Exemption for manufacture of machinery denied where imported plates were used only to replace worn-out parts in existing cells.

Exemption under Notification No. 58/87-Cus. applied only where imported goods were used in the manufacture of machinery falling under Chapters 84 or 85, and not for renovation or replacement of existing parts. The imported M.S. plates were used to fabricate bare bottoms or steel bottoms as substitutes for worn-out components in mercury electrolytic cells, so they did not bring a new machine into existence. The fabricated items were merely replacement parts classifiable as parts, and strict construction of exemption notifications barred extension of the concession to repair or replacement materials.

---

---

Issues: Whether imported M.S. plates used for fabrication of bare bottoms or steel bottoms as replacement of worn-out parts in mercury electrolytic cells were entitled to concessional benefit under Notification No. 58/87-Cus.

Analysis: The exemption under Notification No. 58/87-Cus. applied only where the specified goods were imported for the purpose of manufacture of machinery falling under Chapters 84 or 85. The evidence showed that the imported M.S. plates were used for renovation and replacement of worn-out bottoms of existing mercury electrolytic cells, and not for bringing into existence a new machinery. The fabricated bare bottoms were at best parts of the machinery and were classifiable as parts under Heading 84.79/ Sub-heading 8479.90, not as machinery having an individual function. Since exemption notifications must be strictly construed, an intermediate product or replacement part did not satisfy the condition of manufacture of machinery.

Conclusion: The claim for concessional benefit was not allowable, as the imported goods were used for repair or replacement of parts and not for manufacture of machinery covered by the notification.

Ratio Decidendi: An exemption notification confined to goods used in the manufacture of machinery cannot be extended to imported materials used only for renovation, repair, or replacement of parts of existing machinery.

---