TaxTMI 
TaxTMI 
1994 (11) TMI 219
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....me product w.e.f. 1-3-1989 but had not claimed the said benefit. The Assistant Collector held that the notification in question exempts component parts of diesel oil IC engines other than nozzle and nozzle holders, and it did not exempt component parts of IC Engines. He also did not give retrospective effect to the Ch. 2/89. The Ld. Collector after a careful examination of their pleas before him rejected their contentions on the ground that Notification 217/85 granted to component parts of diesel oil operated IC Engine, other than engine valves, jackets, nozzle and nozzle holders etc. and as the Notification did not grant the benefit to nozzle and nozzle holders, he rejected their plea. As regards Notification No. 112/88 dated 1-3-1988 and Notification No. 216/87 which specifically exempted nozzle and nozzle holders from the whole of excise duty on certain conditions, stipulated therein, the Ld. Collector held that :- "The appellants use certain parts in the manufacture of nozzle and nozzle holders. They claim the benefit of Notification 217/85 for these parts used in the above manners. However, nozzle and nozzle holders are not enjoying exemption under Notification 217/85. When....
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....facture of such engines. They state that engines need not be manufactured in the same factory and as they are following Chapter X Procedure, they satisfy the proviso to the said notification and hence the benefit should be extended. They contend that they are not claiming the benefit for nozzle and nozzle holders but are claiming the benefit for its component parts, as nozzle and nozzle holders are already exempt under Notification Nos. 112/89 & 216/87. They submit that nowhere it provides that in order to avail the benefit of Notification No. 217/85, nozzle and nozzle holders must enjoy the benefit of the same notification. It is their plea that parts of nozzle and nozzle holders manufactured by them are also parts of diesel oil operated IC engines. Therefore, they contend that "a part of a part is a part of the whole". Thus, they plead that a part of a nozzle and nozzle holder must be considered to be a part of a diesel oil operated IC engine. They further plead that the component of nozzle and nozzle holders are captively consumed in the manufacture of nozzle and nozzle holders. If they clear its component parts following the Chapter X Procedure prescribed under Notification No.....
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.... (iii) Audio Vision Electronics v. Collector of Central Excise - 1987 (31) E.L.T. 797 (para 5) (iv) State of Gujarat v. Golden Metal Industries - 1975 (35) STC 349 (II) Practical and meaningful interpretation should be given to the notification and its predecessor notification can also be looked into, but earlier wording of the notification cannot be read in the subsequent notification. In this context following ratios are relied. The notification should not be interpreted in such a manner as to defeat its intendment & purpose and reduce it to nugatory. In this context, Counsel relied on the following ratios :- Hemraj Gordhandas v. H.H. Dave, Assistant Collector - 1978 (2) E.L.T. J 350 (S.C.) Quality Steel Tubes Pvt. Ltd. v. Collector - 1987 (30) E.L.T. 447 (Tribunal) Meteor Satellite Ltd. v. Collector - 1987 (29) E.L.T. 437 (Tribunal) (III) The third proposition placed was that the Trade Notice & Circular are binding on the authorities. In this context, the Counsel relied on the following rulings : (i) Union of India & Others v. Godfrey Philips India Ltd. & Others - 1985 (22) E.L.T. 306 (ii) Nav Gujarat Paper Industries v. Supe....
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....arged, which would be against the intendment of the notification. He submitted that in that event, there would be large evasion of duty by manufacturers clearing the item as spare parts. He submitted that the ratio of the ruling rendered in the case of Mahindra & Mahindra's case is clearly distinguishable as the interpretation was in the context of the wordings in the notification which covered to "parts of power driven pumps" and hence part of parts were also held to be exempted. While the situation in this case was different and that nozzle and nozzle holders were clearly excluded in the notification and hence by a different interpretation, its component cannot be granted benefit by considering it as component parts of diesel oil operated internal combustion. The Trade Notices and Circulars referred to part of parts being exempted under the notification, while in the present case, the part i.e. nozzle and nozzle holder had been excluded and hence the denial of benefit is totally justified. He submitted that the period in question pertains to the period, when the Notification 217/85 was in operation and the other two notifications were not applicable, as they did not operate retro....
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....ly nozzle and nozzle holders fall within the exclusion clause. Its sub-assemblies which go to form the said item are also clearly excluded. The parts or sub-assemblies of nozzles and nozzle holders cannot be considered independently as parts of diesel oil operated internal combustion, in the face of their clear exclusion. Such an interpretation would be to cause violence to the notification by granting benefit to those parts and its parts which are clearly excluded from the ambit of the notification. The ratio of Mahindra & Mahindra's case is clearly distinguishable. The notification therein granted benefit to "parts of power driven pumps", therefore, part of parts also fell within the ambit of the description of the parts of power driven pump. The citation cannot be misapplied, as sought by Ld. counsel. The Trade Notices referred were also in the context of those parts which fell within the ambit of `component parts of diesel oil operated internal combustion engine' and the T.N's did not suggest anywhere that parts of excluded items should be brought within the main description and wording of the notification. The Ld. counsel has attempted to place a very strange reading of both t....
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....ty of these two notifications only, in the light of settled blaw and rulings. The original authorities may also consider any fresh evidence that may be placed by the appellants. It is seen that the C.L. filed before us does not give the various details of the components of nozzles and nozzle holders. Therefore, it is necessary that the appellants place full evidence in this regard at the time of consideration of their claim under these two notifications. 8. The Appeals are disposed of in the above terms. Sd/ (S.L. Peeran) Dated : 19-4-1994 Member (J) 9. [Order per : P.C. Jain, Member (T)]. - I have carefully considered the order proposed by my learned brother. But I regret, with respect, that I am unable to agree to the same. 10. Central Excise duty, it is now well-settled, is a tax on manufacture of the goods specified in the Schedule to the CETA, 1985 (hereinafter referred to as the Tariff Schedule). If any goods are mentioned in the Tariff Schedule, they are liable to duty in their own right irrespective of the fact that those `goods' are further used or utilised in the manufacture (or assembly) of another goods. This liability to....
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....de thereunder, as explained above, an exemption notification cannot be extended in its scope by a process of intendments, conjectures and surmises, as observed by the Hon'ble Supreme Court in Hemraj Gordhandas (supra). 11.1 Notification 217/85 (as amended by Notification 79/86, dated 10-2-1986) exempts component parts of diesel operated I.C. engines except certain specified parts - one of them being nozzles and nozzle holders. Question involved herein is whether parts of nozzle and nozzle holders are also excluded from the scope of Notification 217/85; Revenue is of the view that parts of "nozzles and nozzle holders" are also excluded from the scope of the notification whereas the assessee (appellant) contends that parts of nozzle and nozzle holders - being parts of diesel operated I.C. engines other than the excluded categories of parts - are covered by the said exemption notification. It is significant to note that parts of nozzle and nozzle holders are being classified in the same heading of the tariff as the parts of diesel operated I.C. engines. It is also noted here that some of the parts of `nozzle and nozzle holders' are purchased by the appellant from outside and s....
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....ntion of the notification. Value of `nozzle and nozzle holders' which would still be liable to duty would be reduced only by the element of duty on parts of nozzle and nozzle holders. I am, therefore, unable to appreciate the reasoning of the lower authorities. 13. The impugned order in Appeal E/5530/91-B1, therefore, deserves to be set aside on the question of applicability of Notification 217/85 (as amended) to parts of nozzle and nozzle holders. I order accordingly. 14. In the second appeal, apart from the question of availability of the said notification, demand of duty has been raised. Since the benefit of the Notification 217/85 (as amended) is available to parts of nozzle and nozzle holders, question of demand of duty and consequently valuation of such parts does not arise. The impugned order in the second appeal E/5647/91-B1 is also set aside. 15. In short, both the appeals are allowed with consequential relief to the appellant. Sd/ (P.C. Jain) Dated : 26-4-1994 Member (T) POINT OF DIFFERENCE Whether in the facts and circumstances of the case parts of nozzle and nozzle holders are entitled to the benefit of Notification....
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....e for exemption under the said notification. 18. It is seen that in the case of Audio Vision Electronics v. Collector of Customs, Madras, reported in 1987 (31) E.L.T. 796, the Tribunal has held that a component of a component of a machine has to be deemed as a component of the machine. Similarly, in the case of Sahney Steel and Press Works Ltd., Bombay v. Union of India & Others, reported in 1988 (36) E.L.T. 94, the Hon'ble Bombay High Court has held that starter armature which is a part of automobile starter motor is a part of automobile. It is also seen that in the case of Collector of Central Excise v. MP (I) Ltd., reported in 1990 (46) E.L.T. 68, the Tribunal has held that a part of a cycle tyre is also a part of bicycle. Hence, it is well settled in law that a component of a component of a machine has to be deemed as a component of the machine taken as a whole. Since it cannot be denied that nozzles and nozzle holders are parts of automobile internal combustion diesel engines, on the ratio of the judgments discussed above, it has to be held that parts of nozzles and nozzle holders are also parts of automobile internal combustion diesel engines. 19. As regards t....
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....trength of that licence, all and several kinds of parts and accessories of motor cycles and scooters. The only question, therefore, before the Collector was whether the respondents' licence covered the goods imported by them, i.e., whether the goods were parts and accessories. If they were, the imports were legitimate and no question of their being not covered by the licence or the respondents having committed breach of Sec. 3 of the Imports and Exports (Control) Act or Sec. 167(8) of the Sea Customs Act could possibly arise. What the Collector, however, did was that he put the two consignments together and held that they made up 51 `Rixe' Mopeds in C.K.D. condition and were, for that reason, not the articles covered by Entry 295 but articles prohibited under remarks (ii) of Entry 294. But Entry 294 deals with motor cycles and scooters complete and assembled. Remark (ii) against that entry prohibits an importer who held a licence to import motor cycles and scooters from importing motor cycles and scooters in C.K.D. condition. Remark (ii) containing that prohibition had nothing to do with Entry 295 which did not contain any limitations or restrictions whatsoever against imports of p....