ORDER

K.L. Rekhi, Member (T)

1. The common point of dispute involved in these two appeals is the classification of certain machinery parts made of carbon (or graphite) imported by the appellants. The Department assessed the goods under Heading 68.01/16(1) of the Customs Tariff Act, 1975, The appellants claim re-assessment under Heading 84.65. It was the common ground of both sides that there was no other competing heading to be considered. Both the appeals were argued before us together and they are being disposed of by this common order.

M/s E.I.D. Parry (India) Ltd., appellants in Appeal No. CD/SB/T 888/81-D, had, vide their application dated 12-12-84, prayed to be joined as interveners in these appeals. Notice to attend this hearing was duly sent to the learned advocate of M/s E.I.D. Parry (India) Ltd. However, when these matters were called, no one was present on their behalf. Since both the appellants and the respondents were present and ready to proceed, and since these appeals have been pending for quite some time and have been adjourned on a number of previous occasions, the Bench decided to proceed with the hearing of these appeals.

2. Before beginning the discussion of this case, it would be helpful to notice the relevant headings and other provisions of the Customs Tariff :-

"68.01/16-Articles of natural or artificial stones, of agglomerated natural or artificial abrasives, of plastering material, of cement, of concrete, of asbestos, of asbestos-cement or cellulose fibre cement, or of mica; articles of vegetable materials agglomerated with mineral binders; mineral wools; expanded mineral materials, articles of other mineral substances, not elsewhere specified or included :

(1) Not elsewhere specified

(2) Grinding stones, grinding wheels and the like, of natural stone, of agglomerated natural or artificial abrasives, and segments or other finished parts of such stones and wheels but excluding hand polishing stones, whetstones, oil stones, and hones."

"Section XVI

Machinery and Mechanical Appliances; Electrical Equipment; Parts Thereof

Notes : 1. *********

2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines [not being parts of the articles described in Heading No. 84.64 or parts of the following articles falling within Heading No. 85.18/27, namely (i) insulators or insulated electric wire and the like, (ii) carbon articles used for electrical purposes, or (iii) electrical conduit tubing and joints thereof] are to be classified according to the following rules :

(a) goods of a kind described in any of the Headings of Chapters 84 and 85 (other than Heading Nos. 84.65 and 85.28) are in all cases to be classified in their respective Headings.

(b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines falling within the same Heading (including a machine falling within Heading No. 84.59 or electrical goods and apparatus falling within Heading No. 85.18/27) are to be classified with the machines of that kind. However, goods which are equally suitable for use principally with the goods of Headings No. 85.13 and 85.15 are to be classified in Heading No. 85.13;

(c) all other parts are to be classified in Heading No. 84.65 or 85.28.

"CHAPTER 84

Notes : 1. This Chapter does not cover :

(a) Millstones, grindstones and other articles falling within Chapter 68.

*******

84.65. Machinery parts, not containing electrical connectors, insulators, coils, contacts or other electrical features and not falling within any other heading in this Chapter."

3. The facts of the case in brief are that the appellants imported carbon rings and ring carbon seals for use as spare parts in turbosets and compressors. The Department considered the goods as articles of mineral substance (i.e. carbon or graphite) and assessed them under Heading 68.01/16(1). The appellants sought their re-classification as machinery parts under Heading 84.65. Their claim failed at the level of the Assistant Collector and later the Appellate Collector. The appellants thereupon filed revision applications to the Central Govt. which, on transfer have been taken up as the subject appeals.

4. The appeals first came up before a Special Bench comprising three Members, as usual, on 30-4-84. During the hearing, it was brought to the notice of the said Bench that similar goods imported by the same appellants were earlier the subject matter of a judgment by Special Bench 'D' (Order No. D-234/83 dated 18/28-4-83 in Appeal No. 245/78-D). This was a majority judgment. Two Members of that earlier Bench had held that the goods were classifiable under Heading 84.65 and accordingly had allowed that appeal No. 245/78-D. The dissenting Member, relying on Note l(a) to Chapter 84 of the Tariff, had upheld the Department's classification under Heading 68.0l/ 16(1). During the hearing on 30-4-84, the appellants relied on the earlier majority judgment of the Bench while the Department's representative relied on the dissenting judgment. After the hearing was over, the Bench reserved its orders. When members of the said Bench discussed the matter among themselves, they noticed that the Section Notes and Chapter Notes in the Customs Tariff Act were a part of the statutory tariff and were thus relevant in the matter of classification of goods under the Customs Tariff. The Bench also noticed that in the earlier majority judgment there was no discussion on the relevant Section Notes and Chapter Notes. In the circumstances, the Bench felt that in the interests of justice to both sides, the two appeals should be heard afresh and decided by a larger Special Bench. The matter was accordingly placed before the President who constituted the larger Special Bench on 14-5-84. This is how these two appeals have come up before the present larger Special Bench.

5. The Bench heard both sides. During the hearing, the appellants made an attempt to distinguish the goods (ring carbon seals) involved in the second appeal, saying that they were steel-backed and were thus a composite article and not made of carbon alone. The Bench noticed that this was a new plea of i'act. However, the appellants were given an opportunity to prove it with contemporaneous documentary evidence. The appellants could not do so and for this reason they themselves chose not to press for this plea. Considering the remaining pleas taken by both sides, we find that there is agreement between the appellants and the Department on the following points :-

(1) The goods were made of carbon.

(2) Carbon is a mineral substance and for that reason the goods could be called articles made of a mineral substance.

(3) At the same time, in the form the goods were imported, they were fully finished machinery parts exclusively designed for fitment to particular turbosets and compressors, were identifiable as such and bore part numbers of the respective foreign manufacturers. There was also agreement that the goods had been imported for use as spare parts of machinery.

There was also agreement that the goods could claim to fall in either of the competing headings. The difference between the two sides was on the point whether Heading 68.01/16 was the correct one or the Heading 84.65 was more appropriate. The learned representative of the Department cited a later order of Special Bench `D' (Order No. 279/84-D dated 26-5-84 passed in Appeal No. C-998/79-C of M/s Hindustan Zinc Ltd., Udaipur) in support of his case. It had been held in this order that graphite blocks imported for fitment as spares in heat exchangers were covered by Heading 68.01/16 and not under Heading 84.17 of the Customs Tariff. The appellants referred to the majority decision in their own earlier case.

6. We have given our earnest consideration to the matter. We observe, as would be seen from the texts of the competing headings reproduced in paragraph 2 above, that both Headings 68.01/16(1) and 84.65 are residuary items. If it were a simple matter to decide the classification of the subject spare parts made of carbon by a comparative reading of the two headings just by themselves, we would have no hesitation in saying that Heading 84.65 was more specific for the goods which were indisputably machinery parts.

7. But we observe that the Customs Tariff Act has not left the matter to be decided just on that basis. The relevant headings in the tariff have to be interpreted and applied in the light of the Section Notes and Chapter Notes which are statutory and binding like the headings themselves. These Section Notes and Chapter Notes sometimes expand and sometimes restrict the scope of certain headings. In other words, the scheme of the Customs Tariff Act is to determine the coverage of the respective headings in the light of the Section Notes and Chapter Notes. In this sense, the Section Notes and Chapter Notes have an over-riding force on the respective headings.

8. We also observe from paragraph 2 above that classification of machinery parts is regulated by Note 2 in Section XVI of the Customs Tariff Act. This Note itself is subject, inter alia, to Note l(a) of Chapter 84 of the Tariff. In other words, Note 1 (a) of Chapter 84 has been given over-riding effect when it comes to determining the classification of goods falling within its scope. This Note says clearly that Chapter 84 does not cover "millstones, grindstones and other articles falling within Chapter 68". The appellants argued that, applying the principle of Ejusden Generis, the words "and other articles" in this Note could mean only articles similar to millstones and grindstones. On careful consideration, we find no force in their argument. The relevant words are "and other articles falling within Chapter 68" and not "and similar other articles falling within Chapter 68" or "and the like articles falling within Chapter 68". We notice further that the articles falling within the entire Chapter 68 have been excluded by this Note. Millstones, grindstones, grinding wheels, and the like fall within sub-heading (2) of Heading 68.01/16. If the intention of the Parliament were to exclude only millstones, grindstones and other similar articles, there was no need to exclude the articles "falling within Chapter 68"; in that case, the wording of the Note would have been "and other articles falling within Heading 68.01/16(2)". We find support in this finding of ours from the other exclusion Notes in the beginning of Chapter 84 wherein specific sub-headings have been cited wherever the intention was to restrict the exclusion to those specific sub-headings only. Therefore, giving Note l(a) "Millstones, grindstones and other articles falling within Chapter 68" its natural meaning, we hold that if any goods fall within within Chapter 68, their classification under Chapter 84 is clearly forbidden by Note l,(a) to that Chapter.

9. We find further that if we were to take the view that all machinery parts made of carbon etc. would fall under Chapter 84 and only other articles (i.e. other than machinery parts) made of carbon etc. would fall under Heading 68, we would be making Note l(a) to Chapter 84 redundant and meaningless. This is so because if the goods are parts they would then invariably fall under Chapter 84 and if they are not parts they could in any case not come under Chapter 84 ; in either of these cases, Note l(a) would be rendered nugatory. It is a settled principle of interpretation that no provision of the legislation should be rendered nugatory or redundant. We are of the considered view that Note l(a) to Chapter 84 has to be given its full meaning and effect intended by the Parliament. We, therefore, hold that even fully finished machinery parts, if they are made of carbon, would fall under Chapter 68 as held by the lower authorities and not under Heading 84.65 as urged by the appellants.

10. The learned representative of the Department cited the Alphabetical Index to the CCCN and the Explanatory Notes to the CCCN to say that nonelectrical articles made of carbon were classified by the CCCN under Chapter 68. He stated that the Explanatory Notes and the Index, though not legally binding, had persuasive value and Special Bench 'D' had earlier accepted them as such in the case of Durametallic India Ltd., Madras v. Collector of Customs, Madras-1983 E.L.T. 609 (CEGAT). Since, in this case, we have held that by virtue of Note l(a) to Chapter 84, machinery parts made of carbon cannot fall under Chapter 84 and so would fall under Chapter 68, we do not consider it necessary to go into the point whether any reliance should be placed on the Alphabetical Index or the Explanatory Notes in the present two appeals.

11. In the result, we reject both the appeals.

S. Duggal, Member (J) and S.C. Jain, Member (J)

12. I have gone through the order proposed on behalf of the Bench by Learned Brother Shri K.L. Kekhi. Since I have some reservations to the view taken in the said order, I propose to differ, with all respects, to the view recorded therein, and endorsed by the Learned Senior Vice President ; for the reasons detailed below.

13. The facts, as also the relevant provisions of the Customs Tariff, are very clearly set out in the order already recorded. A reading of the aforesaid order indicates that, but for the existence of Note l(a) to Chapter 84 of the Tariff, the more specific heading for the subject-goods would have been T.I. 84.65 of the C.T.A. as against the general heading covered by T.I. 68.01/ 16(1).

14. It is true that in the earlier order, on which the appellants have placed reliance ; namely, Order No. D-234/83 dated 18/28-4-1983 in Appeal No. 245/78-D (1983 E.C.C. 1504), no reference was made to Chapter Note l(a) by the Departmental Representative during hearing and, as such, no consideration of the said Note occurred in the Majority judgement till the Dissenting Order brought out this point, regarding which the Learned Member, recording the Dissenting Order, had also not given any indication during hearing. That view having been now solely relied upon by the learned SDR, Shri Vineet Ohri, in this appeal, and Chapter Note being primarily the basis for the proposed order, I have now very carefully analysed the implications thereof, and my conclusion is that this Chapter Note notwithstanding, the Tariff Heading 68.01/16(1) cannot be applied to the subject goods which are described in the Bili of Entry as 'Ring Carbon Seal'.

15. The provisions of the said Tariff Item have been noticed in the proposed order and it is clear that 'Carbon' does not find an express reference in the whole of the entry which falls within the Chapter meant for : 'articles of stone, of plaster, of cement, of asbestos, of mica and of similar materials ; ceramic products, glass and glassware'. There is again specific reference to certain articles by description in the Tariff Heading 68.01/16 and, still further on, in sub-entry (2) thereof. There is not even a hint that carbon or articles of carbon are to be covered by this entry. The items which are mentioned do not have any remote likeness or commonness with articles of carbon. Same is the position in regard to the exclusion Note l(a) of Chapter 84 where, again, articles excluded from contemplation of that Chapter are : 'mill stones, grind stones and other articles falling within Chapter 68'.

16. As already noticed, Chapter 68 does not, by express reference, include articles of carbon. Apart from the fact that principles of Ejusdem Generis, as pleaded by learned Counsel of the appellants, provide guide-lines in such cases and the normal rules of interpretation are that when in a Statute, etc., particular classes are specified by name, followed by general words, the meaning of the general words is cut down by reference to particular words and the general words are taken to apply to those Ejusdem Generis with the particular classes of the same kind or measure. (Reference page 115 of Law Dictionary by Mozley and Whitely, Ninth Edition by John B. Saunders). Going by this criterion, articles of carbon cannot be considered to be within the contemplation of Chapter 68 because the wording of Chapter 68.01/16, then of sub-heading (2), and then of Chapter Note l(a) mention, by express reference, articles which have no apparent affinity with carbon.

17. I would also like to add that the observation, recorded in para 5 of the proposed order, as a second point of agreement between the parties, seems to be based on some mis-conception of the submissions because these propositions were formulated only by the SDR, and not commonly by both the sides, and learned Counsel of the appellants, as already noted, had laid great stress on the principles of Ejusdem Generis by placing reliance on Wharton's Law Lexicon (Fourteenth Edition, page 362), and had argued that, by applying general rules of interpretation, articles of carbon could not be held to be covered by Chapter 68.

18. The sole argument of the Departmental Representative, in which the proposed order is concurring, turns wholly on the point that carbon was a mineral substance, and that articles of carbon would fall within the category of 'articles of mineral substances', as mentioned in T.I. 68.01/16.

19. I am afraid, on a cumulative reading of Tariff Headings in the Customs Tariff Act of 1975, it is not possible to come to this inference in such wide and general terms. It is to be noted that the Customs Tariff has a specific heading for mineral products (covered by Chapter 25, Section-V), and carbon is not enumerated as any of the mineral products in that Chapter-heading. As against that, we have Chapter 28, and 'carbon' figures therein under T.I. 28.01/58 as one of the specific products against Serial No. 6; under the Chapter-description: "Inorganic chemicals, etc." It is, thus, clear that 'carbon' is not considered by the Tariff as directly a mineral substance or product and, correspondingly, articles of carbon would not fall within the category of 'articles of mineral substances'. They cannot, thus, be held falling within Chapter 68 so as to be covered by" Note l(a) to Chapter 84. The SDR placed extensive reliance on terms of the Alphabetical Index to the CCCN, as well as the Explanatory Notes to the CCCN, particularly Chapter 68.16 thereof, but as rightly observed in the proposed order that when we have a codified tariff, we do not have to apply the Explanatory Notes to the CCCN and are to be strictly governed by the terms of the Indian Customs Tariff. It is significant to note that there is no entry in the Notes to Chapter 68, similar to 68.16 of the CCCN Explanatory Notes, so as to include by a specific reference non-electrical articles of carbon under this Chapter.

20. In the absence of that, and in view of 'carbon' not having been shown to be a mineral product in the Tariff, and as against that, as a species of 'inorganic chemicals' under Chapter 28, I do not think that Chapter Note l(a) to Chapter 84 can be pressed into aid by the respondents; as the CTA does not treat carbon as a mineral substance, and so, articles of 'carbon' cannot be held covered by Chapter 68.

21. It is pertinent to note that Chapter 25, which covers mineral products specified therein, is expressly excluded from Chapter 68, by virtue of Chapter Note 68(a). Thus, although 'Graphite' occurs under Chapter 25 but apart from the fact that 'Graphite' is not synonymous with 'carbon'; otherwise also even that is excluded from Chapter 68, because of Note (a) referred to above. The intention and scheme of the tariff is manifest to the effect that mineral substances contemplated by Chapter Heading 68.01/16, along with other specified articles are of an entirely different genre, and not any item of the family of carbon, much less carbon itself.

22. It may be of interest to note that the 'Materials Handbook' by George S. Brady and Henry R. Clauser (Eleventh Edition), which is described as-

'An encyclopedia for managers, technical professionals, purchasing and production managers, technicians, supervisors, and foremen', and, as such, a very reliable guide book on trade understanding and common parlance, too. describes 'carbon' as a 'non-metallic clement'. There is not a hint in the commentary in respect to carbon that it is treated as a mineral substance. As against that, some of the products which are specifically enumerated in Tariff Heading 68, such as 'asbestos' (p. 64), 'cement' (p. 162), and 'mica1 (p. 485) are described as 'a general name for several varieties of fibrous minerals', as 'obtained by a mixture of certain varieties of minerals' and as 'a group of silicate minerals', respectively.

23. Thus, the items expressly mentioned under Chapter Heading 68 are commonly regarded as minerals whereas 'carbon' is not so understood. This also fortifies the view that the expression 'articles of mineral substance', as occurring in T.I. 68.01/16 does not take within its ambit: 'articles of carbon'.

24. In view of the foregoing, the subject goods being admittedly machinery-parts, and not falling within any of the specific items enumerated under T.I. 84, these have to be classified under T.I. 84.65. In that view of the matter, both the appeals deserve to be allowed, and I hold accordingly.

In accordance with the judgment of the majority of the Members who have heard the matter, both the appeals are rejected.