Judgment:
1. In this appeal filed by M/s. Central Scientific Instrument Corporation, Agra, the matter relates to the eligibility for the goods imported to the benefit of Notification No. 66/88-Cus., dated 1-3-1988, which provided concessional rate of customs duty to the component parts of the goods covered by the Notification No. 65/88-Cus., dated 1-3-1988. Under Notification No. 65/88-Cus., dated 1-3-1988 concessional rate of customs duty was provided to the specified medical equipment where accessories and spare parts at SI. No. (3)/(4) of the Table annexed to that Notification No. 65/88-Cus. Stereo Zoom Microscope for inspection of contact lenses were included. The appellants had imported Stereo Zoom Binocular Head DZ-240 with paired WF 10X eyepieces and with fluorescent Ring illuminator to 220V for Stereo Zoom Binocular Microscope Model DZ 240 used in inspection of contact lenses. The appellants have declared their goods as component parts of the Stereo Zoom Microscopes for inspection of contact lenses and claimed the benefit of Notification No. 66/88-Cus., dated 1-3-1988.
The proceedings were instituted against them and the matter was adjudicated by the Additional Collector of Customs, New Delhi, who had held that the goods imported were not eligible for the benefit of exemption under Notification No. 66/88-Cus. The adjudicating authority imposed a redemption fine of Rs. 50,000/- and a penalty of Rs. 10,000/-.
2. We have carefully considered the submissions made by both the sides and have gone through the facts on record.
3. The appellants were engaged in the manufacture of Microscope of different types and other Scientific Instruments and apparatus. They were the holder of Central Excise Licence No. L4 l/Sl/Range-III/Agra-86 for manufacturing the excisable goods. It is also on record that they were a small scale unit registered with the Director of Industries, U.P. under SSI registration of 1962. They imported the goods in dispute and described the same in the Bill of Entry as component parts of Stereo Zoom Microscope. In the invoice, the goods have been described as Stereo Zoom Binocular Head DZ-240 in grey colour with paired WF 10X eyepieces and with Fluorescent Ring Illuminator, 220 Volts AC with two spare ring tubes for Stereo Zoom Binocular Microscopes Model DZ-240-FR for inspection of contact lenses. They had imported 10 sets.
4. The adjudicating authority had observed that the items imported viz.
Stereo Zoom Head eyepiece ring illuminator has assumed the special characteristics of finished components and that the only thing missing was a stand for something which would hold the items at the place.
While approving the classification under Heading No. 9011.10, she had denied the benefit of Notification No. 66/88-Cus.
5. Rule 2(a) of the Rules of interpretation provides that any reference in a heading to an articles shall be taken to include a reference to that article incomplete or unfinished provided that as presented the incomplete or unfinished articles has the essential character of the complete or finished article. We find that the goods were not presented for assessment as one article but as component for Stereo Zoom Microscope. The Adjudicating Authority had taken three different items viz. Stereo Zoom Head eye piece Ring Illuminator as Stereo Zoom Microscope. She had observed that these items taken together have assumed the special characteristics of finished component. We consider that for bringing an article within the purview of Rule 2(a) the article even if incomplete or unfinished, must be an article as such.
7. The ld. JDR had referred to the Explanatory Notes under Rule 2 of the Rules for the interpretation, which provided for the exclusion of the Rules to any Heading which refers to a particular article to cover not only the Complete article but also that article incomplete or unfinished provided that as presented it has the essential character of the complete or finished article. We consider that as presented the items were not incomplete or unfinished articles but were items which had been mentioned also by the adjudicating authority separately in her order. The interpretative Rule (2) had come-up for detailed examination by the Larger Bench of the Tribunal in the case of Bharat Heavy Electricals Ltd. v. C.C., Madras - 1987 (28) E.L.T. 545 (Tribunal). In that case, the Tribunal had laid down that in order to apply the provisions of Rule 2(a) it has to be seen (1) whether the imported product had attained the approximate shape or outline of the finished article; (2) whether the said imported article can only be used for completion into the finished article; and (3) these would have to be determined with reference to the nature of the material, its bulk, quantity, weight or value. The Tribunal had further observed that while no general principles can be laid down at to how and in what circumstances Rule 2(a) could be pressed intoservice for assessment of the imported unfinished article, in each case the factors enumerated above would have to be taken into consideration individually, and then collectively, to determine whether the imported article had attained the approximate shape or outline of the finished article and could be used only for completion into the finished article (Head Note). This Larger Bench's decision has been followed by the Tribunal in the case of TELCO v. Collector of Customs 8. Keeping in view the various factors enumerated by the Tribunal in these two decisions, we do not consider that the goods imported were to be classified as Stereostopic Microscope for the purposes of Heading No. 9700.10.
9. The ld. DR had referred to the majority decision in the case of Collector of Customs, Bombay v. Maruti Udyog Ltd. and Ors. - 1996 (16) RLT 646 (Tribunal). We find that the Larger Bench's decision of the Tribunal had not been noted by the Tribunal in that decision. Further, we find that in that majority decision, interpretative Rule 2(a) was not the main issue and the Tribunal held that legal fiction created by the interpretative Rule 2(a) was applicable only to the classification of the goods while in that case the Tribunal was concerned with the Import Trade Control Policy. The Tribunal had held that the legal fiction created by the Interpretative Rule 2(a) shall not automatically be applicable to the imports under the Customs Policy for the relevant period. We do not consider that this majority decision in the case of Maruti Udyog Ltd. referred to above is relevant to the present proceedings.
10. Taking all the relevant considerations into account, we do not agree with the view taken by the ld. Additional Collector of Customs.
As a result, the impugned order is set aside and the goods imported are held to be eligible to the benefit of the Notification No. 65/88-Cus., dated 1-3-1988 with consequential benefit to the appellants, if any subject to the Supreme Court's decision in the case of Mafatlal Indus.
Ltd. v. Union of India reported in 1997 (89) E.L.T. 247 (SC). With the above observations, the appeal is allowed. Ordered accordingly.