Customs exemption for parts of steam turbines extends despite separate tariff classification and also supports auxiliary duty relief.

Customs exemption notifications were construed purposively to cover pressure gauges imported as parts of steam turbines for initial setting up, assembly or manufacture. The fact that the gauges were independently classifiable under Heading 90.24 did not defeat the benefit, because the relevant consideration was their status as parts of a specified article under Heading 84.04/05. The related auxiliary duty exemption was also held applicable, since it extended to the same class of goods covered by the basic exemption and did not depend on an arithmetical comparison between part and whole. The imported goods accordingly qualified for both exemptions.

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Issues: (i) Whether pressure gauges imported as parts of steam turbines could claim the benefit of Notification No. 35/79-Cus. even though they were themselves assessable under Heading 90.24 of the Customs Tariff; (ii) Whether the same goods were entitled to exemption from auxiliary duty under Notification No. 41/80-Cus.

Issue (i): Whether pressure gauges imported as parts of steam turbines could claim the benefit of Notification No. 35/79-Cus. even though they were themselves assessable under Heading 90.24 of the Customs Tariff.

Analysis: The exemption under Notification No. 35/79-Cus. was held to apply to parts of articles falling under the specified headings when imported for initial setting up, assembly, or manufacture. The decisive consideration was that the imported goods were parts of steam turbines falling under Heading 84.04/05, not that the parts themselves had to be classifiable under that heading. The tariff notes did not displace this position.

Conclusion: The assessee was entitled to the benefit of Notification No. 35/79-Cus. on this issue.

Issue (ii): Whether the same goods were entitled to exemption from auxiliary duty under Notification No. 41/80-Cus.

Analysis: Notification No. 41/80-Cus. was construed as extending auxiliary duty relief to the class of goods covered by Notification No. 35/79-Cus., without making the relief depend on whether a particular import had in fact obtained a differential basic-duty concession in a marginal comparison between part and whole. A construction linking the auxiliary-duty exemption to such arithmetical variations was rejected as inconsistent with the purpose of the notifications.

Conclusion: The assessee was entitled to exemption from auxiliary duty under Notification No. 41/80-Cus. on this issue.

Final Conclusion: The notifications were construed purposively to grant relief to the imported pressure gauges as parts of the relevant machinery, and the departmental appeals failed.

Ratio Decidendi: Where a customs exemption notification applies to parts of specified articles imported for assembly or manufacture, the benefit cannot be denied merely because the parts are independently classifiable under another tariff heading; a related auxiliary-duty exemption intended for that class of goods must be given effect according to the purpose of the exemption scheme.

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