Customs, Excise and Gold Tribunal - Tamil Nadu
Sha Harakchand Dharmaji vs Commissioner Of Customs on 26 June, 1996
Equivalent citations: 1996(88)ELT764(TRI-CHENNAI)
ORDER T.P. Nambiar, Member (J)
1. The present appeal is directed against the order of CC (Appeals) Madras, dated 10-11-1995. In terms of that order, he did not extend the benefit of Notification 45/94, dated 1-3-1994. The short point that arises for determination in this appeal is whether Poly Vinyl Alcohol (PVA for short) imported by the appellants can be given the benefit of Notification No. 45/94, dated 1-3-1994 as per the abovecited notification. It is seen that the Government of India has exempted the duty in excess of 20% ad valorem in respect of the specified goods which are imported "for use in the leather industry". The learned adjudicating authority has observed that the scope of the words "for use" in the leather industry should be taken as actual use.
2. Shri Sudhakar, the learned Counsel for the appellants contended before us that in the notification it is clearly stated that actual use is only with respect to those goods which are mentioned under Heading B of the notification. He contended that the condition and procedure laid down under Heading B is not with respect to Heading A of the Notification in question. The learned Counsel contended that the goods imported admittedly fall under Heading A and this fact is riot disputed by the lower authority. He, therefore, stated that the appellants are entitled to the benefit of the exemption notification referred to above. In support of his contention he drew our attention to the following decisions:
1988 (14) ECR 292 1991 (55) E.L.T. 253
3. Shri V. Thyagaraj, the learned SDR drew our attention to the impugned order. He stated that the appellants are only trader and, therefore, in order to ensure that the goods imported are not misused it must be satisfied by the authorities that the goods are imported for use in the leather industry and this condition can be satisfied only if the goods are imported by actual user. He also stated that the conditions as are applicable for the goods under Heading B of the notification will also be applicable for the goods described under Heading A of the notification.
4. We have considered the submissions made before us by both the sides. It is now seen that the exemption notification gives the benefit among other items to the goods which are imported into India in respect of PVA for use in the leather industry. The goods imported by the appellants admittedly fall under SI. No. 36, Heading A of the notification. This position is admitted by the adjudicating authority. Therefore, there is no dispute in this regard. It is, therefore, admitted that the goods which are imported by the appellants fall under Heading A of the notification. In the case of the goods under Heading B the notification stipulates that the importer at the time of importation shall furnish an undertaking to" the Assistant Collector to the effect that the said goods shall be used for the purpose specified and that the importer of the goods also shall produce an extract of such account duly certified by the manufacturer evidencing receipt of the said imported goods in the premises of the manufacturer and he shall also pay duty on demand and in case of failure to do so. These conditions are for importation of the goods described under Heading B of the notification. There is no such condition attached to the goods which are imported under Heading A of the notification. Therefore, the words "for use" in the leather industry has to be interpreted by us. Shri V. Thyagaraj, the learned SDR stated that the words "for use" in the leather industry connotes actual use and not capable of being used. We are unable to accept this contention of the learned SDR in view of the fact that words used in the notification are "for use" in the leather industry. "For use" in the leather industry does not mean actual use. In the decision cited by the learned Counsel viz., 1988 (14) ECR 292, the Hon'ble Supreme Court in Para 10 has held as follows :
10. We are unable to accept the submission of Mr. Bana that, in order to get the exemption it must be shown that the goods in question, namely, the cement supplied by the assessee in this case was actually used in the generation or distribution of electrical energy. It must be noted that the important words used in the relevant provisions are goods for use by it in the generation or distribution of "such energy" (emphasis supplied by us). On a plain reading of the relevant clause it is clear that the expression "for use" must mean "intended for use". If the intention of the legislature was to limit the exemption only to such goods sold as were actually used by the undertaking in the generation and distribution of electrical energy, the phraseology used in the exemption clause would have been different as, for example, "goods actually used" or "goods used".
A perusal of the above decision goes to show that if the intention of the legislature was to limit the exemption only to such goods as are actually used by the importer the phraseology used in the exemption clause would have been different, as for eg. "goods actually used" or "goods used".
In the present case, the phrase used is goods imported into India" for use" in the leather industry. Therefore, the principle laid down by the Hon'ble Supreme Court in the above case will apply to the case of the appellants. The contention of the SDR that the words "for use" should be taken to be actual use cannot be accepted. This decision of the Hon'ble Supreme Court was also taken note of by the Tribunal in the decision reported in 1991 (45) E.L.T. 553. In that case also the issue involved was interpretation of the words used in the notification wherein the words used was "for use" in the context of penetrators used in the leather industry as per Notification 224/85. The Tribunal in the said decision has followed decision of the Hon'ble Supreme Court cited supra. The observation of the Tribunal in Para 16 of their decision is reproduced below :
"In the present case the notification permits exemption to penetrators imported for use in the leather industry. It has been shown that the substance imported has use in leather industry as a penetrator. Proof of actual use is not a condition attached to the exemption. If it were so, the notification would have provided for execution of a bond obliging the importer to produce proof of actual use as in the case of many other notifications. We, therefore, do not agree with the Revenue's contention that the benefit of exemption would not be available to the appellants since they are not engaged in the leather industry but are stockists for sale."
A perusal of the above decision goes to show that the burden of actual use is not a condition attached to the exemption, as otherwise the notification would have provided for executing a bond and obliging the importer to produce proof of actual use. In any event in the case of the goods falling under Heading A, there was no such condition attached and the conditions attached were only in the case of the goods described under Heading B of the notification. In view of the above, we are not able to agree with the contention of the learned SDR. At this stage, the learned Counsel for the appellants drew our attention to the Collectors' conference where this issue was taken and he also produced a copy of the minutes of the Collectors' conference which is reproduced below :
CONFERENCE CONCLUSION : After discussing the issue, the Conference recommended that since question raised by Bangalore Custom House is about the goods which can be used for general purpose also. T.R.U. should re-examine the issue whether the items of general use can be shifted to list 'B'. The conference observed that items figuring at ST. Nos. 30,31, 35 and 36 may have alternative uses and not having exclusive use in the leather industry. T.R.U. should also check with C.L.R.I., Madras or with any other Institute under the control of C.I.S.R. for revising the list 'A' to cover only those items which are exclusively used in the leather industry, to be in line with the intention of the notification. On the question whether, notification can be extended to traders, Conference felt that the same could be allowed as the items are not subject to any actual user condition.
5. It is thus seen from the conclusion arrived at the Collectors' conference that the appellants are entitled to the benefit of the notification in question. In the proviso, we set aside the impugned order and allow the appeal with consequential relief.