Sen, J. - (1.) Modi Rubber Limited, the appellant herein, set up a tyre and tube manufacture plant in 1974. It had a colloboration agreement with a West German Company (hereinafter referred to as "foreign collaborators") who agreed to supply the latest technical knowhow and also to guide the appellant in the manufacture of high quality tyres. Some machineries and its components were also supplied by the foreign collaborators. The dispute in this case relates to Polypropylene Liner Fabric (PPLF). According to the appellant, PPLF was supplied by the foreign collaborators for use as Liner components to various machinery units. PPLF is basically a Liner Fabric which protects the rubber coated tyre fabric from atmospheric moisture and dust. The Liner Fabric is fed into various machinery units and at each stage, it is rolled with a layer of the Liner Fabric component in between. This has the effect of protecting and preserving the thickness, surface and elongation etc. during the manufacturing process. The Liner Fabric was an essential part of the working of the machineries. The necessary manufacturing process could not be carried out unless it was used in the various machinery units. It is not a consumable raw material nor does it form part of the finished products like automobile tubes and tyres.
(2.) On behalf of the appellant, it has further been contended that the plant and machineries imported by it including PPLF as a part thereof and formed part of "Project Import". The appellants import licence was likewise endorsed. However, the appellant thought that the capital goods import licence might not beadequate to cover all the requirements of PPLF for setting up of the said factory and applied to the Director General, Trade and Development, for inclusion of PPLF in another import licence for raw material which was duly allowed.
(3.) The grievance of the appellant is that the Customs Department has levied duty at the rate of nearly 305 per cent under Item 53, ICT. The only reason for classifying the goods imported by the appellant under Item 53 ICT was that PPLF had been imported under a separate and subsequent licence and not under the Project Import licence. The appellant is aggrieved by the levy of duty under Item 53, ICT on PPLF imported by it. The contention of the appellant is that in the facts of this case, duty should have been levied under Item 72(3) ICT as component part of the machinery imported by it and not under Item 53, ICT as "Textile manufactures not otherwise specified". The relevant entries are as under: "MACHINERIES AND APPARATUS; ELECTRICAL MATERIAL 72 (3). Component parts of machinery as defined in Item 72, 72(1) and 72(2) and not otherwise specified, namely, such parts only as are essential for the working of the machine or apparatus and have been given for that purpose some special shape or quality which would not be essential for their use for any other purpose but excluding small tools like twist drills and reamers, dies and taps, gear cutters and hacksaw blades: Provided that articles which do not satisfy this condition shall also be deemed to be component parts of the machine to which they belong if they are essential to its operation and are imported with it in such quantities as may appear to the Collector of Customs to be reasonable" ********** 53. Textile manufactures, not otherwise specified." ;