1996 (9) TMI 269 - AT - Customs

Summary

Issues:
Import of spare parts and accessories along with D.G. sets, denial of benefit of assessment under Accessory (Condition) Rules, 1963, requirement of compulsory supply of spare parts, determination of whether spare parts were specifically designed for D.G. sets, consideration of invoice indicating composite price, and the obligation of suppliers in case of using non-supplied spare parts.

Analysis:
The appeal was filed against the Order-in-Appeal No. 2255/88-Bom., dated 26-5-1988 of Collector of Customs (Appeals), Bombay, regarding the denial of benefit of assessment under Accessory (Condition) Rules, 1963 for the import of two D.G. Sets along with spare parts and accessories. The lower authorities contended that the import of spare parts and accessories was optional, leading to the initiation of the appeal.

The appellants argued that the spare parts were specifically designed and tailor-made for D.G. sets, as confirmed by the suppliers, who mentioned that using non-supplied spare parts would void any responsibility on their part for at least two years. The spare parts were not for general use but specially made to work with the imported D.G. sets, as indicated in the invoice showing the composite price for D.G. sets and parts. The appellants requested the supplier to provide a breakup of the price to demonstrate that the value of spares was included in the machine's value.

The Learned DR contended that the appellants failed to produce a contract proving the compulsory supply of spare parts. While acknowledging the supplier's letter confirming the special design of spare parts for D.G. sets, the Learned DR insisted on the production of an order and contract indicating the compulsory supply of both D.G. sets and accessories.

The Tribunal examined the facts and legal provisions, emphasizing that spare parts and accessories imported with an article are dutiable at the same rate if they are compulsorily supplied along with the article and no separate charge is made for such supply. The supplier's letter and invoice indicated that the spare parts were specially designed for the D.G. sets and were not available in the open market. The suppliers recommended importing spares for smooth engine operation for at least two years, absolving themselves of any liability if non-supplied spare parts were used.

The Tribunal concluded that the spare parts were compulsorily supplied with the D.G. sets, considering the supplier's obligation and the composite price indicated in the invoice. As no separate charge was made for the spare parts, their price was included in the price of the articles. Consequently, the appeal was allowed, and the impugned order was set aside, granting the appellants consequential relief as per the law.