Konkan Synthetics Fibres Ltd. v. Commissioner Of C. Ex., Mumbai

[Order per : C. Satapathy, Member (T)]. - Heard both sides. The miscellaneous application is for citing a specific case law. The same is allowed.

2. The dispute in this case relates to coverage of the impugned goods under Notification No. 17/2001-Cus., dated 01-03-2001. List 18A annexed to the said notification at Sr. No. 8 specifies the following machine :-

“High Speed Warping machine with yarn tensioning, pneumatic suction devices and accessories.”

The goods imported by the appellants were declared as “Karl Mayer High Speed Draw Warping Machine with 1536 ends along with essential spare”. The order-in-original notes that the catalogue produced from the manufacturer established that the imported machine was equipped with separate unit of drawing and warping. Two letters were produced from the office of the Textile Commissioner stating that the goods under import were High Speed Draw Warping Machines and covered under the aforecited Sr. No. 8 of List 18A. The Adjudicating Dy. Commissioner also found that pneumatic suction devices was not attached to the impugned goods and further it was admitted by the importers that such devices would be procured by the importer locally and fitted to the imported machine. Finally, the Adjudicating Dy. Commissioner came to the conclusion that the impugned machine was not covered under the Notification No. 17/2001-Cus. because it had a separate drawing unit and it was also not equipped with the pneumatic suction devices.

3. Commissioner (Appeals) has come to the conclusion that the appellants contention regarding drawing unit being an accessory is not correct. He has also rejected the contention of the appellants that Warping machine with or without pneumatic suction devices is covered under the Notification on the ground that if that was the intention, then only warping machine without qualification would have been specified in the Notification. The Commissioner (Appeals) has given detailed reason for his findings on both the counts. The appellants have relied on the decision in the case of Jupiter Radios v. Collector of Customs, Bombay - . In the said case, Tribunal had granted benefit of exemption under Notification No. 118/80-Cus., dated 19-6-1980 on the ground that the impugned goods in that case was certified by the Department of Electronics wherein it was stated that the machine in question was an automatic wire cutting and stripping machine with additional function of wire twisting.

4. In the present case, it is not established that the impugned goods are principally warping machine with the additional function of drawing. In fact the Commissioner (Appeals) has dealt with this issue at length and has referred to authoritative books such as Fairchild’s Dictionary of Textiles. He has come to the conclusion that the drawing unit in the impugned machine cannot be treated as an accessory since it does not enhance effectiveness of the warping machine. He has also noted that drawing machine for particular use has been separately listed under list 18 of the same notification at Sr. Nos. 130, 139 and 145. The Commissioner (Appeals) has also given a finding that drawing machine under these Sr. Nos. can be separately exempted but not if the same are part of other machine.

5. We have heard the learned DR, who supports the order of the lower authorities. He also states that the exemption notification should be strictly construed and the exemption cannot be granted to the impugned goods firstly because it has the drawing unit, secondly because it does not have pneumatic suction devices which is required to be imported along with warping machine to qualify for the exemption. He also states that the cited case law is not applicable since drawing unit is not an accessory to the impugned machine as has been held by the Commissioner (Appeals).

6. After hearing both sides, we are of the opinion that since drawing machines and warping machines separately qualify for exemption under the same notification, a combination thereof is also entitled to the exemption particularly keeping in view the recommendation of the Administrative Ministry received through the Textile Commissioner’s office that the impugned goods are eligible for exemption under the Notification No. 17/2001. We have also considered the objection of the Revenue that the impugned goods have been imported without pneumatic suction devices which the importers have claimed to be locally available. Normally when the notification is worded incorporating the word ‘with’ the exemption would apply if the impugned goods are imported with the specific devices. However, in this case even ‘accessories’ have been specified after the word “with”. It is common understanding that accessories may or may not be imported along with a machine and import of the same is optional. It, therefore, appears that word “with” has been loosely used in this particular notification and keeping in view the Textile Commissioner’s recommendation we are inclined to interpret the notification liberally and allow the benefit of exemption to the impugned goods. The impugned orders passed by the lower authorities are set aside and appeal is allowed.