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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 are capital equipments used alongwith the resultant products namely capacitor Banks. They are nothing but testing equipments which are not used for the manufacture of the resultant products but are supplied alongwith the resultant product for testing purposes. Since they are not covered by the term materials, they are not eligible for the benefit of notification 159/90.

4. The Assistant Collector did not 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:

e to f* * * * * * In the Explanation annexed to the notification, the term "exempt materials" and "materials" are defined as follows :

"Exempt materials" means the materials imported and specified in Part 'C' of the said Certificate and eligible for exemption from duty under this 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.

(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 this product namely Capacitance Bridge, becomes part and parcel of the 'Capacitor Bank' which are installed as per contract, alongwith transformer. The revenue on examination of the entire literature has held this product to be an independent product and that it is a testing instrument and that it does not become a part of the capacitor bank, in the sense that it is not utilised in the manufacture of the final product. This contention of the revenue deserves to be accepted for the reasons to be discussed hereinbelow: