1997 (10) TMI 66 - SC - Customs

Whether the concessional rate of customs duty on the basis of Notification No. 49/F. No. Bud (Cus.)/78, dated March 1, 1978 can be held to be applicable in respect of the said Electronic Pitch Tester Attachment? Held that - The Tribunal was in error in construing the Notification dated March 1, 1978 to hold that since the Electronic Pitch Tester Attachment has not been expressly excluded in the said notification it must be treated to have been included therein. The said view of the Tribunal is not in consonance with the principle laid down by this Court in Novopan India Ltd., Hyderabad (1994 (9) TMI 67 - SUPREME COURT OF INDIA) for construing a notification granting exemption from duty. In accordance with the said principle it must be held when an accessory to a machine is imported with the machine unless the accessory has been expressly included in the exemption notification it would not be enured to the concessional rate of customs duty under the Notification dated March 1, 1978. Having regard to the finding recorded by the Tribunal, the Electronic Pitch Tester Attachment must be held to be an accessory of the Helix Tester imported by the respondent. In favour of assessee.

Summary

Issues:
Interpretation of Notification No. 49/F. No. Bud (Cus.)/78 for customs duty on Electronic Pitch Tester Attachment.

Analysis:
The case involved a dispute regarding the applicability of a concessional rate of customs duty on an Electronic Pitch Tester Attachment imported along with a main machine. The issue was whether the attachment could benefit from the exemption under Notification No. 49/F. No. Bud (Cus.)/78, dated March 1, 1978.

The Notification provided an exemption for goods specified in the table, including "Gear Profile and Helix Tester." The respondent claimed the concessional rate for the entire equipment, including the attachment. The Assistant Collector of Customs denied the benefit for the attachment, while the Collector of Customs (Appeals) allowed it. The Tribunal upheld the decision of the Collector (Appeals), leading to the appeal before the Supreme Court.

The Additional Solicitor General argued that the attachment should not qualify for the concessional duty as it was an accessory, citing a strict interpretation principle for exemption provisions. The Court referred to a previous case to emphasize the need for clear establishment of coverage under an exemption provision.

The Tribunal's view that the attachment should be included in the exemption due to its use with the main machine was deemed erroneous by the Supreme Court. The Court held that unless an accessory is expressly included in the exemption notification, it would not qualify for the concessional duty. The attachment was considered an accessory and not an integral part of the main machine.

The respondent's argument that the attachment should be treated as part of the machine due to its inability to operate independently was rejected by the Court. It was emphasized that even without the attachment, the main machine could function. Since the notification did not expressly include accessories for concessional duty, the benefit could not be extended to the attachment.

Ultimately, the Supreme Court allowed the appeal, setting aside the Tribunal's judgment and restoring the Assistant Collector of Customs' decision. No costs were awarded in the case.