1987 (9) TMI 46 - SC - Customs

Whether the appellant is entitled to the benefit of the Notification No. 281-Cus/76, granting part exemption from payment of Customs duty in respect of the rod bushes and camshaft bushes imported by the appellant? Held that - The intention of the Notification is clear enough to provide that the parts of the engines, mentioned under Heading No. 84.06, will get the exemption under the Notification and in the absence of any provision to the contrary, we are unable to hold that the parts of the engines, which are included under a heading other than Heading No. 84.06, are excluded from the benefit of the Notification. As in the instant case, there is no material or evidence nor is there any finding of the Appellate Tribunal or the Customs authorities that the bushes, which have been imported by the appellant, are parts of internal combustion piston engines falling under Heading No. 84.06. In the circumstances, it is necessary that the Customs authorities should embark upon the question and decide whether the bushes, imported by the appellant, are really parts of such engines. Appeal allowed.

Issues: Interpretation of Customs Act, 1962 regarding exemption from Customs duty for specific imported articles.

Analysis:
1. The appeal in question under Section 130E of the Customs Act, 1962, revolves around the entitlement of the appellant to the benefit of Notification No. 281-Cus/76, providing partial exemption from Customs duty for specific imported articles like rod bushes and camshaft bushes.

2. The Customs authorities initially denied the appellant's claim for exemption under the said Notification, citing that the bushings imported by the appellant did not fall under Heading No. 84.06 but under Heading No. 84.63, thus not qualifying for the exemption.

3. The Notification in question, dated 2-8-1976, exempts articles specified in Column (2) falling under Heading No. 84.06 from a portion of the Customs duty. The controversy arose due to the absence of explicit mention of 'parts' in Heading No. 84.06, leading to differing interpretations.

4. The key argument presented by the Additional Solicitor General was that even if the bushings were parts of internal combustion piston engines, they were not entitled to exemption under Heading No. 84.06. Furthermore, the contention was made that bushings and bearings were considered identical, thus not qualifying for the exemption.

5. The Court analyzed that while Heading No. 84.06 did not explicitly mention 'parts,' the Notification intended to grant exemption to both internal combustion piston engines and their parts. Thus, it was unreasonable to restrict the exemption to only the engines and not their parts.

6. The Court rejected the argument that all parts of the engine must qualify for exemption, stating that 'parts thereof' in the Notification encompassed any or some parts of the engine. Therefore, parts of engines under Heading No. 84.06 were deemed eligible for the exemption.

7. Disagreeing with the Customs authorities' assertion that bushings and bearings were identical, the Court emphasized that even if two articles performed similar functions, they could be distinct. The Court highlighted the importance of market recognition of distinct names for different articles.

8. The Court concluded that to avail the exemption under the Notification, it must be established that the parts claimed for exemption were indeed parts of internal combustion piston engines under Heading No. 84.06, irrespective of their inclusion under other headings like Heading No. 84.63.

9. As there was no evidence or finding regarding whether the imported bushes were parts of engines under Heading No. 84.06, the Court directed the Customs authorities to reevaluate the classification and determine if the bushes qualified for the exemption.

10. Consequently, the Court set aside the previous orders and remanded the case to the Collector of Customs for a fresh decision on the classification of the imported bushes. The appeal was allowed without costs due to the circumstances of the case.

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