1987 (4) TMI 246 - AT - Central Excise

Summary

Issues:
1. Interpretation of the term 'spares' under the Import Policy.
2. Validity of the order of confiscation and reduction of fine by the Board.
3. Application of the Public Notice No. 33-ITC(PM)/80.
4. Consideration of the nature of goods imported as spares.
5. Compliance with the Import Policy for spares.
6. Requirement of specific license for import under OGL.

Analysis:

1. The case involved the interpretation of the term 'spares' under the Import Policy. The appellants imported lubricant oil pumps as spare parts for their machinery. The Collector and the Board held that the imported goods did not qualify as spares under the policy as they were complete units and not integral parts of the machinery, requiring a specific license for import.

2. The validity of the order of confiscation and the reduction of fine by the Board was challenged by the appellants. The Board upheld the confiscation but reduced the fine from Rs. 50,000 to Rs. 20,000 in each case. The appellants argued that the pumps imported were permissible spares, citing Public Notice No. 33-ITC(PM)/80, but the Collector and the Board disagreed.

3. The application of Public Notice No. 33-ITC(PM)/80 was discussed, with the appellants claiming that the pumps became non-permissible spares under this notice. However, since the import and indent for import occurred before 1980, the notice was deemed inapplicable.

4. The nature of the goods imported as spares was a crucial point of contention. The Collector observed that the pumps were stand-by equipment and not integral parts of the machinery, leading to the conclusion that they did not qualify as spares under the policy.

5. Compliance with the Import Policy for spares was analyzed, with reference to Chapter 9 and Paragraph 55A(i) of the policy. The goods imported should be required for the operation and maintenance of capital goods to qualify as spares. The lack of evidence supporting the claim that the pumps were integral parts of the original machinery weakened the appellants' argument.

6. The requirement of a specific license for import under OGL was emphasized, as the Collector and the Board justified their decision based on the lack of qualification of the imported goods as spares. The rejection of the appeal was based on the conclusion that the pumps did not meet the criteria for spares under the Import Policy.