JUDGMENT

BHAGWATI, J.:— This appeal by special leave raises a short question as to what is the correct amount of import duty chargeable on pot motors when imported separately from Rayon Spinning frames: do they fall within Item 72 (3) or Item 73 (21) of the First Schedule to the Indian Customs Tariff? The facts giving rise to the appeal are few and may be briefly stated as follows:

2. Sometime in 1956 a licence for setting up a plant for manufacture of Rayon was granted to one Kesoram Industries and Cotton Mill Ltd., under the Industries Development and Regulation Act, 1951. Since the machinery and equipment required for setting up the plant were not available in India, Kesoram Industries and Cotton Mills Ltd., applied for an import licence and on the basis of this application, import licence was granted to them for importing "complete continuous filament Rayon plant-with spares and accessories" of the C. I. F. value of Rs. 5.50 crores from general currency area excluding South Africa. It appears that Kesoram, Industries and Cotton Mills Ltd. imported, on the strength of this import licence, Rayon Spinning frames, excluding pot motors, from Japan, but so far as pot motors, were concerned, they authorised the appellants to import from Germany 4000 of these motors for initial installation of the Spinning frames. Pursuant to the authority so given, the appellants placed orders for 4000 pot motors with manufacturers in Germany and imported the same in seven different consignments under the Import licence of Kesoram Industries and Cotton Mills Ltd. These seven consignments arrived at Calcutta port between September and December 1961. The appellants claimed before the Customs authorities at the time of assessment of import duty on these seven consignments that pot motors imported by them fell within Item 72 (3) of the First Schedule to the Indian Customs Tariff and were chargeable to import duty under that item at the rate of 15 per cent of their accepted value. This claim was accepted by the Customs Authorities and these seven consignments were allowed to be cleared on payment of import duty under Item 72 (3). However, within a short time thereafter, the Assistant Collector of Customs issued seven separate notices of demand in respect of these seven consignments claiming that customs duty at the rate of 15 per cent, had been short levied, because pot motors were assessable at the rate of 20 percent, and requiring the appellants to pay up the difference within 15 days from the date of demand under Section 39 of the Sea Customs Act. 1878. The appellants sent representations against these notices pointing out that and we are quoting here from the representation dated 8th December, 1961, which is:-

"These pot motors are vital component parts of the Rayon Spinning machines already imported and are not in excess of the quantity required for the first installation of the said plant. The pot motors are required for 24 Spinning frames having 2 sides each. On each side of these frames, 66 motors are connected. Hence total initial requirement of pot motors for running 24 frames is 3168. In view of general experience with this type of plant approximately 25% additional motors are required for trial runs and commissioning 4000 Nos. of pot motors should, therefore, be supplied for first installation of the Rayon plant.

These pot motors are of very high speed and are specially designed for use in spinning frames for manufacturing rayon thread. They run at 7700 RPM and are designed for rated voltage of 130 V. at 130 cycles per second for use in circuits of less than 10 amps. As such, these motors can in no circumstances be used for any other purpose excepting as stated above.

The accessories of these motors are specially designed to suit particular size of spinning pots well as spinning chambers. The smooth running of these motors is achieved after a great research by using flexible, elastic and hollow shaft, special rubber bushings for support as wel