PETITIONER:
JAIN ENGINEERING CO.
Vs.
RESPONDENT:
COLLECTOR OF CUSTOMS, BOMBAY
DATE OF JUDGMENT18/09/1987
BENCH:
DUTT, M.M. (J)
BENCH:
DUTT, M.M. (J)
MISRA RANGNATH
CITATION:
1987 AIR 2279 1988 SCR (1) 220
1987 SCC (4) 492 JT 1987 (3) 596
1987 SCALE (2)584
ACT:
Customs Tariff Act, 1975: First Schedule, Headings Nos.
84.06 and 84.63-Rod bushes and camshaft bushes-Exemption
from customs duty-Effect of Notification No. 281/Cus/76
dated 2.8.197 Parts of internal combustion piston engines-
Whether included.
HEADNOTE:
Heading No. 84.06 of the Customs Tariff Act, 1975
prescribed 100% duty on internal combustion piston engines,
while Heading No. 84.63 laid down 60% duty on transmission
shafts, cranks, bearing housings, plan shaft bearing etc.
The Notification No. 281-Cus/76 dated 2nd August, 1976 as
amended from time to time exempted the articles specified in
column (2) of the table thereto and falling under Heading
No. 84.06 from payment of duty in excess of 40% ad valorem.
Internal combustion piston engines and parts thereof were
one such article.
The appellant sought part exemption from payment of
customs duty in respect of rod bushes and camshaft bushes,
imported by it, in terms of the Notification. The Assistant
Collector and the Collector of Customs (Judicial) found that
he was not entitled to the benefit of exemption under the
said Notification. The Appellate Tribunal affirmed the
orders of the Customs authorities being of the view that the
bushes and bearings were the same and as the bearings come
under the Heading No. 84.63 and not under Heading No. 84.06,
they were not entitled to the benefit of exemption.
In this appeal under s. 130E of the Customs Act, 1962
it was contended for the respondent that as Heading No.
84.06 does not refer to the parts of internal combustion
piston engines, the appellant was not entitled to claim any
exemption for the bushes, even if they were parts of such
engines, that even assuming that Heading No. 84.06 also
contemplates parts of the engine, such parts must be all the
parts of the engine and not a few parts thereof, and that
bushes and bearings were the same and identical articles as
held by the Appellate Tribunal and, as bearings have been
provided for under Heading No. 84.63, the question of any
exemption under the Notification did not arise, that there
is no material for holding that the bushes, which have been
imported by the
221
appellant, were parts of the engines referred to in Heading
No. 84.06.
Allowing the appeal,
^
HELD: 1.1 The Notification No. 281/Cus/76 dated August
2, 1976, as amended from time to time will apply to parts of
the internal combustion piston engines mentioned under
Heading No. 84.06. [225G]
1.2 Paragraph 2 of column (2) does not provide that it
must be all the parts of the engine or engines. It simply
provides 'parts thereof'. Such parts may be all the parts or
any or some of the parts of the engine or engines in
question. Although the parts are not mentioned under Heading
No. 84.06, by necessary implicated and in the context of the
Notification, it includes the parts of the engine. [225D-F]
2. Bushes and bearings are not same and identical. As
the functions of bushes are the same as that of the bearings
sometimes bushes are also called bearings. These two
articles are distinct and separate. They are known in the
market by two different names. [226A-B]
3.1 In order to avail of the benefit of the exemption
granted by the Notification, it has to be proved that the
parts in respect of which the exemption is claimed, are
parts of the internal combustion piston engine mentioned in
Heading No. 84.06. As soon as that is proved such parts will
get the benefit irrespective of the fact that they or any or
some of them have already been included under Heading No.
84.063 or under any other heading. [226C-D]
3.2 The intention of the Notification is clear enough
to provide that the parts of the engines, mentioned under
Heading No. 84.06, will get the exemption under the
Notification. Therefore, even if bushes are same as
bearings, still they would come within the purview of the
Notification, provided they are parts of the engines
mentioned under Heading No. 84.06.[226F]
3.3 In the instant case, there is no material or
evidence nor is there any finding of the Appellate Tribunal
or the Customs authorities that the bushes, which have been
imported by the appellant are parts of internal combustion
piston engines falling under Heading No. 84.06. The case is,
therefore, sent back to the Collector of Customs to decide,
after giving an opportunity to the appellant, whether the
bushes imported by the appellant are really parts of the
internal combustion piston engines, as mentioned under
Heading No. 84.06. [226G; 227A-B]
222
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 335 of
1987.
From the order dated l0.12.1986 of the Customs Excise
and Gold Control Appellate Tribunal, New Delhi in Appeal No.
C/l080/ 86-B-2(OrderNo. 1284/86-B-2).
S.K. Dholakia, R.C. Bhatia, P.C. Kapur and S.K. Beri
for the Appellant.
G. Ramaswamy, Additional Solicitor General, B.
Parthasarthy and Mrs. S. Suri for the Respondents.
The judgement of the court was delivered by
DUTT, J. The only question that is involved in this
appeal preferred under section 130E of the Customs Act,
1962, is whether the appellant is entitled to the benefit of
the Notification No. 281-Cus/76, granting part exemption
from payment of Customs duty in respect of the rod bushes
and camshaft bushes imported by the appellant.
Before we refer to the said Notification, we may notice
the provisions of the Heading No. 84.06 and Heading No.
84.63 of the Customs Tariff Act, which are as follows:-
Heading Sub-heading No. and Rate of duty Central No. description of article (a)Standard Excise (b)Preferen- Tariff tial areas Item 84.06 International combustion (a)100% 29 piston engines. 84.63 Transmission shafts, (a) 60% cranks, bearing housings, plan shaft bearings, gears and gearing (including friction gears and gear-boxes and other variable speed gears), flywheels, pulleys and pulley blocks, clutches and shaft couplings. 223
The said Notification No. 281-Cus dated 2.8 1976, as
amended A from time to time, reads as follows:-
“Notfn. No. 281.Cus.-The articles specified in
column(2) of the Table hereto annexed and falling
under Heading No. 84.06 are exempt from so much of
that portion of the duty of Customs leviable
thereon which is specified in the First Schedule
to the Customs Tariff Act, 1975, as is in excess
of the rate specified in the corresponding entry
in column (3) of the said Table.
THE TABLE Description of article Rate of duty (2) (3)
Stationary or industrial internal combus- 40 percent.
tion piston engines and parts thereof ad valorem.
excluding those which are inter-changeable
for use with motor vehicle other than those
specified against S. No 2
International combustion piston engines 40 per cent.
for industrial and agricultural tractors ad valorem.
and power tillers and parts thereof excluding
those which are inter-changeable for use with
other motor vehicles
Marine engines and parts thereof excluding 40 per cent.
those which are inter-changeable for use ad valorem.
with motor vehicles other than those
specified against Sl. No. 2.
International combustion piston engines 3 per cent.
designed for use in aeroplanes and parts ad valorem
of such engines.
International combustion piston engines 40 per cent.
for locomotives and parts thereof excluding ad valorem.
those which are inter-changeable for use with
motor vehicles other than those specified
against Sl. No. 2.”
224
The Assistant Collector and the Collector of Customs
(Judicial) overruled the contention of the appellant that
the appellant was entitled to the benefit of exemption under
the Notification No. 281Cus/76. The Customs, Excise and Gold
(Control) Appellant Tribunal, hereinafter referred to as
‘the Appellate Tribunal’, dismissed the appeal of the
appellant and affirmed the orders of the Customs
authorities. According to the Appellate Tribunal, the
bushings and the bearings are the same and as the bearings
come under the Heading No. 84.63 and not under Heading No.
84.06, they are not entitled to the benefit of exemption
under the said Notification. Hence this appeal under section
130-E of the Customs Act.
The Notification grants exemption in part from payment
of the Customs duty in respect of articles specified in
column (2) of the Table and falling under Heading No. 84.06.
Heading No. 84.06 refers to ‘internal combustion piston
engines’ Paragraph 2 of column (2) of the Table annexed to
the Notification, which is relevant for our purpose, not
only refers to internal combustion piston engines, but also
to ‘parts thereof’. Heading No. 84.06 does not, however,
contain or refer to the Parts of internal combustion piston
engines
It is submitted by the learned Additional Solicitor
General that as Heading No. 84.06 does not refer to the
parts of internal combustion piston engines, the appellant
is not entitled to claim any exemption for the bushes, even
if they are parts of such engines. Secondly, it is contended
by him that even assuming that Heading No. 84.06 also
contemplates parts of the engine, such parts must be all the
parts of the engine and not a few parts thereof In other
words, his contention is that Heading No. 84.06 will apply
when an internal combustion piston engine in imported in a
knocked-down condition. Lastly, it is contended that bushes
and bearings are the same and indentical articles as held by
the Appellate Tribunal and, as bearings have been provided
for under Heading No. 84.63, the question of any exemption
under the Notification does not arise. It is also submitted
by the learned Additional Solicitor General that even
assuming that the bushes and bearings are not identical
articles but they are distinct and separate, yet there is no
material for holding that the bushes, which have been
imported by the appellant, are parts of the engines referred
to in Heading No. 84.06.
The Notification provides that the articles specified
in column (2) of the Table and falling under Heading No.
84.06 are exempt from payment of a certain portion of the
customs duty. Paragraph 2 of
225
column (2) of the Table not only mentions internal
combustion piston engines, undoubtedly forming the only
subject-matter of Heading No. 84.06, but it also mentions
the ‘parts thereof’, that is to say, parts of such engines.
Heading No. 84 06 does not refer to ‘parts’ of such engines.
Non-mention of ‘parts’ in Heading No. 84.06 has given rise
to a controversy between the parties. It may be that the
Notification has been inartistically drafted. It is,
however, clear that the Notification not only intends to
grant exemption to internal combustion piston engines, but
also to ‘parts thereof’. When, therefore, the intention is
clear and manifest, it will be unreasonable to take a narrow
view of the Notification and not to extend its benefit to
the parts of the engines referred to in Heading No. 84.06.
To accept the contention made on behalf of the respondents
that as Heading No. 84 06 does not mention ‘the parts’, the
Notification is inapplicable to the parts, will be to amend
the Notification, which the court will not do. In our
opinion, therefore, the Notification will apply to parts of
the engines mentioned under Heading No. 84.06.
We are unable to accept the contention of the
respondents that ‘the parts’ referred to in paragraph 2 of
column (2) of the Table must be all the parts of the engines
or engine in question and not a few parts thereof. Paragraph
2 of column (2) does not provide that it must be all the
parts of the engine or engines. It simply provides ‘parts
thereof’. In the absence of any clear and unambiguous
provision that exemption will be granted in respect of parts
of the engines, which must be all the parts constituting the
engine or engines, we are not inclined to restrict the scope
of the Notification. Accordingly, we hold that ‘parts
referred to in paragraph 2 of column (2) of the Table may be
all the parts or any of some of the parts of the engine or
engines in question. A mention of internal combustion piston
engines under Heading No. 84.06 not only contemplates the
engine or engines, but also the parts thereof. So, although
the parts are not mentioned under Heading No. 84.06, by
necessary implication and in the context of the
Notification, it includes the parts of the engine. We are,
therefore, of the view that parts of the engine or engines,
mentioned under Heading No. 84.06, will get the benefit of
exemption under the Notification.
It has been held by the Appellate Tribunal and it is
also the contention of the learned Additional Solicitor
General that bushings and bearings are identical articles.
It seems that the appellate Tribunal was influenced by the
fact that the functions of the bushings and bearings are the
same. It may be that two articles have the same functions
but, nonetheless, they are distinct and separate. As the
functions of
226
bushings are the same as that of the bearings, sometimes
bushings are also called bearings, as pointed out by the
Appellate Tribunal. But when these two articles are known in
the market by two different names, it is difficult to uphold
the contention that they are same and identical, even though
they perform the same functions. We, therefore, do not agree
with the finding of the Appellate Tribunal and the R Customs
authorities that bushings and bearings are same and
identical.
In view of our finding that the Notification exempts
also parts of the engines mentioned in paragraph 2 of column
(2) of the Table, in order to avail of the benefit of the
exemption granted by the Notification, it has to be proved
that the parts in respect of which the exemption is claimed,
are parts of the internal combustion piston engine, as
mentioned under Heading No. 84.63. Some of such parts may
have been included under Heading No. 84.63. In other words,
as soon as it is proved that the parts are of the engines,
mentioned in heading No. 84.06, such parts will get the
benefit of exemption as provided by the Notification,
irrespective of the fact that they or any or some of them
have already been included under Heading No. 84.06 or under
any other Heading. Therefore, even if bushings are the same
as bearings, still they would come within the purview of the
Notification, provided they are parts of the engines
mentioned under Heading No. 84.06. The contention of the
Customs authorities that the article, which is provided
under another Heading other than Heading No. 84.06, will not
get the exemption as provided in the Notification, is not
readily understandable. When the Notification grants
exemption to the parts of the engines, as mentioned under
Heading No. 84.06, we find no reason to exclude any of such
parts simply because it is included under another Heading.
The intention of the Notification is clear enough to provide
that the parts of the engines, mentioned under Heading No.
84.06, will get the exemption under the Notification and in
the absence of any provision to the contrary, we are unable
to hold that the parts of the engines, which are included
under a Heading other than Heading No. 84.06, are excluded
from the benefit of the Notification.
In the instant case, there is no material or evidence
nor is there any finding of the Appellate Tribunal or the
Customs authorities that the bushes, which have been
imported by the appellant, are parts of internal combustion
piston engines falling under Heading No. 84.06. In the
circumstances, it is necessary that the Customs authorities
should embark upon the question and decide whether the
bushes, imported by the appellant, are really parts of such
engines.
227
For the reasons aforesaid, we set aside the order of
the Appellate A Tribunal and of the Customs authorities and
send the case back to the Collector of Customs with a
direction to decide, after giving an opportunity to the
appellant, whether the bushes imported by the appellant are
parts of the internal combustion piston engines, as
mentioned under Heading No. 84.06.
The appeal is allowed, but in view of the facts and
circumstances of the case, there will be no order as to
costs.
P.S.S. Appeal allowed.
228