Exemption for parts of parts can extend to intermediate goods, even if not specifically claimed in the classification list.

An exemption notification applicable to parts can extend to parts of parts used in the manufacture of final goods, and the Tribunal applied that principle to steel balls, outer rings and inner rings used in ball bearings. It rejected the argument that the notification was inapplicable merely because the intermediate goods were not identical to the articles considered in an earlier ruling, and relied on Board circulars supporting exemption for parts of parts. It also held that exemption eligibility cannot be denied solely because the notification was not specifically claimed in the classification list if it is otherwise legally available. The duty demand was set aside and consequential relief followed.

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Issues: (i) Whether the exemption under Notification No. 64/86-C.E. was available to steel balls, outer rings and inner rings used in the manufacture of ball bearings as parts of parts; (ii) Whether the benefit of the exemption could be denied because it was not specifically claimed in the classification list.

Issue (i): Whether the exemption under Notification No. 64/86-C.E. was available to steel balls, outer rings and inner rings used in the manufacture of ball bearings as parts of parts.

Analysis: The exemption had been denied on the footing that the earlier Tribunal decision extending Notification No. 64/86 to stampings and laminations used in electric motors was inapplicable because the present case concerned parts of ball bearings. The Tribunal held that this distinction was unsustainable. The earlier decision recognised that parts of parts could also fall within the notification, and the same principle applied whether the intermediate article was an electric motor or a ball bearing component used further in manufacture. The Board circulars supporting exemption for parts of parts were also relied upon.

Conclusion: The exemption under Notification No. 64/86-C.E. was held to be available to the goods in question.

Issue (ii): Whether the benefit of the exemption could be denied because it was not specifically claimed in the classification list.

Analysis: The Tribunal held that entitlement to an exemption notification does not depend solely on its specific mention in the classification list. The appellants had claimed Notification No. 217/86-C.E. in the classification list and, when that claim was rejected, they alternatively sought the benefit of Notification No. 64/86-C.E. The cited precedent was followed to hold that an exemption can be granted if otherwise legally available, even where it was not originally claimed in the classification list.

Conclusion: The denial of exemption on this ground was rejected and the appellants' claim was upheld.

Final Conclusion: The demand of duty was set aside, and the appellants were held entitled to the exemption with consequential relief.

Ratio Decidendi: An exemption notification applicable to parts may extend to parts of parts used in the manufacture of the final goods, and such exemption cannot be denied merely because it was not specifically claimed in the classification list.

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