1995 (11) TMI 161 - AT - Customs

Summary

Issues: Classification of goods under customs tariff, eligibility for exemption under Notification No. 16/85-Cus., confiscation of goods under OGL, interpretation of versatile machine.

In the present case, the appeal was made against an order-in-original passed by the Collector of Customs regarding the classification of an "Elastic Lace Making Machine" imported in 1985. The customs classified the goods under Heading 84.37, undisputed by the appellants, but denied the benefit of exemption under Notification No. 16/85-Cus., claiming the machine was versatile and not covered under OGL. The appellants argued that the item was specifically mentioned in Appendix I Part B Entry 35, allowing importation of capital goods under OGL. They contended that the machine, although versatile, was primarily meant for manufacturing elastic laces, as per the pamphlet and required special adapters for other functions. The appellants cited previous Tribunal orders establishing that specific mention of an item with reference to its main function entitles it to exemption, even if it can perform multiple functions.

The Department, however, maintained that the machine's versatility, as shown in the pamphlet, rendered it ineligible for the exemption, emphasizing the need for strict construction of exemption Notifications. They argued that the OGL Entry should cover only machines capable of manufacturing elastic laces exclusively. The Tribunal noted that the customs had classified the item under Heading 84.37 and identified a specific entry in OGL Appendix 1 Part B for "Elastic Laces Making machines," coinciding with the exemption Notification's entry for listed items falling under Chapter 84. The Tribunal relied on previous decisions, establishing that specific mention of an item with reference to its primary function mandates granting the benefit, regardless of its additional capabilities.

Ultimately, the Tribunal upheld the appellants' contentions, setting aside the impugned order and allowing the appeal with any consequential benefits due. The decision was based on the principle that specific mention of an item with reference to its main function entitles it to exemption, even if the item is capable of multiple functions. The Tribunal's ruling aligned with previous judgments, emphasizing the importance of specific entries in exemption Notifications and OGL for determining eligibility for benefits, particularly in cases involving versatile machines like the Elastic Lace Making Machine in question.