Customs, Excise and Gold Tribunal - Delhi
Uttam Air Products Pvt. Ltd. vs Collector Of Customs on 18 September, 1992
Equivalent citations: 1993ECR272(TRI.-DELHI), 1993(63)ELT479(TRI-DEL)
ORDER N.K. Bajpai, Member (T)
1. This is an appeal against the orders of the Additional Collector of Customs, (Group II A), New Custom House, Bombay confiscating a consignment of "Compressed Air Breathing Apparatus Oxy" valued at Rs. 38,928/- on the ground that its clearance under the OGL Appendix 6, List 2, Item 6 of the 1990-93 Import Policy was not permissible. The Additional Collector has given the option to the appellants to clear the goods on payment of a fine of Rs. 60,000 in lieu of confiscation and has also imposed a penalty of Rs. 20,000 under Section 112 of the Customs Act, 1962 besides denying the claim for exemption from duty under Notification 208/81-Cus, dated 22-9-1981 on the ground that the goods are not life saving equipment because the manufacturer's own instructions printed on the cans are as follows :-
"The Oxygen inside the can is not intended as a substitute for oxygen prescribed by a doctor nor as a medical or life saving equipment. "
(Emphasis supplied)
2. The appellants' ground of appeal is that the instruction on the can is at best only a precaution against allegation of incorrect claims. If breathable oxygen of 97% with 3% Nitrogen is supplied in readily usable Spray Cans it has to be necessarily life saving in cases of breathlessness whether the inscription on the cans are contrary or not. The finding of the learned Additional Collector that the goods were found to be in consumer packing and were therefore covered under Serial No. 172 of Appendix 2B of the Import Policy has been contested on the ground that consumer packing does not make the goods a consumer item.
3. We have heard Shri K.V. Kunhikrishnan, the learned Consultant and Smt. Ananya Ray, the learned SDR.
4. Shri Kunhikrishnan cited the decision of the Bombay High Court in the case of Shah Enterprises v. Union of India, 1990 (50) E.L.T. 229 and of the Delhi High Court in the case of Khan & Siroli Steel Rolling Mills, Bulandshahr v. Union of India 1988 (34) E.L.T. 35 and in the case of Bombay Conductors & Electricals Ltd. v. Government of India 1986 (23) E.L.T. 87, to indicate how an exemption notification should be interpreted. He also contested the argument of the learned SDR that the title "Life Saving Equipment" figuring in OGL as well as in the exemption notification can control the plain words of the entry and cited "Principles of Statutory Interpretation" by G.P. Singh (3rd Edition 1983) in which the author has referred to the judgment of the Supreme Court in Bhinka and Ors. v. Charan Singh, AIR 1959 SC 960 while discussing the significance of titles and headings of sections in a statute while interpreting the statute itself in the following words :-
"Under Section 180 of the Uttar Pradesh Tenancy Act, 1939 a remedy was provided for ejectment of a person who was retaining possession of land 'otherwise than in accordance with the provisions of the law for the time being in force'. The question before the Supreme Court was whether a person having no title but retaining possession by virtue of an order passed under Section 145, Criminal Procedure Code could be ejected under the aforesaid provision. In reaching the conclusion that such a person could be ejected the Supreme Court construed the words 'possession in accordance with the law for the time being in force' as meaning possession with title. Support for arriving at this conclusion was taken from the heading of the section which read 'Ejectment of person occupying land without title' SUBBARAO, J. quoted with approval the following passage from MAXWELL. "The heading prefixed to sections or sets of sections in some modern statutes are regarded as preambles to those sections. They cannot control the plain words of the statute but they may explain ambiguous words".
5. The question which the learned Consultant raised before us was that as long as the goods imported were held to be "Compressed Air Breathing Apparatus and other breathing equipment", they were also covered by the heading Life Saving Equipments, and their clearance had to be allowed under the OGL and exemption from duty also given under the Notification. We observe that the invoice description of the subject goods is as under :-
"Compressed Air Breathing Apparatus "OXY" (Portable Breathing Apparatus) For contents of 500 CMB Fresh Oxygen in Spray Canned".
6. The English translation of the inscription in Japanese on the cans is as under :-
"OXYGEN FOR ENERGY IMPORTANT"
"Oxygen is not intended as a substitute for Oxygen prescribed by a doctor nor as a medical or life saving device".
7. In Bhinka v. Charan Singh (supra), the Supreme Court has quoted from Maxwell on "interpretation of Statutes" (XII edition) page -11 as under :
"The headings prefixed to sections or sets of sections in same modern statutes are regarded as preambles to those sections. They cannot control the plain words of the statute but they may explain ambiguous words".
8. We are concerned here with the interpretation of Appendix 6, List 2 which is a "List of Life Saving Equipment allowed for import under Open General Licence" and it is in this list at Serial No. 6 that Compressed Air Breathing Apparatus is listed. Therefore, while interpreting the entry as such one cannot start with the premise that there is any ambiguity or conflict between the heading and the individual entries. Nor has it been the claim of the appellants in the Memorandum of Appeal. The appellants are claiming clearance under the OGL which is an Open General Licence and is in the nature of an exemption from the normal requirement of holding an import licence for clearance of the goods. To the extent to which it is an exemption, it has to be strictly construed. This has been held by the Supreme Court in the case of Collector of Central Excise v. Parle Exports (P) Ltd. 1988 (38) E.L.T. 741 in which, while quoting from the Privy Council's decision in the case of Caroline M. Armytage and Ors. v. Frederic Wilkinson, 1878 (3) A.C. 355, the Supreme Court observed "the Judicial Committee reiterated in the said decision at page 369 of the report that in a taxing Act provisions providing an "exception to the general rule of taxation are to be construed strictly against those who invoke its benefit. While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided."
"In Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh and Anr., 1982 (1) SCR 129 this Court emphasised that the notification should not only be confined to its grammatical or ordinary parlance but it should also be construed in the light of the context. This Court reiterated that the expression should be construed in a manner in which similar expressions have been employed by those who framed relevant notification. The Court emphasised the need to derive the intent from the contextual scheme...".
9. Therefore, while interpreting the entry in the OGL, we cannot overlook the heading of List 2 which is list of 'Life Saving Equipment, allowed for import under Open General Licence.' Thus, Compressed Air Breathing Apparatus figuring at Sl. No. 6 has to be a Life Saving Equipment and, to the extent to which the manufacturer himself does not consider it to be so, its import under the OGL is not permissible. During the hearing, the learned SDR had read out to us from the other inscription on the cans which shows that the pack is intended to provide energy to athletes to enhance their performance and to get over the fatigue before or after a strenuous work-out and provides instant boost of energy for virtually any activity from high altitude skiing to late night studying. With these indications of their use, the subject goods cannot be accepted as Life Saving Equipments which is what they have to be basically be, in order to be allowed clearance under the OGL and be also entitled to the benefit of exemption notification The principles that apply to the interpretation of the entry in the OGL are equally applicable to the interpretation of the exemption notification. The notification has to be interpreted on its plain language. Just as a number of articles have been listed in List 2 of Appendix 6 under the heading Life Saving Equipment, similarly, a number of articles have been listed below the heading Life Saving Equipment in the exemption notification. No words of the exemption notification can be omitted; nor can any disharmony be created while interpreting them. Therefore, on a harmonious construction of the plain language of the notification, it will have to be held that the Compressed Air Breathing Apparatus is a Life Saving Equipment and it should answer that description and fulfil the requirements of Life Saving Equipment. Since the manufacturers themselves are not satisfied that this requirement is fulfilled, the claim for exemption from duty has rightly been denied by the learned Additional Collector.
10. The appellants have not placed any evidence before us in support of their claim that the fine in lieu of confiscation is high or is not in accordance with the provisions of Section 125 of the Customs Act, 1962. We find that the Additional Collector has recorded reasons for imposing penalty on the ground of deliberate mis-declaration with intention to evade payment of duty and circumvent the provisions of ITC regulations. The appellants, on the other hand, have not placed any material on record which would justify reduction of fine and penalty. The appeal, therefore, fails and is rejected.