MODI RUBBER LIMITED versus UNION OF INDIA AND ANR.

Citation: [1997] SUPP. 3 S.C.R. 519 · Decided: 26-08-1997 · Supreme Court of India · Bench: S.C. SEN · Disposal: Dismissed
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Judgment (excerpt)

MODI RUBBER LIMITED 
v. 
UNION OF INDIA AND ANR. 
AUGUST 26, 1997 
(SUHAS C. SEN AND K.T. THOMAS, JJ.) 
Customs Act 1962-/CT Items 53, 72(3)-Poly Propylene Liner 
Fabric-Imported as a liner fabric-{]sed not only in tyre production but also 
A 
B 
in other similar machines-Held, Levy of duty as an accessory under ICT C 
Item 53, and not as a component part-Valid. 
The Appellant imported Poly 'Propylene Liner Fabric (PPLF) from 
their foreign collaborators for use as Liner components to various 
machinery units of their tyre & tube manufacturing plants. The liner 
fabric is fed into various machinery units and at each stage, it is rolled D 
With a layer of the Liner fabric component in between. 
The appellant challenged the inclusion of PPLF under ICT Item 53 
whereby duty at the rate of 305 percent was charged. The appellant 
contended that the PPLF was supplied by the foreign collaborators for use E 
as Liner components to various machinery units, that PPLF is basically a 
liner Fabric which protects the rubber coated tyre fabric from atmos-
pheric moisture and dust, that the Liner Fabric was an essential part of 
the working of the machineries, that the necessary manufacturing process 
could not be carried out unless it was used in the various machinery units 
and that it is not a consumable raw material nor does ifform part of the F 
fmished products like automobile "tubes and tyres. 
The appellant further contended that the plant & machineries im-
ported by it included PPLF as a part thereof and formed part of "Project 
Import", that their import licence was likewise endorsed and that the PPLF G 
has been included in another import. licence as a raw material, that the 
Customs Department bas levied duty at the rate of nearly 305% under Item 
53 ICT on the ground that PPLF has been imported under a separate and 
subsequent licence and not under the Project Import Ucence, and that in 
the facts of the case duty should have been levied under Item 72(3) ICT as 
component part of the machinery imported by it. 
H 
519 
A 
520 
SUPREME COURT REPORTS [1997] SUPP. 3S.C.R. 
The Appellant described the goods as accessory and not a raw 
material which goes into the finished product and relied on certain af-
fidavits of experts. The Assistant Collector did not agree with the appellant 
and the appellant approached the Government of India on revision. The 
Government of India held that the term component part as defined under 
B Item 72(3) ICT referred to such parts only as were essential for the 
working of the machines or the apparatus and had been given for that 
purpose some shape or quality which would not be essential for their use 
for any other purpose. The Government of India found that it was more 
properly in the nature of an accessory, running in different sizes and 
lengths and that in the form in which they were imported, these fabrics 
C could not be considered as component parts of any machine. The Govern-
ment further held that PPLF imported by the Appellant ·could not be 
treated as component of the machinery installed by the appellant. 
Dismissing the Appeal, the Court 
D 
HELD : l. There is no error of law in the revisional order passed by 
the union Government. As per the experts' affidavits, PPLF was not a 
component part of the machine itself. It was not a constituent part. It was 
used as a Liner Fabric not only in tyre production but also in similar other 
industrial process. It could be used not only in the machines imported by 
E the appellant but also in other similar machines. [523-D] 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1845-51 
of 1981. 
From the Judgment and Order dated 25.7.79 of the Government of 
F India, Ministry of Finance, Department of Revenue, New Delhi in Customs 
Revision Applications Passed Order Nos. 61B to 67B of 1979. 
Joseph Vellapally, Ms. Amrita Mifra and Amit Bansal for Mis. JBD 
& Co. for the Appellant. 
G 
R. Mohan, R.S. Rana, V.K. Verma and P. Parmeswaran for the 
Respondents. 
The Judgment of the Court was delivered by 
SEN, J. Modi Rubber Limited, the appellant herein, set up a tyre· 
H and tube manufacturing plant in 1974. It had a collaboration agreement 
' 
MODI RUBBER LTD. v. U.O.I. [SEN, J.) 
521 
with a West German Company (hereinafter referred to as "foreign A 
collaborators") who agreed to supply the latest technical knowhow and also 
to guide the appellant in the manufacture of high quality tyres. Some 
machineries and its components were also supplied
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