1985 (4) TMI 195 - AT - Income Tax

Tribunal classifies filter cloth as machinery parts, not fabrics, exempting from additional duty.

The Tribunal ruled in favor of the appellants, determining that the Polypropylene Multifilament filter cloth for Rotary Drum Filter should be classified ... Classification Issues: Classification of Polypropylene Multifilament filter cloth for Rotary Drum Filter under Central Excise Tariff as fabric or component parts of machinery and liability for additional duty (CV duty)Analysis:1. The primary issue in this case was the correct classification of Polypropylene Multifilament filter cloth for Rotary Drum Filter under the Central Excise Tariff. The question before the Tribunal was whether the imported filter cloth should be classified as fabric under Tariff Item No. 22 or as component parts of machinery, thereby exempt from additional duty (CV duty).2. The appellants imported the Polypropylene filter cloth as spare parts for their Rotary Drum filter machine. The goods were initially assessed as spare parts of machinery for basic customs duty but were classified as man-made fabrics under Item 22 of the Central Excise Tariff for additional duty (CV duty) purposes.3. The appellants sought re-assessment and refund of CV duty, arguing that since the goods were considered component parts of machinery for basic customs duty, they should not be classified as man-made fabrics for CV duty. The Assistant Collector of Customs and the Appellate Collector upheld the classification under Item 22 of the Central Excise Tariff.4. During the appeal hearing, the appellants argued that the goods, being made of cloth and designed for use as a filter in machinery, should be classified as component parts of machinery exempt from central excise duty and CV duty. The customs authorities were urged to maintain the initial classification under Item 72(3) ICT.5. The Respondents contended that classification for customs and CV duty could differ as they fall under separate enactments. They defended the classification under Tariff Item 22, asserting that the goods were man-made fabrics. They cited legal precedents to support their argument.6. The Tribunal did not delve into whether the classification for basic customs duty should align with that for CV duty. However, it was noted that component parts of machinery need not be solely metal or wood, and after reviewing the goods' description and purpose, it was concluded that the correct classification should have been as component parts of machinery, not man-made fabrics under Tariff Item 22.7. Consequently, the Tribunal set aside the Appellate Collector's order, ruling in favor of the appellants. The goods were deemed not liable for CV duty, given their appropriate classification as component parts of machinery.In conclusion, the Tribunal's judgment resolved the issue of classification of the imported Polypropylene Multifilament filter cloth for Rotary Drum Filter, determining it as component parts of machinery rather than man-made fabrics under the Central Excise Tariff, thereby exempting it from additional duty (CV duty).