Integral component test for customs exemption: specially designed air-conditioning equipment qualified as part of the machine.

Imported air-conditioning equipment qualified for exemption only if, on the technical material and surrounding facts, it could be shown to be a specially designed and integral component of the specified machine. The notification required proof that the goods were required for setting up or assembling the machine and that they formed part of its functional whole. On the record, the equipment was found to maintain the temperature and controlled environment needed for the machine's hydraulic and electronic systems, and was treated as tailor-made rather than a general-purpose unit. The exemption benefit under Notification No. 155/86-Cus. was therefore available.

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Issues: Whether the imported air-conditioning equipment, claimed to be required for the stamp charging and pushing machine, qualified as an integral part of the machine and thus attracted the benefit of Notification No. 155/86-Cus. dated 01.03.1986.

Analysis: The notification required the importer to satisfy the authority that the goods were required for setting up, assembly or manufacture of the specified machine, and to support that claim with the prescribed technical certification. The equipment was examined in the light of the machine's functioning, the technical literature, the supplier's description, and the surrounding conditions in which the machine operated. On that material, the equipment was found to be specially designed to maintain the required temperature, dust-free and controlled environment for the machine's hydraulic and electronic systems. The fact that the equipment was essential was not treated as sufficient by itself; what mattered was whether, on the facts, it formed part of the machine's functional whole. The material on record showed that it was tailor-made for the machine and not merely a general-purpose air-conditioner.

Conclusion: The imported air-conditioning equipment was held to be an integral part of the stamp charging and pushing machine, and the appellant was entitled to the exemption benefit under Notification No. 155/86-Cus. dated 01.03.1986.

Final Conclusion: The appeal succeeded because the disputed equipment was accepted as part of the machine itself and not merely as an accessory or independent general-purpose unit.

Ratio Decidendi: For exemption under the notification, an imported item must be shown, on the facts and supporting technical material, to be a specially designed and integral component of the specified machine, and not merely an item that is useful or essential to its operation.

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