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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

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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

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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

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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

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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

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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