Machinery classification controls diesel engine components, preserving exemption where imported parts were used mainly for industrial assembly.

Imported component parts used to assemble diesel engines qualified for exemption under Notification No. 82/60 because the notification covered parts required for setting up, assembly or manufacture of machinery. The assembled engines were shown to be principally used for industrial and stationary purposes, so a restrictive motor-vehicle classification could not displace the specific machinery entry. Item 72(a) covered machinery including prime movers, while Items 75(10) and 75(11) applied to motor-vehicle parts and accessories, not engines as a whole. The proviso to Item 75(13) also required articles ordinarily used otherwise than as motor-vehicle parts to be classified on their own merits, leaving the exemption intact and the duty demand unsustainable.

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Issues: Whether imported component parts used to assemble diesel engines fitted on dumpers were entitled to exemption under Notification No. 82/60, and whether such engines were classifiable under Item 72(a) of the Indian Tariff Code or under Item 75(10) to 75(13).

Analysis: The notification exempted component parts required for the initial setting up, assembly, or manufacture of machinery, and the engines assembled from the imported parts were not confined to vehicular use. The material on record showed that the assembled diesel engines were principally used for industrial and stationary applications, with only a few fitted on dumpers. Item 72(a) specifically covered machinery including prime movers and fire engines, while Items 75(10) and 75(11) dealt with parts and accessories of motor vehicles and not engines as a whole. The proviso to Item 75(13) further required articles ordinarily used otherwise than as motor-vehicle parts to be assessed according to their own classification, which excluded the present engines from Item 75(12).

Conclusion: The imported components remained eligible for exemption under Notification No. 82/60, and the disputed duty demand based on classification under Item 75 was unsustainable.

Ratio Decidendi: Where the goods in question are machinery ordinarily used for industrial purposes and not specifically classified elsewhere, a restrictive motor-vehicle classification cannot displace the specific machinery entry or defeat exemption under the applicable notification.

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