Functional use as machinery part can justify customs exemption even when goods are separately classifiable on merits.

Imported reduction gear boxes, though separately classifiable on merits under Heading 84.63, were treated as parts of roller mills for the limited purpose of exemption under Notification No. 35-Cus./79 because they were functionally necessary to connect turbine output to the mill and reduce speed for its operation. The DGTD certificate and the fact that the import was for initial setting up of sugar mill machinery supported concessional treatment. The notification benefit was therefore available, subject to compliance with the prescribed procedural requirements.

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Issues: Whether imported reduction gear boxes, though classifiable on merits under Heading 84.63 of the Customs Tariff Act, 1975, could still be treated as parts of roller mills classifiable under Heading 84.30(2) of the Customs Tariff Act, 1975 for the purpose of exemption under Notification No. 35-Cus./79.

Analysis: The entitlement to the exemption was held to be distinct from the tariff classification of the goods on merits. The gear box was found to be functionally necessary for connecting the turbine output to the roller mill and for reducing speed to suit the working of the mill. On that construction, design and use, it was treated as a part of the roller mill for the limited purpose of the notification, even though it remained classifiable separately under Heading 84.63. The production of the DGTD certificate and the fact that the import was for initial setting up of sugar mill machinery supported the claim to concessional treatment.

Conclusion: The imported goods were held entitled to the benefit of Notification No. 35-Cus./79, subject to compliance with the other procedural requirements.

Final Conclusion: The revision was allowed and the appellate order was set aside, with directions to extend the notification benefit in accordance with the prescribed procedural conditions.

Ratio Decidendi: For exemption under a notification granting concessional treatment to parts of specified machinery, functional necessity and use as a part of the machinery may be sufficient even if the item is separately classifiable under another tariff heading on merits.

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