TMI Blog1994 (11) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assistant Collector held that the notification in question exempts component parts of diesel oil IC engines other than nozzle and nozzle holders, and it did not exempt component parts of IC Engines. He also did not give retrospective effect to the Ch. 2/89. The Ld. Collector after a careful examination of their pleas before him rejected their contentions on the ground that Notification 217/85 granted to component parts of diesel oil operated IC Engine, other than engine valves, jackets, nozzle and nozzle holders etc. and as the Notification did not grant the benefit to nozzle and nozzle holders, he rejected their plea. As regards Notification No. 112/88 dated 1-3-1988 and Notification No. 216/87 which specifically exempted nozzle and nozzle holders from the whole of excise duty on certain conditions, stipulated therein, the Ld. Collector held that :- The appellants use certain parts in the manufacture of nozzle and nozzle holders. They claim the benefit of Notification 217/85 for these parts used in the above manners. However, nozzle and nozzle holders are not enjoying exemption under Notification 217/85. When this being the case, the parts which go into the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the same factory and as they are following Chapter X Procedure, they satisfy the proviso to the said notification and hence the benefit should be extended. They contend that they are not claiming the benefit for nozzle and nozzle holders but are claiming the benefit for its component parts, as nozzle and nozzle holders are already exempt under Notification Nos. 112/89 216/87. They submit that nowhere it provides that in order to avail the benefit of Notification No. 217/85, nozzle and nozzle holders must enjoy the benefit of the same notification. It is their plea that parts of nozzle and nozzle holders manufactured by them are also parts of diesel oil operated IC engines. Therefore, they contend that a part of a part is a part of the whole . Thus, they plead that a part of a nozzle and nozzle holder must be considered to be a part of a diesel oil operated IC engine. They further plead that the component of nozzle and nozzle holders are captively consumed in the manufacture of nozzle and nozzle holders. If they clear its component parts following the Chapter X Procedure prescribed under Notification No. 217/85, then they are undoubtedly entitled to the benefit of the said noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) State of Gujarat v. Golden Metal Industries - 1975 (35) STC 349 (II) Practical and meaningful interpretation should be given to the notification and its predecessor notification can also be looked into, but earlier wording of the notification cannot be read in the subsequent notification. In this context following ratios are relied. The notification should not be interpreted in such a manner as to defeat its intendment purpose and reduce it to nugatory. In this context, Counsel relied on the following ratios :- Hemraj Gordhandas v. H.H. Dave, Assistant Collector - 1978 (2) E.L.T. J 350 (S.C.) Quality Steel Tubes Pvt. Ltd. v. Collector - 1987 (30) E.L.T. 447 (Tribunal) Meteor Satellite Ltd. v. Collector - 1987 (29) E.L.T. 437 (Tribunal) (III) The third proposition placed was that the Trade Notice Circular are binding on the authorities. In this context, the Counsel relied on the following rulings : (i) Union of India Others v. Godfrey Philips India Ltd. Others - 1985 (22) E.L.T. 306 (ii) Nav Gujarat Paper Industries v. Superintendent Others - 1977 (1) E.L.T. (J 67) (IV) The fourth proposition placed was that the department was bound to give the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em as spare parts. He submitted that the ratio of the ruling rendered in the case of Mahindra Mahindra s case is clearly distinguishable as the interpretation was in the context of the wordings in the notification which covered to parts of power driven pumps and hence part of parts were also held to be exempted. While the situation in this case was different and that nozzle and nozzle holders were clearly excluded in the notification and hence by a different interpretation, its component cannot be granted benefit by considering it as component parts of diesel oil operated internal combustion. The Trade Notices and Circulars referred to part of parts being exempted under the notification, while in the present case, the part i.e. nozzle and nozzle holder had been excluded and hence the denial of benefit is totally justified. He submitted that the period in question pertains to the period, when the Notification 217/85 was in operation and the other two notifications were not applicable, as they did not operate retrospectively. Ld. JDR submitted that the supplemental classification list cannot be approved retrospectively and the procedure is only to ask for refund within six months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and nozzle holders cannot be considered independently as parts of diesel oil operated internal combustion, in the face of their clear exclusion. Such an interpretation would be to cause violence to the notification by granting benefit to those parts and its parts which are clearly excluded from the ambit of the notification. The ratio of Mahindra Mahindra s case is clearly distinguishable. The notification therein granted benefit to parts of power driven pumps , therefore, part of parts also fell within the ambit of the description of the parts of power driven pump. The citation cannot be misapplied, as sought by Ld. counsel. The Trade Notices referred were also in the context of those parts which fell within the ambit of `component parts of diesel oil operated internal combustion engine and the T.N s did not suggest anywhere that parts of excluded items should be brought within the main description and wording of the notification. The Ld. counsel has attempted to place a very strange reading of both the notification and the trade notice, which requires to be rejected outright. The other rulings relied before us are also not applicable for consideration. Merely because the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is seen that the C.L. filed before us does not give the various details of the components of nozzles and nozzle holders. Therefore, it is necessary that the appellants place full evidence in this regard at the time of consideration of their claim under these two notifications. 8. The Appeals are disposed of in the above terms. Sd/ (S.L. Peeran) Dated : 19-4-1994 Member (J) 9. [Order per : P.C. Jain, Member (T)]. - I have carefully considered the order proposed by my learned brother. But I regret, with respect, that I am unable to agree to the same. 10. Central Excise duty, it is now well-settled, is a tax on manufacture of the goods specified in the Schedule to the CETA, 1985 (hereinafter referred to as the Tariff Schedule). If any goods are mentioned in the Tariff Schedule, they are liable to duty in their own right irrespective of the fact that those `goods are further used or utilised in the manufacture (or assembly) of another goods. This liability to duty of components/parts has to be discharged separately unless there is a specific exemption from duty on such components. Needless to say that these components/parts should be `marketable to become goods , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). 11.1 Notification 217/85 (as amended by Notification 79/86, dated 10-2-1986) exempts component parts of diesel operated I.C. engines except certain specified parts - one of them being nozzles and nozzle holders. Question involved herein is whether parts of nozzle and nozzle holders are also excluded from the scope of Notification 217/85; Revenue is of the view that parts of nozzles and nozzle holders are also excluded from the scope of the notification whereas the assessee (appellant) contends that parts of nozzle and nozzle holders - being parts of diesel operated I.C. engines other than the excluded categories of parts - are covered by the said exemption notification. It is significant to note that parts of nozzle and nozzle holders are being classified in the same heading of the tariff as the parts of diesel operated I.C. engines. It is also noted here that some of the parts of `nozzle and nozzle holders are purchased by the appellant from outside and such parts have discharged duty due thereon. The dispute is about the manufacture of parts of nozzle and nozzle holders within the factory of the appellants. 11.2 Lower appellate authority s findings have already been set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he lower authorities. 13. The impugned order in Appeal E/5530/91-B1, therefore, deserves to be set aside on the question of applicability of Notification 217/85 (as amended) to parts of nozzle and nozzle holders. I order accordingly. 14. In the second appeal, apart from the question of availability of the said notification, demand of duty has been raised. Since the benefit of the Notification 217/85 (as amended) is available to parts of nozzle and nozzle holders, question of demand of duty and consequently valuation of such parts does not arise. The impugned order in the second appeal E/5647/91-B1 is also set aside. 15. In short, both the appeals are allowed with consequential relief to the appellant. Sd/ (P.C. Jain) Dated : 26-4-1994 Member (T) POINT OF DIFFERENCE Whether in the facts and circumstances of the case parts of nozzle and nozzle holders are entitled to the benefit of Notification 217/85 (as amended), as held by the Technical Member. OR they are not entitled to the benefit of the said notification and matter requires to be remanded for considering the claim of benefit of Notification 216/87-C.E., dated 15-9-1987 and Notification 112/88-C.E., dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el and Press Works Ltd., Bombay v. Union of India Others, reported in 1988 (36) E.L.T. 94, the Hon ble Bombay High Court has held that starter armature which is a part of automobile starter motor is a part of automobile. It is also seen that in the case of Collector of Central Excise v. MP (I) Ltd., reported in 1990 (46) E.L.T. 68, the Tribunal has held that a part of a cycle tyre is also a part of bicycle. Hence, it is well settled in law that a component of a component of a machine has to be deemed as a component of the machine taken as a whole. Since it cannot be denied that nozzles and nozzle holders are parts of automobile internal combustion diesel engines, on the ratio of the judgments discussed above, it has to be held that parts of nozzles and nozzle holders are also parts of automobile internal combustion diesel engines. 19. As regards the question whether parts of nozzles and nozzle holders have to be treated as nozzle and nozzle holders which stand excluded from the purview of the exemption under Notification 217/85 (as amended), I am inclined to agree with the Learned Member (Technical) that parts of nozzles and nozzle holders cannot be deemed as nozzles and nozzle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g not covered by the licence or the respondents having committed breach of Sec. 3 of the Imports and Exports (Control) Act or Sec. 167(8) of the Sea Customs Act could possibly arise. What the Collector, however, did was that he put the two consignments together and held that they made up 51 `Rixe Mopeds in C.K.D. condition and were, for that reason, not the articles covered by Entry 295 but articles prohibited under remarks (ii) of Entry 294. But Entry 294 deals with motor cycles and scooters complete and assembled. Remark (ii) against that entry prohibits an importer who held a licence to import motor cycles and scooters from importing motor cycles and scooters in C.K.D. condition. Remark (ii) containing that prohibition had nothing to do with Entry 295 which did not contain any limitations or restrictions whatsoever against imports of parts and accessories. 21. Having regard to the ratio of the judgment discussed above, it has to be held that in the absence of any stipulation in Notification No. 217/85 to the effect that for the purposes of the exemption parts and sub-assemblies of articles specified in the notification including nozzles and nozzle holders would also be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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