Case: Modi Rubber Limited Vs. Union of India and Another

Mode Rubber Limited, the appellant herein, set up a tyre and tube manufacturing plant in 1974. it had a collaboration agreement with a West German Company (hereinafter referred to as "foreign collaborators") who agreed to supply the latest technical know how 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).

Court's reasoning:
Having regard to the facts of the case, we are of the view that no error of law has been committed in the revisional order. The appellant had imported plants and machineries. While using the plants and machineries, PPLF was used as a device to protect the rubber coated tyre fabric from atmospheric moisture and dust. PPLF was not a component of the machine itself. It was not a constituent a part. it was used as a Liner Fabric not only in tyre production but also in similar other industrial processes. for this finding of fact reliance was placed on the affidavits of Shri Ram Mohan Rai and Shri Waldemar lange where it was stated that PPLF was used as Liner component of tyre manufacturing machines and in similar other industrial uses.In Item 72(3), it has been categorically stated that the components imported must have some special shape or quality which would not be essential for their use for any other purpose." The finding of the Tribunal is that PPLF came in various sizes and forms and not in any particular shape suitable for any particular machine. Moreover, it could be used not only in the machines imported by the appellant but also in other similar machines.