1993 (1) TMI 168 - AT - Customs

Summary

Issues Involved:

1. Whether the imported goods are classified as electric portable generators under S. No. 12 of list J of the ITC Policy.
2. Eligibility for the benefit of Notification 155/86 regarding the import duty exemption.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:

The appellants imported 480 units described as A.C. Generators. The authorities questioned the import due to the listing of "Electric portable generators up to 3.5 KVA" under S. No. 12 of list J of the restricted items list in the ITC Policy (1992-1997). The appellants argued that the imported items were merely alternators and not complete generators, as they lacked internal combustion engines and control panels necessary for a complete generator. The adjudicating authority rejected this contention, stating that the entry at S. No. 12 does not specify whether the generators should include prime movers and other accessories. Consequently, the authority held that the imported items were fully assembled portable A.C. Generators requiring a valid import license.

Judgment:

The tribunal concluded that an alternator alone cannot produce electricity without a prime mover, as per the World Book 1990 Edition, which states, "A generator does not create energy. It changes mechanical energy." Therefore, the term 'generator' in S. No. 12 of list J must refer to a complete generator capable of producing electricity. Since the appellants did not import prime movers, the goods could not be classified as generators under S. No. 12. Consequently, no import license was required, and the confiscation of goods was set aside.

2. Eligibility for Notification 155/86:

The appellants claimed the benefit of Notification 155/86, which exempts parts required for the assembly or manufacture of specified articles from import duty, provided they are certified by the appropriate authorities. The adjudicating authority denied this benefit, arguing that the imported items were fully assembled A.C. Generators and not parts or assemblies of generators, thus not eligible for the exemption.

Judgment:

The tribunal noted that the imported alternators were intended for use in assembling electric generating sets falling under Tariff Heading 85.02, as certified by the Director of Industries. The adjudicating authority's classification of alternators as sub-assemblies rather than parts was deemed incorrect. The tribunal held that a sub-assembly is indeed a part of the whole assembly, analogous to how a piston assembly is part of an internal combustion engine. Therefore, the appellants were entitled to the benefits of Notification 155/86 for importing alternators as parts of generating sets. The tribunal rejected the argument that parts referred to in the notification must fall under Tariff Heading 85.03, as this interpretation was not supported by the notification's language.

Conclusion:

The appeal was allowed with consequential relief to the appellants, recognizing that the imported goods did not require an import license and were eligible for the duty exemption under Notification 155/86.