Per Shiben K. Dhar :

APPEAL NO. C/3133/89-B2

This appeal is directed against the Order-in-Appeal dt. 28.7.89 of Collector of Customs (Appeals), Bombay.

2. The appellants imported a consignment of what they claimed to be parts of Encoder Mechanism in SKD condition. They claimed benefit of exemption under Notification No. 349/86 which exempts parts other than specified parts of encoder. This benefit was denied to the appellants on the ground that the goods imported are a complete mechanism in SKD and in terms of Rule 2 (a) of General Rules of Interpretation of the Customs Tariff Act. These goods will have to be treated as only one unit. The order of the Assistant Collector further stated that the encoding mechanism consist of 3 sub-assemblies which are containing semi-conductor devices, and therefore, in terms of exemption Notification, exemption to such parts would not be available.

3. Arguing for the appellants, the Learned Advocate submits that admittedly the goods are only parts in SKD condition, and though for classification they would merit assessment as a complete unit in terms of Rule 2 (a) of Rule of Interpretation, they are seeking assessment only for such parts as do not contain semi-conductor devices and are in a position to furnish separate value of various parts.

4. The Learned DR while fairly conceding the position submits that they ought to have established their claim with split values to enable the assessing officer to consider admissibility or otherwise of exemption.

5. We have heard both sides. The Notification 349/86 exempts parts (other than parts containing thermionic valves or transisters or other semiconductor devices or light emitting diodes or electronic thermocircuits or capacitors) of the goods specified in the Table annexed to the Notification and falling within Chapter 84 or Chapter 85 of the First Schedule to the Customs Tariff Act, when imported into India for the purpose of manufacture of the said goods. It is contended before us that the goods were presented as a complete encoding mechanism in SKD condition only. In these circumstances, we have to hold that while for classification Rule 2 (a) of the Rules of Interpretation can be pressed into service to hold that what has been imported is an encoder system, for exemption Notification, however, we have to look at the goods in the condition in which they are presented for assessment. The Assistant Collector himself has recorded that the encoding mechanism consists of 3 sub-assemblies which contained semi-conductor devices. These sub-assemblies are Sensor, Endorser drive and print head. It is clear therefore that these 3 items would not be eligible to benefit of exemption Notification No. 349/86. Since the entire consignment consists of parts other than these 3 items also these have to be looked at only as parts and not a complete goods for the purpose of considering admissibility or otherwise of exemption Notification. Since the other goods are admittedly only parts and are claimed by the Learned Advocate not to contain semi-conductor devices they would be entitled to exemption within the terms of Notification No. 349/86.

5.1. The Learned Advocate undertakes to produce separate values of all the parts to enable the customs authorities to finalise assessment by giving benefit of exemption Notification in respect of such parts as do not contain semi-conductor devices.

6. In view of this, we hold that those parts as do not contain semi-conductor devices would be eligible to exemption in terms of Notification No. 349/86 and accordingly, we set aside the impugned order and remand the matter to Assistant Commissioner of Customs for de novo decision in the light of our observations made in this order.

APPEAL NO. C/3134/89-B2

7. This appeal relates to admissibility or otherwise of benefit of exemption Notification No. 349/86 in case of "Journal Printer Mechanism".

7.1. It is admitted before us that this printer mechanism consists of semi-conductor devices and