TaxTMI 
TaxTMI 
2008 (5) TMI 51
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....etal & Ferro Alloys Ltd. (M/s. IMFA). In view of the fact that the Custom Appeal No. 66/05 is against the same impugned order passed by the lower appellate authority, with the consent of both sides, we take up both the Appeals CDM-52/05 & CDM-66/05 for hearing and disposal together. As submitted by Shri J.P. Khaitan, ld. Sr. Advocate appearing for M/s. IMFA, the dispute relates to grant of exemption under Notification No. 13/81-Cus., dated 9-2-81 in respect of following 5 (five) items — (1) Front End Loader (2) Slag Pot Carrier (3) Belt Conveyor (4) Spares of. cranes (5) Spares of conveyors 2. These items were imported by M/s. IMFA between April 85 to June, 1985. The import took place through the Port of Visakhapat....
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....ds other two items, i.e. Sl. No. (4) & (5) above, it was the contention of the department that Spares of Cranes and Spares of Conveyors were included in the Notification 13/81-Cus. only through amending Notification 11/88-Cus., dated 15-2-88 and hence the impugned spares imported prior to the amendment were not eligible for exemption. 5. Shri Khaitan states that the show-cause notices were adjudicated by the Deputy Commissioner of Central Excise & Customs, Bhubaneswar, who after considering the submissions of the appellants, M/s. IMFA, decided in their favour on merit. The Department filed appeals against the orders of the Deputy Commissioner before the lower appellate authority who by a common order dated 14-3-05 allowed the appeal file....
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....us. dated 15-2-88 to replace SI. No. 4 by the following: "4. Spares of capital goods and material handling equipments, namely, fork lifts, overhead cranes, mobile cranes, crawler cranes, hoists and stackers." 10. It is apparent that the department's demand notices have been prompted by the subsequent amendments to the original Notification 13/81. The main plank of the department's case is that when the subsequent amendments specifically covered the impugned goods, the same could not have been included in the original list. It is significant that when the goods were imported and cleared from Vishakapatnam Port, no such objection was initially raised regarding non-coverage of the impugned goods under Notification 13/81 and in fact, the ....
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....ence to Notification 52/2003-Cus. dated 31-3-03, it clarifies that the term "capital goods" has not been defined in the Notification and that some of the items mentioned in the other Sl. Nos. of the Annexure to this Notification which are specifically listed for being eligible for the exemption may also qualify as "capital goods" depending upon their use in a particular case (such as overhead cranes, jigs and fixtures, moulds etc.). The Circular goes on to say that the capital goods listed at Sl. No. 1 and some of the goods covered under other Sl. Nos. are not mutually exclusive. Drawing attention to the aforesaid Circular dated 18-4-07, Shri Khaitan states that in respect of Notification 13/81, the term "capital goods" included against S. ....
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....e very integral to the process of production and manufacturing of goods. The definition also includes the items for replacement or expansion and hence spares for machineries and equipments held to be "capital goods" also get coverage under the definition of "capital goods" under the Exim Policy. We have no doubt in our mind that the impugned goods, namely, Front End Loader, Slag Pot Carrier, Belt Conveyor on the one hand and Spares of cranes and conveyors on the other are respectively in the nature of machineries/equipments and replacement of original parts of such machineries (cranes and conveyors) which qualify to be "capital goods" under the Exim Policy. Since these are obviously used for handling of raw materials, finished goods and the....
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....n to restrict the ambit and scope of the expression "capital goods" against Sl. No. 1 of the Table annexed to Notification 13/81. We are of the view that since Notification 13/81 was issued in the context of export promotion to make available imported capital goods, raw materials and components duty free to the Indian producers and to provide a level playing field to produce export goods for international market at competitive prices, such a Notification requires to be interpreted liberally to carry out its principal purpose and not to defeat it purpose when there is not an iota of evidence that any of the imported items were otherwise used except in the production process such as handling of raw materials; handling of finished goods; and h....