Functional nexus test governs furnace parts exemption despite tariff classification of consumable crucibles.

Silicon carbide crucibles used inside electric resistance furnaces were treated as parts of the furnaces because they had a functional nexus with the manufacture of the specified industrial furnaces and were supported by the prescribed certificates. The exemption under Notification No. 155/86 depended on the use of the goods as parts required for manufacture or assembly, not on the tariff classification of the imported items. Their consumable nature and need for periodic replacement did not alter that character. Accordingly, classification under Heading 6903.90 did not defeat the exemption, and the Revenue's challenge failed.

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Issues: Whether silicon carbide crucibles imported for use in electric resistance furnaces were parts of furnaces and, if so, entitled to exemption under Notification No. 155/86 despite their classification under Heading 6903.90.

Analysis: The exemption notification was concerned with parts required for the manufacture or assembly of the specified articles, not with the tariff classification of the parts themselves. The relevant certificates issued by the specified authorities were accepted, and the material showed that the crucibles were placed inside the furnace and required for manufacture of industrial furnaces. The fact that the articles were consumable and needed replacement from time to time did not change their character as parts of the furnace. Since the final product was covered by the notification and the requisite certification was available, the classification of the imported parts under Heading 6903.90 did not defeat the exemption claim.

Conclusion: The crucibles were parts of furnaces and were eligible for exemption under Notification No. 155/86; the Revenue appeal failed.

Ratio Decidendi: For exemption based on parts used in manufacture of a specified article, the decisive test is the functional nexus of the imported goods with that article and the prescribed certification, not the tariff classification of the parts; a consumable remains a part if it performs that function.

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