Advocates Appeared:
P.C. Gokhale, R.C. Pande, C.L. Kakkar,J. Gopinath

ORDER

D.C. Mandal, Member (T)

1. In this appeal, which was originally filed as a Revision Application before the Central Government, the appellants have prayed that a consignment of rough machined ram forgings for manufacture of pneumatic power hammers imported by them may be re-assessed @ 40% ad valorem under heading 84.45/48 as against the original assessment under heading 73.04/06(2) of the Customs Tariff Act, 1975 @ 60% ad valorem plus 15% ad valorem plus countervailing duty at Rs. 165/- per M/Ton under item 26 AA of CET. They have stated that the forgings were hardened at 900°C/600°C and quenched and tempered. These were subjected to rigorous test for chemical compositions, ultrasonic test for rough machining, izod impact test (or charpy test) and for tensile strength. The forgings were made from ingots large enough to have a minimum reduction of 3 to 1 on the ram head. They have been forged into shape and rough machined to very close tolerances and as such acquired the specific shape and characteristics of the rams. The dimensions are very close to the finished articles. They have further stated that the cost of rough machining does not exceed 20% of the C.I.F. value.

2. Similar contentions, were raised by the appellants before the Appellate Collector of Customs. According to them, the impugned goods had acquired the characteristics of finished rams and as such, should be classified as component parts under heading 84.45/48 in terms of Rule 2(a) of the Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975.

3. While rejecting their appeal, the Collector of Customs (Appeals) has observed that the imported goods are in the form of solid forged T. The base of the T is to be bored and a slot is to be made. The operations involved are machine turning, machine boring, machine squaring and dovetailing. The edges of the T are to be chamfered. The top of the T is to be worked upon to make an intricate collar. The drawing makes it quite evident that material transformation has to be made to convert the solid forged T into a ram. Without these multiple operations on the forged' solid T, the goods in the condition in which they were imported, cannot be said to have acquired essential characteristics of a ram. The provision of Rule. 2(a) of the Rules of Interpretation cannot be applied to the goods imported. Assessment on merit was in order.

4. We have heard Shri P.G. Gokhale, learned Advocate for the appellants and Shri J. Gopinath, learned S.D.R. for the respondent. Learned Advocate has reiterated the contentions made before the Appellate Collector as well as in the Revision Application. He has further stated that whatever processing has been done after importation of the forgings, that was necessary for fixing the machine. He has drawn our attention to pages 17 and 19 of the Instruction Manual submitted by the appellants with the paper book and has stated that the machine turning, boring, squaring and dovetailing were necessary for fixing up ram in the main machinery. He has further stated that the cost of post-importation processing is about 20% of the total price of the imported ram forgings. He has submitted that forgings attained the shape and characteristics of the finished ram and therefore, imported forgings should be re-assessed under Heading No. 84.45/48 of the C.T.A. 1975 at 40% ad valorem.

5. Learned S.D.R. Shri Gopinath has argued that apart from the processing at the bottom of the ram forgings by way of machine turning, boring, squaring and dovetailing, considerable processing was necessary in the imported forgings to give it the essential characteristics of finished rams. He has stated that after importation, intricate collar was to be made on the top of the T shaped forging. Chamfering was also to be done at the top. Pages 17, 19 and 21 of the printed Instruction Manual show that post-importation operations were to be done not only at the bottom, but also on the top of the forging. Besides, the comparative chart of dimensions of finished rams and semi-finished ram forgings, 5 cwt. (250 Kg.) and 10 cwt. (500 Kg.) as submitted by the appellants with the Revision Application, shows that the diameter and length, head as well as body, of the forgings were reduced by 3/4th of an Inch each after importation. Without these operations ram cannot function. Without Chamfering and collar, hydraulic operation is not possible. The imported ram forgings did not attain the characteristics of ram at the time of importation and hence they cannot be re-assessed under item 84.45/48 of the C.T.A, 1975, in terms of Rule 2(a) of the Rules for Interpretation. The original assessment on merits was correct and appeal deserves to be dismissed. The learned S.D.R. has relied on this Tribunal's (i) order No. 537/86-B.2 dated 11-6-1986 in appeal No. CS (SB)(T) 583/79-B.2 in the case of The Enfield India Ltd., Madras v. Collector of Customs, Madras, (ii) MANU/CE/0096/1986 : 1986 (25) ELT 468 (Tribunal) Order Nos. 395 to 397/86-B.2 dated 21-5-1986 in the case of Bharat Heavy Electricals Ltd., Madras v. Collector of Customs, Madras reported in 1986 (9) E.C.C- T.I and (iii) Order No. B-917 and 924/83-B dated 3-9-1983 in the case of Collector of Customs v. Antifriction Bearing Corporation, Lonawala. reported in MANU/CE/0379/1983 : 1984 (16) ELT 613, in support of his arguments.

6. We have carefully considered the case records and the arguments of both sides. In the case of The Enfield India Ltd., Madras v. Collector of Customs, Madras, MANU/CE/0096/1986 : 1986 (25) ELT 468 (Appeal No. CD (SB)(T) A. No. 583/79-B.2), imported forgings for Motor-cycles were subjected to the following post-importation processes:-

1. The rough forging was loaded in a drill jig and suitable drillings and reaming operations were done on both the small end and big end bosses.

2. It was then loaded on a turning fixture of centre lathe and turned to maintain the width and diameter of the big end boss as per design dimensions.

3. It was then loaded on a spot facing fixture of a drilling machine for facing the small end boss to the specified width. It was also machined to maintain the 450 chamfers on both the end faces of the small end.

4. It was then loaded on another drill jig for drilling and countersinking the oil hole at the small end.

5. It was heated in an electric oven and a hardened steel Bush was pressed on to the big end bore.

6. Then it was loaded on to an internal grinding fixture for grinding the inner surface of the pressed bush to the close tolerances of specified dimensions.

7. Then it was loaded on to a boring fixture of a Boromatic machine for carrying out fine boring operation at the small end to attain a bore of finer tolerance to locate the gudgeon pin of the piston in actual application.

It was held by this Tribunal vide Order No. 537/86-B.2 dated 11-6-1986 that the imported forging did not attain the characteristics of machinery parts and hence the original assessment under Heading 76.08/16 CTA as article of aluminium was correct. It was also observed by the Tribunal that if those imported forgings were accepted as machinery parts, then every forging which would necessarily have the shape resembling the final article would have to be classified as the finished product. That cannot be the intention of a Tariff Heading.

7. In the case of Collector of Customs, Bombay v. Antifriction Bearing Corporation (MANU/CE/0379/1983 : 1984 (16) ELT 613), forged rings for bearing races were imported. The forged rings as imported were only rough shaped forgings requiring manufacturing processes to turn them into bearing races for use in roller bearings. It was held by the Tribunal in that case that merely because the imported forged rings had rough round shape of bearing races and were made of required metal, it would not be correct to say that they had acquired essential characteristics of bearing races. It was decided by the Tribunal that the imported forged rings were classifiable under Heading 73.15(1) read with Heading 73.06/07 and not under Heading 84.62(3) of the Customs Tariff Act, 1975.

8. In Bharat Heavy Electricals Limited v. Collector of Customs, Madras (1986 (9) E.C.C. T-l), the appellants imported retaining ring frames which were assessed by the Custom House under Heading 73.33/40 of the First Schedule to the Customs Tariff Act, 1975. The appellants claimed re-assessment of the goods under Heading 84.11(1) of the said First Schedule, but their claim was rejected firstly by the Assistant Collector and then by the Appellate Collector at appeal stage. The matter came up before this Tribunal for consideration. After importation, outer diameter of retaining ring forgings was reduced by 10-12 mm, inner diameter was increased by 10-11 mm, width was reduced by 9-10 mm, grooving was done in both ends, holes were drilled on the rings for mounting of motor winding and surface finishing was done. It was held by this Tribunal that considerable post-importation operation had to be carried out to the goods and the benefit of Rule 2(a) of the Rules for Interpretation of the First Schedule to the Customs Tariff Act could not be extended as the imported goods had not attained the essential characteristics of component at the time of importation. It was also observed by this Tribunal that in cases of this type, each case was to be decided on merits taking into consideration the extent of post-importation process involved.

9. We find that considerable post-importation operation was carried put to the imported forgings in this case for the purpose of giving them the essential characteristics of rams. After importation, the diameter and length of the forgings were considerably reduced, intricate collar was made on the top of the 'T' shaped forgings and Chamfering on the top was necessary. These were in addition to the turning, boring, squaring and dovetailing at the bottom. The appellants' letter No. Imp/S 76/51 dated 27-2-1979 addressed to the Appellate Collector, shows that post-importation operations for 71 hours in the case of 10 cwt. forging and 50 hours in the case of 5 cwt. forging were necessary, involving expenditure of about 20% of the price of the forgings. The learned Advocate has not controverted the arguments of the learned S.D.R. that without these operations ram cannot function and hydraulic operation is not possible. The forgings at the time of importation properly fell under Tariff Heading 73.04/06(2) C.T.A., 1975 read with item 26 A A of C.E.T. for the purpose of countervailing duty. We, therefore, find that the original assessment was correct and the goods do not merit re-assessment as finished ram under Heading 84.45/48 in terms of Rule 2(a) of the Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975, as claimed by the appellants. In the result, we uphold the impugned order and dismiss the appeal as untenable.