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Issues:
Availability of benefit of Notification No. 36/97 for Special Imprest Licence (SIL) spares under DEEC scheme. Analysis: The appeal concerned the denial of the benefit of Notification No. 36/97 to the appellants for claiming total exemption from customs duty on spares of machines imported under the DEEC scheme. The Commissioner (Appeals) had ruled against the appellants, citing that the Notification applied only to components, not spares. This decision was based on a Tribunal ruling in Delta Jute and Industries Ltd. v. CCE. Calcutta-II, which in turn relied on a Larger Bench decision in Hindustan Sanitaryware and Industries v. Collector of Customs. However, the Apex Court later overruled the Larger Bench decision, stating that spare parts, when fitted to a machine to replace defective parts, become components entitled to exemption under relevant Notifications. The Tribunal noted that the Calcutta Bench had overlooked the Apex Court's ruling while deciding Delta Jute & Industries Ltd., leading to an erroneous decision based on the overruled judgment of the Larger Bench. Therefore, the Commissioner's decision to deny the benefit of the exemption Notification to the appellants was deemed incorrect. The Tribunal emphasized that the spare parts imported by the appellants, intended to replace defective parts and become components of the machines, should indeed be eligible for the exemption. Previous Tribunal decisions in cases like Jindal Strips Ltd. and Siv Industries Ltd. supported this interpretation for spares used to replace worn-out parts in various contexts. Moreover, the Tribunal highlighted that the Board had issued Circular No. 525/21/2000-CX, aligning with the Apex Court's ruling in Hindustan Sanitaryware and Industries, to allow the benefit of the Notification for spares. Consequently, the impugned order of the Commissioner (Appeals) was deemed legally unsustainable and was set aside. The appeal was allowed in favor of the appellants, with any consequential relief permissible under the law granted to them.
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