Holding

Notification No. 281/Cus/76 exempts any part of internal combustion piston engines listed under Heading 84.06, including individual parts like bushes, provided they are proved to be parts of such engines, irrespective of other classifications.

Summary

The Supreme Court examined whether Notification No. 281/Cus/76, which grants a partial exemption from customs duty, applies to rod bushes and camshaft bushes imported by Jain Engineering Co. The Court held that the notification does extend to parts of internal combustion piston engines listed under Heading 84.06, and the term "parts" need not refer to all components but can include any individual part. It clarified that bushes and bearings, though functionally similar, are distinct articles and therefore not automatically covered by Heading 84.63. Consequently, if the bushes are proved to be parts of the engines covered by Heading 84.06, they are eligible for the exemption regardless of any other classification. The Court set aside the Appellate Tribunal’s decision and remanded the matter to the Collector of Customs to determine whether the imported bushes are indeed parts of such engines.

Issues considered

Does Notification No. 281/Cus/76 apply to parts of internal combustion piston engines falling under Heading 84.06?
Must the term "parts" in the notification refer to all parts of the engine or can it include any individual part?
Are rod bushes and camshaft bushes the same as bearings, thereby falling under Heading 84.63 and excluded from the exemption?
Can a part receive the exemption under the notification even if it is already classified under a different heading such as 84.63?
Is the appellant required to prove that the imported bushes are parts of engines covered by Heading 84.06 to claim the exemption?

Legislation cited

Customs Act, 1962s. 130E
Customs Tariff Act, 1975

Subjects

customs dutyexemptionnotificationinternal combustion piston enginerod bushescamshaft bushesheading 84.06heading 84.63customs tariffclassification

Judgment

A JAIN ENGINEERING CO.
v.
COLLECTOR OF CUSTOMS, BOMBAY

SEPTEMBER 18, 1987

B [RANGANATH MISRA AND MURARI MOHON DUTT, JJ.]

Customs Tariff Act, 1975: First Schedule, Headings Nos. 84.06
and 84.63-Rod bushes and camshaft bushes-Exemption from
customs duty-Effect of Notification No. 281/Cus/76 dated 2.8.1976--
Parts of internal combustion piston engines-Whether included.
c Heading No. 84.06 of the Customs Tariff Act, 1975 prescribed
100% duty on internal combustion piston engines, while Heading No.
84.63 laid down 60% duty on transmission shafts, cranks, bearing hous-
ings, plan shaft bearing etc. The Notification No. 281-Cns/76 dated 2nd
August, 1976 as amended from time to time exempted the articles
D specified in column (2) of the table thereto and falling under Heading
No. 84.06 from payment of duty in excess of 40% ad valorem. Internal
combustion piston engines and parts thereof were one such article.

The appellant sought part exemption from payment of customs
duty in respect of rod bushes and camshaft bushes, imported by it, in
E terms of the Notification. The Assistant Collector and the Collector of
Customs (Judicial) found that he was not entitled to the benefit of
exemption under the said Notification. The Appellate Tribunal aff'll'-
med the orders of the Customs authorities being of the view that the
bushes and bearings were the same and as the bearings come under the
Heading No. 84.63 and not under Heading No. 84.06, they were not
F entitled to the benefit of exemption.
-
In this appeal under s. BOE of the Customs Act, 1962 it was.
contended for the respondent that as Heading No. 84.06 does not refer
to the parts of internal combustion piston engines, the appellant was not
entitled to claim any exemption for the bushes, even if they were parts
G of such engines, that even assuming that Heading No. 84.06 also con-
templates parts of the engine, such parts must be all the parts of the
engine and not a few parts thereof, and that bushes and bearings were
the same and identical articles as held by the Appellate Tribunal and, as
bearings have been provided for under Heading No. 84.63, the question
of any exemption under the Notification did not arise, that there is no
H material for holding that the bushes, which have been imported by the
220
JAIN ENGG. CO. v. COLLECTOR OF CUSTOMS 221

appellant, were parts of the engines referred to in Heading No. 84.06.
A
Allowing the appeal,

HELD: 1.1 The Notification No. 281/Cus/76 dated August 2,
1976, as amended from time to time will apply to parts of the internal
· combustion piston engines mentioned under Heading No. 84.06. [225G I B

. 1.2 Paragraph 2 of column (2) does not provide that it must be all
I the parts of the engine or engines. It simply provides 'parts thereor.

- ,(
Such parts may be all the parts or any or some of the parts of the engine
or engines in question. Although the parts are not mentioned under
Heading No. 84.06, by necessary implicated and in the context of the
Notification, it includes the parts of the engine. [225D·FI
c
j
2. Bushes and hearings are not same and identical. As the func·
lions of hushes are the same as that of the bearings sometimes bushes
are also called hearings. These two articles are distinct and separate.
They are known in the market by two different names. [226A·BI D

3.1 In order to avail of the benefit of the exemption granted by
the Notification, it has to be proved that the parts in respect of which
the exemption is claimed, are parts of the internal combustion piston
engine mentioned in Heading No. 84.06. As soon as that is proved such
"f parts will get the benefit irrespective of the fact that they or any or some E
of them have already been included under Heading No. 84.063 or under
any other heading. [226C·D I

- 3.2 The intention of the Notification is clear enough to provide
that the parts of the engines, mentioned under Heading No. 84.06, will
get the exemption under the Notification. Therefore, even if boshes are F
same as bearings, still they would come within the purview of the Notifi·
~ cation, provided they are parts of the engines mentioned under Heading
No. 84.06. [226F]

3.3 In the instant case, there is no material or evidence nor is
there any finding of the Appellate Tribunal or the Customs authorities G
that the bushes, which have been imported by the appellant are parts of
internal combustion piston engines falling under Heading No. 84.06.
The case is, therefore, sent back to the Collector of Customs to decide,
after giving an opportunity to the appellant, whether the bushes im-
ported by the appellant are really parts of the internal combustion
piston engines, as mentioned under Heading No. 84.06. [226G; 227A·BI H
222 SUPREME COURT REPORTS [1988) I S.C.R.

A CIVIL APPELLATE JURISDICTION: Civil Appeal No. 335
of 1987.

From the Order dated 10.12.1986 of the Customs Excise and
Gold Control A-ppellate Tribunal, New Delhi in Appeal No. C/1080/
86-B-2 (Order No. 1284/86-B-2).
B
S.K. Dholakia, R.C. Bhatia, P.C. Kapur and S.K. Berl for the
Appellant.

c
G. Ramaswamy, Additional Solicitor General, B. Parthasarthy
and Mrs. S. Suri for the Respondents.

The Judgment of the Court was delivered by
-
DUTT, J. The only question that is involved in this appeal pre-
ferred under section 130E of the Customs Act, 1962, is whether the
appellant is entitled to the benefit of the Notification No. 281-Cus/76,
D granting part exemption from payment of Customs duty in respect of
the rod bushes and camshaft bushes imported by the appellant.

Before we refer to the said Notification, we may notice the provi-
sions of the Heading No. 84.06 and Heading No. 84.63 of the Customs
Tariff Act, which are as follows:-
E

Heading Sub-heading No. and Rate of duty Central
No. description of article (a) Standard Excise
(b) Preferen- Tariff
tial areas Item
F
84.06 International combustion (a) 100% 29
piston engines.

84.63 Transmission shafts, (a) 60%
cranks, bearing housings,
G plan shaft bearings, gears
and gearing (including
friction gears and gear-boxes
and other variable speed
gears), flywheels, pulleys
and pulley blocks, clutches
H and shaft couplings.
JAIN ENGG. CO. v. COLLECTOR OF CUSTOMS [DUTT, J.J 223

The said Notification No. 281-Cus dated 2.8.1976, as amended A
-t from time to time, reads as follows:-

"Notfn. No. 281.Cus. -The articles specified in column
(2) of the Table hereto annexed and falling under Heading
No. 84.06 are exempt from so much of that portion of the
duty of Customs leviable thereon which is specified in the B
First Schedule to the Customs Tariff Act, 1975, as is in
'y' excess of the rate specified in the corresponding entry in
column (3) of the said Table.

THE TABLE

Description of article Rate of duty
c
~ (2) (3)
J
Stationary or industrial internal combus- 40percent.
tion piston engines and parts thereof advalorem.
excluding those which are inter-changeable D
for use with motor vehicle other than those '
specified against S. No. 2

International combustion piston engines 40percent.
for industrial and agricultural tractors advalorem.
'1- and power tillers and parts thereof excluding E
those which are inter-changeable for use with
other motor vehicles.

- Marine engines and parts thereof excluding
those which are inter-changeable for use
with motor vehicles other than those
40percent.
advalorem.
F
specified against SI. No. 2.
~

International combustion piston engines 3 percent.
designed for use in aeroplanes and parts ad valorem.
of such engines.
G
International combustion piston engines 40percent.
for locomotives and parts thereof excluding advalorem.
fhose which are inter-changeable for use with
' -1 motor vehicles other than those specified
against SI. No. 2."
H
224 SUPREME COURT REPORTS [1988) 1 S.C.R.

A The Assistant Collector and the Collector of Customs (Judicial)
overruled the contention of the appellant that the appellant was
entitled to the benefit of exemption under the Notification No. 281-
Cus/76. The Customs, Excise and Gold (Control) Appellant Tribunal,
hereinafter referred to as 'the Appellate Tribunal', dismissed the
appeal of the appellant and affirmed the orders of the Customs
B authorities. According to the Appellate Tribunal, the bushings and the
bearings are the same and as the bearings come under the Heading
No. 84.63 and not under Heading No. 84.06, they are not entitled to
the benefit of exemption under the said Notification. Hence this

C
appeal under section 130-E of the Customs Act.

The Notification grants exemption in part from payment of the
Customs duty in respect of articles specified in column (2) of the Table
-
and falling under Heading No. 84.06. Heading No. 84.06 refers to
'internal combustion piston engines'. Paragraph 2 of column (2) of the
Table annexed to the Notification, which is relevant for our purpose,
not only refers to internal combustion piston engines, but also to 'parts
D thereof'. Heading No. 84.06 does not, however, contain or refer to the
parts of internal combustion piston engines.

It is submitted by the learned Additional Solicitor General that
as Heading No. 84.06 does not refer to the parts of internal combus-
tion piston engines, the appellant is not entitled to claim any exemp-
E tion for the bushes, even if they are parts of such engines. Secondly, it
is contended by him that even assuming that Heading No. 84.06 also
contemplates parts of the engine, such parts must be all the parts of the
engine and not a few parts thereof. In other words, his contention is
that Heading No. 84.06 will apply when an internal combustion piston
engine in imported in a knocked-down condition. Lastly, it is con-
F tended that bushes and bearings are the same and indentical articles as
held by the Appellate Tribunal and, as bearings have been provided
for under Heading No. 84.63, the question of any exemption under the )-
Notification does not arise. It is also submitted by the learned Addi-
tional Solicitor General that even assuming that the bushes and bear-
ings are not identical articles but they are distinct and separate, yet
G there is no material for holding that the bushes, which have been
imported by the appellant, are parts of the engines refered to in Head-
ing No. 84.06.

The Notification provides that the articles specified in column (2)
of the Table and falling under Heading No. 84.06 are exempt from
H payment of a certain portion of the customs duty. Paragraph 2 of
JAIN ENGG. CO. v. COLLECTOR OF CUSTOMS !DUTT, J.J 225

column (2) of the Table not only mentions internal combustion piston
A
engines, undoubtedly forming the only subject-matter of Heading
No. 84.06, but it also menti.ons the 'parts thereof', that is to say, parts
of such engines. Heading No. 84.06 does not refer to 'parts' of such
engines. Non-mention of 'parts' in Heading No. 84.06 has given rise to
a controversy between the parties. It may be that the Notification has
been inartistically drafted. It is, however, clear that the Notification B
not only intends to grant exemption to internal combustion piston
y engines, but also to 'parts thereof'. When, therefore, the intention is
clear and manifest, it will be unreasonable to take a narrow view of the
Notification and not to extend its benefit to the parts of the engines
referred to in Heading No. 84.06. To accept the contention made on
behalf of the respondents that as Heading No. 84.06 does not mention C
;( 'the parts', the Notification is inapplicable to the parts, will be to
.. ~ amend the Notification, which the court will not do. In our opinion,
therefore, the Notification will apply to parts of the engines mentioned
under Heading No. 84.06.

We are unable to accept the contention of the respondents that D
'the parts' referred to in paragraph 2 of column (2) of the Table must
be all the parts of the engines or engine in question and not a few parts
thereof. Paragraph 2 of column (2) does not provide that it must be all
the parts of the engine or engines. It simply provides 'parts thereof'. In
the absence of any clear and unambiguous provision that exemption
will be granted in respect of parts of the engines, which must be all the E
parts constituting the engine or engines, we are not inclined.to restrict

-
the scope of the Notification. Accordingly, we hold that 'parts' refer-
red to in paragraph 2 of column (2) of the Table may be all the parts or
any of some of the parts of the engine or engines in question. A
mention of internal combustion piston engines under Heading
No. 84.06 not only contemplates the engine or engines, but also the F
parts thereof. So, although the parts are not mentioned under Heading
No. 84.06, by necessary implication and in the context of the Notifi-
cation, it includes the parts of the engine. We are, therefore, of the
view that parts of the engine or engines, mentioned under Heading
No. 84.06, will get the benefit of exemption under the Notification.
G
It has been held by the Appellate Tribunal and it is also the
contention of the learned Additional Solicitor General that bushings
-1 ·and bearings are identical articles. It seems that the appellate Tribunal
was influenced by the fact that the functions of the bushings and bear-
ings are the same. It may be that two articles have the same functions
but, nonetheless, they are distinct and separate. As the functions of H
226 SUPREME COURT REPORTS [1988] 1 S.C.R.

A bushings are the same as that of the bearings, sometimes bushings are
also called bearings, as pointed out by the Appellate Tribunal. But
when these two articles are known in the market by two different
names, it is difficult to uphold the contention that they are same and
identical, even th9ugh they perform the same functions. We, therefore,
do not agree with the finding of the Appellate Tribunal and the
B Customs authorities that bushings and bearings are same and identical.

In view of our finding that the Notification exempts also parts of y
the engines mentioned in paragraph 2 of column (2) of the Table, in
order to avail of the benefit of the exemption granted by the Notifica-
tion, it has to be proved that the parts in respect of which the exemp-
C tion is claimed, are parts of the internal combustion piston engine, as
-
mentioned under Heading No. 84.63. Some of such parts may have
been included under Heading No. 84.63. In other words, as soon as it
is proved that the parts are of the engines, mentioned in heading
No. 84.06, such parts will get the benefit of exemption as provided by
the Notification, irrespective of the fact that they or any or some of
D them have already been included under Heading No. 84.06 or under
any other Heading. Therefore, even if bushings are the same as bear-
ings, still they would come within the purview of the Nqtification,
provided they are parts of the engines mentioned under Heading
No. 84.06. The contention of the Customs authorities that the article,
which is provided under another Heading other than Heading
E No. 84.06, will not get the exemption as provided in the Notification,
is not readily understandable. When the Notification grants exemption

-
to the parts of the engines, as mentioned under Heading No. 84.06, we
find no reason to exclude any of such parts simply because it is in-
cluded under another Heading. The intention of the Notification is
clear enough to provide that the parts of the engines, mentioned under
F Heading No. 84.06, will get the exemption under the Notification and
in the absence of any provision to the contrary, we are unable to hold
that the parts of the engines, which are included under a Heading
other than Heading No. 84.06, are excluded from the benefit of the
Notification.

G In the instant case, there is no material or evidence nor is there
any finding of the Appellate Tribunal or the Customs authorities that
the bushes, which have been imported by the appellant, are parts of
internal combustion piston engines falling under Heading No. 84.06.
In the circumstances, it is necessary that the Customs authorities
should embark upon the question and decide whether the bushes,
H imported by the appellant, are really parts of such engines.
JAIN ENGG. CO. v. COLLECTOR OF CUSTOMS [DUTT, J.] 227

For the reasons aforesaid, we set aside the order of the Appellate A
Tribunal and of the Customs authorities and send the case back to the
Collector of Customs with a direction to decide, after giving an
opportunity to the appellant, whether the bushes imported by the
appellant are parts of the internal combustion piston engines, as
mentioned under Heading No. 84.06. B
The appeal is allowed, but in view of the facts and circumstances
of the case, there will be no order as to costs.

P.S.S. Appeal allowed.

c

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