Customs, Excise and Gold Tribunal - Tamil Nadu
Mysore Cements Ltd. vs Commissioner Of Customs on 1 December, 1997
Equivalent citations: 1998(101)ELT268(TRI-CHENNAI)
ORDER
V.P. Gulati, Vice President
1. The prayer in the application is for dispensation of pre-deposit of an amount of Rs. 7,08,657 demanded in terms of the impugned order for the reasons that the appellants were not eligible for the benefit of Notification 77/90-Cus. The issue arises out of the appellate order passed by the Commissioner of Customs (Appeals), Mumbai. The appellants have filed a miscellaneous application to say that their HQ is situated within the jurisdiction of South Zonal Bench and they sought for the appeal to be dealt with by this bench in terms of the Public Notice 1/97 dated 22-1-1997.
2. A perusal of the affidavit and the miscellaneous application filed, we find that the appellants are covered by the terms of this order. We, therefore, take up this appeal for disposal.
3. Shri Ravishankar, the learned C.A. for the appellants has pleaded that the issue that falls for the consideration is whether the appellants should be allowed the benefit of the Notification No. 77/90 which provides for exempted rate in the event of the refractory bricks being used as components in the industrial furnace. He has pleaded that the issue is squarely covered by the ratio of the full bench of the Tribunal in the case of jindal Strips v. CC, Bombay reported in 1997 (94) E.L.T. 234 (T) He has pleaded that the Tribunal has held that when a concession has been provided for in respect of Refractory bricks used as components of the brick as spare parts it could be taken to be covered within the ambit of this Notification. In this connection, he referred us to paras 17,18,19,22 & 25 of the order which are reproduced below for convenience of reference.
"17. "Component" is the genus and "spare" is a species that is, component which is used for replacement. If all that is available is the use of the expression "component" or "component part", the usage must be understood in its normal connotation, in the absence of any specific qualification or restriction. There are several notifications where such qualifying or restrictive words have been used to suggest that the component part must have been used in the initial assembly or in the manufacture of the final product thereby excluding "spare" from the ambit of the expression "component part". There are no such qualifying or restrictive words used in the notifications under consideration.Hence, with respect, it is not possible to agree with the view taken in some of the decisions of the Tribunal that "component" implies parts used in the initial assembly or manufacture and excludes "spares". The amplitude and significance of the word "component" cannot be cut down in the absence of clear words indicative of any intention to restrict its meaning and operation. The view taken in Vaz Fowarding Pvt. Ltd. -1989 (43) E.L.T. 358 (Tribunal) was not followed in Metal Impacts Pvt. Ltd. - 1993 (64) E.L.T. 286 (Tribunal), but the distinction drawn based on the fact that the words "component parts" occur in isolation and not in conjunction with the final product is a distinction without difference. The amplitude of the words "component part" is not in any way restricted by using the words in conjunction with the article of which they are component parts.
18. We indicated that there are a large number of Notifications using appropriate language to bring out an intention to restrict the scope and amplitude of the word "component". The following table refers to the particulars :-
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Notification No. Language used
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1. 82/60 Component parts of any machinery...required for the purpose of initial setting up of that machinery or for its assembly or manufacture
2. 80/70 Imported as replacement for defective component parts or peripherals
3. 117/70 Spare parts required for the purpose of manufacture
4. 74/85 Components are imported for the purpose of providing warranty coverage or after sales service by the manufacturer to his customers
5. 77/85 -Do-
6. 503/86 -Do-
7. 155/86 Parts required for the purpose of initial setting up or assembly or manufacture
8. 158/86 Components required for the manufacture of goods
9. 66/88 Component parts of goods covered by Notification No.65/88 imported into India for the manufacture of the said goods
10. 269/88 Components required for the manufacture of forklift trucks
11. 97/89 Parts required for the manufacture of specified goods when imported into India by a manufacturer of such goods
12. 106/92 Components and parts when imported into India for repair of dredges.
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In the above Notifications, wherever it was intended to restrict the amplitude and significance of the word "component", specific and appropriate language was used to bring out the intention. The Notifications contain illustration of intention to restrict the meaning of components as those to be used in assembly or manufacture or as spare. It is obvious that the word "component" includes "spare" and has very wide connotation and this position fully supports the view we have taken. Shri D.S. Negi, SDR is dealing with the above position, referred to following Notifications :-
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Notification No. Language used
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1. 13/81-Cus. Capital goods, Raw materials components imported for the purpose of manufacture of articles for export out of India by 100% export oriented undertakings
2. 262/81-Cus. Machinery, Raw materials, components, spare parts of machinery, consumables, packaging materials, office equipment, spares and consumables thereof, Tools, jigs, gauges, fixtures and accessories proto types, technical and trade samples for development and diversification, Drawings, Blue prints and charts etc...imported for the production of goods for export or for being used in connection with the production or packaging of goods for export or for the promotion of such export by units...
3. 256/87-Cus. Capital goods, raw materials, components, spares of production machinery, consumables etc. imported by or on behalf of the gem and jewellery units set up in...
Export processing zone... for manufacture of jewellery for export by...
4. 260/87-Cus. -Ditto-
5. 3/88-Cus. -Ditto-
6. 277/90 -Ditto
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He points out that these notifications refer to components as well as spare parts and indicated that they refer to different articles, namely, parts used for first assembly or manufacture on the one hand and spares used for replacement. Notification No. 13/88 refers to raw materials, components and not spares, while the remaining notifications refer to both components and spare parts along with consumables, raw materials etc. These notifications indicate only an exercise to cover the main goods (capital goods or machinery) and all other articles connected thereto and necessary to set up and run export oriented production units. The fact that care has been taken to furnish an exhaustive list is not sufficient to give rise to an inference that word "component part" will necessarily exclude from its scope "spare parts" also.
19. It has been urged on'behalf of the department that since the subject Notifications refer to "Refractory Bricks for use as component parts of...", that is an indication that the Bricks must be intended for use in the manufacture of furnace and not for use as spares. We have indicated that the word "component" cannot be understood in such a restricted manner. "Component" indicates that it must be an integral part. "Spare" is a component used for replacement. In other words, the word "component" indicates the nature of the article and not the user of the article while the word "spare" indicates the use to which the article is put and not the nature of the article. The nature of the spare is that it is a component and its use is as replacement. "Component" means an essential or integral part of the whole. Its use is in different contexts, in the initial manufacture or as spare. As already indicated, "component" is the genus and spare is a species. The word "component" without any qualifying or restrictive words must be allowed free play and must comprehend components used for initial manufacture or for replacement.
22. We have considered the matter in the light of the guidelines formulated by the Supreme Court. The furnace, the final product is made of layers of sheets put together and inner sides are lined with Refractory Bricks of special shape or quality which could withstand high temperatures. After some time, the Refractory Bricks get damaged or suffer wear and tear and are no longer fit for the purpose for which they are used in the lining and require to be replaced. For a long period prior to the coming into force of Central Excise Tariff, under erstwhile T.I. 72(3), tariff rate of duty of all component parts of machinery, namely, such parts as are essential for the working of the machine and have been given for that purpose some special shape or quality was 40%. There is no dispute that erstwhile T.I. 72(3) covered spares also. With the coming into force of Central Excise Tariff Act, 1975, under sub-heading 6902.01, the prescribed rate of duty was 85%. The statement of objects and reasons of the new Act indicated intention to maintain old level of effective duty by issuing appropriate exemption notifications.
25. For the reasons indicated above, we hold that "component parts" referred to in the Notification under consideration would cover "spare parts" and benefit of the Notification would be available also in respect of import of Refractory Bricks intended for use as spare parts. Appellant is, therefore, entitled to the concessional rate of duty under the Notification in respect of the subject import. With respect, we hold that the earlier decisions taking a contrary view did not lay down the law correctly."
Therefore, he has pleaded that dispensation of pre-deposit may be allowed and the matter remanded for disposal of the issue by the lower appellate authority in the light of the latest decision.
4. Shri Ram Rao, the learned DR has no objection to this course of action.
5. On going through the records we observe that the issue is prima facie covered by the ratio of the decision of the Tribunal cited supra. We, therefore, in the circumstances grant dispensation of pre-deposit of the amount as prayed for.
6. The appeal will be required to be disposed of in the light of the decision supra. This decision was not available to the learned lower appellate authority and we are therefore, of the view that the matter will have to be re-considered in the light of the ratio of the decision cited supra. We in the circumstances, set aside the impugned order and remand the matter for de novo consideration and decision in the light of the decision cited supra after affording opportunity of hearing to the appellants. The appeal in thus allowed by remand.