1999(09)LCX0146
IN THE CEGAT, SOUTH ZONAL BENCH, MADRAS
S/Shri S.L. Peeran, Member (J) and V.K. Ashtana, Member (T)
LAKSHMI MACHINE WORKS LTD.
Versus
COMMISSIONER OF CUSTOMS, CHENNAI
Final Order No. 2294/99, dated 6-9-1999 in Appeal No. C/22/94/B2/Md
Cases Quoted
Jindal Strips Ltd. v. Commissioner — 1997(05)LCX0115 Eq 1997 (094) ELT 0234 (Tribunal) — Relied on [Paras 2, 4]
Metal Impacts Pvt. Ltd. v. Collector — 1992(11)LCX0022 Eq 1993 (064) ELT 0286 (Tribunal) — Relied on [Paras 2, 4]
DEPARTMENTAL CLARIFICATION CITED
Ministry’s Comments vide F. No. 521/19/90-Cus. (TU) [Para 2]
Advocated By : Shri M.S. Kumaraswamy, Consultant, for the Appellant.
Shri S. Sankaravadivelu, DR, for the Respondent.
[Order per : V.K. Ashtana, Member (T)]. - In this appeal against the Order-in-Appeal No. M. Cus. 1169/93, dated 4-10-1993 passed by the Collector (Appeals), the issue concerned is classification and assessment of the lubrication pump with front connected suction filters loosely described as `lubricating unit’ imported by the appellants. In the said impugned order, the Collector (Appeals) upheld the order of the original authority classifying the item under Heading 84.79.89 hence denying exemption under Notification 156/86 on the ground that the item imported was a spare and not component of the main machine and also not falling’ under 8466.93.
2. Heard Shri M.S. Kumaraswamy, learned Consultant who submits that as per the technical write up available on page 24 of the paper book the said lubricating unit 016004A was imported to replace the defective one in ELB surface grinder which is a grinding machine. He submits that the said item is fitted on to the machine and the machine bed itself adds as the tank for the lubricating oil. He submits that this unit has dual functions; firstly it functions to supply the lubrication to the various parts of the said grinding machine and secondly it also controls certain hydraulic functions to operate the said machine. The appellants have averred therein that it cannot be used with any other machine. Therefore, its classification under 8466.93 is the most appropriate. The learned Consultant further submits that the issue of whether the said equipment has to be regarded as spare part or component is now well settled both by circular of the Board as well as by the decision of the Tribunal. He submits that by Ministry’s comments vide F. No. 521/19/90-Cus. (TU) it has been reiterated that there had never been any concept of spare parts as far as statutory tariff headings were concerned, and even, the concept of component parts for initial manufacture has to be applied only in specific cases where the notification so provides. In all other cases, component parts cover all parts including spare parts also. The learned consultant further submits that this issue was considered at length in the case of Metal Impacts Pvt. Ltd. v. CCE as reported in 1993 (064) ELT 286 wherein it was held that parts of machine tools would be classifiable under heading 8460 and eligible for exemption under Notification 156/86, dated 1-3-1986, there being no difference between component parts and spare parts. He submits that in this case also grinding machine is a tool and the said lubricating unit is specifically manufactured to fit in the said grinding machine. Therefore, the ratio of the above decision would be clearly applicable in this case. He further cited the case of Jindal Strips Ltd. v. CCE as reported in 1997(05)LCX0115 Eq 1997 (094) ELT 0234 (Tribunal) wherein the larger bench of the Tribunal comprising of Five Members had considered the meaning of the expression “components” when it is not specifically defined in the Notification. It was held by the larger bench that the common parlance meaning would have to be used in such cases and in such common parlance, component would mean part or a constituent. He submits that the goods were imported as spare parts for use as component part in industrial functions. Thus exemption contained in Notification 77/90-Cus., dated 20-3-1990 was available. The learned Consultant submits that the same principle would apply to the facts in this case for the grant of benefit of Notification No. 156/86.
3. Shri S. Sankaravadivelu, learned DR reiterates the findings of the Collector (Appeals). He submits that the learned Collector (Appeals) did not have the benefit of the detailed decisions before him at the time of passing the order impugned.
4. We have considered the rival submissions and facts of the case. We have in particular perused in detail the technical write up available on page 24 of the paper book. We find that the detailed technical write up clearly shows that the item in question is manufactured with specific function and specific design so as to make usable only by fitment into the ELB surface grinder of the appellants. It is also clear that the said item was essential for the operation of the said surface grinder which is a machine tool because without the lubricating system the function of grinding was not capable of sustained operation in a commercial environment. We also find that apart from supplying lubrication to the machine tool it also controls certain hydraulic functions of the machine. We also find that the said item is machine tool dependent inasmuch as its own functions are controlled by a timer which is an integral part of the machine tool. Therefore, in view of all these undisputed facts, we are clearly of the opinion that the unit is specifically designed for this particular machine tool. This leaves the question as to whether it could be considered as spare part or component of this machine while classifying under Customs Tariff Act, 1975. On this, we have perused two citations noted above as well as the copy of notes in the Ministry’s file referred to by the learned Consultant. Since we have already held that the item imported is essential to operate the said machine with the appellants, therefore, we find that it is to be classified as component of the said machine. This view is supported by the two decisions in the case of Jindal Strips and Metal Impacts (supra). Therefore, we order that the lubricating unit would be classified under 8466.93. The final issue for our consideration is whether it can qualify for the exemption under Notification 156/86. Herein again the issue has been considered in the case of Metal Impacts and Jindal Strips (supra) wherein while considering the same Notification it had been held that component parts of machine tool would be entitled to the said exemption Notification. Since we have already held that the item imported is a component part of the grinding machine (machine tool) and is classifiable under 8466.93, therefore, with respect to applying the ratio of these decisions we find that the exemption contained in Notification 156/86 would be available to the item imported. In view of this, the order in appeal impugned is set aside and the appeal allowed with consequential relief as per law.
Equivalent 2000 (115) ELT 118 (Tribunal)
Equivalent 2000 (036) RLT 0570 (CEGAT)