1985 (10) TMI 181 - AT - Customs

Summary

Issues:
- Interpretation of customs notification for exemption of duty on imported yarn
- Requirement of end-use certificates for imported goods
- Application of notification to manufacturers of intermediate products

Analysis:

The case involved an appeal against the rejection of a customs duty benefit by the Collector of Customs (Appeals) regarding the import of Nylon Filament Yarn for the manufacture of belting ducks. The Assistant Collector had denied the benefit of a customs notification, resulting in the goods being assessed at the full rate of duty. The Collector of Customs (Appeals) upheld the decision, stating that since the appellants were only manufacturing belting ducks and not finished belting for machinery, the notification did not apply. Additionally, it was found that the imported yarn was also used for the manufacture of tyre cord.

The appellants argued that belting ducks were essential components in the manufacture of conveyor and transmission belts, supplied to belting manufacturers for further processing. They contended that the notification did not specify that the importer must manufacture the belting themselves, only that the imported yarn must be used in the manufacture of belting for machinery.

The Customs Notification in question exempted certain yarns from duty when imported for the manufacture of belting for machinery. The Tribunal noted that the notification did not require the importer to manufacture the belting themselves but only that the imported yarn must be used in the manufacture of belting for machinery. The appellants were required to prove to the Assistant Collector that the imported yarn was indeed used for this purpose to avail of the duty exemption.

The Tribunal considered a scenario where the importer manufactures both the intermediate product (belting ducks) and the final belting. They opined that if belting ducks are an essential component in the manufacture of belting, the duty exemption should apply to such importers. Therefore, as long as the use of the imported yarn in the manufacture of belting for machinery is established, the benefit of the notification should be available to the importer.

The appeal was allowed by the Tribunal with consequential relief, limited to the quantity of imported Nylon filament yarn that the appellants could prove to have been used in the manufacture of belting for machinery. The Tribunal did not address the argument regarding whether belting ducks could be considered as "belting."

In conclusion, the Tribunal clarified the interpretation of the customs notification, emphasizing the requirement for the imported yarn to be used in the manufacture of belting for machinery to avail of the duty exemption, regardless of whether the importer directly manufactures the final belting.