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Issues:
- Interpretation of exemption Notification No. 42/78-Cus. dated 1-3-1978 regarding the eligibility of a machine with multiple functions for exemption. Detailed Analysis: The appeal before the Appellate Tribunal CEGAT, New Delhi involved the interpretation of whether a machine imported, identified as a complete Super/Quick 18, Toggling and drying machine with 1500 Automatic toggles, was covered by exemption Notification No. 42/78-Cus., dated 1-3-1978. The Assistant Collector of Customs, Bombay initially deemed the machine ineligible for exemption as it was used for toggling, drying, and cooling, beyond just drying. However, the Collector of Customs (Appeals) disagreed, stating that the machine was eligible for exemption based on a certificate from the Small Industries Services Institute and ISI Specification. Upon hearing arguments from both sides, it was acknowledged that the primary function of the imported machine was drying, with toggling and cooling being additional functions. The Revenue argued that toggling and cooling were not covered under the exemption notification, which specifically mentioned automatic drying machines. Conversely, the Advocate for the respondents contended that toggling was essential for proper drying and that cooling was necessary post-drying. The Tribunal examined the technical aspects of the machine, noting that toggling was crucial for ensuring equal heat distribution to hides and skins during the drying process. The Tribunal referred to a previous decision involving a wire twister and a film processor, where additional functions did not disqualify the machines from exemption if the primary function was covered. In the current case, the togglers were used before drying, and cooling occurred after the drying process. Therefore, the Tribunal concluded that since the machine was primarily an automatic drier, it fell within the scope of the exemption Notification No. 42/78-Cus. dated 1-3-1978. Consequently, the Tribunal found no fault in the Collector of Customs (Appeals) decision to grant exemption to the imported machine. After considering all relevant aspects, the Tribunal dismissed the appeal filed by the Revenue, affirming the Collector of Customs (Appeals) order. The judgment upheld the eligibility of the machine for exemption under the specified notification, emphasizing the primary function of drying as the determining factor for exemption qualification.
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