TaxTMI 
TaxTMI 
1997 (5) TMI 152
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....alorem. This notification was the successor notification issued in replacement of earlier Notification No. 246/76, dated 2-8-1976. On 29-7-1990, the Collector of Customs passed an order holding that the consignment was not entitled to the benefit of Notification No. 77/90 on the ground that the appellant's furnaces are not industrial furnaces and holding that the declaration filed to the effect that the consignment was intended for use as component part of "Industrial Electric Arc Furnace" was factually incorrect and the convertor of appellant was not "Electric Arc Furnace." The Collector also observed that if the goods are to be used in "Industrial Electric Furnace" as claimed, the benefit of the Notification would be available. Accordingly he ordered confiscation of the goods valued at Rs. 30,86,459.00 under Section 111(m) of the Customs Act, 1962 (for short, the Act) but allowing redemption on payment of fine of Rs. 8 lakhs and allowing release on payment of appropriate duty without allowing the benefit of the Notification No. 77/90. He also imposed penalty of Rs. 5 lakhs under Section 112(a)(ii) of the Act. 3. On appeal by the importer, the Tribunal reversed the finding....
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....tion to exempt parts used for initial assembly as well as parts imported later for replacement, the Notification should not have used the word "component" and should have really mentioned "parts" and held that only the parts used in the initial assembly or manufacture of machine would be called "component parts", whereas the same parts imported for subsequent replacement of parts of initial assembly have to be considered "spare parts". Accordingly it was held that parts imported for replacement are spare parts and do not attract the operation of the Notification. In Metal Impacts Pvt. Ltd. v. Collector of Customs - 1993 (64) E.L.T. 286 (Tribunal), a two-Member Bench had to consider the applicability of Notification No. 156/86 which granted exemption to "component parts of machine tools for working on metals falling under Heading 84.66." The Bench distinguished the decision in Vaz Forwarding Pvt. Ltd. - 1989 (43) E.L.T. 358 (Tribunal) stating that Notification No. 284/76 gave exemption to wireless apparatus and component parts thereof and the concessional rate for component parts was not in isolation by itself but was in conjunction with the wireless apparatus and the Notification N....
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....art must be regarded as a component and observed that the expression "component" indicated the nature of the article and not the manner of user and expression "spare" indicated the manner of use and not the nature of the article. Keeping in view the broad objective of encouraging 100% export oriented units, it was held that there was no warrant for interpreting the expression "component" in any restricted manner and it must be understood in the manner in which it is ordinarily and generally understood, i.e. as a "part". Accordingly it was held parts used as "spares" are "components" within the meaning of the Notification and hence the benefit of the Notification was attracted. 9. Shri D.N. Mehta, appearing for appellant contended that, under the old tariff all parts, used as spares or otherwise were taken in by T.I. 72(3) and for years, Refractory Bricks were regarded as entitled to the benefit of lower duty, Notification 242/76 which was replaced by Notification No. 77/90 maintaining status quo, that there is no justification for understanding "component parts" in a narrow or restricted sense and "component" indicates the nature of the article and not the user thereof. Acc....
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....tification covers only Refractory Bricks used as component parts, it will not apply to Refractory Bricks used not in first assembly of Furnace but used as spare for replacement of damaged or worn out component parts. 10. Tariff Item 59 of the First Schedule to the erstwhile Indian Tariff Act, 1934 covered the following :- "Building and Engineering materials, all sorts, not of iron steel or wood, not otherwise specified including tiles other than glass, earthenware or porcelain tiles, and fire bricks not being component parts of any articles included in Item No. 72 or No. 74( 2 )". Tariff Item 72(3) of the erstwhile tariff took in the following :- "Component parts of machinery as defined in Item Nos. 72, 72(1) and 72(2) and not otherwise specified, namely, such parts only as are essential for the working of the machine or apparatus and have been given for that purpose some special shape or quality which would not be essential for their use for any other purpose but excluding ..................................................... Tariff rate of duty was 40% which could be considered as reasonably low rate of duty. 11. Customs Tariff Act, 1975 was brought in....
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....ity for use as component parts of industrial furnaces" of Chapter 69 of the Customs Tariff Act, 1975. 12. "Part" is defined in Black's Law Dictionary Sixth Edition at page 1117 as under :- "An integral portion, something essential belonging to a larger whole; that which together with another or others makes up a whole ........ a portion, share or purpart". In Chambers 20th Century Dictionary the meaning given for "component" is as under :- "one of the parts or elements of which anything is made up, or into which it may be resolved". In Oxford Dictionary the meaning of "component" is :- "Contributing the composition of whole" In Webster's Dictionary the meaning given is "A part; a constituent, an ingredient." In our view, the common parlance meaning of the expression "component" is also the same, that is, one of the parts or elements of which anything is made up or into which it may be resolved or a constituent. The meaning in common parlance has to be looked into since the notification itself does not contain any definition of the expression. 13. Several decisions of High Courts containing reference to "part", "component" or spares have been ....
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....cy and no owner of vehicle will keep body of a vehicle in readiness for use in emergency. It was held that every component part need not be a spare part while every spare part will necessarily be a component part. 14. In Paul Lazar v. State of Kerala - 1977(40) STC 437 (Kerala HC) it was held that copper wire used in manufacture of transformers is not a component part thereof. It was indicated that component part has to be an identifiable object and copper wire used in the manufacture of transformer is not an identifiable object. 15. In Ghaziabad Engg. Co. (P) Ltd. v. Commr. of Sales Tax - 1991 (80) STC 243 (Delhi HC) under the provisions of the Bengal Finance (Sales Tax) Act, the court considered entry 1 of first schedule of Bengal Finance (Sales Tax) Act, namely, motor vehicles, including motor vehicles tyres and tubes and spare parts of motor vehicles and held that fuel injection pump, which is a part of diesel engine is a component part of the diesel engine and not a component part of the motor vehicle and, therefore, the fuel injection pump sold as a spare part would not be a spare part of motor vehicle. In Khoday Distilleries (P) Ltd v. Commr. of Commercial Ta....
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....ds "component parts" or "constituent parts" is an example of tautology. "Constituent" and "component" essentially mean the same thing, that is, an essential part of which anything is made of or into which it may be resolved. When parts are put together to create an end product, they are regarded as component parts. When an assembled product is dismantled, it gives rise to component parts. Whatever be the stage, that is, before assembling, after assembling and after dismantling, such essential are [integral] part is a component, when a component part is damaged or is worn out and therefore requires replacement and is replaced, the replacing part does not cease to be a component part because it was not present in the initial assembly and had been put in the place of a damaged or worn out component part. The much wider meaning given to the expression "component" in Khodey Distilleries (P) Ltd. v. Commissioner of Commercial Taxes, Karnataka and Others - 1991 (82) STC 251 (Kar. HC) and in State of Madras v. R.M.K. Krishnaswami Naidu & Ors. - 1970 (26) STC 42 (SC) does not affect this position. A spare is a replacement part, to replace a damaged or worn out component; nevertheless it is ....
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....6  6. -Do- 155/86  7. Parts required for the purpose of initial setting up or assembly or manufacture 158/86  8. Components required for the manufacture of goods 66/88  9. Component parts of goods covered by Notification No. 65/88 imported into India for the manufacture of the said goods Notification No. Language used 269/88  10. Components required for the manufacture of forklift trucks 97/89  11. Parts required for the manufacture of specified goods when imported into India by a manufacturer of such goods 106/92  12. Components and parts when imported into India for repair of dredges. In the above Notifications, wherever it was intended to restrict the amplitude and significance of the word "component", specific and appropriate language was used to bring out the intention. The Notifications contain illustration of intention to restrict the meaning of components as those to be used in assembly or manufacture or as spare. It is obvious that the word "component" includes "spare" and has very wide connotation and this position fully supports the view we have taken. Sh....
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....derstood in such a restricted manner. "Component" indicates that it must be an integral part. "Spare" is a component used for replacement. In other words, the word "component" indicates the nature of the article and not the user of the article while the word "spare" indicates the use to which the article is put and not the nature of the article. The nature of the spare is that it is a component and its use is as replacement. "Component" means an essential or integral part of the whole. Its user is in different contexts, in the initial manufacture or as spare. As already indicated, "component" is the genus and spare is a species. The word "component" without any qualifying or restrictive words must be allowed free play and must comprehend components used for initial manufacture or for replacement. 20. Reference is made to the treatment given to these words in Import-Export Policies of different years. The following definitions occur in 1992-97 Policy :- "Component means one of the parts of a sub-assembly or assembly of which a manufactured product is made up and into which it may be resolved. A component includes an accessory or attachment." "Spares means a part or a s....
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....iming relief under an exemption provision in a taxing statute has to show that he comes within the language of the exemption. But, in trying to understand the language used by an exemption notification, one should keep in mind two important aspects : (a) the object and purposes of the exemption and (b) the nature of the actual process involved in the manufacture of the commodity in relation to which exemption is granted....... so far as (a) is concerned, the object of the notification - even as the Tribunal finds - is to grant a concession to a manufacturer of soap who manufactures soap from rice bran oil to a substantial extent and thus discourage the use of edible oils in the manufacture. If these two aspects are considered together, it is clear that the emphasis in the notification is not that rice bran oil should be used as raw material in the very factory which produced the soap. The requirement is that the soap manufacture should, to a prescribed extent, be from rice bran oil as contrasted with other types of oil. The contrast is not between the use of rice bran oil as opposed to rice bran fatty acid or hydrogenated rice bran oil, the contrast is between the use of rice br....
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....cess of 40% ad valorem. Notification No. 77/90 continued this state of affairs. There is nothing in this background or the terms of the Notifications to indicate any intention to maintain the level of duty only in regard to Refractory Bricks used in initial assembly or manufacture of Furnaces and not to maintain the level of effective rate of duty in respect of Refractory Bricks used as spares. The language used in the Notification is clear, unambiguous and of wide import. Considering the process involved and the broad object, import and language of the Notifications, the absence of any words of restriction or qualification, any restrictive interpretation will lead to frustration of the underlying object and cannot be adopted. On a reasonable interpretation, it is clear that application of the Notification is not restricted to cases of intended use in initial assembly or manufacture of Furnace and covers cases of intended use as spares also. 23. It is contended on behalf of the department that meaning of words used in one statute cannot be used in interpreting the words used in another statute, without reference to the subject matter or the context or the language used in t....
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....not lay down the law correctly. 26. The impugned order is set aside and the appeal allowed. 27. [Order per : Shiben K. Dhar, Member (T)]. - With respect, I have arrived at a different conclusion through my separate order as under : 1. The short question that calls for answer is whether refractory bricks imported as spare parts can be considered as imported "for use as component parts of industrial furnace". 2. The Shorter Oxford Dictionary gives the meaning of word `component' as : "Composing : making up; constituent. A constituent part or element". "Part" is defined as "that which with another or others makes up a whole, a portion, section, element, constituent," In Funk and Wagnalls' New Standard Dictionary of the English Language (1953 Edn.) 'component' is explained as "forming part of ingredient, constituent, a constituent element or part." "Part" means that which goes with other to constitute the whole. The meaning given in Webster's International English Dictionary (Vol. I, 9th Edn.) is : "Serving or helping to form, comprising - constituting, constituent the component parts of natural bodies." 2.2 The emphasis is on the word c....
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....facture of the final product and without which final product cannot be conceived of. Spare parts are those component parts which, in the course of use, wear and tear out frequently and are, therefore, required to be kept in readiness for use as and when necessary. Reference may usefully be made in this context to the plain dictionary meaning of these expressions as per the Shorter Oxford English Dictionary : "Component" : "Composing, making up, constituent, a constituent part or element. `Spare' : Not in actual or regular use at the time spoken of, but carried, held or kept in reserve for future use or to supply on emergency; additional, extra, that can be spared, dispensed with or given away, as being in excess of actual requirements, superfluous" (emphasis added). 4. Notification exempts refractory bricks of special shape and quality when imported into India for use as component part of industrial furnace. Now Notification uses the expression "for use as component parts". The lining of the furnace is made up of the refractory bricks joined together which acts as a component part of the furnace being, an integral part. Different qualities of refractory bricks may be ....
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....efore, held that refractory bricks as imported even of special shape and quality cannot be considered as component parts of industrial furnace. 7. Ld. Advocate, Shri Ravinder Narain argued that even when these spare parts are used as spare parts they are used only as component parts of the furnace. That two terms would appear even conceptually not interchangeable should be clear from the preceding paras. The language of the Notification however makes it clearer. 7.2 The Notification uses the expression "when imported into India". One of the meanings given to the word "when" in Shorter Oxford Dictionary is "at what time or on what occasion". In Black's Law Dictionary it is defined as "in the event that; on condition that". The world is generally implied as an equivalent to word "if" in legislative enactments and in common speech. Considering these definitions, there is no doubt therefore that the entire clause read as a whole in the exemption Notification uses the word "when" to indicate the purpose of the Notification for import. So read, it means Refractory Bricks are exempted from duty if imported into India for use as Component Part of Industrial furnace. 7....
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....in emergency. Mr. Banaji's argument seeks to equate the expression "spare parts" with the term "parts", and does not give to the expression "spare parts" the colour that is [lent] by the word "spare" with which it is associated in the entry. Again in the case of Sujan Singh & Another v. Appellate Commissioner of Sales Tax - 1969 STC Vol. XXIV Page 504 - it was held by High Court of Delhi that "spare part" means "an extra part of a vehicle or machine kept for use in emergency or replacement." The expression "spare part" cannot be equated with "parts" without regard to the colour that is lent by the word "spare". The Court observed that the expression "component" is different from the expression "spare parts" with which we are alone now concerned. In case of Televista Electronics (P) Ltd. v. Commissioner of Sales Tax - 1992 STC Vol. 87 Page 410 - the Delhi High Court observed, "the fact that at different points of time the relevant entries, some time contained the expression "component parts" and some time "spare parts", and in the 1975 Act Entry No. 1 contains both, namely, "spare parts" as also "component parts" leads to the inevitable inference that these terms are not treated ....
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.... "Even if it is true that persons who dealt with the statute understood its provisions in a restricted sense, such mistaken construction of the statute did not bind the Court as to prevent it from giving it its true construction." 9.5 I am of the view, therefore, that Doctrine of Contemporanea Expositio cannot be pressed into service in this case. 10. In case of Attri Electronics v. C.C. - 1991 (52) E.L.T. 73 (Tribunal) held that spare is a part or a sub-assembly or an assembly which is ready to replace an identical part or sub-assembly or assembly, when the same becomes faulty or worn-out. Colour picture tubes as were imported were used as part or assembly of such a manufactured product like the Coloured T.V. is made-up and into which the same is resolved. Tribunal, therefore, held that these cannot be considered as spares but are components The Import-Export Policy 1983-84, as set out at Page-74 of that Order under Point No. (i) is extracted below : "Point No. (i) The term `spares' mentioned in the 1983-84 Import and Export Policy as per Para 5(11) which reads as follows : "Spare" means a part of sub-assembly or assembly for substitution, i.e., ready t....