1997 (12) TMI 193 - AT - Customs

Summary

Issues:
- Whether ion exchange resin, anthracite, and rubber lining material are to be considered as capital goods for the purpose of exemption under Notification 160/92-Cus.
- Whether the goods imported by the respondent fall within the definition of capital goods as per the notification.
- Whether the licensing authorities' decision on the imported goods as capital goods is binding on the Customs authorities.
- Whether the goods are essential for the manufacturing process and thus qualify as capital goods.

Analysis:
1. The appeal was against an Order-in-Appeal where the Commissioner treated ion exchange resin, anthracite, and rubber lining material as capital goods under Notification 160/92-Cus, granting exemption to the respondent. The dispute arose as the Asstt. Commissioner considered these goods as consumables, not capital goods or spare parts.

2. The respondent imported machinery for a membrane cell plant under the EPCG scheme, claiming a concessional duty rate. The Asstt. Commissioner held that the goods in question needed periodic replacement, classifying them as consumables. The Collector of Customs (Appeals) reversed this decision, stating that the goods were essential for running the plant and thus qualified as capital goods under the notification.

3. The Department argued that the goods were not capital goods as per the notification's definition, citing a Tribunal judgment on ion exchange resin. The respondent contended that the licensing authorities had approved the goods as capital goods, emphasizing their essential role in the manufacturing process.

4. The Adjudicating Authority found the goods to be consumables, not capital goods, as they required periodic replacement. However, the Appellate Authority disagreed, stating that the goods were essential for the manufacturing process and thus qualified as capital goods under the notification.

5. The Tribunal reviewed the arguments and previous judgments, noting that the definition of capital goods in Notification 160/92 was restrictive. Following the precedent set by Bharat Starch's case, the Tribunal agreed with the Department's arguments, setting aside the Collector (Appeals) order and restoring the Asstt. Commissioner's decision.

6. Ultimately, the Tribunal held that the goods in question did not meet the criteria to be classified as capital goods under Notification 160/92-Cus. The appeal was allowed, setting aside the Collector (Appeals) order and reinstating the Asstt. Commissioner's decision.