In
view of this categorical finding, there can be no hesitation in holding that the
C goods in question fall within Heading 84.17(1) of the Customs Tariff Act, 1975,
unless it is shown they being millstones, grindstones and other articles
falling within Chapter 68 have to be excluded from Heading 84.17(1) of the
Customs Tariff Act in view of Note l(a) of Chapter 84. Obviously the articles
in question are not millstones, grindstones or the like. The contention that
the goods in question fall within Chapter 68 has no substance.
D (266-F-G; 267-B-C)

1.2. A perusal of the title of Chapter 68 of the Customs Tariff Act and·
the description of the sub-heading shows that what is brought in thereunder
are articles of stone plaster, cement, asbestos, mica or similar materials.
There is no scope to bring within that Chapter machinery and mechanical
E appliances and parts thereof. The title of Chapter 84 of the Customs Tariff
Act leaves no room for doubt that the goods falling within it are boilers,
machinery, and mechanical appliances and parts thereof. The description and
the sub-headings enumerate various categories of machinery and appliances
falling thereunder. There can be no controversy about the proposition that if
F the goods in question are machinery, plant and similar laboratory equipment
or parts thereof, they fall within Chapter 84 of the Act; but if they are
millstones, grindstones or other articles that fall within Chapter 68 of the
Act, they get excluded from Chapter 84. (268-C-D; 266-C-F]

Ballarpur Industries Ltd. v. Collector of Customs, Madras. (1995) 75
G E.L.T. 6 SC, relied on.

Saurashtra Chemicals v. Collector a/Customs, (1997) 95 E.L.T. 455 SC,
distinguished.

Saurashtra Chemicals, Porabandar v. Collector of Customs, Bombay,
H (1986) 23 E.L. T. 283, CEGAT, referred to.
COLLECTOR OF CUSTOMS v. GRASIM INDUSTRIES LTD. [QUADRI, J .] 263

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 11388 of A
1995.

From the Judgment and Order dated 11.11.91 of the Central Excise
Customs and Gold (Control) Appellate Tribunal, New Delhi in A. No. C/117/
85-B2 in 0. No. C/254/91-B2.
B
N.K. Bajpai, K.K. Dhawan and P. Parmeswaran for the Appellant.

Joseph Vellapally, Ms. Shally Maggon, U.A. Rana and Rajesh Nair for
Mis. Gagrat & Co. for the Respondent.

The Judgment of the Court was delivered by c
SYED SHAH MOHAMMED QUADRI, J. The short question that arises
in this appeal is: whether hydrochloric acid synthesis unit of combustion
chambers is classifiable under Heading 84.17(1) or Heading 68.01116(1) of the
Customs Tariff Act, 1975.
D
The appeal came up before us on reference by a Bench of two learned
judges, taking the view that the decision of this Court in Ballarpur Industries
Ltd v. Collector o/Customs, Madras, (1995) 75 E.L.T. 6 S.C. holding that a
part of paper finishing machinery was classifiable under Heading 84.31 of
Customs Tariff Act, 1975 (for short, 'the CTA ')and not under Heading 68.0 II
16(1) of the CTA, is seemingly different from what is stated in Saurashtra E
Chemicals v. Collector o/Customs, (1997) 95 E.L.T. 455 S.C.

The facts giving rise to this appeal fall in a short compass. The
respondent imported four cases of hydrochloric acid synthesis unit of
combustion chambers and claimed that they are classifiable under Heading F
84.17(1) of the CTA. By order dated October 7, 1982, the Assistant Collector
of Customs, Bombay, rejected the claim and classified them under Heading
68.01116(1) of the CTA. The Collector of Customs (Appeals), Bombay, acceded
to the contention of the respondent for their classification under Heading
84.17(1) of the CTA. The appellant appealed before the Customs Excise and
Gold (Control) Appellate Tribunal, New Delhi (for short, 'the CEGAT'). On G
November 11, 1991, the CEGAT confirmed the order of the Collector of Customs
(Appeals) and dismissed the appeal. The appellant challenges the order of the
CEGA T in this appeal.

Mr. N.K. Bajpai, learned counsel appearing for the appellant, has
contended that the respondent imported parts of machinery which are articles H
264 SUPREME COURT REPORTS (2000] SUPP. I S.C.R.
,.
A of graphite falling within Heading 68.01/16(1) of the CTA and as Note l(a) of
Chapter 84 of the CTA specifically excluded articles falling within Chapter 68
of the CTA, they were wrongly held to be classifiable under Heading 84.17(1)
of the CTA. He submitted that in Saurashtra Chemicals, Porabandar v.
Collector ofCustoms, Bombay, (1986) 23 E.L.T. 283, the larger Bench of the
Tribunal by majority held that the spare parts of the machinery made of
B carbon were classifiable under Heading 68.01/16 of the CTA which was approved
by this Court in Saurashtra Chemicals v. Collector of Customs (supra).
Therefore, the order under appeal has to be set aside.

In support of the order under appeal, Mr. Joseph Vellapally, learned
C senior counsel appearing for the respondent, drew our attention to title of
Chapters 68 and 84 of the CTA to point out that plants and machinery fell
within Heading 84.17(1) of the CTA and not within Heading 68.01/16(1) of the
CTA. According to the learned counsel, Note l(a) to Chapter 84 of the CTA
has no application to machinery or part of machinery covered by Heading
84.17(1) of the CTA. As such the Collector of Customs (Appeals) as well as
D the CEGAT rightly classified the goods under Heading 84.17(1) of the CTA.

Inasmuch as the controversy relates to the interpretation of Headings
68.01/16(1) and 84.17(1) of the CTA, it would be useful to quote them here:

"CHAPTER 68
E
ARTICLES OF STONE, OF PLASTER, OF CEMENT, OF ASBESTOS, OF
MICA AND OF SIMILAR MATERIALS

NOlES

F This Chapter does not cover:

(a) to (n) ••• ••• •••
Heading Sub-heading No. Standard Cenral
No. and description Rate of dury Excise
G of article Tariff
Item
68.01/16 Articles of natural or artificial stone, of 22F,
agglomerated natural or artificial abrasives, 23C,
of plastering material, of cement, of concrete, 51
H of asbestos, of asbestos-cement or cellulose
COLLECTOR OF CUSTOMS v. GRASIM INDUSTRIES LTD. [QUADRI, J .] 265

fibre cement, or of mica; articles of vege- A
table materials agglomerated with mineral binders;
mineral wools; expanded mineral materials;
articles of other mineral substances, not
elsewhere specified or included :
(I) Not elsewhere specified 100%
B
(2) Grinding stones, grinding wheels 40%
and the like, of natural stone, of agglomera-
ted natural or artificial abrasives, and segments
or other finished parts of such stones and
wheels but excluding hand polishing stones, c
whet stones, oil stones, and hones."

A perusal of the title of Chapter 68 of the CTA and the description of
the sub-heading shows that what is brought in thereunder are articles of
stone, plaster, cement, asbestos, mica or similar materials. There is no scope
to bring within that Chapter machinery and mechanical appliances and parts D
thereof.

"CHAPTER 84

BOILERS, MACHINERY AND MECHANICAL APPLIANCES; PARTS
lHEREOF E
NOIBS

I. This Chapter does not cover:

(a) millstones, grindstones and other articles falling within Chapter
68·, F

2. to 5. *** *** ...
Heading Sub-heading No'. and Standard Central
No. description of article Rate of Excise
duty Tariff G
Item
84.17 Machinery, Plant and similar laboratory equipment,
whether or not electrically heated, for the treatment
of materials by a process involving a change of tempe-
rature such as heating, cooking roasting, distilling, H
266 SUPREME COURT REPORTS [2000] SUPP. I S.C.R.

rectifying sterlising, pasteurising steaming dry-
ing, evaporating, vaporising, condensing or
cooling, not being machinery or plant of a kind
used for domestic purposes; instantaneous or
storage water-heaters, non electrical:

B I. Not elsewhere specified

2. Machinery and equipment for food and 60"/o
drink other than those used for treating milk,
instantaneous or storage water-heaters, non-
electrical; machinery and equipment imported
C for use in air conditioning."
The title of Chapter 84 of the CTA leaves no room for doubt that the
goods falling within it are boilers, machinery, and mechanical appliances and
parts thereof. The description and the sub-headings enumerate various
categories of machinery and appliances falling thereunder. At the beginning
D of the Chapter are Notes which specify what articles are excluded from that
Chapter.

A reading of the Note l(a) on which reliance is placed by Mr. Bajpai,
suggests that it excludes millstones, grindstones and other articles falling
within Chapter 68 from being classified under Heading 84.17(1) of the CTA.
E
There can be no controversy about the proposition that if the goods
in question are machinery, plant and similar laboratory equipment or parts
thereof, they fall within Chapter 84 of the CTA; but if they are millstones,
grindstones or other articles that fall within Chapter 68 of the CTA, they get
F excluded from Chapter 84.

A perusal of the order of the Tribunal shows that though the combustion
chamber of the goods in question is made of graphite, they constitute a
complete unit, consisting of three parts fitted with burners and other accessories
forming part of synthesis unit of caustic soda plant and thus an equipment.
G In that equipment hydrogen is burnt with chlorine and thereby a new product
- hydrochloric acid - is produced. In the latter part of the judgment the
Tribunal recorded the following finding :

"Further there is no dispute that what they have imported is for
combustion chambers and drawing also indicates that the combustion
H chamber consist of three parts, that is, upper shell, intermediary shell
COLLECTOR OF CUSTOMS v. GRASIM INDUSTRIES LTD. (QUADRI, J.) 267

and lower shell alongwith fittings. Based upon the records and A
functioning of the imported parts we are of the opinion that they
constitute a complete unit".

In view of this categorical finding, there can be no hesitation in holding
that the goods in question fall within Heading 84.17(1) of the CTA unless it
is shown they being millstones, grindstones and other articles falling within B
Chapter 68 have to be excluded from Heading 84.17(1) of the CTA in view of
Note I (a) of Chapter 84. Obviously the articles in question are not millstones,
grindstones or the like. We have carefully gone through various sub-headings
of Chapter 68 of the CTA and we are of the view the contention that the
goods in question fall within Chapter 68 has no substance. C

In the case of Saurashtra Chemicals, Porbandar (supra), a larger Bench
of the Tribunal by majority took the view that carbon rings and carbon seals
which are used as spare parts in turbosets and compressors fall within the
Heading 68.01/16(1) of the CTA and the minority held that they fall within
Heading 84.65 of the Customs Tariff Schedule. The view of the majority was D
approved by this Court in Saurashtra Chemicals' case (supra). No reasons
are given in that case. But a perusal of the order of the Tribunal shows the
question there related to articles which were spare parts made of carbon and
not to a complete unit or an equipment, unlike in the present case where the
goods constitute a complete unit. Also, the goods here are not made entirely E
of graphite; only a part thereof is graphite. Further in Saurashtra Chemicals'
case, there was agreement between the parties that those articles would fall
both within Heading 68.01116(1) as well as within Heading 84.65.

In Ballarpur Industries ltd 's case (supra), granite press rolls fitted with
mild steel shafts and end-plates and its cavities filled with concrete were F
admitted to be a part of the paper finishing machinery. Disagreeing with the
judgment of the Tribunal that parts of the machinery were classifiable under
Chapter 68 of the CTA, this Court held that they were classifiable under
Heading 84.31 of the CTA. The distinction between the Saurashtra Chemicals'
case and the Ballarpur Industries' case is that in the former case the articles G
made of carbon were conceded to fall both within Heading 68.01/16(1) as well
as within Heading 84.65 being spare parts of machines whereas in the latter
case the goods were part of machinery not falling within Chapter 68 and were
not made entirely of granite.

In the instant case, in view of the finding recorded by the Tribunal that H
268 SUPREME COURT REPORTS (2000) SUPP. I S.C.R.

A the goods in question constitute a complete unit, an equipment, and are not
made only of graphite they are clearly classifiable under Heading 84.17 (I) of
the CTA. We, therefore, find no illegality in the order of the Tribunal. The
appeal fails and it is accordingly dismissed with costs.

MP. Appeal dismissed.
B