1985 (12) TMI 188 - AT - Customs

Summary

Issues Involved:
1. Whether the imported inconel strips qualify as "spare parts" under Policy AM-78.
2. Interpretation of paragraphs 52, 53, and 54 of Policy AM-78.
3. Legality of the confiscation order and the imposed fine.

Detailed Analysis:

1. Whether the imported inconel strips qualify as "spare parts" under Policy AM-78:
The appellants imported inconel strips for use in their Ammonia Reformer machinery, arguing that these strips are essential for replacing worn-out parts. The Customs authorities, however, contended that the strips were not identifiable as spare parts in their imported form, as they needed to be cut and bent to fit the machinery. The Additional Collector and the Board both held that the strips did not qualify as spare parts, citing that items requiring fabrication, such as plates and sheets, do not fall under the definition of spare parts according to para 54 of Policy AM-78. The Board reduced the fine but upheld the confiscation, asserting that the strips had to be converted into covers for the pipes, which constituted fabrication.

2. Interpretation of paragraphs 52, 53, and 54 of Policy AM-78:
The appellants argued that the authorities misinterpreted paragraphs 52, 53, and 54 of Policy AM-78, which collectively define permissible spare parts. Paragraph 52 allows the import of spares for maintenance of machinery. Paragraph 53 includes all spare parts except those explicitly non-permissible or consumable. Paragraph 54 specifies that spare parts are those needing replacement due to wear and tear and may include items like pipes and wires that only need to be cut or bent. The appellants contended that their strips fell under this definition, as they only required cutting and bending, not fabrication. The Additional Collector and the Board, however, did not adequately consider this argument and did not seek expert opinion or demonstration from the appellants.

3. Legality of the confiscation order and the imposed fine:
The Tribunal found that neither the Additional Collector nor the Board provided sufficient evidence that the strips required fabrication beyond cutting and bending. The definition of spare parts in later policies and the clear language of paragraph 54 supported the appellants' contention that the strips qualified as spare parts. The Tribunal noted that the authorities failed to challenge the appellants' claim that the strips were necessary replacements for worn-out parts in the Ammonia Reformer. Consequently, the Tribunal concluded that the confiscation order was legally unsound and set it aside, ordering a refund of any fine paid by the appellants.

Conclusion:
The appeal was allowed, the confiscation order was set aside, and the fine paid by the appellants was ordered to be refunded. The Tribunal concluded that the imported inconel strips qualified as spare parts under Policy AM-78, and the authorities had misinterpreted the relevant policy provisions.