2016 (12) TMI 431 - AT - Customs

Benefit of Notification No. 21/2002 dated 1.3.2002, Sr. No. 425(2) - classification of imported goods - 4000 pieces of timing belts - classified under Chapter Heading 84 or under Chapter 40 of the Customs Tariff Act? - Held that - it is undisputed that the exemption Notification No. 21/2002 under Sr. No. 425 is available to the goods falling under Chapter 84, 85 or 90 - However, in the Entry No. 2, the exemption is provided to parts of the machine. Whether the parts of the machine to Entry No. 2, list 45, where the exemption on the parts can be allowed irrespective whether such parts falls under Chapter 84, 85 or 90 or in any other chapter? - Held that - The appellant heavily relied upon the judgment of Hon ble Supreme Court in the case of Jain Engineering Co. Vs. Collector of Customs. Bombay 1987 (9) TMI 46 - SUPREME COURT OF INDIA , wherein it was held that irrespective of fact that whether the parts is included under the heading specified or in any other heading, it would come within the purview of Notification provided it is part of the main equipment. In the present case, the timing belt is undisputedly part of the Draw Texturising Machine, which is evident from the certificate issued by the jurisdictional excise authority under the provisions of Customs (Import of Goods at concessional rate of duty for manufacturing of excisable goods) Rules, 1996. Therefore, whether the timing belt falls under Chapter 40 or chapter 84, the same is part of the Draw Texturising Machine - the exemption notification is applicable to the goods imported by the appellant i.e. timing belt. Since the issue is being decided on the basis of Hon ble Supreme Court judgment, we refrain from addressing the classification issue of the product that whether the goods in question falls under Chapter 40 or 84 - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues involved:
Classification of imported goods under Chapter Heading 84 for exemption benefit.

Detailed Analysis:

1. Facts of the Case: The appellant imported timing belts and sought classification under Chapter Heading 84 with the benefit of a specific notification. The original authority denied the benefit based on the classification under Chapter 40. The appeal was rejected by the Commissioner of Customs (Appeals).

2. Appellant's Arguments: The appellant's counsel argued that even if the timing belts are classified under Chapter 40, they should still be eligible for the exemption as they are parts of a specific machine. Citing a Supreme Court judgment, it was emphasized that parts of a machine should be exempted, regardless of the specific chapter heading they fall under. The counsel also highlighted that the timing belts are not conveyer belts and are solely used for a particular machine, thus should be classified under Chapter 84.

3. Revenue's Arguments: The Revenue contended that the goods should be classified under Chapter Heading 4010 and are not eligible for the exemption. They argued that the Supreme Court judgment cited by the appellant was not directly applicable to the present case due to differences in products and notifications.

4. Exemption Notification Analysis: The Tribunal examined the exemption notification which specified that parts falling under Chapter 84, 85, or 90 are eligible for exemption. Referring to the Supreme Court judgment, it was concluded that parts of the main equipment should be exempted irrespective of their specific chapter heading. The Tribunal found that the timing belts were indeed part of the machine, justifying exemption.

5. Decision and Conclusion: The Tribunal set aside the impugned order and allowed the appeal based on the application of the Supreme Court judgment. It was determined that the exemption notification applied to the imported goods, the timing belts. The focus was on granting exemption to parts of the main equipment, regardless of their specific chapter classification.

This detailed analysis showcases the arguments presented by both sides, the interpretation of relevant legal provisions and notifications, and the ultimate decision by the Tribunal based on the application of legal principles and precedents.