Kirloskar Pneumatic Ltd. Vs. Collector of Customs - Court Judgment

Excerpt:
1. the issue for determination in this appeal, which arises out of the order of the collector of customs (appeals), bombay, is the eligibility of driving lever with bellows to the benefit of notification 111/86, dated 17-2-1986 and 60/87-cus., dated 1-3-1987.2. the appellants herein imported a consignment of warranty spares for centrifugal compressors over 7.5 h.p. and cleared the same on payment of duty. subsequent to the clearance of the goods, they filed a refund claim on the ground that the goods are eligible to the benefit of concessional rate of duty in terms of the notifications mentioned above. the authorities below held that the benefit is available only to component parts of the compressor and since the goods imported by appellants are only spares, they would not be covered by the notification. in addition, the bar of unjust enrichment has been held to operate against the appellants.3. we have heard shri t. vishwanathan, ld. advocate, who submits that the issue has been settled by the order of the larger bench in the case of jindal strips ltd. v. collector reported in 1997 (21) rlt 275 in which the majority view is to the effect that the expression "component parts" referred to in notification 77/90, dated 20-3-1990 covers spare parts.4. ld. d.r., shri ojha, pointed out that in the case considered by the larger bench and in all the citations placed before the bench, the importers themselves were using the imported item as spares while in the present case, admittedly, although initially appellants were manufacturing compressors, they have later stopped the production of the same and the imported goods in this case were sold to the dealers.the dr submits that the benefit, therefore, cannot be extended to the imported parts for trade and it can only be extended to spare parts for use by the importers themselves.5. we have considered the submissions made by both sides. the ld.counsel is correct in pointing out that the judgment of the larger bench covers the issue in favour of the importers. the wording of the notification also does not straightway lend itself to the view propounded by the ld. d.r. because it exempts specified goods when imported into india...s. no. 2 of the notification grants concessional rate of duty to component parts of compressors over 7.5 h.p. for use in refrigerators and air-conditioning equipment. we find that the collector (appeals) in para 6 of his order has found that the goods imported were for replacing parts of compressors and has, therefore, considered them to be spare parts of compressors. since the larger bench has held that the expression "component parts" covers "spare parts" and since there is no further dispute that the goods are component parts of compressors over 7.5 h.p. and for use in refrigerators and air-conditioning equipment, we hold that the benefit of notification is available to the goods imported by the appellants herein. we, however, make it clear that the claim for refund will be governed by the provisions of section 27 of the customs act as it stands after its amendment in 1991. in other words, we hold that the bar of unjust enrichment is applicable to the appellants.

Judgment:
1. The issue for determination in this appeal, which arises out of the Order of the Collector of Customs (Appeals), Bombay, is the eligibility of Driving Lever with Bellows to the benefit of Notification 111/86, dated 17-2-1986 and 60/87-Cus., dated 1-3-1987.

2. The appellants herein imported a consignment of Warranty spares for centrifugal compressors over 7.5 H.P. and cleared the same on payment of duty. Subsequent to the clearance of the goods, they filed a refund claim on the ground that the goods are eligible to the benefit of concessional rate of duty in terms of the notifications mentioned above. The authorities below held that the benefit is available only to component parts of the compressor and since the goods imported by appellants are only spares, they would not be covered by the notification. In addition, the bar of unjust enrichment has been held to operate against the appellants.

3. We have heard Shri T. Vishwanathan, ld. Advocate, who submits that the issue has been settled by the Order of the Larger Bench in the case of Jindal Strips Ltd. v. Collector reported in 1997 (21) RLT 275 in which the majority view is to the effect that the expression "Component Parts" referred to in Notification 77/90, dated 20-3-1990 covers spare parts.

4. Ld. D.R., Shri Ojha, pointed out that in the case considered by the Larger Bench and in all the citations placed before the Bench, the importers themselves were using the imported item as spares while in the present case, admittedly, although initially appellants were manufacturing compressors, they have later stopped the production of the same and the imported goods in this case were sold to the dealers.

The DR submits that the benefit, therefore, cannot be extended to the imported parts for trade and it can only be extended to spare parts for use by the importers themselves.

5. We have considered the submissions made by both sides. The ld.Counsel is correct in pointing out that the judgment of the Larger Bench covers the issue in favour of the importers. The wording of the Notification also does not straightway lend itself to the view propounded by the ld. D.R. because it exempts specified goods when imported into India...S. No. 2 of the Notification grants concessional rate of duty to component parts of compressors over 7.5 H.P. for use in refrigerators and air-conditioning equipment. We find that the Collector (Appeals) in Para 6 of his Order has found that the goods imported were for replacing parts of compressors and has, therefore, considered them to be spare parts of compressors. Since the Larger Bench has held that the expression "Component Parts" covers "spare parts" and since there is no further dispute that the goods are component parts of compressors over 7.5 H.P. and for use in refrigerators and air-conditioning equipment, we hold that the benefit of notification is available to the goods imported by the appellants herein. We, however, make it clear that the claim for refund will be governed by the provisions of Section 27 of the Customs Act as it stands after its amendment in 1991. In other words, we hold that the bar of unjust enrichment is applicable to the appellants.