2001 (3) TMI 95 - SC - Customs

Whether benefit of the notification No. 155/86-Cus., dated 1st March, 1986 be denied to the appellants as serviceable parts out of the dismantled furnace were used besides some indigenous parts along with the imported parts and, therefore, new furnace has not come into existence? Held that - It is evident from the notification that the expression assembly has been separated from the expression initial setting up . These expressions are intended to cover different situations. We are unable to accept the contention of learned Attorney General that the expression assembly is to take colour from the expression initial setting up and, therefore, without new article coming into existence, the question of claiming benefit under the notification would not arise. The language of the notification is clear and plain. The notification is to be construed reasonably and rationally and not in a manner which deprives the benefit thereof. The expression assembly in the context and setting in which it has been used cannot be construed to mean bringing into of a new article. This expression cannot be equated with the expression manufacture . If the construction as placed by the Tribunal is accepted, it would render the expression assembly in the notification redundant. The expression assembly has been used as opposed to dismantle. The notification does not contemplate denial of its benefit on the ground of reuse of certain parts and/or use of some indigenous parts with the imported parts. Thus, the appellants are clearly entitled to the benefit of the notification. In favour of asseesee.

Summary

Issues:
Interpretation of Notification No. 155/86-Cus. for lower rate of duty on imported parts used in assembly of furnaces.

Analysis:
The case involved the appellants who assembled modernized furnaces using imported parts, indigenous parts, and serviceable components from dismantled furnaces. The appellants claimed the benefit of Notification No. 155/86-Cus., dated 1st March, 1986, which provided for a lower rate of duty on imported parts. The Director General of Technical Development recommended the lower duty rate, but the benefit was denied on the basis that no new furnace emerged from the assembly. The Tribunal upheld this decision, stating that the modernization of existing furnaces did not result in the assembly of a new furnace eligible for the notification's benefit.

The main contention was whether the notification required the creation of a new article for claiming the benefit. The Court analyzed the terms 'initial setting up', 'assembly', and 'manufacture' separately, emphasizing that they have distinct meanings. The Court held that the expression 'assembly' should not be equated with 'manufacture' and that the notification should be interpreted reasonably to avoid depriving its benefits. The Court noted that the notification did not preclude the use of serviceable or indigenous parts alongside imported parts in the assembly process.

The Court concluded that the appellants were entitled to the benefit of the notification as the expression 'assembly' did not necessitate the creation of a completely new article. Therefore, the impugned order denying the benefit was set aside, and the appeal was allowed. Each party was directed to bear their own costs as a result of the judgment.