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TMI Blog1994 (5) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ted below : i. The Notification fully exempts materials required for the purpose of manufacture of products (Resultant Products) or replenishment of materials having identical specifications and technical characteristics as those, actually used in the manufacture of the resultant products. The condition specified for the grant of the exemption include among other things that the materials imported should be covered by a duty exemption entitlement certificate is- sued by the Licensing Authority in the form specified, in the schedul to this notification in respect of the value, quantity, description and technical charateristics as specified in part `C of the said certificate. There is also an explanation given for the term `materials . Explanation (viii) reads as follows : Materials means goods which are raw-materials, components, Intermediate products or consumables used in the manufacture of Resultant products and their packings or mandatory spares to be exported alongwith the resultant products......". In the instant case, the imported goods namely capacitance bridge are not covered by the term materials as given in explanation viii. These goods are not components but ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot agree with the contentions. He has held that the item `Capacitance Bridge cannot be considered as falling under the either raw-materials or components or intermediate products or consumables used for the manufacture of the resultant products and their packagings or mandatory spares to be exported alongwith the imported goods with reference to the term materials appearing in the notification. He has held that the item is a testing equipment and is not used in manufacture of the resultant products, and that it is supplied along with the resultant products for testing purposes. He has also held that these imported goods do not qualify as materials required to be imported for the purpose of manufacture of resultant products and hence, denied the benefit of exemption under the said notification. He has also held that : simply because the item is specified under part `C of DEEC Book and also in the Advance Licence, they do not become entitled to the concession unless all the conditions specified in the notification are satisfied . 5. The ld. Collector has confirmed the order of the Assistant Collector and also relied on the ruling rendered in the case of M/s. Precision Rubber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d they are left to open sky. This item which is a testing equipment is a portable unit, which is taken to the power capacitor (capacitor bank) now and then, the fuse unit is fixed with the item in question i.e. capacitance bridge for the purpose of measurement and testing, in order to see as to whether there is a continuous flow of power or not and also to detect any unit fault which may blow the external fuse. He submitted that the use of this item alongwith the power capacitor is essential and it has no use elsewhere. He also referred to the contract and the agreement with Karnataka Electricity Board dated. 12-5-1993 for supply of 110 KV and 66 KV, 30 MVAR Capacitor Banks for 220 KV Stations. Referring to the schedule one of the contract, he submitted that capacitor unit was to be alongwith internal fuses. The serial No. 1B referred separately to capacitance bridge. He also referred to the affidavit of Shri T.P. Vijaya who has stated in para 3 4 as follows : 3. The Item, Capacitance Bridge, Type CB-10, is a Bridge developed exclusively by ABB, Sweden and is being used for checking capacitance of Capacitor Bank. This test is mandatory before energising Bank and is to be condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation of the beneficial notification. It has been held that interpretation unduly restricting the scope of a beneficial provision is to be avoided, so that it may not take away with one hand, what the policy gives with the other. 7. Ld. SDR submitted that the item is not fixed to the final product permanently but it is a portable testing equipment and it does not form part and parcel of the final resultant product. He submitted that in the case of uninterrupted power supply equipment, it is fixed permanently to prevent damage to the machines caused by fluctuating power supply. The present item does not perform such a function and it is admittedly meant only to detect faults and, therefore, it does not fall within the function of the term `materials , appearing in the notification. The ld. SDR drew strength on the following portion of the catalogue which is reproduced hereinbelow : Simple bank design With internally fused capacitor units the bank layout and assembly is much simplified since no consideration must be taken to the placement of a fuseholder when putting the units in the rack and making the electrical connections. Furthermore, the space saved when using ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw materials were mentioned, which would go in the final product. He also submitted that the item in question is not a project supply and thus it would not come within the later part of the definition of term `materials . He relied on the definition of `raw-material , as extracted and reported in the case of Collector of Central Excise, Chandigarh and Another v. Kashmir Vanaspati and Another as reported in 1987 (31) E.L.T. 218. He also referred to the manufacturing process and the assembly line diagrams furnished by the importer to show that the item did not figure in the final product. He submitted that the decision rendered in the case of Vulcan Engineers Ltd. v. Collector of Customs as reported in 1992 (62) E.L.T. 636 squarely applied to the facts of the present case and that there was no reason to differ from the ratio of the said ruling. He pointed out that the rulings cited by the ld. Advocates were not applicable to the facts of the present case and they were not pari materia to the facts in issue. 8. We have carefully considered the submissions and perused the literature, contract agreement and citations referred to before us. The main question that arises for our cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s notification. Materials means goods which are raw materials, components, intermediate products or consumables used in the manufacture of resultant products and their packings, or mandatory spares to be exported alongwith the resultant products. A reading of the notification makes it clear that (i) the imported material should be for the purpose of manufacture of resultant products or replenishment of materials. (ii) It should be covered by DEEC issued by the licensing authority. (iii) the exempt materials shall be utilised for the manufacture of resultant products specified in Part `E of the said certificate. The definition of the term materials indicates that they are goods which are in the nature of (i) Raw materials, (ii) Components (iii) Intermediate products or (iv) Consumables Materials are required to be used in the manufacture of resultant product and their packagings, or mandatory spares, to be exported alongwith the resultant product. They should be required for carrying out modification or alignment or processing necessary for rendering them as an integral part or sub-system of the industrial project or plant. 9. The appellant s case is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s protected by a fuse and therefore disconnects the entire unit after the operation of the external fuse (Fig. 1b). Both these methods require relay protection as well - eg. unbalance protection which has to be thoroughly co-ordinated with the fuse operation(s). The design with internally fused capacitor units offers several advantages which have long been recognised by our collaborators ABB capacitors AB (formerly ASEA KABEL AB) and by the world market. In its pioneering work more than 45 years ago, ABB Capacitors incorporated internal fuses in low voltage power capacitors and their continuous development work over the years has led to incorporating internal fuses in all types of high voltage units. In the 1950s, 400 kv series capacitor banks in Sweden were equipped with internally fused capacitors. Today, with high power units and new, combustible, non-PCB impregnation fluids almost universally used, it has become increasingly important to have an efficient and safe protection system for the capacitors. The solution with individually fused capacitor elements has been accepted as a superior alternative. Internally fused capacitors have also been supplied to India for the 400 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther within a residuary item, under the sub-heading Other Instruments and apparatus , which falls under the main Heading 90.30. The description of Heading 90.30 is reproduced herein below : 90.30. This heading exludes apparatus incorporating a scintillation counter whose data are converted into analogue signlas for the purposes of making medical diagnoses (e.g. gamma camera, scintillation scanner) (heading 90.18); measuring or checking apparatus designed to incorporate the radio-active source (in particular, artificial isotopes) for example, for measuring thickness of materials (sheets, linings, or the like), for monitoring the contents of packages, for measuring low speed air currents (ionisation anemometers), etc. (Heading 90.22) . Reading from the above chapter heading and sub-heading, it is clear that the item has been classified as a testing equipment and not as a part of capacitor. In this case the appellants have also not taken a stand that the item is required to be classified alongwith the power Capacitor Bank, being its integral part. They have got this classified as a testing instrument. The literature and the catalogue and the affidavit also clearly support the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate. In Part A of the certificate, there is a Col. which has given the following details. Names and addresses of factories where the resultant products for export are manufactured. Against this, details in part A, the appellants address namely Vulcan Engineers Ltd., MIDC Area, Ahmednagar has been given. Therefore, it follows that the appellants were to have manufactured the resultant products in the address given in Part A of this DEEC. Admittedly, the appellants have not carried out this process of manufacture to bring in the resultant product as per the terms of DEEC and also in terms of the notification. Therefore, the appellants not having complied with both the terms, they will not be entitled to the benefit of the notification as held by the lower authorities". The above ratio clearly applies to the facts of this case and there is no reason to differ from the same. 11. The ld. Advocate has relied on the judgment rendered by the Hon ble Supreme Court in the case of Suksha International Nutan Gems Another; Star Paper Mills Ltd. and that of Karnataka High Court s judgment rendered in the case of Vikrant Tyres Ltd. As can be seen from the ratio of these judgments, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly known as such and are marketed as textile machinery components . 12. The Tribunal has also dealt with the aspect of `accessories under the Accessories (Condition) Rules, 1963 in the Kashmir Vanaspati s case. This ratio is not directly applicable, as there is no claim made by the appellants for considering the item as an accessory under the Accessories (Condition) Rules, 1963. In Kashmir Vanaspati s case the question of grant of set-off of Nickel Catalyst, bleaching activated earth and activated carbon used in the manufacture of vegetable product came up for consideration before the Tribunal. The Tribunal has held that they are neither raw-material nor component parts of vegetable product and hence held to be not entitled to the concession under Notification No. 201/79-CE. The interpretation of the term Raw-material came up for consideration in this judgment. The Tribunal has held that the words `raw-material , as used in the definition of `manufacture denotes merely material from which a final product is made. In other words, the Tribunal held, which after undergoing process gets converted into a distinct product. The Tribunal also examined the ambit and scope of the word ..... 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