Primary measuring function test supports customs exemption for precision inspection machine with only incidental layout use.

Notification No. 394/76-Cus. was construed to cover instruments used for both measuring and checking, not only machines used solely for measurement. The decisive test was the primary function of the imported machine: if its foremost function was precision measurement or checking and measuring, the exemption could apply even where it also had an additional layout function. On the catalogue and functional description, the machine was found to be primarily a precision measuring instrument, with layout only incidental. The narrower view that sole measuring use was required was rejected, and exemption-related relief was allowed.

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Issues: Whether the imported machine, whose main function was precision measurement for inspection, quality control and quality assurance with an additional layout function, was entitled to the benefit of Notification No. 394/76-Cus. dated 02.08.1976.

Analysis: The notification was construed as extending exemption not only to instruments used solely for measuring, but also to instruments used for both measuring and checking. The decisive test was whether the primary function of the instrument was measuring or checking and measuring. On the catalogue and functional description, the machine was found to perform precision measurement as its foremost function, while layout was only supplemental or additional. The view that exemption was confined to instruments with sole measuring function was rejected.

Conclusion: The imported goods were held entitled to the benefit of the notification, and the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded and the assessee obtained exemption-related relief on the basis that the machine was primarily a measuring or checking instrument.

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