Detachable machine attachment and separate functions did not make the import a composite machine for exemption purposes

An imported gear shaper cutter sharpener with a detachable attachment was treated as eligible for concessional duty under Notification No. 40/78 because the machine and attachment performed different functions separately, not simultaneously. The attachment was characterised as an accessory used for spur cutting, while the main machine was designed for helical cutters, so the import was not regarded as a composite machine on the facts shown by the invoice, literature and catalogue. The analysis also states that section note 3 of Section XVI was not accepted as a basis for departing from the plain language of the exemption notification, which was applied according to its terms.

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Issues: Whether the imported machine and its attachment were entitled to concessional duty under Notification No. 40/78 dated 01.03.1978, and whether the goods constituted a composite machine or separate items with an accessory performing a distinct function.

Analysis: The imported machine was found, on the invoice, literature and catalogue, to be a gear shaper cutter sharpener of type designed for helical cutters, with a separate attachment used when spur cutting function was required. The functions were capable of being performed separately and one at a time, not simultaneously. On that basis, the attachment was treated as an accessory and the import was not regarded as a composite machine in the manner suggested by the Revenue. The reasoning based on section note 3 of Section XVI was not accepted for construing the plain language of the exemption notification.

Conclusion: The imported goods were held eligible for the concessional benefit under Notification No. 40/78, and the contention that the import was ineligible because it formed a composite machine was rejected.

Final Conclusion: The impugned order was set aside and the appeal was allowed, with the importers held entitled to the exemption benefit.

Ratio Decidendi: Where a machine and a detachable attachment perform different functions separately and not simultaneously, the import is not necessarily a composite machine, and the exemption notification must be applied according to its plain terms.

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