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Issues: Whether the Ground Power Unit (GPU) used with aircraft is classifiable as a part of aircraft under Heading 8803 and entitled to exemption under Notification No. 65/93-C.E. dated 28-2-1993.
Analysis: The GPU was found to be specially designed for exclusive use with aircraft, to function only when attached to the aircraft on the ground, and to act as the substitute for the aircraft's inbuilt auxiliary power source when the engines are shut down. The majority held that, applying Section Note 3 of Section XVII, the determining factor was the principal and sole use of the article with aircraft, not merely its generic function of generating electricity. On that view, the GPU was treated as an adjunct and part of the aircraft, and Heading 8803 was preferred over Heading 8502. The exemption notification therefore became applicable.
Conclusion: The GPU is classifiable under Heading 8803 as a part of an aircraft and is eligible for exemption under Notification No. 65/93-C.E.; the appeal succeeds.
Dissenting Opinion: The dissent held that the evidence showed the GPU to be only a servicing apparatus for aircraft and not a part of the aircraft. On that view, Section Note 3 could not apply because the item was not first established to be a part or accessory of aircraft, and the exemption was denied.
Ratio Decidendi: Where a specially designed unit is used solely with aircraft as an integral on-ground auxiliary power sub-system, its principal and exclusive use may justify classification as a part of aircraft under Heading 8803 and entitlement to the related exemption.
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