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 com