| SooperKanoon Citation | sooperkanoon.com/8425 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | May-04-1995 |
| Reported in | (1996)(85)ELT305TriDel |
| Appellant | Collector of Customs |
| Respondent | Modern Apparels |
2. The matter relates to the applicability of the exemption Notification No. 195/76-Cus., dated 2-8-1976, and Notification No.291/84-Cus., dated 28-12-1984, to the aluminised glass fibre fabrics, imported for manufacturing fire fighting suits for use on the ships.
The Revenue had pleaded that the said fabrics imported were not the goods for construction of or fitment to the ships of Indian Navy/Coast Guard.
3. The matter was posted for hearing on 27-3-1995 when Shri Mohan Lal, learned JDR appeared for the appellant (Revenue). Shri M. Shah, partner of the respondent company represented the respondent (importers).
4. Shri Mohan Lal, the ld. JDR stated that the fire fighting suits were for personal use, and were not for fitment to the ships. They were a general purpose item and were not covered by the provisions of exemption Notification No. 195/76-Cus. and Notification No. 291/84-Cus.
The ld. DR pleaded that the order passed by the ld. Collector of Customs (Appeals) was not proper and correct, and that the appeal filed by the Revenue (Appellant) merited acceptance.
5. Shri M. Shah, the partner submitted that it was mandatory to keep the fire fighting kits on the ships. The suits were not for any particular individual. According to him, they could be considered as 'fitment to the ship.' 6. We have carefully considered the matter. M/s. Modern Apparels, the respondent were engaged in the manufacture of fire fighting suits for the fire brigade establishments. They had imported aluminised glass fibre fabrics, in running length, by Air from U.S.A. in July, 1993. The importers sought exemption from the Payment of customs duty under Notification No. 195/76-Cus., dated 2-8-1976 which provided exemption to the goods required for construction of or fitment to the ships of the Indian Navy. The exemption was available only when the goods were imported into India by the Government of India, or by a person authorised by the Government of India, or shipped on the order of a Department of the Government of India and appropriated to such order at the time of shipment. Exemption was also sought under Notification No.291/84-Cus., dated 28-12-1984 which exempted, among others, the machinery, equipment, components and raw materials required for construction of or fitment to the ships of the Coast Guard. Under Notification No. 291/84-Cus. also the goods were required to be imported into India by the Government of India or by a person authorised by the Government of India, or shipped on the order of a Department of the Government of India and appropriated under such order at the time of shipment. The Assistant Collector of Customs, Air Cargo Complex (Bombay) had observed that the glass fibre fabrics was not a material for construction of or fitment to a ship. He held that the goods were not eligible for exemption under the aforesaid Notifications. On appeal, the Collector of Customs (Appeals), Bombay referred to the provisions of the International Convention for the safety of life at sea 1974, and observed that the fire fighting suits were essential equipment to the ships. He held that the fire fighting suits could be considered as fitment to the ships for the purpose of exemption Notification No. 195/76-Cus.
7. The exemption is in favour of the goods required for construction of or fitment to the ships of the Indian Navy or the Coast Guard. The aluminised glass fibre fabrics were imported in running length. The importers were manufacturing fire fighting suits for various fire brigade establishments. The fabrics imported were required to be converted into articles in the premises of the importers. Once so converted, it could be used by any person engaged in fire fighting.
Obviously, the fabric imported in running length was not required for construction of the ships. It could also not be said that the aluminised glass fibre fabrics was required for fitment, to the ships.
The expression 'fitment to the ships' refers to the physical identification of the particular thing to the ship. It may mean fittings that is things used in fitting up closely; or for a length of time, even if, not permanently, or the fixtures i.e. the things to be put in place to stay; here also for a perceptible length of time.
Everything essential for the complete ship, for its navigation, for its safety or for the safety of the goods, crew and passengers may not be 'fitment'. The goods or articles may add to the effectiveness, proper utilization or the safety of the ship, goods and personal, but unless they form physical part of the ship, they could not be categorised as 'fitment'. The requirement that every ship will have a number of fire fighting suits will not necessarily make such suits as fitment to the ships. They were not even attached to the body of the ship, and they were just kept at hand and could be removed easily, at will. They were also not suitable for use soley or even principally with the ship.
8. In the case of Amkar Engineering Works v. Superintendent of Central Excise, 1979 (4) E.L.T. 145, the Gujarat High Court had held that the items in the nature of accessories could not be characterised as components or integral parts of a trailer. Para 2 from the said Judgment is extracted below : "2. Mr. V.B. Patel appearing for the petitioner contended that even without the items in question the trailer is complete and one can use the trailer without any of these items. In other words, it is his case that these items were accessories and not spare parts or components of the trailer and as such they are not excisable goods.
It is specifically admitted by the respondents that without these items the trailer could be used and would be complete by itself.
Some of the items in question could be got fixed by a purchaser either from the petitioner's engineering works or from any other engineering works with may not manufacture trailers. We cannot understand how a tool box or a jack or angles supporter or chains could be construed as forming integral or components of a trailer.
Tool box is a separate box where tools are kept. Similarly, a jack is not fixed to a trailer and it is a portable item. Unless it is shown that the items in question are components or integral parts of a trailer and without them a trailer is not a complete manufactured item and cannot be used, it would be difficult to hold that these items which are only in the nature of accessories could be characterised as components or integral Parts of a trailer. We are, therefore, unable to agree with the learned Counsel for the respondents that the Items in question are excisable items."Steel Crafts v. Collector of Central Excise, Belgaum, 1995 (75) E.L.T. 897 (Tribunal), the Tribunal had held that the cost of articles not detachable or usable at will was to be included in the assessable value of the main product. Para 10 from that decision is extracted below : 10. In the case before us it is seen that all the items [except (i) Military Hook, (2) Hood and (3) Tool box] as enumerated in the impugned order, were at the time or clearance Part and Parcel of the trailer. They were fixed to the body of the trailer, and once affixed, they no more could be considered as separate from the trailer, As regards heavy duty axle, they were a part of the vehicle and were fixed to the trailer. In the written submissions dated 6-10-1992 it has been mentioned that "whenever heavy duty axle is fixed to the trailer then it may form part of trailer since it is very essential for the use". The show grill is also fixed to the body of the trailer. The appellants have mentioned that "all the trailers are not being fixed with this showgrill", but wherever the showgrill has been fixed, it forms part of the trailer and cannot be detached at will. The hook, hukka and handles were fixed to the body of the trailer, and once affixed, they become part and parcel of the trailer. Similarly rope tightening pipes are functionally essential for the purposes for which the trailers are manufactured and purchased. As regards tipping attachments, it is fixed to the brackets at the bottom of the platform and on the chassis. Tripping is performed by releasing the locking device retaining tipping body.
The appellants have pleaded that it is not fixed to the trailer at the time of delivery and only the demonstration of the item is given. It is not understood as to how without fixing, the demonstration of the tipping mechanism could be given. The tipping attachment in the case of before us cannot be considered as a weight lifting or any specialised material handling equipment for the purposes of explanation II under Item No. 34 of the Tariff. In the case of Ashok Leyland Limited, 1982 (10) E.L.T. 684 (GOI), the matter before the Government of India related to the value of specialised handling equipment like cab, tipping gear and steel body which was mounted on dumpers. Trailer is a vehicle but it is not a motor vehicle. Thus Explanation II Under Item No. 34 of the Tariff which relates to motor vehicle, will not be applicable to trailer".
9. The Hon'ble Supreme Court had held to in a number of decisions that the exemption Notifications are required to be construed strictly. The exemption under Notification Nos. 195/76-Cus. and 291/84-Cus. is only in favour of the goods which are required for construction of or fitment to the ships. In this case, as has been seen above, the goods were the aluminised glass fibre fabrics, and were imported in running length. They were required to be converted into fire fighting suits in the factory outside and were placed in the ship to be used in an emergency. It could not be said that the fabrics imported was required either for construction of the ship or for fitment to the ship. It is a personal equipment comprising protective clothing of material to protect the skin from the fire and from burns and scalding by steam. It is worn by the personal, and not fitted to the ship. In the circumstances, the present import did not satisfy the conditions of the exemption Notification.
10. The Collector of Customs (Appeals) had observed that the department could not change its stand arbitrarily. The details of the earlier imports are not before us. On the basis of the facts in this case on record, we cannot say that the reasoning applied by the Assistant Collector of Customs, Air Cargo Complex, Suffers from any infirmity.
11. Taking all the relevant considerations into account, we allow the appeal of the Revenue and set aside the impugned order-in-appeal, dated 27-4-1994 passed by the Collector of Customs (Appeals), Bombay, and order accordingly.