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TMI Blog1998 (6) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... aft (for example, helicopters, aeroplanes); spacecraft (including satellites) and spacecraft launch vehicles . 4. The ld. Consultant for the appellants has pleaded that the Ground Power Unit (GPU) was not known commercially as the generating sets and the same were not sold as generator sets as understood in the trade. He has pleaded that it is a well settled law for assessment under Central Excise Tariff, the assessment should be based on the commercial parlance test in the absence of any definition of the goods as set out under the tariff. He pleaded in the impugned order, the ld. Collector himself has held in Para 13 as under : No doubt, it cannot be compared to ordinary Generator and it can only be used for providing power to the Aircraft. The ground power unit generates electrical power 3 phase 4 wire 400 Hz, 200/115 volts. Whereas the normal generator produce 50 Hz 415 volts. 5. He has pleaded that once it was conceded that the GPU was exclusively used for the Aircraft Industry, the same should be treated as part of the Aircraft falling under T.H. 88.03 and the benefit of Notification 65/93 should have been extended to the same. 6. He has pleaded under the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepting the position that the GPU was for exclusive use of the aircraft, the ld. Lower Authority s observations that it did not help the cause of the appellants was not correct. 8. He has pleaded that the GPU became integral part of the aircraft when the aircraft was on ground as it helped the aircraft to remain functional and various parameters of the engine can be kept functional to enable the aircrafts to ultimately take off and the GPU came to be detached when the aircraft was moved to the runway for taking off. 9. He has pleaded as it is under the tariff, the parts of the aircraft has not been defined in the Central Excise Tariff and in this connection, he referred us to the definition of the parts as given in the import trade policy. In the April 1992-97 Import Trade Policy in Para 7 at S. No. 29 the parts defined as under :- Part means an element of a sub-assembly or assembly not normally useful by itself and not amenable to further disassembly for maintenance purposes. A part may be a component or an accessory. 10. He has pleaded that the appellants goods squarely qualify on this definition as part of the Aircraft. He, in this connection, also referred us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e drawn is that those parts which are solely or principally used with the item falling under Chapter 86 to 88 are to be considered as parts of those items and otherwise not. 14. He has pleaded once the exclusive use with the aircraft is established, the goods will have to be assessed under this Tariff Heading notwithstanding the Note 2 to this Section XVII under which it has been stated that the expression parts and parts and accessories do not apply to the articles enumerated thereunder in Section XVII, whether or not they are identifiable as for the goods of this Section. He has pleaded that the items which are excluded under this note are those which can be used otherwise than exclusively for the item falling under Chapters 86 to 88. He has pleaded even though under Note 2, the electrical machinery and equipments of Chapter 85 is excluded for assessment under T.H. 86 to 88, this exclusion would not apply to the GPU for the reason of its exclusive use with the aircrafts and being something totally different from the generators as understood in the trade. He has therefore pleaded that the GPU for assessment purposes stands fixed for assessment under Chapter Heading 88. He h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also as accepted by the ld. lower authority in his order, the GPU is attached to the aircraft when it is on the ground to keep the aircraft in the functional condition of readiness for taking off. The appellants, in the statement of facts in the appeal memorandum in Para 3 have stated that when the aircraft is in the air, there is an inbuilt power unit which keeps the various instruments and control functionals and the GPU performs the same function on the ground when the aircraft is stationary. It has also been stated that the GPU has an inbuilt computer system which synchronizes with the aircraft mechanism and which also activates the computer operations in the aircraft. It was also pleaded that the GPU cannot be used as a normal generating sets in view of the inbuilt configuration, which facilitates the functions only with the aircrafts. 18. We observe that the ld. JDR has described the equipment as the one for servicing the aircraft while the appellants have claimed the same to be part of the aircraft. The ld. lower adjudicating authority has observed in his order that it is providing the power on the ground for the aircraft for system checking and testing of the aircra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that part or accessory. 19. It is significant to note that under this section note, it is not defined functionally as to what output is given by the equipment but the use to which equipment is to be put would be determinative of the classification. Going by the use of the equipment and the undisputable position that i.e. the exclusive use of GPU meant for the aircraft in terms of this section note, it qualifies as an item which will fall under Chapter 88 which covers aircrafts. 20. The Section Note 2 under which the Electrical Machinery of Chapter 85 stands excluded from purview of Section XVII will not come in the way of the classification of the goods under Chapter 88 in view of the fact that the item on market criteria of its exclusive use gets to be classified under Chapter 88. 21. We observe that a meaning has to be given to provisions of Chapter Note 3 and what is set out to be included should be given preference to what is set out to be excluded when both the notes deal with the same issue. The interpretation which is favourable to the assessee has to be preferred in view of well settled principle law as laid down by the Hon ble Supreme Court in a number of case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of ground power unit. The said goods were imported in 1992 at Madras and were cleared provisionally. As payment of complete customs duty would not be economical, it has been decided to give partial exemption from payment of customs duty. It is seen that the appellants had developed GPU and air jet starting system/air-conditioning system for the aircrafts and they had imported engine and alternator which were to be used along with indigenous parts for the manufacture of the GPU. It is by reason of the specialised nature of the equipment that this exemption was allowed. 24. Further, it is seen that the appellants have produced evidence that the equipment has to stand up to rigorous requirements for use with the aircrafts which are not required for ordinary generators. The Indian Airlines authorities as well as the Office of the Controller of Air Worthiness have placed orders for the GPU needed for servicing of A-320, A-300, B-737, F-27-500 types of aircrafts apart from others and they had been granted approval for the manufacture of the equipments in question by the Office of the Director of Air Worthiness, Hyderabad which all goes to show that the equipment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s falling under sub-heading No. 88.03 of the Schedule to this Central Excise Tariff Act, 1985 from the whole of duty of excise leviable thereon which is specified in the Schedule. Therefore, in order to entitle the appellants for the benefit of this notification, there are two conditions which are to be fulfilled. The first condition is that the same should be part of the aeroplane and secondly the same should fall under the sub-Heading 8803.00 of the Central Excise Tariff Act, 1985. In this back ground, it is to be found out whether the Ground Power Unit (GPU) is a part of the aeroplane or not. 30. The GPU is attached to the aircraft only when it is on the ground in order to keep the aircraft in the functional condition of readiness for taking off. Therefore, the expert evidence which is produced by the appellants also has to be looked into in this connection. The appellants had produced a letter of Dy. Director of Stores Purchase of Indian Airlines dated 4-8-1992 which is at Page 45 of the Paper Book which reads as follows :- Dated : 4th August, 1992 Our Reference To Whom It May Concern This is to certify that we have placed an order for Six Nos. of 90 KVA, 115 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goes to show that the GPU is only for servicing the above said aircrafts and it has got no other applications. So also the certificate produced by the appellants which is dated 4-9-1994 issued by the Controller of Airworthiness, Civil Aviation Department, states that the Ground Power Unit is needed for servicing the aircrafts. So also the Certificate from the Govt. of India, Civil Aviation Deptt., issued by the Controller of Airworthiness which is at Page 52 of the Paper Book which reads as follows :- No. M/F-1/IA/4875 Dated 7-10-1994 To The Director, M/s MAK Control, Red Fields, Coimbatore-641 045. Sub : Import of Internal Combustion Engine and Alternators with All other parts thereof constituting a power unit for servicing A320, A300, B737 aircraft. Dear Sir, Further to this office Letter No. M/F-1/IA/4621, dated 14-9-1994, this is to certify that the following items also forms one of Ground Power Unit. Components apart from those mentioned in the above referred letter :- 1. Part No. AB3050-30 Air Start Hose Assembly. Ground Power Unit is needed for servicing A320, A300, B737, F-27-500 type of aircraft apart from others. Yours faithfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e available evidence on record it can never be said that this part or accessory. 37. The GPU no doubt is attached to the aircraft only when it is on the ground to keep the aircraft in the functional condition of readiness for taking off. The appellants have said so in the appeal grounds also. But when the aircraft is in the air, there is an inbuilt power unit which keeps the various instruments and control the functionals. But the aircraft when it is on the ground, the GPU is used for servicing the aircraft as could be seen from the above certificates which are produced by the appellant themselves. The mere fact that GPU cannot be used as a normal generating set is no ground to hold that it is a part of the aircraft. It is no doubt true it is designed in a way that it could function only in servicing aircraft and cannot be used as a generator elsewhere. But that is not the reason to hold that it is a part of the aircraft itself. In order to avail of the benefit of Notification 69/93, it should be shown that this is a part of the aeroplane. The evidences produced in this case only show that it is complementary to the aircraft and it is needed for servicing the aircraft and such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants claim for the benefit of assessment under T.H. 88.03 read with Notification No. 65/93 has to be disallowed as opined by the ld. Member (J). Sd/- (T.P. Nambiar) Member (J) Dated 10-11-1997 Sd/- (V.P. Gulati) Vice President 42 . [Order per : V.K. Ashtana, Member (T)]. - The difference of opinion between learned Vice President (since retired) and learned Member (J) (since retired) is being considered as per above reference. 43. Heard learned Consultant Shri A. Vijayaraghavan. He reiterated his earlier arguments and submitted that they imported (a) Alternator and Diesel Engine and (b) certain other electronic items were purchased from indigenous sources. When assembled, they formed the ground support unit for aeroplanes when on ground. Thus it is not an ordinary electricity generating set but an extension of certain sub-systems of the aeroplane which it is servicing. He further submitted that neither ld. Vice President nor ld. Member (J) dispute that it services the aeroplane. 44. He further submitted that said GPU was part of an aircraft because - (i) When the above imported components were cleared by Customs as parts of aircraft; then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood as per its text and there is no room for any intendment. It is also an equally well established law that the words and phrases of a notification issued under one statute should not normally be used to interpret the meaning of words and phrases in another statute. On both these counts, the Notification No. 65/93-C.E., dated 28-2-1993, the exemption contained in which is claimed by the appellant, is to be read and understood on its own and not with reference to any other notification issued under the Customs law or definitions contained in ITC Policy. 49. But before one can claim exemption under this exemption notification, one has to first classify the Ground Power Unit (GPU). Department proposes under Heading 8502 as D.G. Set, while appellants under Heading 8803. However, one thing is clear. If it would merit to fall under 8803 as parts of aircraft, then this position surely would allow it the benefit of the said exemption, because it becomes a part of an aircraft. 50. Therefore, the moot point for consideration is whether the GPU is a unit which merely services a grounded plane or whether it is a part thereof. Instead of taking resort to the ITC Policy or the Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the more cost effective. Therefore, the inbuilt auxillary power source of the aircraft of yester years has been now taken out and instead placed on the ground, connected with the aircraft by the NATO connector - its so to say umbelical cord! So whenever the aircraft has to remain functional (as opposed to being in storage in the hanger) so as to also take-off, the GPU is a necessity because it is the erstwhile inbuilt auxillary power source of the aircraft, now kept out of its airframe. It is nobody s case that an auxillary power source built in an aircraft is not a part thereof. So, why should the same source - a GPU - not be a part thereof, merely because it is kept on the ground, but connected to the aircraft? 55. This brings us to the interesting preposition that can a unit capable of rendering such a service to the aircraft be called its part . It is not disputed that the word part is not to be limited to connote only a mere bolt or washer or tyre or hinge - i.e. a primary function article. Even a component or a sub-system can be a part of the full system. An aircraft is a complicated system - partly mechanical, partly electrical, partly electronic and partly aerod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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