CNC system exclusion in customs exemption applies only when imported parts are proved to be components of the CNC system.

Notification No. 181/87-Cus. granted partial exemption for parts required for initial setting, assembly or manufacture of specified articles, but excluded CNC systems and components of such systems. The imported A.C. Servo Motors and A.C. Servo Controls were used in a machine capable of conventional or CNC operation, and there was no material showing that they formed part of the CNC system itself. The distinction between a CNC system and a CNC-controlled version of a machine was treated as material. On that basis, the exclusion was not attracted and the exemption was available to the assessee.

---

---

Issues: Whether A.C. Servo Motors and A.C. Servo Controls imported for a horizontal drill centre were eligible for exemption under Notification No. 181/87-Cus., dated 29-4-1987, or were excluded as components of a CNC system.

Analysis: The notification granted partial exemption to parts required for initial setting, assembly or manufacture of specified articles, but excluded CNC systems and components of such systems. The imported goods were shown to be parts used in a machine that could be conventional or CNC controlled, and there was no material to establish that they formed part of the CNC system itself. The distinction between a CNC system and a CNC version of a machine was material, and the exclusion could apply only if the goods were clearly shown to be components of the CNC system as such.

Conclusion: The imported A.C. Servo Motors and A.C. Servo Controls were not proved to be parts of the CNC system or its components, and the exemption was available to the assessee.

---