Per Justice U.L. Bhat :

Appellant has come up before this larger Bench on a reference by a two-Member Bench of the Tribunal.

2. Appellant imported a consignment of "Refractory Bricks for Industrial furnace temperature 1760o C" of USA origin from USA and submitted Bill of Entry dated 24.6.1992 in respect of goods under Tariff sub-heading 6902.10 and sought clearance on payment of concessional rate of duty under Notification No. 77/90 dated 20.3.1990. The Notification exempted Refractory Bricks of special shape or quantity for as component parts of industrial furnaces falling under Chapter 69 of the Tariff from so much of that portion of the customs duty leviable thereon as is in excess of 40% advalorem. This notification was the successor notification issued in replacement of earlier Notification No. 246/76 dated 2.8.1976. On 29.7.1990, the Collector of Customs passed an order holding that the consignment was not entitled to the benefit of Notification No. 77/90 on the ground that the appellant's furnaces are not industrial furnaces and holding that the declaration filed to the effect that the consignment was intended for use as component part of "Industrial Electric Arc Furnace" was factually incorrect and the convertor of appellant was not "Electric Arc Furnace." The Collector also observed that if the goods are to be used in "Industrial Electric Furnace" as claimed, the benefit of the Notification would be available. Accordingly he ordered confiscation of the goods valued at Rs. 30,86,459.00 under Section 111 (m) of the Customs Act, 1962 (for short, the Act) but allowing redemption on payment of fine of Rs. 8 lakhs and allowing release on payment of appropriate duty without allowing the benefit of the Notification No. 77/90. He also imposed penalty of Rs. 5 lakhs under Section 112 (a) (ii) of the Act.

3. On appeal by the importer, the Tribunal reversed the finding of the Collector holding that the convertors of appellant are a type of Industrial Furnace, set aside the order and remanded the case for examination whether the imported Refractory Bricks can be said to be for use as component parts of Industrial Furnaces and for decision afresh as to the applicability of Notification No. 77/90. Penalty imposed was set aside.

4. After remand, the Collector held that admittedly the goods had been imported for use as replacement in Industrial Furnace (convertor) and not for use in the initial construction of Industrial Furnace, that though the goods are Refractory Bricks of special shape and quality with capacity to withstand temperature up to 1760o C, being replacement parts they can be regarded only as "spares" and not "component" parts, that the expression "component" is not used for an article intended for replacement of a defective or worn out part and the Notification will apply only if the imported goods are intended for initial setting up of Furnace. Accordingly the claim for benefit of Notification was rejected. It is this order which is challenged in the present appeal.

5. The two-Member Bench which heard the appeal noticing conflicting decisions of the Tribunal on the question arising in the case and further noticing the reference of two other appeals to larger Bench, referred this appeal to a larger Bench to resolve the following questions :-