1997 (2) TMI 232 - AT - Customs

Summary

Issues:
1. Applicability of exemption under Notification No. 349/86 to imported goods claimed as parts of Encoder Mechanism in SKD condition.
2. Interpretation of the Customs Tariff Act and General Rules of Interpretation regarding classification of goods.
3. Requirement to establish separate values of parts for consideration of exemption eligibility.
4. Assessment of admissibility of exemption based on presence of semi-conductor devices in goods.
5. Admissibility of benefit of exemption under Notification No. 349/86 to goods like "Journal Printer Mechanism" containing semi-conductor devices.

Analysis:
Issue 1: The appeal challenged the denial of exemption under Notification No. 349/86 to goods imported as parts of Encoder Mechanism in SKD condition. The appellants claimed that the goods were only parts in SKD condition and should be assessed accordingly. The Assistant Collector contended that the goods should be treated as a complete mechanism due to the presence of semi-conductor devices in sub-assemblies. The Tribunal held that goods without semi-conductor devices were eligible for exemption under the notification, remanding the matter for a de novo decision.

Issue 2: The Tribunal considered the interpretation of the Customs Tariff Act and General Rules of Interpretation regarding the classification of goods. While the goods could be classified as a complete unit under Rule 2(a) for classification purposes, the Tribunal emphasized assessing goods for exemption based on their presentation for assessment, especially concerning the presence of semi-conductor devices in sub-assemblies.

Issue 3: The Tribunal noted that the appellants should have established separate values of parts to enable the assessing officer to determine the admissibility of exemption. The Learned DR acknowledged this requirement, indicating that split values would aid in evaluating exemption eligibility.

Issue 4: The Tribunal clarified that goods containing semi-conductor devices, such as the sub-assemblies Sensor, Endorser drive, and print head, were not eligible for exemption under Notification No. 349/86. However, parts without semi-conductor devices were entitled to the exemption, as claimed by the appellants' advocate.

Issue 5: The second appeal concerned the admissibility of exemption under Notification No. 349/86 for the "Journal Printer Mechanism" containing only semi-conductor devices and no other parts. The Tribunal upheld the denial of exemption, stating that goods with semi-conductor devices were not eligible for the benefit under the notification.

In conclusion, the Tribunal granted exemption under Notification No. 349/86 to parts of the Encoder Mechanism without semi-conductor devices, remanding the matter for a fresh decision. Conversely, the appeal related to the "Journal Printer Mechanism" was rejected due to the presence of semi-conductor devices, rendering it ineligible for the exemption.