1999 (12) TMI 276 - AT - Central Excise

Summary

Issues involved:
1. Eligibility of reflector for the benefit of Notification No. 62/86-C.E. as part of a bicycle.

Detailed Analysis:

1. Arguments by Revenue:
The Revenue argued that the reflector is not eligible for the benefit of Notification No. 62/86 as it is neither a part nor an accessory of a cycle. They relied on previous court decisions to support their stance. The Revenue contended that since a cycle can function without a dynamo, the reflector cannot be considered a part of the bicycle. They emphasized that even though a dynamo is an accessory of a cycle, the reflector, being part of an accessory, does not qualify as an accessory itself. Therefore, they concluded that the exemption under the notification should not apply to the reflector.

2. Arguments by Respondents:
The Respondents argued that under Notification No. 62/86, parts and accessories of cycles are chargeable at a nil rate of duty. They contended that if a component of a component that ultimately forms an exempt product is also exempt, then the reflector should be considered eligible for the exemption. They cited previous tribunal decisions to support their argument, stating that parts of parts are also considered parts of a machine. Hence, they asserted that the reflector, being part of the dynamo, should be deemed a part of the cycle, and therefore, entitled to the exemption.

3. Judgment:
The Tribunal analyzed Notification No. 62/86, which provides exemptions for parts and accessories of cycles and cycle rickshaws at a nil rate of duty. Referring to previous court decisions, the Tribunal noted that dynamos are considered accessories, not parts of cycles. Therefore, the argument that parts of parts are also parts, as seen in previous cases, did not support the Respondents' claim. The Tribunal emphasized that the notification only exempts accessories, not parts of accessories. As the notification did not explicitly mention exemptions for parts of accessories, the benefit could not be extended to the reflector. Citing legal principles, the Tribunal construed the exemption strictly against the subject, concluding that the reflector manufactured by the Respondents was not eligible for the notification's benefit. Consequently, the appeal filed by the Revenue was allowed.

This detailed analysis outlines the arguments presented by both parties and the Tribunal's reasoning in arriving at the decision regarding the eligibility of the reflector for the benefit of Notification No. 62/86-C.E. as part of a bicycle.