ORDER
D.C. Mandal, Member (T)
1. The appellants imported a consignment of simplex sheet cutter and one spares package containing sufficient quantities of spares of the main equipment to adequately cover normal wear and tear items for two years operation, under Bill of Entry No. D-1468, dated 30-1-1981. The simplex sheet cutter machine with accessories and auxiliaries vide serial No. 23 of the Bill of Entry having assessable value of Rs. 47,94,955.00 was assessed under Heading 84.33 of the Customs Tariff Act, 1975. The items contained in the ‘spares package’ were assessed on merits under various tariff headings vide serial Nos. 1 to 22,24 and 25 of the Bill of Entry. The appellants filed an application claiming refund of duty amounting to Rs. 92,456.48, being the difference between duty charged on those items of the spares package vide serial Nos. 1 to 11,14 to 22,24 and 25 of the Bill of Entry and the duty calculated under Tariff Heading 84.33. In the refund application they stated that these spare parts were intended for the said sheet cutter imported by them to recover the requirement of two years and they formed part of the main contract. They also stated that those spares were exclusively designed, shaped to specially suit the simplex sheet cutter and the same could not be used elsewhere for any other purpose. The spare parts also indicated part numbers, specification etc. They claimed that since they have imported these spare parts alongwith the main sheet cutter, the spares should be charged to duty at the same rate at which the main sheet cutter machine has been assessed. They stated that the spare parts in question were compulsorily supplied with the article and no separate charge was made therefor. The refund claim was rejected by the Assistant Collector on the ground that as seen from the purchase order and invoice the order had been placed by the customers for spare parts also and all spare parts had been separately invoiced. Secondly, these spare parts are not covered by the Accessories (Conditions) Rules, 1963 and hence the same could not be classified under Heading 84.33 of the Customs Tariff Act, 1975. The Collector (Appeals), by the impugned order, has upheld the Assistant Collector’s order. Hence, the present appeal before us.
2. We have heard the arguments of Shri A. Rama Rao, learned legal adviser of the appellant’s company and Shri R.M. Ramchandani, learned SDR. Shri Rama Rao has argued that the spare parts in question were compulsorily supplied by the foreign supplier in terms of the order placed by the appellants and accepted by the supplier and the value of the spare parts was included in the total value of the entire goods and hence according to the Accessories (Conditions) Rules, 1963, the customs duty thereon should be charged under Tariff Heading 84.33 as charged for the main machine. His second argument is that under Section Note 2(b) of Section XVI of the Customs Tariff Act, 1975 die spares package under dispute should be assessed under Heading 8433.
3. Shri Ramchandani has argued that the spares package vide Item 10 of the contract was supplied by the foreign supplier in view of special request of the appellants and the same were separately charged. In this context he has drawn our attention to the appellant’s purchase order and the foreign supplier’s acknowledgement. He has also drawn our attention to the invoice which shows “net cash”, separately charged.
4. We have gone through the records of the case and the arguments of both sides. According to the provisions of the Accessories (Conditions) Rules, 1963, accessories of and spare parts and maintenance or repairing implements for, any article, when imported alongwith that article shall be chargeable at the same rate of duty as that article, it the proper officer is satisfied that in the ordinary course of trade – (i) such accessories, parts and implements are compulsorily supplied along with that article; and (ii) no separate charge is made for such supply, their price being included in the price of the article. In this case, from Item 23 of the Bill of Entry, we find that simplex sheet cutter with accessories and auxiliaries was imported in the consignment and the same were assessed to duty under Tariff Heading 84.33. Obviously, the accessories and auxiliaries which are mentioned against the said Item No. 23 alongwith the simplex sheet cutter, are covered by the Accessories (Conditions) Rules, 1963. Other items of the spare parts imported vide Item Nos. 1 to 22,24 and 25 of the Bill of Entry are in addition to the accessories which have been compulsorily supplied by the foreign supplier in the normal course of trade without separately charging therefor. The accessories and auxiliaries which have been supplied compulsorily against Item No. 23 in the normal course of trade along with the main sheet cutter have not been separately charged. These accessories and auxiliaries were covered by the Accessories (Conditions) Rules, 1963. Item 10 under the Heading “specifications” hi the appellant’s letter/order dated 26-9-1979 addressed to the foreign supplier M/s. Masson Scott Thrissell Engineering Ltd. (Annexure II to the appeal memorandum) shows that the appellants had placed orders for “spares package” containing sufficient quantities of the following items for adequate cover for two years of smooth operation :-
“Cross cut and Slitter Knives, Elastic Tapes, Timing Belts, Strategic Bearings, Filters, Chains Seals, Repair Kits for Cylinder and Solenoid Valves, Electrical Spares including Fuses, Transducers, PC Cords, Brake Pads for Unwind Stand etc.”
The price for this spares package was shown £ 10,000. The appellants also requested the foreign supplier to provide them with the spares catalogue indicating the item wise cost of each spare part being supplied in the package. Therefore, these spares package containing the spare parts in question were not supplied by the foreign supplier compulsorily in the normal course of trade. Supplier’s invoice No. 176 dated 17-9-1980 shows that against Item No. 10, £ 10,000 was charged for “spares” which means that the spares package which is in dispute in this case were separately charged by the foreign supplier. In the circumstances, the impugned spare parts were not covered by the Accessories (Conditions) Rules, 1963. The appellant’s contention that the spare parts were supplied compulsorily and were not separately charged is not, therefore, acceptable.
5. However, Shri Rama Rao has argued before us that according to Section Note 2(b) of Section XVI of the Schedule to the Customs Tariff Act, 1975 these spares package should be assessed under Tariff Heading 84.33 as these were tailor made for use in the imported simplex sheet cutter machine. Section Note 2(b) reads as follows :-
“Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of Heading No. 84.79 or 85.43) are to be classified with the machines of that kind However, parts which are equally suitable for use principally with the goods of Heading Nos. 85.17 and 85.25 to 85.28 are to be classified in Heading No. 85.17.”
This point was not raised before the lower authorities and we do not have the benefit of their findings. In the circumstances, while holding that the impugned spare parts included in the “spares package” are not assessable under the Accessories (Conditions) Rules, 1963, we remand the matter to the Assistant Collector of Customs for de novo examination of the point whether the imported spare parts in dispute are covered by Section Note 2(b) of Section XVI for assessment under the said Tariff Heading alongwith the main simplex sheet cutter.
6. The appeal is allowed by remand on the limited issue as stated in the preceding paragraphs.