1994 (2) TMI 142 - AT - Customs

Summary

Issues:
- Classification of imported machine under Heading 90.28(4) and benefit of Notification No. 394-Cus. of 1976.
- Interpretation of the primary function of the imported machine as measuring and checking or marking.
- Extending benefit of lower duty to goods under Heading 90.16 and Heading 90.28.

Analysis:

Classification and Benefit of Notification:
The appellants imported a Bendix 3 Co-ordinate Measuring and Marking Machine and claimed assessment under Heading 90.28(4) with the benefit of Notification No. 394-Cus. of 1976. The original authority rejected the claim, stating that the machine did not merit exemption from duty as a measuring and checking instrument. The Collector of Customs (Appeals) upheld this decision. The appellants argued that the machine's primary function is measuring and checking, supported by the machine's applications listed in the catalogue. The tribunal noted that the machine's primary function of precision measurement for inspection and quality control entitles it to the benefit of lower duty under the notification, even though it also performs a marking function.

Interpretation of Primary Function:
The tribunal disagreed with the lower authorities' interpretation that the machine must be solely used for measuring to qualify for the duty exemption. Instead, the tribunal clarified that the notification exempts instruments used for measuring and checking, not just those solely for measuring. As long as the primary function involves measuring or checking, the instrument qualifies for the lower duty rate. The tribunal found that the imported machine fulfills these functions, even though it also serves a layout function, thereby allowing the appeal and granting consequential relief to the appellants.

Extending Benefit to Goods under Different Headings:
Regarding the controversy over extending the benefit of lower duty to goods under Heading 90.16 and Heading 90.28, the tribunal noted that a Bombay High Court judgment settled this issue. The tribunal did not delve further into this point as it was no longer in dispute, focusing instead on the primary function of the imported machine and its qualification for the duty exemption under the notification. Ultimately, the tribunal allowed the appeal, emphasizing the machine's role in precision measurement and quality control as the basis for granting the benefit of lower duty under the notification.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the tribunal's reasoning in reaching its decision.