Exemption for component goods requires the item to form part of the exempted commodity, not merely support its functioning.

An item supplied with an exempted apparatus does not qualify for the exemption merely because it is functionally useful or required for operation; it must form part of the exempted commercial commodity itself. Applying that test, the line tester had a separate catalogue, a separate function, and was capable of use with any type of telephone exchange, so it was treated as a distinct marketable entity rather than an integral part of the rural automatic exchange. The exemption under Notification No. 73/90 was therefore denied for the line tester.

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Issues: Whether the line tester supplied with a rural automatic exchange formed an integral part of the telephone exchange so as to qualify for exemption under Notification No. 73/90.

Analysis: The exemption applied to specified goods, including rural automatic exchanges, and the dispute turned on whether the line tester could be treated as part of that exempted commodity. The line tester had a separate catalogue, a separate function, and was described as capable of use with any type of telephone exchange. The exchange was treated as a distinct commercial entity, and the fact that the line tester was useful or even necessary for efficient working did not make it part of the telephone exchange itself. The relevant test was whether the item formed part of the goods as a separate marketable entity, not whether it was functionally connected with the system.

Conclusion: The line tester was not part of the rural automatic exchange and did not qualify for the exemption.

Final Conclusion: The appeal of the Revenue succeeded, and the exemption benefit was denied for the line tester.

Ratio Decidendi: An item used in conjunction with an exempted apparatus does not become part of that apparatus merely because it is functionally useful or required for its operation; it must form part of the exempted commercial commodity itself.

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