1997 (8) TMI 240 - AT - Customs

Summary

Issues:
1. Eligibility of steel sheets/plates for customs duty exemption under Notification No. 70/87-Cus.
2. Interpretation of "consumable goods" under the exemption notification.

Detailed Analysis:

Issue 1: Eligibility of steel sheets/plates for customs duty exemption
The appeal was filed by M/s. Vikram Sarabhai Centre, Department of Space, challenging the Order-in-Appeal by the Collector of Customs (Appeals) regarding the eligibility of steel sheets/plates imported for fabrication of rocket motor hardware for customs duty exemption under Notification No. 70/87-Cus. The Collector held that the goods were not consumable as they were raw materials and did not get consumed in the manufacturing process, thus not qualifying for the exemption.

Issue 2: Interpretation of "consumable goods"
The appellants argued that the steel sheets/plates were consumable goods as they were used in the fabrication of rocket motor hardware for a single-shot application, making them eligible for duty exemption. They compared the use of steel sheets/plates to fuel, stating that in aerospace applications, such materials are not designed for a second use and are essentially "consumed" after one-time use. However, the Tribunal found that the steel sheets/plates did not lose their identity and were not used up or transformed into new goods, thus not meeting the criteria of consumable goods under the exemption notification.

The Tribunal referred to previous judgments, such as the case of C.C. v. Kidwai Memorial Institute of Oncology, where items used in specific medical treatments were not considered consumable goods. It was emphasized that the exemption notification applied to goods that were used up in the research process, not as specific parts of finished products. Additionally, the Tribunal clarified that the term "consumable goods" should be interpreted strictly, and the strategic use of the goods in aerospace applications did not alter their classification for duty exemption purposes.

After considering all relevant aspects, the Tribunal upheld the decision of the Collector of Customs (Appeals) and rejected the appeal, concluding that the steel sheets/plates imported for fabrication of welded pressure vessels did not qualify as consumable goods under Notification No. 70/87-Cus., thus not eligible for duty exemption.