Classification of paper machine components under Customs Tariff Heading 84.39 and exemption eligibility under customs notification

Goods specially manufactured for use in paper-making machinery were treated by the majority as classifiable under Customs Tariff Heading 84.39 because they functioned as integral parts for dewatering pulp and aiding paper formation. Section Note 1(a) of Section XVI was held to exclude only transmission or conveyor belts or belting of plastics under Chapter 39, and the Revenue did not establish that the goods fell within that description. The majority also held that Notification No. 156/86-Cus. covered component parts of paper machinery, with spare parts and component parts treated as substantially equivalent for exemption purposes. One Member dissented, characterising the goods as polyethylene film in rolls under Chapter 39 and denying the exemption.

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Issues: (i) whether the imported goods were classifiable under Customs Tariff Heading 84.39 as parts of paper making machinery or under Chapter 39 as plastic film or belting, and (ii) whether the goods were entitled to the benefit of Notification No. 156/86-Cus. dated 01-03-1986 as component parts of paper machinery.

Analysis: The goods were examined with reference to the samples, catalogue, technical literature and the manner in which they were manufactured and used in the paper machine. On that material, the majority found that the items were specially made for the paper industry and functioned as parts of paper making machinery for dewatering pulp and aiding paper formation. Section Note 1(a) of Section XVI was held to exclude only transmission or conveyor belts or belting of plastics of Chapter 39, and the Revenue did not establish that the goods answered that description. The majority also held that the notification covered component parts of paper machinery and that spare parts and component parts were treated as substantially equivalent for the purpose of the exemption.

Conclusion: The imported goods were correctly classified under Heading 84.39 and were eligible for the benefit of Notification No. 156/86-Cus. dated 01-03-1986.

Dissenting Opinion: One Member held that the goods were polyethylene film in rolls used as an accessory to fabric or conveyor belting, fell under Chapter 39, were excluded by Section Note 1(a) of Section XVI, and were not entitled to the notification benefit.

Ratio Decidendi: Goods specially manufactured for use as integral components of paper making machinery, and not shown to be transmission or conveyor belts or belting of plastics, are classifiable under the machinery heading and qualify for an exemption available to component parts of such machinery.

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