Bombay High Court
Shri Gurudev Photo-Colour vs Union Of India (Uoi) And Ors. on 23 June, 1994
Equivalent citations: 1995(1)BOMCR665
JUDGMENT B.P. Saraf, J.
1. The petitioners imported one automatic film developing and processing machine with micro processor based system. It filed the bill of entry covering the said machine and sought clearance of the same under OGL Appendix 2, Item 9(24) of the Import Export Policy AM 83-84. It was contended by the petitioners that it was assessable at concessional rate of duty under chapter Heading 84.66 of the Customs Tariff Act, 1975. As the customs authorities were of the opinion that the said machine was not covered under OGL as claimed by the petitioners and needed a specific licence for import, petitioners were asked to explain as to how they were claiming clearance of the goods under OGL. In reply, the petitioners by their letter dated 6-7-1984 explained that on enquiries being made from Government agencies/importers, they were given to understand that the import of Automatic Film Developing and Processing Machine with Micro System was covered under OGL vide Item 9(24) of Appendix 2 of Import and Export Policy AM 83-84. In support of their contention they produced a letter issued by the Collector of Imports and Exports, Srinagar which states that items covered by Appendix 2, item 9 of the Import Export Policy AM 83-84 are covered by OGL. The petitioners also produced a letter from the Director of Industries to the same effect. In the said letter it was stated by the Director of Industries that the machinery was required by the petitioners for initial setting up of their industry. The Assistant Collector of Customs was also requested to consider the case of the petitioner for concessional rate of duty as per the rules in vogue.
2. It may be pertinent to mention that there is no controversy in this case about the fact that the machinery imported by the petitioners was for use in photo film laboratory and not "cinematographic film laboratory". The Additional Collector of Customs, Bombay considered the reply filed by the petitioners and on interpretation of Item 9(24) of Appendix 2 of the Import Export Policy held that the machine imported by the petitioners not being a cinematographic film laboratory equipment, did not fall within items permitted to be imported under OGL. He, therefore, confiscated the goods under section 111(d) of the Customs Act, 1962 read with section 3 of the Imports and Exports (Control) Act, 1947. Option was, however, given to the petitioners to pay in lieu of confiscation, a fine of Rs. 1,50,000/- and clear the goods. It was also held that the petitioners were not eligible to assessment of the said machine at concessional rate of duty under paragraph 177(1) of the Hand Book of Import and Export Procedure AM 84-85. The petitioners have challenged the above actions of the respondents by this writ petition.
3. Learned Counsel for the petitioners Dr. Kantawala submits that the machine imported by the petitioners falls under Appendix 2, item 9(24) of the Import Policy AM 83-84 (corresponding to Item 9(23) of Appendix I, Part B of Import Export Policy AM 84-85). The second submission of the counsel is that even if it does not fall under the said item, on payment of fine in lieu of confiscation the import gets authorised and the goods imported by the petitioners become eligible to concessional rate of duty available to importers of machinery under OGL.
4. We have carefully considered the above submissions. So far as the first submission is concerned, it may be expedient to set out Item 9(24) of Appendix 1 Part B of Import Export Policy AM 83-84 which reads as follows :
"9. Cinematographic Studio and Film Laboratory Equipment (23) Automatic or semi-automatic film developing and processing machines with micro processor based system."
A reading of the above item clearly goes to show that it deals with "Cinematographic Studio and Film Laboratory Equipment". Various items are specified under the above head. A close look at those items clearly goes to show that the items enumerated thereunder are equipments used in cinematographic studio or cinematographic film laboratory. Item 23 is preceded by (i) optical effects and trick printing machine (16 mm), (item 20), (ii) 16 mm colour processing plants, (item 21), (iii) 16 mm Xenon or arc projectors with a throw of 60 feet or more for the theatrical studio/laboratory use (item 22) and succeeded by (i) editing machines 16 mm, 35 mm and 70 mm or combined (excluding flat bed type) (item 24), (ii) notching machines (item 25). In between these items and that too under the broad classification Cinematographic Studio and Film Laboratory Equipment appears Item 24 viz. "Automatic or semi-automatic film developing and processing machines with micro processor based system". This clearly goes to show that the various items mentioned under (Sr. No. 9) are all equipments used in Cinematographic studio or cinematographic film laboratory. It is obvious from the above that equipments used in photo studio do not fall under this item.
5. In this view of the matter, we are of the clear opinion that the machinery or equipment imported by the petitioners does not fall under OGL category.
6. So far as the second submission relating to concessional rate of duty under Tariff Item 84.66 which is applicable to the project import is concerned, it may by observed that the benefit of concessional rate of duty is subject to pary 177 of the Hand Book of Import Export Procedure AM 84-85. Paragraph 177 reads as follows :
"Import of Capital Goods/Component Parts of machinery required for initial Setting up/Assembly - Eligibility for concessional rate of duty.
177.(1) Import licenses issued for Capital Goods and connected raw materials and components required for the initial setting up or for substantial expansion of a project would be endorsed, as admissible, on the recommendations of the sponsoring authority concerned for availing concessional rate of duty. Before making recommendation, the sponsoring authority will satisfy itself that the case is covered under the relevant notification issued by the Ministry of Finance in this regard. The endorsement to be made on the licence will be as follows :
"Project import for assessment under Heading No. 84.66 of section XVI of the Customs Tariff Act, 1975 (51 of 1975)."
(2) It may be noted that the proper authority to decide whether a particular import is eligible to the concessional rate of customs duty as project import is the customs authority. Such authority may allow the benefit of concessional duty, where permissible, even without the endorsement of the licensing authority to this effect on the relevant import licence, on the basis of recommendation of sponsoring authority.
(3) Where import of machinery is allowed under Open General Licence, the benefit of concessional rate of duty may be allowed by the Customs Officer on the recommendation of the sponsoring authority concerned."
The benefit of concessional rate of duty under sub-paragraph (1) of this paragraph is available only on the issuance of an import licence for import of such goods with a specific endorsement on the said licence to the following effect :
"Project import for assessment under Heading No. 84.66 of section XVI of the Customs Tariff Act, 1975 (51 of 1975)"
The benefit of sub-paragraph (3) is, however, available without a licence only on the recommendation of the sponsoring authority concerned. The machinery imported by the petitioners does not fall under OGL. There is no dispute that no import licence has been obtained by the petitioners with an endorsement specified above. In such a situation, the petitioner's case can neither fall under sub-paragraph (1) nor under sub-paragraph (3) of paragraph 177.
7. Learned Counsel for the petitioners submits that on payment of fine in lieu of confiscation the import stands regularised and, as such, the concessional rate of duty allowed in respect of goods imported under OGL should be made available to the petitioners. The contention of learned Counsel, in other words, is that such payment should be construed as substantial compliance with the requirements of sub-paragraphs (1) or (3) of paragraph 177. We have carefully considered the above submission. We, however, find it extremely difficult to accept the same. Payment of fine in lieu of confiscation is an option given to the importer to avoid confiscation. It cannot in any event have the effect of converting the import without licence as one with a licence. It is well settled that one who wants to avail of the benefit of concessional rate of duty which is available on fulfilment of certain conditions must fulfil those conditions in order to avail the same. If he fails to do so, the benefit of concessional rate of duty would not be available to him. In the instant case, the machinery imported is not covered under OGL. Payment of fine in lieu of confiscation only avoids the consequences of confiscation. At any stretch of imagination, it cannot tantamount to grant of licence thereby enabling the petitioners to avail of concessional rate of duty nor on payment of fine the goods imported by a person which do not fall under OGL category can be held to fall under that category. In that view of the matter, we do not find any merit in the above submissions. The same are, therefore, rejected.
8. Learned Counsel for the petitioners also makes a grievance of the fact that though the petitioners asked the respondents to supply copy of the query addressed to the Jt. Chief Controller of Import and Exports, New Delhi, who had issued a certificate on 3rd September, 1984 to the effect that import under OGL by Still Photographic Studios is not permissible it was not supplied to them. This grievance of the petitioners though genuine does not affect the outcome of this case, as we have already interpreted the item under which the petitioners claim that the machinery or equipment imported by them falls in OGL category. On interpretation of that item we have held that the equipment imported by the petitioners is not covered by the said item. In that view of the matter we do not find any merit in the above submission.
9. In the result, this writ petition fails. It is accordingly dismissed. Rule discharged.
Under the facts and circumstances of the case, there shall be no order as to costs. On the prayer of the petitioners, we direct the respondents not to enforce the Bank guarantee or bond furnished by the petitioners for a period of six weeks from today. The petitioners shall also keep the Bank guarantee alive till then.
Certified copy expedited.