LexCOLLECTOR OF CUSTOMS, BOMBAY versus BHARAT HEAVY ELECTRICALS LTD., NEW DELHI.
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A B COLLECTOR OF CUSTOMS, BOMBAY v. BHARAT HEAVY ELECTRICALS LTD., NEW DELHI. AUGUST 25, 1992 [S. RANGANATHAN, V. RAMASWAMI AND B.P. JEEVAN REDDY, JJ.] Customs Tariff Act, I975: C Items No. 84.04/05 and 90.24 of the Schedule and Notifications No.35/79-cus dated I5.2.79 and No.4I/80-cus dated 25.3.81>-Goods im- ported Assessable to basic customs duty under Item No. 92.1#-Whether entitled to exemption from auxiliary duty as part of steam engines falling under Item No.84.04/05. D Notification No.35/79-cus dated 15.2.1979 laid down conditions for ex· emption Crom payment or import duty on the goods imported, viz. (1) the exemption was given in respect of the duty on a part; (2) the part in question was part or an article; (3) the article fell under one oCthe various headings nos. set out in the notification; (4) the part was imported into India; and (5) E the authorities concerned were satisfied that the part was required for the purpose of the initial setting up of the article; its assembly or manufacture. If these conditions were fulfilled, no import duty would be levied on the part as was in excess of the duty that would have been leviable on the article, had it been imported in a complete shape. Notification No.41/80-cus dated 25.3.1980 exempt•d the goods, which were partially or wholly exempt from F the duty or customs specified in the first schedule to the Act, by virtue of Notification No.35179 from the whole of the auxiliary duty of customs leviable on such goods nnder sub-section (1) of Section 4 of the Finance Act oC1980. The respondent-assessee, a public sector company engaged in the G manufacture or heavy electrical machinery, imported various consign· ments of "pressure gauges" for manufacture of steam turbines. These pressure gauges were subjected to basic customs duty at the rate of 40% under item No. 90.24 or the schedule to the Customs Tariff Act, 1975. The assessee also paid an auxiliary duty at 5% in respect or the imports. H Subsequently, the assessee claimed a refund of the auxiliary duty 16 _'.) 1 ' 1 COLLECTOR OF CUSTOMS v. B.H.E.L. 17 paid on the ground that the item was chargeable .to customs duty at 40% A only, without the levy of the auxiliary duty of 5%, in terms of Notification No. 35/79-cus dated 15.2.79 read with Notification No. 41/80-cus dated 25.3.80. The assessee's case was that the pressure gauges imported by it were the parts of articles falling under heading No. 84.04/05 and were chargeable to basic customs duty of 40% and, therefore, the parts could B not be charged to duty at a rate in excess of 40%. The assessee's claim for refund was rejected by the Assistant Collector and the Appellate Collector. The Tribunal allowed the assessee's appeals. In the appeals before this Court, on behalf of the department, it was contended that Notification No. 35179 only exempted articles which fell C under Item Heading No. 84.04/05 and since the pressure gauges had been assessed and were clearly assessable under item Heading No. 92.04, there was· no question of the asses see getting any concession under Notification No. 35/79, and the relief in respect of auxiliary duty under Notification No. 41/80 was available only where the goods in question were partially or D wholly exempt from duty of customs by virtue of the notifications of the Government of India specified in the Schedule, but in the instant case the duty of customs leviable on the part taken by itself, under Item Heading No. 92.04, as well as the duty leviable on the article of which it formed a part, under Item No. 84.04/05 were the same, and consequently, the E pressure gauges had not become entitled to any exemption of concession by virtue of the Notification No. 35179, and the terms of Notification No. 41/80 were thus not fulfilled and the assessee was not entitled to the relief claimed and that since the duty payable on the part, even without invoking the notification, was not in excess of the duty payable on the article, the assessee could not be said to have got a partial or complete exemption of F basic duty by virtue of Notification No. 35179, and consequently, the assessee could not claim any benefit under Notification No. 41/80; and though this interpretation would lead to an anomoly, inasmuch as the assessee would have been eutitled to complete exemption from auxiliary duty if the rate of duty on the part had been 41 %, but it was not so, if the G ra
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