Functional role test for exemption: indispensable laser delivery items were treated as parts of the system, not accessories.

Imported laser delivery items were treated as parts of the laser system, not mere accessories, because technical literature, invoice descriptions and the supplier's letter showed they were optical fibres and applicators used to deliver laser energy for surgical use. The decisive test was their functional role: the laser system could not operate for surgery without them, and they formed an essential component of the working unit. Separate invoicing or accessory description did not alter their true character. On that basis, the note states that indispensable items with an essential operational function are eligible to be classified as parts for exemption purposes.

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Issues: Whether the imported laser delivery items were parts of the laser system eligible for exemption, or merely accessories outside the scope of the notification.

Analysis: The imported items were shown, on the technical literature, invoice description and supplier's letter, to be optical fibres and applicators used for delivering laser energy to target tissue for specific surgical applications. The laser system could not be used for surgery without these items, and they formed an essential component of the functional unit. On that basis, their mere separate invoicing or description as accessories did not determine their true character. The decisive test was their role in the functioning and operation of the laser system.

Conclusion: The imported goods were parts of the laser system and not mere accessories. The assessee was entitled to the exemption and the appeal was allowed.

Ratio Decidendi: Where imported goods are indispensable to the operation of the main machine and perform an essential functional role in its use, they are to be treated as parts rather than accessories for exemption purposes.

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