1988 (5) TMI 122 - AT - Customs

Machine producing laminated boards deemed to create new commodity under Customs Tariff.

The tribunal concluded that the machine producing laminated boards constituted the production of a new commodity under the Customs Tariff. Despite not ... Machinery and mechanical appliances Issues:Interpretation of whether a machine producing laminated boards constitutes the production of a new commodity under sub-heading 2 of Heading 84.59 of the Customs Tariff.Analysis:The case involved a dispute regarding whether a machine imported by National Small Industries, which produced laminated boards used for making printed cartons, constituted the production of a new commodity as per the Customs Tariff. The appellants argued that the process of gluing together two layers of rolls with a third paper to create a rigid board transformed the materials into a new commodity. On the other hand, the department contended that the machine merely pasted together pre-existing materials without creating a new commodity. The central issue revolved around whether the machine qualified as a 'machine or a mechanical appliance designed for the production of a commodity' under the relevant sub-heading.The tribunal considered both perspectives presented by the parties. It acknowledged that the machine did not fundamentally alter the nature of the materials used, as the plain or printed sheets and corrugated or non-corrugated boards were already manufactured commodities. However, it also recognized that the resulting rigid board had distinct characteristics and applications compared to the original materials, indicating the creation of a new commodity. The tribunal noted that while the process may seem simple, the production of a rigid board suitable for carton making could be considered the manufacture of a commodity.In its analysis, the tribunal emphasized that the Customs heading focused on whether the machine was designed for the production of a commodity, rather than the intricate manufacturing processes involved. It highlighted the vague and open-ended nature of the heading's definition, which allowed for differing interpretations. Ultimately, the tribunal leaned slightly towards the view that the machine did produce a commodity, citing the unique properties and utility of the rigid board compared to the original materials.Concluding that the machine indeed produced a commodity in the form of laminated products suitable for carton making, the tribunal ordered the assessment to be conducted under the relevant sub-heading of the Customs Tariff. The decision underscored the importance of considering the end product's characteristics and functionality in determining whether a new commodity had been manufactured, despite the simplicity of the production process.