1. The appellants filed a Bill of Entry dated 3-7-1993 for clearance of four numbers of "Capacitance Bridge", along with copy of invoices, Bill of Entry, Advance Licence dated 4-6-1993, DEEC Book No. 81961 and Catalogue from Asea Brown Boveri, Sweden for "Portable Capacitance Bridge CB-10" along with copy of purchase order dated 21-6-1993.
2. On scrutiny of the above documents, the department found the item 'Capacitance Bridge' have been mentioned in the description of goods under Advance Licence dated 4-6-1993 and which was also listed in part 'C list of materials in DEEC Book. However, it appeared that the importers were not entitled to the benefit of duty of free clearances in terms of customs Notification No. 159/90 dated 30-3-1990 for the following reasons as noted below : "i. The Notification fully exempts materials required for the purpose of manufacture of products (Resultant Products) or replenishment of materials having identical specifications and technical characteristics as those, actually used in the manufacture of the resultant products. The condition specified for the grant of the exemption include among other things that the materials imported should be covered by a duty exemption entitlement certificate issued by the Licensing Authority in the form specified, in the schedule to this notification in respect of the value, quantity, description and technical charateristics as specified in part 'C' of the said certificate. There is also an explanation given for the term 'materials'.
Materials means goods which are raw-materials, components, Intermediate products or consumables used in the manufacture of Resultant products and their packings or mandatory spares to be exported alongwith the resultant products...".
In the instant case, the imported goods namely capacitance bridge are not covered by the term materials as given in explanation viii.
These goods are not components but are capital equipments used alongwith the resultant products namely capacitor Banks. They are nothing but testing equipments which are not used for the manufacture of the resultant products but are supplied alongwith the resultant product for testing purposes. Since they are not covered by the term materials, they are not eligible for the benefit of notification 159/90.
ii) It also appeared that the value of SEK 80,000/- in the Invoice No. 182074 dated. 18-6-1993 is covering only the 4 nos. of CB-10 Capacitance Bridge. The values for the Tong Transformers (4 Nos.) and the cables & the cases for Tong Transformers (4 nos.) have not been indicated in the invoice. The purchase order produced by the importer. M/s. Asea Brown Boveri also mentions the value of SEK 80,000 only in the capacitance bridge. Hence, it appears that the Tong Transformer as well as cables for the same though delivered alongwith the capacitance bridge will have to be valued separately and added to the total value".
3. The importers justified their claim for duty exemption under the said notification. They had indicated the following reasons, before the original authorities, which are reproduced hereinbelow : "The imported goods namely 4 nos. of Capacitance Bridge have been specifically listed out in both the Advance Licence No. 1100562 as well as part 'C' of the DEEC No. 81961. Once the goods are included in the DEEC Book/Advance Licence, it is not for the Customs authorities to go into the aspect as to whether the goods imported into India is meant to be utilised as components or otherwise in the manufacture of the resultant product.
2. The term materials have been defined to include components, consumables and even intermediate products. Thus, there can be no basis for making any distinction that the imported goods are testing equipment or capital equipment.
3. The imported goods become a part and parcel of the resultant product to be exported. Hence It will be nothing but a component.
4. The term component has been defined in the part VII(10) of Chapter 3 of Export Import Policy 1992-97 as "the component means one of the parts of sub-assembly/assembly of which a manufactured product is made up and into which it may be resolved. The component includes an accessory or an attachment". By applying this definition, the imported item is a component".
4. The Assistant Collector did not agree with the contentions. He has held that the item 'Capacitance Bridge' cannot be considered as falling under the either raw-materials or components or intermediate products or consumables used for the manufacture of the resultant products and their packagings or mandatory spares to be exported alongwith the imported goods with reference to the term "materials" appearing in the notification. He has held that the item is a testing equipment and is not used in manufacture of the resultant products, and that it is supplied along with the resultant products for testing purposes. He has also held that these imported goods do not qualify as materials required to be imported for the purpose of manufacture of resultant products and hence, denied the benefit of exemption under the said notification. He has also held that: "simply because the item is specified under part 'C of DEEC Book and also in the Advance Licence, they do not become entitled to the concession unless all the conditions specified in the notification are satisfied".
5. The ld. Collector has confirmed the order of the Assistant Collector and also relied on the ruling rendered in the case of Precision Rubber Industries v. Collector of Central Excise as reported in 1990 (49) E.L.T. 170, wherein it has been held that 'Component' is always an essential element of a machine, 'accessory' is an aid to the machine. A machine is not a machine without a component but a machine can perform without a given accessory. Therefore, the ld. Collector has held that the item in question is not a component and that the importer has also not let in sufficient evidence to justify their claim. Aggrieved by this order, the appellants have filed this appeal. They have filed two miscellaneous applications for producing, catalogue Advance Licence application dated 29-4-1983, contract agreement between Karnataka Electricy Board and the Importer, bidding document issued by Karnataka Electricity Board for design, manufacture and supply of 'Capacitor Banks', certificate of Chatered Engineer, process chart for manufacture of Capacitor Bank and affidavit of Assistant Manager Shri T.P. Vijaya.
On hearing both the sides we allowed the miscellaneous applications, permitting the appellants to produce these documents as they are material evidence required for disposing this appeal.
6. We have heard ld. Advocate, Shri K. Parmeshwaran for the appellants and ld. SDR, Shri B.K. Singh for the Revenue. Ld. Advocate relying on the catalogue and the other materials submitted that capacitors are used in transmission towers to ensure continuous supply of electricity and also to ensure uninterrupted factor in the power is retained. He submitted that power capacitance bridge is a part of power capacitor and that there was no dispute pertaining to the manufacture of final product namely power capacitors by the importer, and it had an inbuilt capacitor bridge. He referred to the catalogue which stated that faulty capacitance units in a capacitor bank with externally fused may be indicated by blow fuses. It further stated that "Capacitance bridge is for fast and accurate direct measurement without disconnection of units".
Referring to the above extract, the ld. Advocate submitted that the item becomes a part of testing and it is used indigenously alongwith the Capacitor Bank and, therefore, it is a part of power capacitor. He submitted that the item is exclusively designed for the capacitors. He submitted that the power capacitors are very huge equipments which are installed alongwith the transformers and they are left to open sky.
This item which is a testing equipment is a portable unit, which is taken to the power capacitor (capacitor bank) now and then, the fuse unit is fixed with the item in question i.e. capacitance bridge for the purpose of measurement and testing, in order to see as to whether there is a continuous flow of power or not and also to detect any unit fault which may blow the external fuse. He submitted that the use of this item alongwith the power capacitor is essential and it has no use elsewhere. He also referred to the contract and the agreement with Karnataka Electricity Board dated. 12-5-1993 for supply of 110 KV and 66 KV, 30 MVAR Capacitor Banks for 220 KV Stations. Referring to the schedule one of the contract, he submitted that capacitor unit was to be alongwith internal fuses. The serial No. IB referred separately to capacitance bridge. He also referred to the affidavit of Shri T.P.Vijaya who has stated in para 3 & 4 as follows : "3. The Item, Capacitance Bridge, Type CB-10, is a Bridge developed exclusively by ABB, Sweden and is being used for checking capacitance of Capacitor Bank. This test is mandatory before energising Bank and is to be conducted periodically to check healthiness of Capacitor Bank to maintain uninterrupted power factor in the grid.
4. Healthiness of Capacitor Bank is to be checked always, whenever there is a faulty tripping. For checking the same, the only technically possible way would be through Capacitance Bridge as shown in the drawing enclosed".
Referring to these materials the ld. Counsel submitted that the item formed part and parcel of the process of capacitor bank. He submitted that the definition of 'materials' appearing in the notification is wide enough to bring within its ambit, the item in question also. The definition would bring even an attachment and as per ITC definition of 'component', the item has to be accepted as part of capacitor bank, which is a final resultant product under DEEC Book. He submitted that the item is used in a process which is ancillary or incidental to the completion of final product. In this context, he referred to the judgment rendered in the case of Star Paper Mills v. Collector of Central Excise as reported in 1989 (43) E.L.T. 178, wherein Hon'ble Supreme Court has taken a view that paper cores used for rewinding of paper in rolls was entitled to the benefit of set-off under Notification No. 201/79. He also referred to the ruling rendered in the case of Vikrant Tyres Ltd. v. Collector of Central Excise, Karnataka High Court in Writ Petition No. 15531 of 1986 rendered on dated 19-12-1990 wherein it has been held that a certificate issued by DGTD should be accepted, as the certificate has been issued after due application of mind and also on the basis of the certificate issued by the Chartered Accountants. It has also been held that DGTD cannot be allowed to review their own order on a change of opinion. Drawing analogy from the judgment, ld. Advocate submitted that in the present case also the authorities had permitted to import all the items under the DEEC Scheme, after examining the contract and the certificate issued by the Chartered Engineer and, therefore, it was not open to customs authorities to review the grant of benefit of notification. The ld. Counsel also refered to the judgment rendered by the Hon'ble Supreme Court in the case of Union of India v. Suksha International & Nutan Gems and Anr. as reported in 1989 (39) E.L.T. 503, wherein, it has been held that the benefit given by a policy cannot be taken away by a strict interpretation of the beneficial notification. It has been held that interpretation unduly restricting the scope of a beneficial provision is to be avoided, so that it may not take away with one hand, what the policy gives with the other.
7. Ld. SDR submitted that the item is not fixed to the final product permanently but it is a portable testing equipment and it does not form part and parcel of the final resultant product. He submitted that in the case of uninterrupted power supply equipment, it is fixed permanently to prevent damage to the machines caused by fluctuating power supply. The present item does not perform such a function and it is admittedly meant only to detect faults and, therefore, it does not fall within the function of the term 'materials', appearing in the notification. The ld. SDR drew strength on the following portion of the catalogue which is reproduced hereinbelow : With internally fused capacitor units the bank layout and assembly is much simplified since no consideration must be taken to the placement of a fuseholder when putting the units in the rack and making the electrical connections.
Furthermore, the space saved when using internally fused capacitors is considerable, mainly due to the extra striking clearance needed for the operation of an external unit fuse.
The full benefits of internally fused capacitors units have been realised in ASEA's enclosed high voltage capacitor banks, type SIKAP. (see front cover and Fig 7c) offering a very compact installation. These banks are delivered complete from factory and are available for voltages upto 24 KV and all ratings upto 12 Mvar.
An additional advantage of the internally fused capacitors is, of course, that the customer is relieved of the many problems associated with the selection of a proper external fuse, in fact, with internally fused capacitor units, the responsibility of the fuse selection has been completely assumed by the manufacturer.
In an internally fused capacitor bank the unbalance current of the protection system gives an indication of the total number of faults, but individual faulty elements can only be detected by a capacitance measurement. For this purpose ASEA KABEL has developed a special capacitance bridge, which permits fast and accurate direct measurements of the units in a bank. A tongs transformer is placed on the capacitor bushings, thus eliminating the need for disconnections, see Fig 8. Complete technical information on the CB 10 capacitance bridge is readily available from your ASEA representative or from ASEA KABEL.
In a capacitor bank with external fuses faulty capacitor units are readily indicated by their blown fuses and can be replaced accordingly. To detect incipient faults in the bank, however, a complete capacitance measurement of all units is necessary also in this case".
Referring to the above extracts, the ld. SDR submitted that the item was merely performing the function of detecting fault and the same had been manufactured by Asea Kabel, which was an independent manufacturer and not the supplier in the present case. He also referred to the contract of the KEB to show that the item is an accessory, or an associate equipment but were not forming part of the final product. He also submitted that the item did not prevent the equipment i.e.
capacitor Bank from damage or contribute to its function. The final product would function without this testing equipment independently.
The DEEC Book only stipulated the items which were permitted to be imported and in para 'C', the raw materials were mentioned, which would go in the final product. He also submitted that the item in question is not a project supply and thus it would not come within the later part of the definition of term 'materials'. He relied on the definition of 'raw-material', as extracted and reported in the case of Collector of Central Excise, Chandigarh and Anr. v. Kashmir Vanaspati and Anr. as reported in 1987 (31) E.L.T. 218. He also referred to the manufacturing process and the assembly line diagrams furnished by the importer to show that the item did not figure in the final product. He submitted that the decision rendered in the case of Vulcan Engineers Ltd. v.Collector of Customs as reported in 1992 (62) E.L.T. 636 squarely applied to the facts of the present case and that there was no reason to differ from the ratio of the said ruling. He pointed out that the rulings cited by the ld. Advocates were not applicable to the facts of the present case and they were not pari materia to the facts in issue.
8. We have carefully considered the submissions and perused the literature, contract agreement and citations referred to before us.
The main question that arises for our consideration is as to whether the item 'Capacitance Bridge' can be granted the benefit of the exemption notification No. 159/90 dated 1-4-1990, which grants benefit against "an Advance Licence issued for the purpose of manufacture of products (hereinafter referred to as the resultant products) or replenishment of materials having identical specifications and technical characteristics as these actually used in the manufacture of the resultant products exported, or both, or for export as mandatory spares alongwith the resultant product", a. the materials imported are covered by a Duty Exemption Entitlement Certificate (hereinafter referred to as the said Certificate), issued by the licensing authority in the form specified in the Schedule to this notification, in respect of the value, quantity, description, quality or technical characteristics, as specified in Part 'C' of the said Certificate; c. the goods corresponding to the resultant products and the mandatory spares, in respect of value, quantity, description, quality, or technical characteristics, as specified in Part 'E' of the said Certificate are exported within the time specified in the said Certificate or such extended period as may be granted by the Committee; d. the exempt materials shall be utilised for the manufacture of resultant products specified in Part 'E' of the said Certificate or for export as are disposed of in any other manner: Provided that where such exempt materials are imported for replenishment of materials used in the manufacture of resultant products exported, holder of an advance licence being a manufacturer-exporter may utilise the replenished materials for further production subject to actual user conditions: Provided further that the licensing authority may consider the request of holder of an advance licence not being a manufacturer-exporter for transfer of the replenished materials at landed cost, to the supporting manufacturer concerned, whose name appears in the said Certificate, for further production, subject to actual user condition: e to f* * * * * * In the Explanation annexed to the notification, the term "exempt materials" and "materials" are defined as follows : "Exempt materials" means the materials imported and specified in Part 'C' of the said Certificate and eligible for exemption from duty under this notification. "Materials" means goods which are raw materials, components, intermediate products or consumables used in the manufacture of resultant products and their packings, or mandatory spares to be exported alongwith the resultant products.
(i) the imported material should be for the purpose of manufacture of resultant products or replenishment of materials.
(iii) the exempt materials shall be utilised for the manufacture of resultant products specified in Part 'E' of the said certificate.
The definition of the term "materials" indicates that they are goods which are in the nature of Materials are required to be used in the manufacture of resultant product and their packagings, or mandatory spares, to be exported alongwith the resultant product. They should be required for carrying out modification or alignment or processing necessary for rendering them as an integral part or sub-system of the industrial project or plant.
9. The appellant's case is that this product namely Capacitance Bridge, becomes part and parcel of the 'Capacitor Bank' which are installed as per contract, alongwith transformer. The revenue on examination of the entire literature has held this product to be an independent product and that it is a testing instrument and that it does not become a part of the capacitor bank, in the sense that it is not utilised in the manufacture of the final product. This contention of the revenue deserves to be accepted for the reasons to be discussed hereinbelow: "The appellants have not produced any technical literature or expert evidence in support of their plea that the capacitance Bridge is a part of power capacitor and it becomes a part of the circuit, as contended by them. They cannot possibly support this plea, as the function of the Capacitance Bridge, as per the purpose of testing, which finding of the revenue, is clearly supported from the reading of the literature, catalogue and agreement. The power capacitor is an independent goods by itself. The product literature of power capacitor does not deal with this item in question. There is a provision made for fixing this item for the purpose of measurement and testing the fluctuation in power supply. The catalogue states that: "Modern high voltage power capacitors, irrespective of the type of fuse protection, are manufactured with highly stressed insulation.
The di-electric materials are very often subjected to electric fields of the order of 45-60 V/um (1125-1500 V/mil) Considering these very high stresses and the large insulated areas involved, the risk of di-electric break-downs in service is a reality, despite very rigorous routine tests. Hence an adequate protection system must be employed.
A capacitor bank usually comprises several capacitor units and the normal protection philosophy is therefore to disconnect a faulty unit or a part of it from continued operation before hazardous consequences develop. It is of-course highly desirable to limit the effects of a fault to the smallest possible volume.
There are two principally different methods of protecting units in a capacitor bank: *With internal fuses - here every individual capacitor element is protected by a fuse. In case of element failure, only one element i.e. a very small part of the capacitor unit, is disconnected (Fig.
la) *With external fuses - each capacitor unit is protected by a fuse and therefore disconnects the entire unit after the operation of the external fuse (Fig. Ib).
Both these methods require relay protection as well - eg. unbalance protection which has to be thoroughly co-ordinated with the fuse operation(s).
The design with internally fused capacitor units offers several advantages which have long been recognised by our collaborators ABB capacitors AB (formerly ASEA KABEL AB) and by the world market. In its pioneering work more than 45 years ago, ABB Capacitors incorporated internal fuses in low voltage power capacitors and their continuous development work over the years has led to incorporating internal fuses in all types of high voltage units. In the 1950s, 400 kv series capacitor banks in Sweden were equipped with internally fused capacitors.
Today, with high power units and new, combustible, non-PCB impregnation fluids almost universally used, it has become increasingly important to have an efficient and safe protection system for the capacitors. The solution with individually fused capacitor elements has been accepted as a superior alternative.
Internally fused capacitors have also been supplied to India for the 400 KV sides of the Vindhyachal HVDC station and Rihand-Delhi HVDC Transmission project".
10. The above reading of the literature on power capacitor shows that the power capacitor is used as a fuse protection unit. They are designed with internally used capacitor units and the literature states that it becomes increasingly important in the present context of high power units to utilise this power capacitor, which acts as an individual fuse protection capacitor. The literature discusses about some of the features and benefits of internal fuse for the purposes of detection of faulty units. It is stated that they are required to have an alarm system from the unbalanced protection. It is stated in the literature that the bank can be kept in service, and the faulty unit detected by capacitance measurement, during a shut down either at the next low load period or the next scheduled maintenance. It states further that this eliminates an emergency shut down. For this purpose a special capacitance bridge for fast and accurate direct measurement without disconection of units has been designed and manufactured. It is this fault detection alarm which has been imported by the importer for supply to the Karnataka Electricity Board in terms of the agreement for setting up 110 KV capacitor banks for a 220 KV power station.
Therefore, the imported item is a testing equipment and it is not a part, which does into the manufacture of final product namely capacitor banks for which the DEEC Licence has been granted. In his affidavit Shri Vijaya, Assistant Manager also stated that the item is used for checking capacitance of Capacitor Bank and the test is detected periodically to check healthiness of Capacitor Bank to maintain uninterrupted power factor in the grid, and such checks are done when there is faulty tripping. Therefore, it is very clear that this item is not utilised in manufacturing process as an internal part and it is not an ingredient for manufacture of the final resultant product i.e.
Capacitor Bank. Therefore, even by the definition of the term 'material' the imported item is not a raw-material nor it is a 'component' or 'intermediate product' or a 'consumable' as envisaged in the definition of the term 'material' given in the notification.
Further, it is to be noticed that this imported item has been independently classified under Tariff sub-heading 9031.80 as "other" within a residuary item, under the sub-heading "Other Instruments and apparatus", which falls under the main Heading 90.30. The description of Heading 90.30 is reproduced herein below : "90.30. This heading excludes apparatus incorporating a scintillation counter whose data are converted into analogue signlas for the purposes of making medical diagnoses (e.g. gamma camera, scintillation scanner) (heading 90.18); measuring or checking apparatus designed to incorporate the radio-active source (in particular, artificial isotopes) for example, for measuring thickness of materials (sheets, linings, or the like), for monitoring the contents of packages, for measuring low speed air currents (ionisation anemometers), etc. (Heading 90.22)".
Reading from the above chapter heading and sub-heading, it is clear that the item has been classified as a testing equipment and not as a part of capacitor. In this case the appellants have also not taken a stand that the item is required to be classified alongwith the power Capacitor Bank, being its integral part. They have got this classified as a testing instrument. The literature and the catalogue and the affidavit also clearly support the stand taken by the deptt. that- the item is an independent testing instrument and that it is used for checking only, whenever there is a faulty tripping. Therefore, the imported item, not being utilised for the manufacture of the resultant product is not entitled for the benefit of the exemption. A similar view has been expressed by the Tribunal in the case of Vulcan Engineers Ltd. (Supra) in para 7. The findings given at page 641 of the report is noted herein below : "7. A reading of the notification makes it clear that the exemption is given to goods imported in India against an advance licence issued under the Import (Control) Order, 1955 or obtained against an advance release order, being materials required to be imported for the purpose of manufacture of products, which is referred to as resultant products or replenishment of materials used in the manufacture of the resultant products or both or for export as mandatory spares alongwith resultant products, for the purpose of execution of one or more export orders. In this particular case, admittedly, the goods which have been imported, have not been utilised for the purpose of manufacture of resultant products or for that matter, they have been imported as replenishment of materials used in the manufacture of the resultant products nor they have been imported as a mandatory spares alongwith resultant products.
Therefore, the basic stipulation of the notification has not been fulfilled by the appellants in this case for the purpose of grant of exemption of the notification in question. It is the appellants' case that they have imported the components of lime kiln which they have exported under an agreement to Bhutan and the same have been utilised for the purpose of erection of a lime kiln furnace at Bhutan. It is their contention that they having put the imported item into the use for which it is imported in terms of their agreement with the Bhutan party, they will be entitled for the benefit of the exemption. In this regard, the findings given by the lower authorities are correct and the terms of both the notifications as well as the Advance licence and DEEC book do not provide for a situation like this. The appellants have produced a copy of the DEEC. Before the issue of this DEEC, the appellants have produced the agreement with the authorities who have made a note of it in the second page of this certificate. In Part A of the certificate, there is a Col. which has given the following details.
Names and addresses of factories where the resultant products for export are manufactured. Against this, details in part A, the appellants address namely "Vulcan Engineers Ltd., MIDC Area, Ahmednagar" has been given. Therefore, it follows that the appellants were to have manufactured the resultant products in the address given in Part A of this DEEC. Admittedly, the appellants have not carried out this process of manufacture to bring in the resultant product as per the terms of DEEC and also in terms of the notification. Therefore, the appellants not having complied with both the terms, they will not be entitled to the benefit of the notification as held by the lower authorities".
The above ratio clearly applies to the facts of this case and there is no reason to differ from the same.
11. The ld. Advocate has relied on the judgment rendered by the Hon'ble Supreme Court in the case of Suksha International & Nutan Gems and Anr.; Star Paper Mills Ltd. and that of Karnataka High Court's judgment rendered in the case of Vikrant Tyres Ltd. As can be seen from the ratio of these judgments, it is clear that the issue is totally different and the same has been rendered to interpret the language of the notification. In the present case, the grant of Advance Licence under DEEC Scheme vis-a-vis grant of benefit of the exemption notification are two different aspects. The DEEC Book clearly stipulates that the duty exemption is subject to the provisions of the Customs notification. In this case the appellant has not satisfied the terms of the notification and, therefore, the question of its liberal interpretation does not arise. The ld. Collector has relied on the ruling rendered in the case of Precision Rubber Industries. In this case the Hon'ble Bombay High Court has referred to the distinction between a component and an accessory. In para 10 of the report, the Hon'ble Court has held as follows : "10. It is undisputed that the process of manufacture of aprons and cots consists of cutting them out of long pipings and tubings. The word 'component' means a constituent part of ingredient such as the various components of electric motor. In the case of chemical system, it is used to denote an ingredient of a chemical compound.
In another sense the word is used to denote smallest unit of classification. On the other hand, "accessory" has altogether different connotation. It signifies aiding or contributing in a secondary or subordinate way. It is used to denote a role or status which is supplementary or secondary to something of greater or primary importance. The word "accessory" is used to suggest that something or somebody is incidental to the main subject. In other words, accessory is something which is inessential and secondary or subordinate to another object. While 'Component' is always an essential element of a machine, an accessory is an aid to the machine. A machine is not a machine without a component. But a machine can perform without a given accessory. The meaning of the words "component" and 'accessory' and the distinctions between them are known to the Respondents Nos. 1 and 2. They have examined the use of aprons and cots. That is why the character of aprons and cots as components of textile machinery was never in dispute. That is why in his notice dated 30th September 1981 the Respondent No. 1 observes: "It is observed that synthetic rubber aprons and cots are essentially textile machinery component parts. They are also distinctly known as such and are marketed as textile machinery components".
12. The Tribunal has also dealt with the aspect of 'accessories' under the Accessories (Condition) Rules, 1963 in the Kashmir Vanaspati's case. This ratio is not directly applicable, as there is no claim made by the appellants for considering the item as an accessory under the Accessories (Condition) Rules, 1963. In Kashmir Vanaspati's case the question of grant of set-off of Nickel Catalyst, bleaching activated earth and activated carbon used in the manufacture of vegetable product came up for consideration before the Tribunal. The Tribunal has held that they are neither raw-material nor component parts of vegetable product and hence held to be not entitled to the concession under Notification No. 201/79-CE. The interpretation of the term "Raw-material" came up for consideration in this judgment. The Tribunal has held that the words 'raw-material', as used in the definition of 'manufacture' denotes merely material from which a final product is made. In other words, the Tribunal held, which after undergoing process gets converted into a distinct product. The Tribunal also examined the ambit and scope of the words "component-part" and held in para 18 at page 223 as follows : "18. Examining the word "component part" the Law Lexicon by Shri T.P. Mukherjee, 1982 (Vol. I) records as follows: "Dictionary meaning of the word "component" as given in the Oxford Concise Dictionary is "contributing to the composition of a whole".
The Shorter Oxford Dictionary (1955 -Edn.) gives the meaning of the word thus: "Composing: making up; constituent. A constituent part of element".
"Part" is defined as that which with another or others makes up a whole, a portion, section, element, constituent".
In bunk and Wagnalls New Standard Dictionary of the English Language (1953 -Edn.) 'component' is explained as "forming part or ingredient, constituent; a constituent element or part".
"Part" means that which goes with others to constitute the whole.
The meaning given in Webster's International English Dictionary (Vol. 1, 9th Edn.) is : "Serving or helping to form, comprising-constituting, constituent the component parts of natural bodies".
It appears, therefore, that for an article to be called a component part, it is not necessary that even after it becomes part of another article, it should still retain its identity. All that is necessary to make an article, a component part is that it goes into the composition of another article If an article is an element in the composition of another article made out of it, such an article may well be described as a component part of the other article. It may be that the final product made may be in the nature of the compound in which case, the elements forming the component parts may not be capable of any more separate identification. Equally, it may be that when a machinery is assembled out of several parts forming that machinery, those parts even after their being fitted may retain their individuality or identity".
Therefore, taking the definitions of these terms, we are fully satisfied that the imported item, namely capacitance bridge, is not a raw-material for the manufacture of the final product i.e. power Capacitor Bank and as such, the importer is not entitled to claim the duty exemption benefit in the notification in question.
13. In the result, there is no merits in this appeal and hence, it is dismissed.