Customs, Excise and Gold Tribunal - Delhi
Dripless Faucets (India) vs Collector Of Customs on 16 January, 1995
Equivalent citations: 1995ECR567(TRI.-DELHI), 1995(77)ELT182(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The eligibility of import of goods described as 'Headworks High Flow with Red Bottom made of Brass' under OGL arises for determination in this appeal - the appellants who are manufacturers of water taps/mixers week clearance of these goods as components/parts covered by Appendix 6, Serial No. 1 of the 1985-88 Import Export Policy while the department's contention is that the items are consumer goods falling under SI. No. 121 of Appendix 2B of the Policy requiring valid licence.
2. The Adjudicating authority held that the items were finished goods required merely to be inserted inside the tap for use and are available in any sanitary shop, therefore, satisfying human needs directly and hence falling within the ambit of Appendix 2B, SI. No. 121. He therefore, confiscated the goods in the absence of licence to cover the same with an option of redemption on payment of a fine of Rs. 1 lakh and also imposed a personal penalty of Rs. 10,0007- on the appellants herein.
3. The lower Appellate Authority has confirmed the finding of the Deputy Collector of Customs holding that the items are consumer goods and by mere dismantling or dis-assembling, consumer goods do not cease to be consumer goods. Hence this appeal.
4. Shri V. Sridharan, learned Counsel for the appellants, submits that the Headworks are only components of water taps admittedly used by the appellants, who are Actual Users (Industrial) of the same, in the manufacture of water taps, and cannot satisfy human needs without further processing and therefore, do not come within the definition of consumer goods as contained in the Policy. He cites the decision of the Hon'ble Calcutta High Court reported in 1990 (45) E.L.T. 24 in the case of Trident Television Pvt. Ltd. v. Collector of Customs, wherein it has been held that the definition of consumer goods for the purpose of Import Policy can only mean consumer goods which can directly satisfy the human needs without further processing and that Television components imported by the appellants before the Court would not directly satisfy human needs and therefore, are not consumer goods within the meaning of the Import Policy. He also cites the order of the Tribunal in the case of Kumar Associates v. Collector of Customs, 1993 (65) E.L.T. 500 wherein cooling coils fitted with expansion valves imported by the appellants are sub-assemblies, which by themselves constitute only a part of the air-conditioners used in automobiles and cannot be used directly without undergoing further processing and assembly alongwith other components for satisfying human needs and for that reason, are not consumer goods covered by Sl. No. 146 of Appendix 2-B of the Import Policy 1990-93. He therefore, prays for setting aside the order of the Collector of Customs (Appeals).
5. Opposing the prayer, Shri R.K. Kapoor, learned SDR contends that the items do not fall under Appendix 6, SI. No. 1 but are consumer goods hit by falling under SI. No. 121 of Appendix 2B and hence cannot be imported without a licence. He further submits that the items fall under SI. No. 517 of Appendix 3 Part A which covers hardware and pipe fittings and therefore, hit by the Exclusion in Appendix 6. In addition, he reiterated the findings of the lower authorities.
6. We have considered the submissions of both the sides. We agree with the learned Counsel that the imported items are not covered by the expression "consumer goods" as they are only components which required further fitting into water taps. The Hon'ble Calcutta High Court had occasion to consider the definition of consumer goods in the case of Trident Television Pvt. Ltd. v. Collector of Customs 1990 (45) E.L.T. 24 (Cal.) and held in para 51 of its judgment that "the definition of consumer goods for the purpose of import can only mean consumer goods which can directly satisfy human needs without further processing. Components imported by the concerned petitioners would not directly satisfy human needs. Further processing would be required before a complete TV set can come into existence. It cannot therefore, be held that the components imported are consumer goods within the meaning of the Import Policy". The components in question were colour picture tubes and plastic moulded parts and printed circuit boards for colour televisions, which according to the Customs Department, were consumer goods and hence, their import was prohibited in terms of SI. No. 122 of Appendix 2, Part B of 1985-88 Policy. The High Court held that the components imported in SKD condition are covered under OGL, set aside the order of confiscation and directed fresh assessment of the goods.
7. In the case of Kumar Associates v. Collector of Customs, reported in 1993 (65) E.L.T. 500, the Tribunal has expressed the same view regarding the definition of consumer goods, namely, mat consumer goods are only those which can directly satisfy human needs without further processing. It was held therein that cooling coils fitted with extrusion valves imported by the appellants are sub-assemblies which by themselves constitute only a part of the air-conditioners used in automobiles, cannot be used directly without undergoing further processing and assembly alongwith other components for specifying human needs, and hence are not consumer goods covered by SI. No. 146 of Appendix 2, Part B of the 1990-93 Import Policy. Following the same reasoning, we hold that the imported goods in question are not consumer goods falling under SI. No. 121 of Appendix 2, Part B of the 1985-88 Import Policy.
8. The next question that arises for consideration is the submission of the learned DR that the components in question are covered by Sr. No. 517 of Appendix 3, Part A, which reads as under :-
"Hardware and pipe fittings made of opper, zinc, aluminium and alloys thereof. The headwork in question is neither a pipe fitting nor it can be treated as hardware which expression covers finished articles and not components. Hardware has been defined in the New Webster's Dictionary of the English Language, Deluxe Encyclopedic Edition at page 440, as under :-
"Metalware or articles, as tools, locks, hinges, cutlery, or utensils; physical equipment, as contrasted to ideas or design, computer, any mechanical, electrical or electronic equipment, as distinguished from software, that includes the manuals, procedures and specifications; milit, equipment of supplies made largely of metal from small fittings or tools to major items as aircraft and weapons."
"Tools and household articles of metal etc. 2. heavy machinery or weaponry 3, the mechanical and electronic components of a computer etc."
Since the imported items are only components of taps of a specific design, size and shape, they are not covered by the definition of hardware.
9. A point of far reaching consequence was raised by the learned DR namely that, for an item to be imported under SI. No. 1 of Appendix 6, it has to fall within list 8, Part I or Part n of Appendix 6 and only such items falling under these lists can be imported under OGL by reference to SI. No. 1 of the Appendix to the Policy. Even though this point has not been raised by the lower authorities, since its ramifications are of immense magnitude, we propose to deal with the same.
10. The paramount legislation dealing with imports and exports is contained in Imports and Exports (Control) Act, 1947. Section 3(3) of the Act reads as under:-
"3. Powers to prohibit or restrict imports and exports -
(3) Notwithstanding anything contained in the aforesaid Act, the Central Government, may by order published in the Official Gazette, prohibit, restrict or impose conditions on the clearance, whether for home consumption or for shipment abroad of any goods or class of goods imported into India."
11. As and when the Import Policy is announced, the Central Government issues statutory notifications in exercise of the powers conferred upon it under the above Section and these orders are called 'Open General Licence No. 1' etc. When the Import Policy for AM 1985-88 was announced on 12-4-1985, the Central Government issued order No. 1/85-88, the relevant portion of which is reproduced below -
"In exercise of the powers conferred by Section 3 of the Imports and Exports (Control) Act, 1947 (18 of 1947), the Central Government hereby gives general permission to import into India from any country, except the Union of South Africa, South West Africa, raw materials, components and consumables by Actual Users (Industrial) subject to the following conditions :-
(1) The items to be imported are not covered by Appendices 2,3,5 and 8 of the Import and Export Policy 1985-88 (Vol. I);
(2) Instruments shall not be allowed to be imported under this Licence;
(3) The raw materials, components and consumables are required by the Actual User (Industrial) concerned for his own use, i.e. subject to the 'Actual User' condition.
(27) In respect of certain items mentioned in Appendix 6, List 8, Part I of Import and Export Policy 1985-88, Vol. I the names of specific industries have been mentioned. For these items, only the Actual users (Industrial) engaged in the respective industries will be eligible to import under OGL.
(28) Items covered under Appendix 6, List 8, Part II of the Import and Export Policy 1985-88 (Vol. I) can be imported by Actual users (Industrial) subject to 'actual user' condition and export houses/trading houses against REP/Additional Licences as per policy for sale to eligible Actual Users (Industrial) subject to 'actual user' condition.
(29) Items covered under Appendix 6, List 8, Part HI of the Import and Export Policy, 1985-88 (Vol. I) can be imported under Open General Licence by Actual Users (Industrial) and others for stock and sale."
A perusal of the above decision shows that there is no stipulation contained anywhere in it that, apart from satisfying the condition that the raw materials/components do not appear in Appendix 2,3,5 and 8, it should also separately appear in Appendix 6, List 8, part I or Part H
12. The main Appendix 6 of the Policy contains various Serial numbers. The various lists numbers 1 to 9 reveal that whenever the Government wanted to stipulate that the items mentioned in the individual lists are the only items permitted under various SI. Nos. of the main Appendix 6 of the Policy, they have indicated it in the main Appendix 6. This is evident from the following tabular statement.
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Sl. Items Categories of No. eligible importers
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(15) Machinery, equipment etc. required for gem and Registered im-
jewellery industry as per list 1 of the Appendix 6 porters of gem and
jewellery, coopera-
tive societies of
goldsmiths etc.
(33) List saving equipments as per list 2 of Appendix 6. By all persons
(35) Finished drug preparations, etc. as per list 3 of By all persons
Appendix 6.
(37) Crude drugs for making Ayurvedic medicines, etc. By all persons as
per List 4 of Appendix 6.
(20) (b) Sutures and needles for surgical purpose as per By Regd. Medical
list 5 of Appendix 6. Practioners etc.
(55) Dental items as per List 6 of Appendix 6. By all persons
(56) Ophthalmic items as per list 9 of Appendix 6. By all persons
(32) Educational, Scientific & Technical books, etc.vide By all persons
list 7 of Appendix 6.
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13. It is significant to note that unlike various other Serial Nos. of Appendix 6, against Sl. No. 1, it has been provided that raw materials, components and consumables as per list 8 alone are permitted for import under OGL. List 8, Part 2 of Appendix 6 inter alia permits imports by export houses/trading houses against REP/Additional licence for sale to actual user (industrial). List 8 Part 3 inter alia mentions items for import for stock and sale. Thus these lists of Part 2 and 3 inter alia cover imports by those other than actual users also while SI. No. 1 of Appendix 6 permits imports only by actual user (industrial). This itself goes to show that the various parts of List 8 are independent, separate and additional lists of OGL items specifically mentioned in the Policy, in addition to Sr. No. 1 of Appendix 6 of the 1985-88 Import Policy. It will be useful to consider para 80 of the 1985-88 Policy, which is reproduced below -
"80(1) Raw materials, components and consumables which do not appear in Appendices 2,3,5 and 8 of this policy will be allowed to be imported under Open General Licence, subject to the conditions laid down. Actual users will use this facility only to import such items as are in confirmity with the respective provisions of their industrial licences of Registration certificates, as well as the extent of indigenisation already achieved/to be achieved by them."
14. A plain reading of the above para itself shows that once the raw materials/components/consumables do not appear in Appendices 2, 3, 5 and 8 of the Policy, then their import under OGL would be permissible subject to other conditions. We may also note that the same pattern of permitting import of raw materials/components/consumables under OGL continued in the two subsequent periods AM 1988-91 and 1990-93 and the exact status of list 8 Part I, II etc. was clarified in the policy provisions relating to those periods (para 61 of the AM 1988-91 Policy and para 63(1) of AM 1990-93 policy).
15. In the light of the above observations, we hold that the import of the items in dispute is covered by OGL as the conditions for import under OGL are satisfied and there is no additional requirement that the item has also to fall within list 8, Part I or Part II of Appendix 6.
16. For the reasons set out above, we hold that the goods in question are entitled to clearance under OGL as components/parts covered by SI. No. 1 of Appendix 6 of the 1985-88 Policy, set aside the impugned order and allow the appeals with consequential relief, if any, due to the appellants.