Aircraft part exemption upheld for specially designed batteries despite Chapter 85 classification and general tariff exclusions.

A notification exempting parts of aircraft falling under any chapter was applied to silver oxide zinc storage and nickel cadmium batteries specially designed, tested and certified for aircraft use. The Tribunal held that the batteries qualified as aircraft parts on the strength of unrebutted documentary evidence, and that a general exclusion in Section XVII could not narrow the broader language of the exemption notification. Classification under Chapter 85 did not defeat the exemption where the item was proved to be an aircraft part. The denial of benefit was therefore unsustainable.

---

---

Issues: Whether silver oxide zinc storage/nickel cadmium batteries, specially designed and certified for use in aircraft, were eligible for exemption as parts of aircraft under the relevant notification despite being classifiable under Chapter 85 and the exclusionary note in Section XVII.

Analysis: The battery was supported by uncontroverted documentary evidence showing that it was manufactured to specific aircraft design and specifications, tested for aircraft use, and certified by defence authorities as an exclusive part of MIG aircraft. The notification granted exemption to parts of aeroplanes or helicopters falling under any chapter of the tariff, and its breadth showed that items not classifiable in Chapter 88 could still qualify if they were parts of aircraft. Section Note 2(f) of Section XVII could not be used to cut down the scope of the exemption where the notification itself was wider, and the Tribunal preferred the earlier view taken in pari materia cases. The Revenue did not discharge the burden of rebutting the evidence establishing aircraft use.

Conclusion: The batteries were held to be covered by the exemption and the denial of benefit was unsustainable.

Final Conclusion: The impugned order was set aside and the assessee obtained exemption relief on the disputed batteries.

Ratio Decidendi: Where a notification expressly exempts parts of aircraft falling under any chapter, an item specially designed and proved by unrebutted evidence to be an aircraft part cannot be denied exemption merely because it is classifiable under Chapter 85 or because of a general exclusion in the tariff section notes.

---