TaxTMI 
TaxTMI 
1986 (4) TMI 225
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....ess plates. However, there is no need to record all the different names which these articles have been given, because one fact is uncontradicted and this is that the goods are flat rectangular pieces of stainless steel whose technical description can be given thus: 2.5 mm thickness, 3110 x 1270 mm length and width, made of martensitic steel, hardness 40-45 Rockwell C and used in forming or shaping or pressing plastic laminates and laminated sheets. The ground of dissension between the Custom House and the importers is the fact that the department says that the goods are nothing but stainless steel sheets/plates, while the importers say that they are not stainless sheets and plates but are forming/shaping moulds which give shape and form to the plastic laminates and, therefore, should be classed as moulds. The different parties i.e. the importers and the Custom House, were heard one after another and they presented long and elaborate arguments. 2. The counsel for M/s. Bakelite Hylam, Hyderabad [appeal Nos. CD(SB) (T)A No. 140/79-B2 and CD(SB)(T)A.No. 151/79-B2] began the arguments and stated that reference to sections XV and XVI of the Customs Tariff would disprove the conte....
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....te or cement) or for rubber or artificial plastic materials. The learned counsel asked that the words "artificial plastic materials" be noted. 5. The department says that this is not a mould, but a look at heading 84.34 will show that even a plate can be a machinery or an apparatus, as its heading covers printing plates and plate for printing purposes. Heading 84.59 can cover these goods because their moulds though flat in surface have definite individual functions since they help in shaping the laminates by pressure. A mould is an apparatus or an appliance for the purpose of Note 5 Section XVI: there is no basis for the department's argument that a .flat surface cannot be a mould. There are plenty of evidences and supports for saying that even a plate can be a mould if it functions and works and has the same application as a mould. Chapter 84 which covers machinery and machinery parts itself refers to plates as parts of machines, for example, in heading 84.34. 6. The learned counsel referred to the words in rule 1 of the Rules for the interpretation of the Customs tariff. He said the words "classification shall be determined according to the terms of the heading....
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....d work to perform which no steel sheet or plate will ever be called upon to perform. The Collector (Appeals) himself accepts that it is a sheet that has acquired special characteristics. He said that the Collector was wrong to hold that the flat moulds imported by them were only sheets and plates of special alloy steel classifiable under heading 73.50(2). He failed to appreciate that the mechanical properties of the flat moulds were different from those of rolled and annealed sheets of ordinary stainless steel and of rolled annealed sheets of steel type AISI 410. The tensile strength of the flat moulds is in the region of 1,70,000 pounds per square inch, whereas other stainless steels do not have that strength above 1,10,000. The elongation of these flat moulds is nil, whereas other types of stainless steel sheets have certain values of elongation. The hardness number of these articles is Rockwell 40 to 45 C, whereas flat ordinary sheets even of the special variety do not have hardness number of more than Rockwell 20C. These so-called sheets were useful for nothing else but the purpose for which they were imported as can be seen from a certificate dated 21st February, 1978 given by....
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....e 84.59 is also applicable. He pointed out that heading 84.80 of the CCCN covers all kinds of moulds. A reference was made to a decision of the Income-Tax Appellate Tribunal, Hyderabad dated 28th February, 1977, in which the Tribunal treated these stainless steel sheets as moulds and so did the Appellate Assistant Commissioner according to the findings of the Tribunal. Rockwell hardner is not used on ordinary stainless steel plates. The learned counsel emphasised that the entire argument of the department was completely baseless. 14. The learned counsel for M/s. Wood Polymer then began his arguments. [Appeal No. 253/84-B2 by Wood Polymer and appeal No. 1587(A)/81-B2, by the collector of Customs, Bombay against M/s. Wood Polymer], The learned counsel for M/s. Wood Polymer said that moulds fall under heading 84.60 and what is true of a mould is true also in a broad sense of their steel plates. These so-called steel plates are not steel plates in the sense people understand steel plates; they have no use as steel plates and have not been manufactured so that they can play the role of steel plates. Their design, manufacture and several other properties are meant to give them ch....
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....ipulated or fabricated into other articles. Their flat steel moulds cannot be cut or fabricated into other steel articles nor are they meant for such cutting or working. Their cost alone would prohibit their use as raw material for the manufacture of other steel articles. The point to be remembered is that these stainless steel flat moulds are understood by the Chief Controller of Imports as moulds. They were imported as capital goods and the Director General of Technical Development certified that the stainless steel sheets which they wanted to import would be categorised as capital goods and not as raw material. Furthermore, the latter also asked them to approach the customs authorities to explain to them that the polished stainless steel sheets were used as flat moulds. The Technical Officer would not have written such a letter unless that office understood the stainless steel sheets to be moulds i.e. flat moulds. 18. The counsel said that if heading 84.60 cannot be applied, they should alternatively be given heading 84.59. These are mechanical appliances and have individual functions and are designed for the production of a commodity by treating a material similar to me....
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....ssification under Schedule I. It is, therefore, clear that these stainless sheets are not "moulds" and cannot, therefore, be considered as spares of machinery. They are, therefore, not covered by Entry 10(4) of Appendix 10. Since stainless steel sheets are included in Appendix 8, they cannot be imported under OGL as entry 10(2) would apply to iron and steel items other than those included in appendices 4,6,7 and 8. The same is reproduced in the Import Trade Control Order No.3/83 with regard to import of spares and components. Since no licence has been produced for the clearance of the goods, they are liable to confiscation under Section 111 read with Section 3(2) of the Import and Control Act, 1947." Strangely enough, the authority who is entitled to issue the import licences said that no licence was necessary, but the customs said otherwise. He referred to the letter dated 28-2-1984 from the Joint Chief Controller of Imports and Exports to that effect. He read from a book PLASTIC PRODUCT AND DESIGN by Ronald Beck and quoted a few pages of the book to support his contention that pressing is also a process of moulding. It can be seen that larger hydraulic presses are used as moul....
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....e moulds, it will make no difference if it is a plate, and there can be no doubting that it is a mould which has been given a special quality, a polish, strength and thickness which would not be given to just a sheet or a plate. 24. The letter dated 30th October, 1979 written by Mr. J.H. Hoguet, Director, Customs Co-operation Council to the Director, Ministry of Finance, Government of India, in which he stated that in his opinion and in the light of the information and samples provided, the plates did not have any feature that would warrant their being classified in a heading other than heading 73.15 should not be relied upon. The counsel argued that this was the writer's personal opinion. The JCCI clarified in his letter dated 28.2.1984, that the stainless press moulds used in the hydraulic press could be imported under OGL serial No. 6 of appendix 10 of April/March, 1984 policy. 25. On behalf of Weldeker, the learned counsel, Mr. Nankani read the show cause notice dated 26.9.1981, issued by the Government of India in terms of Section 131(3) of the Customs Act, 1962, seeking to set aside the order of the Appellate Collector dated 15.10.1980 in respect of flat mould....
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....s but their prices are far higher than prices of ordinary steel plates or sheets. 28. The learned counsel read the importers' reply dated 3-7-1982 given to the show cause notice. He pointed out that the Government's notice does not challenge the Appellate Collector's finding. The findings of the Tribunal must be only in the context of the Appellate Collector's findings and orders. For this, the counsel quoted IAR 1977 S.C. 2050. The Tribunal's decision must be given only on the basis of the review notice. It can annul or modify the Appellate Collector's order: no other order is permissible. The Mill's certificate was read by the learned counsel in which the mill confirms that every press plate had been thoroughly inspected and had passed the final control in respect of surface finish, tolerance on length/width/ thickness and parallelity. All the press plates were up to standard mirror polished, surface and tolerance. He stated that the opinion given by the CCCN Director was not acceptable, and that this person was not competent to give this' opinion; only the Nomenclature Committee was empowered to give such clarification. He also referred to the CCCN published "Classificat....
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....L ENGINEERS' HANDBOOK, a mould is a three dimensional shaper. It must give a shape to a shapeless mass and should form it to a required contour. The importers have referred to the fact that printing plates can fall under heading 84.34; this cannot support their case, because these plates are assessed under Chapter 84 by virtue of their specific inclusion. If any article is specifically included in a chapter or heading, then regardless of any reasons to the contrary that might appear in the imported material itself, assessment must be made under the heading under which that article or material is placed. This is the primary rule of assessment and, therefore, the assessment of printing plates in 84 is not a reason for assessing these flat plates under the same heading. Unlike the CCCN which specifically provides for accessories, the Indian Customs tariff, 1975 will not cover accessories except when so specifically included. He mentioned that this is not a part of the machine; this is proved by the fact that the pack in which the sheets/laminates are stacked and placed before they are put in the hydraulic press for pressing, are assembled outside the hydraulic press. This can be gathe....
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....from the development Officer to the Deputy Chief Controller of Imports & Exports, Hyderabad, as a mechanical letter which was written without application of mind. It said that the office had no objection to the import of the equipment, tools and jigs, namely, flat mould specially hardened. Even when they speak of moulds, they speak of flat moulds as can be seen from a letter written by CAP on 22nd August, 1977 to M/s. Bakelite Hylam. Now the importers claim that the goods are moulds. In all the technical papers and literature given by the manufacturers/suppliers all the goods are shown as being flat. The supplier was the same for M/s. Weldekor and M/s. Wood Polymer, the patent number is also the same. 34. The letter to the Customs from the Brussels nomenclature directorate/ director was a correct interpretation of the tariff headings. It is not the personal opinion of the director. Being a letter, it was in the form of a demi official letter. The directorate committee gave reply only after making enquiries with the manufacturers. A demi official letter is always in the first person. 35. The learned counsel read the rule of interpretation 1 and Note 1(n) of Chapter 7....
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.... is not easy to see the relevance that they have to this dispute, because they do not rule how . a flat press late of the kind imported by the importers should be assessed. One case quoted is J.K. Steel v. Union of India 1978 E.L.T. J355 in which the Supreme Court ruled, that the Court must interpret the statute as it stands and in case of doubt, the decision should go in favour of the tax-payer. This holds true if there is a doubt in the assessment of these goods which is not perhaps borne out. There may have perhaps been a dispute before the lower authorities; but this cannot amount to a doubt in their minds in coming to a decision. The second judgment is the case of Orient Paper Mills v. Union of India, 1978 E.L.T. J 382. In this famous judgment, the Supreme Court laid down that assessing authorities which exercise quasi-judicial functions should act in a judicial and independent manner and not allow their judgements to be controlled or influenced by a superior authority. Another judgment quoted is Nivedita Chemicals v. Collector of Customs, Bombay, 1985 (20) E.L.T. 382 when this Tribunal gave a decision on glass reaction vessels imported for use in research and development. The....
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....es. Where decoration is the aim, a suitable decorative tissue is bonded to the surface during the process and the finished laminated sheet comes with decorative designs and patterns on it. According to the importers, this action of the press plates is synonymous with the action of a mould, because it is under their influence when the impregnated sheets are pressed between them, that the thicker sheet, whether decorative or utilitarious, is moulded, formed and produced. They play the same role that a conventional mould plays, because without the mould, the finished part cannot take its final form; and without these press plate moulds the finished plastic sheet cannot take the shape it does. The forming and shaping is possible only through the direct use of the press plates. 43. To be sure, there is some material that would appear to support the argument that the laminating process is a moulding process. At page 58 Chapter 3 of AN INTRODUCTION TO PLASTICS (Lionel K. Arnold) runs this passage under LAMINATING "It has been customary to speak of laminates moulded at less than 100 psi as low-pressure laminates as opposed to high-pressure laminates molded at higher pressures." ....
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....ted sheet and still be produced by molding, because, after all, a mould fulfils its function when the material to be formed is placed in the mould and is pressed so that it takes the shape of the mould as may be desired, permanently. Since flat sheets and plates are required, the moulds cannot very well be contours or hollow or give shapes other than flat shapes to the finished product. It cannot, however, mean that there is no molding because the finished product has a flat surface and is, so to speak, shapeless. The shape is its flat surface, a required character in the product just like a contour product may be required in another application. It is all a question what shape the product to be produced is required to have. 46. It is not possible to accept the argument of the importers that the goods are moulds or that they form part of the machine. When we speak of a mould, we understand it to be a hollow or a cavity or a recess into which the subject to be formed is poured or injected. Final shape is obtained from the mould, frequently with the help of pressure and heat. Quite frequently too, there are two counter-parts of a mould, the male and the female, the male takin....
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.... through a bath for impregnation, as shown in Figure 25.22. This is a continuous operation and, as the sheet leaves the resinoid bath, it goes through a drier which evaporates the solvent, leaving a fairly stiff sheet impregnated with the plastic material. To facilitate lamination, the sheets are then cut into convenient sizes and stacked together in numbers sufficient to make up the thickness of the final sheet. Each group is assembled between polished metal plates at top and bottom and is then stacked in a hydraulic press. Under the action of heat and pressure, a hard rigid plate is obtained." 47. METALLURGY & PLASTICS FOR ENGINEERS (Merle C. Nutt) writes at page 504 "Lamination of Plastics is a favourable method of processing casein, most of the aldehydes, and some of the other resins by dissolving them in organic solvents and subsequently using them as varnish for coatings and for impregnating sheets of paper, cloth or other fabrics. Layers of these sheets may then be cemented into a unit mass by pressing. Flat laminates can be produced very rapidly and inexpensively. The casein solution may be applied at room temperature by dipping, spraying or brushing and then the....
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....ngle-speed motor, which provides a feed of about 30 fpm, but more often a variable-speed drive is employed, which allows any feed speed from 10 to 60 fpm. Neoprene rubber is used to cover the rolls. This rubber is from 60 to 70 duro A hardness, which will provide a perfect bond without any danger of marring of scratching." It is very significant for our purpose that what the flat platen presses can do can be done by rotary presses. It is argued by the importers that their flat platen presses are moulds. As we have seen the forming is done by means of the pressure exerted by the plates upon the impregnated paper, and with the help of heat to form the laminate sheets/plates. It turns out, however, that the same work can be done by rotary presses whose arrangement is given in the book as follows:- "Its chief functioning elements are two large-diameter rolls, nearly always rubber-covered, one of which is positioned precisely above the other. Sometimes, these rolls are driven by a single-speed motor, which provides a feed of about 30 fpm, but more often a variable-speed drive is employed, which allows any feed speed from 10 to 60 fpm." [fpm stands for feet per minute] It can....
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.... the heat needed during the process is to make the resin flow and to combine the sheets with one another so that they form a single integral sheet. No forming is imparted to the sheets during the pressing operation - there' were flat plane-surface sheets before the process and they remain such sheets afterwards but with the difference that after the pressing/laminating process they have integrated into a thicker flat surface stiff sheet called a laminate; it would be useful to bear in mind that the products are called laminates or laminated plastics, a name that describes not only the manner of the structure but also the manner in which such structure was formed. One of the meanings given to the word "mould" in the Shorter Oxford English Dictionary is "to create, produce, or form out of certain elements or materials, or upon a certain pattern; also, to plan, design. Also with up. This word, as a verb is used to mean create or form and all the books where plastic laminates are said to be molded, use the word as a verb, or as a verbal noun molding to signify, create or the process of molding i.e. creating. The thick sheets/plates are created or formed and this is all the meaning the ....
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....me being handled. Compression molding usually requires the loading of preformed compacts or blanks in heated dies. Proforms may also be reheated electronically to save press time. Transfer molding usually first closes the die or mold with a large hydraulic cylinder to hold the joint line tight against flash and then forces the charge into the cavity by means of a smaller cylinder. Injection molding makes this process automatically by adding a hopper to maintain a supply of power, a controlled injection stroke to meter the correct amount of powder, a controlled heating zone to bring the charge up to temperature before it is injected into the mold cavities, an ejecting means, and automatic cycle timing. Laminating of plastic bonded sheet materials uses steam or electrically heated plates or platens in hydraulic presses. Where more than one set of hot plates is used, the method of suspension opens the plate spacing for removal and reloading. Thus a dozen or more sheets of plywood can be cured at once, using sheet Tago glue interleaved between wood plies. Layers of fabric or other filler material are also cured in sheet or other forms, the curing times depending upon thermal conduct....
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.... be a recess, a hollow or a cavity to hold the material under formation. 54. Just one more authority and the nature of the mould will be clear. The MAKING, SHAPING AND TREATING OF STEEL (Harold E. McGannon) United States Steel - Ninth Edition, gives some interesting illustrations of what a mould is understood to be. At Chapter 19 under the article Ingots, the book describes how the ladle is moved to a pouring platform where the liquid is poured or teemed into a series of molds of the desired dimensions and the steel solidifies in the molds to form a casting called ingot. In another article on Type of ingot molds, one reads that ingot mould that are in common use are tall box-like containers made of cast iron and the mould cavity for receiving the molten steel is usually tapered from the top to the bottom of the mold. There are big-end-down, and big-end-up molds and open-top and bottom-top, open bottom, closed-bottom and plug-bottom molds as well as open-top molds. There is not one word in this authoritative work that will support the view that moulds can be flat, plane-surface-like structures of the kind imported. They are all described and written about as cavities, recess....
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....etal castings lined with refractory material, placed upon the tops of the mold which usually were good for one pouring. At present, the larger proportion of hot tops are refractory-lined steel or iron castings with suitable coatings applied between pourings. The linings may last for twenty-five heats or more. Practically all hot tops, whether of the lined-metal-casting or hollow-tile type. are now inserted into the top of the mold and are supported at various heights depending on the length and required weight of the main body of the ingot. Chapter 19 describes the effect of a hot top." The following paragraphs describe the thickness of mold walls:- "Mold wall thickness ranges from about 4 inches for a 20-inch ingot to about 6 inches for a 32-inches ingot. For molds used to cast large ingots for slabbing mills, the wall thickness may be made somewhat greater for optimum mold life. The life of ingot molds has been found to be a function of the ratio of mold weight to ingot weight." Evidently an enclosed space like a mold must have walls to hold the material under forming. 55. It is not necessary to labour the point any further. Sufficient material has been recorded ....
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....apter 84 but the weight of authority is not in their favour. 58. The goods cannot be said to be parts of hydraulic press, because though they work in conjunction with the press they do not form part of them. These steel sheets can be removed from the hydraulic press without in any way impairing the functioning of the hydraulic press. To say that without their being fitted the work will not be complete and the product will not be produced by the hydraulic press is not really an argument, because the principle of a hydraulic press has nothing to do with the presence or the absence of the platen plates. The final work to make the plastic sheet may be given by the flat plates and without them the laminates cannot be created but that is not to say that they are part of the hydraulic press. The platen press is undoubtedly an accessory that has to be fitted to the hydraulic press if it is to do its work, but this will not make the platen press a component part of the press. It would be like saying that the thread is a component part of the sewing machine, because without the thread the machine cannot sew or stitch the cloth and hence cannot produce the final product; or like sayin....
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....ssion, because the review notice dated 26-9-1981 made it clear that the Government of India thought that the correct assessment of the goods was under 73.15 rather than under 84 as ordered by the Appellant Collector. The review, if made, will involve reassessment of the goods under chapter 84 and the assessment which the Appellate Collector made is to be rejected. For reasons already discussed above, the assessment ordered by the Appellate Collector cannot be supported and needs to be set aside. The dispute in M/s. Weldekor involved only the question of assessment. There appears to be not any other dispute from the order of the Appellate Collector. Therefore, we need not go into any other point that may arise. 62. On behalf of M/s. Bakelite Hylam it was argued that they did not receive any notice for review in respect of the cases which the Government of India wanted to review. This is quite true, but the notice carries an anne-xure of the orders-in-appeal which the Government of India sought to review and two orders-in-appeal relating to the importations by M/s. Bakelite Hylam are listed, namely, S/49-1477/80R and S/49-122/80R. There has been an omission in not addressing ....
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....ce to the meaning of molding in steel industry. In this view of the matter it is unnecessary for me to record a finding on the alternative plea of the importers regarding the products being classifiable under heading 84.59(2). I would accept the importers plea for classification under heading 84.60 in preference to heading 75.15 claimed by the Revenue. 66. I would, however, agree with the finding in para 62 that the review notice issued by the Government of India also related to imports made by M/s. Bakelite Hylam Ltd. 67. [per: S. Duggal, Member (Judicial)]. - I have respectfully gone through the order recorded by Vice President (J), and also the elaborate order recorded by my Learned Brother Shri H.R. Syiem. On a cumulative consideration of the material on the subject, as reproduced in the order of Learned Brother Syiem, I am inclined to say that the issue of classification is not wholly free from doubt, and that much can be said in support of the plea of the importers, for assessment of the subject goods under Tariff heading 84.60. While, therefore, agreeing with the conclusion of the Learned Vice President (J), I wish to add following observations. 68. I....
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....s from manufacturers, produced by the importers where these press-plates have been described as flat moulds or simply 'moulds'. This has been amply taken note of in paragraph 42 as well as paragraphs 44, 45, 46 of the judgment recorded by my Learned Brother Shri H.R. Syiem. A reading of this material leaves no room for doubt that so far as plastic laminates are concerned, these 'press-plates', also called; 'flat moulds' or 'press moulds' by the manufacturers as well as the importers in most of the papers dating back to from 1978, 1979 (Reference: Paper-book in Appeal No. 1.40/79-B2 - pages 15, 18 & 19), perform the function of moulding. It appears that as to whether these are 'flat' or in the form of 'cavities' or other 'profiles' will depend upon the shape the end-product is intended to take. In case the final product is to be made in 'sheet' form as plastic laminates, then the moulding could also be, rather has to be, done by flat-moulds. There could, of course, be products with other shapes, even made' of plastics, for which moulds of a conventional shape would be required. 73. The process of manufacture, as detailed in para 42 of the fore-going order, shows unmistaka....