1997 (8) TMI 193 - AT - Customs

Issues Involved:
1. Eligibility of spare parts for the benefit of exemption Notification No. 315/83-Cus.
2. Interpretation of Heading No. 98.01 of the Customs Tariff.
3. Applicability of Notification No. 132/85-Cus. versus Notification No. 315/83-Cus.
4. Interpretation of the language and scope of exemption notifications.

Issue-wise Detailed Analysis:

1. Eligibility of Spare Parts for the Benefit of Exemption Notification No. 315/83-Cus.:
The primary issue for consideration was whether the spare parts imported by the respondents were eligible for the benefit of Notification No. 315/83-Cus. The respondents had imported various items of machinery and spare parts for the initial setting up of an industrial unit for manufacturing electronic items. The Assistant Collector of Customs, Bombay, initially held that the spare parts were not eligible for the benefit of Notification No. 315/83-Cus. and should be assessed under Notification No. 132/85-Cus. However, on appeal, the Collector, Customs (Appeals), Bombay, observed that Notification No. 315/83-Cus. did not exclude parts from its purview and extended the benefit to the spare parts imported by the respondents.

2. Interpretation of Heading No. 98.01 of the Customs Tariff:
Heading No. 98.01 covers all items of machinery, including components and raw materials required for the initial setting up of a unit or substantial expansion of an existing unit. It also includes spare parts essential for the maintenance of the plant or project. The Tribunal noted that Heading No. 98.01 is widely worded and specifically covers spare parts essential for maintenance. The spare parts in question were within the prescribed value limit under Heading No. 98.01, and the respondents produced a certificate from the Department of Electronics as required under Notification No. 315/83-Cus.

3. Applicability of Notification No. 132/85-Cus. versus Notification No. 315/83-Cus.:
The Tribunal considered that Notification No. 315/83-Cus. should be read along with the scheme of Heading No. 98.01 of the Customs Tariff. The classification and assessment under Notification No. 132/85-Cus. would only be considered if the goods were not eligible for the benefit of Notification No. 315/83-Cus. The Collector (Appeals) found no exclusion for maintenance spares in Notification No. 315/83-Cus., and thus, the spare parts were covered by the notification.

4. Interpretation of the Language and Scope of Exemption Notifications:
The Tribunal emphasized that the language of Notification No. 315/83-Cus. refers to Heading No. 98.01, which is broadly worded to cover various items of machinery and components. The Tribunal rejected the Revenue's argument that a liberal interpretation enlarging the scope of the notification was not permissible. The Tribunal held that the notification should be read in the context of Heading 98.01, which covers a wide range of items necessary for the initial setting up of an industrial unit. The Tribunal also noted that the rate of customs duty under both Notification No. 315/83-Cus. and Notification No. 132/85-Cus. was the same at 35% ad valorem, with any duty differential pertaining to other auxiliary duties.

Conclusion:
After a thorough examination of the facts and relevant notifications, the Tribunal concluded that the restrictive interpretation of Notification No. 315/83-Cus. by the Revenue was not supported by the scheme of the Project Import and the concessions provided to the electronic industry. The Tribunal upheld the view taken by the Collector, Customs (Appeals) and rejected the appeal filed by the Revenue, affirming that the spare parts imported by the respondents were eligible for the benefit of Notification No. 315/83-Cus.

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