Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Colorama Lab. Pvt. Ltd. on 18 November, 1993
Equivalent citations: 1994(70)ELT93(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. The revenue is aggrieved with the order-in-appeal No. 391/85. The dispute before the Collector (Appeals) was whether the imported Fuji Colour Roll Printer Model 8C 6910 with accessories should have assessed to customs duty under Heading 84.86 of the Customs Tariff Act, 1975, since it was imported to substantially expand the production of the Mini, Colour Laboratory of the appellants. The original authority had rejected the assessment under the said heading on the ground that it was not really required for substantial expansion of the laboratory inasmuch as this item by itself could not have substantially expanded the production of the laboratory. The appellate authority after a careful examination of the importers' appeal agreed with their contention but they had expanded the business activities by indigenisation inasmuch as they had already purchased the developing and processing equipments in India, which were manufactured here and since the colour roll printer of the model is not manufactured in India, they had imported it from Japan. The ld. Collector further held that the importer purchased the item from abroad as it had got a high speed of printing. He also held that the importer had fulfilled all the conditions of the project import and hence the item required to be assessed under project import under Tariff Heading 84.66 of Customs Tariff Act, 1975. The revenue in this appeal contend that only complete Mini Laboratory system which comprises of processing, developing and printing systems alone is eligible for concessional assessment under Heading 84.66 of Customs Tariff Act, 1975. It is further contended that the benefit could be extended to a unit importing the lab. as a complete unit as printer alone cannot add to the output and it is the developer which determines the output. Therefore, the imported item by itself cannot add to its existing capacity unless a complete unit of Mini Laboratory system by itself is imported, which does processing, developing and printing automatically in a colour film processing laboratory. Hence the revenue has prayed for restoration of the original authority's order.
2. We have heard Shri B.K. Singh, ld. SDR and Shri Sogani, ld. Consultant for the importer.
3. Reiterating the grounds of appeal, ld. SDR contended that the appellate authority has erred in holding that the importer had satisfied other conditions of the project import, without examining the same and hence the order is unsustainable. He relied on the following rulings :
Uma Arts Studio v. Collector of Customs - 1989 (40) E.L.T. 115 Sujatha International v. Collector of Customs - 1989 (42) E.L.T. 413 He further contended that the importer was not registered under the Factories Act for claiming the benefit and they were merely in service industry and on this ground alone, they would be disentitled for the benefit of the notification.
4. Shri Sogani argued that the Heading 84.66 of the Central Tariff Act, 1975 did not specify that the unit should be registered under the Factories Act. The importer had been registered with DGTD and ACCI and their recommendation by itself is sufficient for grant of the benefit. He argued that the benefit cannot be denied once the recommendation of these two authorities had been relied by the importer. In this context he relied on the ruling rendered in the case of Asiatic Oxygen Ltd. v. Asstt. Collector of Customs - 1992 (57) E.L.T. 563 (Cal.). He pleaded that for substantial expansion, it was not required to import the entire unit and there is no bar to buy indigenous parts or equipments. In this context he relied on the ruling rendered in the case of Satish Kumar Gael v. Collector of Customs - 1985 (21) E.L.T. 873.
5. We have carefully considered the submissions made by both the sides. The point urged by the importer and accepted by the ld. Collector (Appeals) is supported by the ruling rendered in the case of Asiatic Oxygen Ltd. (supra). It has been held that imported cylinders could be imported in stages for achieving its full licensed capacity. It further held that the customs authorities cannot dismiss the recommendations and endorsement of DGTD & CCI & E. Further, Shri Sogani relied on the ruling of Satish Kumar Goel with regard to the equipment automatic colours film process laboratory being entitled to the benefit. It is seen that in this citation the Bench did not address itself with regard to other conditions of the project import i.e. with regard to registration tinder the Factories Act. The Tribunal has gone into this question in the rulings rendered in Uma Arts Studio (supra) in para 6 at pages 117 & 118 of E.L.T. which is reproduced herein below :
* * * * * The matter was again examined in the case of Sujatha International (supra). The findings given in paras 9 to 14 are reproduced herein below:
* * * * * Although, we are in agreement with the Collector's finding, in the light of the ruling rendered by Calcutta High Court in the case of Asiatic Oxygen Ltd. (supra) but still the other conditions of the project import are required to be fulfilled by the importer. There is no finding recorded by both the authorities. Therefore, the matter requires reconsideration and hence the appeal is allowed by remand to original authority to dispose of the matter in the light of the rulings noted above, after giving due opportunity of hearing to the importer and also to place any evidence which they may choose to produce at the time of hearing. Ordered accordingly.
P.C. Jain, Member (T)
6. I have carefully gone through the order proposed by the learned Brother, Shri S.L. Peeran, Judicial Member but I regret I am unable to agree to the conclusions reached by him in the proposed order.
6A. Since the facts have already been set out by the learned Brother in his proposed order, I would not recapitulate the same except those necessary for reaching to my own conclusions.
7. The original authority, namely, the Assistant Collector of Customs has denied the benefit of Project Import under Tariff Heading 84.66 CTA 1975 to the imported goods, namely, one Fuji Colour Roll Printer on the ground that the Printer by itself would not be able to substantially expand the production of the existing unit. According to the said authority, Board's letter No. 5/26/55/83-Cus. (TU) dated 4-11-1983 permits assessment under Tariff Heading 84.66 of Mini Lab System as such which is a complete unit by itself.
8. On appeal, the lower appellate authority accepted the plea of the appellants that they did not import the developing and processing equipments - parts of the mini lab system - from abroad because these were purchased by them in India. They imported the Colour Roll Printing Machine from abroad since it had got a high speed of printing and such a machine was not manufactured in India. Therefore, the machine was allowed the benefit of Tariff Heading 84.66 as applicable for the substantial expansion of the existing units.
9. Learned Brother has agreed with the aforesaid finding of the lower appellate authority to which I also concur. He has, however, remanded the matter for determining whether the other conditions of the project import are fulfilled by the importer.
9.1 Learned Brother has referred to the other conditions of the 'Project Import'. It is the benefit of Tariff Heading 84.66 which is in question here. Perhaps the intention is to determine whether the respondent herein fulfills the two conditions referred to in Madras High Court's judgment in the case of Dass Lab, mentioned supra, at page 4 of the proposed order of the learned Brother.
9.2 Tariff Entry 84.66 by itself does not lay down the two conditions as have been referred to by Madras High Court, namely :-
(i) Whether the importer is a unit registered either with the DGTD or with the State Director of Industries; and
(ii) that the said unit qualifies as a factory within the meaning of the Factories Act.
For this purpose, I reproduce below Tariff Entry 84.66:
"Heading Description of the goods No. (1) (2)
(i) All items of:
(a) Machinery including prime movers,
(b) Instruments, apparatus and appliances,
(c) Control gear and transmission equipment,
(d) Auxiliary equipment, as well as all components (whether finished or not) or raw materials for the manufacture of the aforesaid items and their components required for the initial setting up of a unit, or the substantial expansion of an existing unit, of a specified :
(1) industrial plant, (2) irrigation project, (3) power project, (4) mining project, (5) project for the exploration for oil or other minerals, and (6) such other projects as the Central Government may, having regard to the economic development of the country, notify in the official Gazette in this behalf:
Provided these are imported (whether in one or in more than one consignment) against one or more specific contracts, which have been registered with the appropriate Custom House in the manner prescribed by Regulations which the Central Board of Excise and Customs may make under Section 157 of the Customs Act, 1962 (52 of 1962) and such contract or contracts has or have been so registered before any order is made by the proper officer of Customs permitting the clearance for home consumption, or deposit in a warehouse of items, components or raw materials;
(ii) All spare parts, other raw materials (including semi-finished materials) or consumable stores imported, as a part of a contract or contracts, registered in terms of sub-heading (i), provided the total value of such spare parts, raw materials, and consumable stores does not exceed 10% of the value of the goods covered by sub-heading (i) and further provided that such spare parts, raw materials or consumable stores are essential for the maintenance of the plant or project mentioned in sub-heading (i)" [Emphasis supplied) It is apparent that no such restrictions, as mentioned above, regarding registration with DGTD or Director of Industries or under the Factories Act have been stipulated either in the Tariff Heading 84.66 or the Project Import (Registration of Contract) Regulations, 1975.
10. It appears from the extracts set out by the learned brother from the Tribunal's decisions in the case of Uma Arts Studio [1989 (40) E.L.T. 115] and from Sujatha International [1989 (42) E.L.T. 413] that the Madras High Court laid down the two conditions with reference to the clarification issued by the Government regarding the eligibility of Fuji Colour Laboratories and Printing Machines to the benefit of Project Importation under Tariff Heading 84.66. It is apparent from para 10 of the report in the case of Sujatha International, supra, which speaks of the Government of India issuing certain instructions laying down the conditions in respect of eligibility of Fuji Colour Laboratories and Printing Machines to Project Importation. It is in this context that the High Court in the case of Dass Lab laid down the aforesaid two conditions with reference to the aforesaid Policy of the Government of India; otherwise there is no requirement as such under Tariff Heading 84.66. Government cannot impose any restrictions through non-statutory instructions where the statutory provisions themselves do not envisage such condition or restriction.
11. I find that there are subsequent judgments of the Tribunal, namely:-
(i) Collector of Customs v. Systems Data & Control P. Ltd. - 1993 (63) E.L.T. 275 (Tri.).
(ii) DPS India Pvt. Ltd. v. Collector of Customs, Calcutta - 1992 (62) E.L.T. 837 (Tri.).
which are not dependent upon fulfilment of the aforesaid two conditions. In fact, such a question was never raised therein even though both the cases relate to Servicing Industries.
12. Apart from the foregoing, I also observe that no such ground has been taken by the appellant-Collector in his appeal memo. Only two grounds have been taken which are as follows :-
(i) Only the complete mini lab systems which comprise of processing, developing and printing systems, is eligible for concessional assessment under Tariff Heading 84.66. This is the same ground on which respondent's claim was rejected by the original authority. (This ground has been rejected by both of us).
(ii) Developing and printing of photofilms is in the nature of a service industry.
This ground in my view has been taken in a half-hearted manner by the Collector when in the subsequent sentence he states :-
"No doubt it does bring into existence a commodity called a photograph in the place of an exposed film. Even assuming that it is a production process, can a studio be called an industrial unit." [Emphasis supplied] This ground is no longer available in view of Madras High Court's judgment in the case of Dass Lab, supra and a series of judgments of the Tribunal following Dass Lab such as (i) Saraswati Stores [1985 (22) E.L.T. 68 (Tri.) ], (ii) DPS India Pvt. Ltd. and (iii) Systems Data and Control Pvt. Ltd., mentioned supra.
13. In view of the foregoing discussion, I reject the appeal of the Revenue.
Sd/-
(P.C Jain) Technical Member 27-7-1993
14. The following point of difference has arisen between the two Members :-
"Whether in the facts and circumstances of this case the appeal is to be rejected or the matter is required to be remanded to the original authority."
Sd/-
(S.L. Peeran) Judicial Member Sd/-
(P.C. Jain) Technical Member Dated : 27-7-1993 S.D. Mohile, Member (T)
15. The following point of difference has been referred to me for decision :
"Whether in the facts and circumstances of this case the appeal is to be rejected or the matter is required to be remanded to the original authority."
16. The Revenue is aggrieved with the Order-in-Appeal No. 391/85. The dispute before the Collector (Appeals) was whether the Imported Fuji Colour Roll Printers Model 8-C 6910 with accessories was eligible to the benefit of Project Import under the Heading No. 84.66 of Customs Tariff Act, 1975. Since it was legibly imported to substantially expand the production of the Mini-Colour Laboratory of the appellants [Before the Collector (Appeals) and the respondents in the present appeal by the Department]. The original Authority had rejected the assessment under the said heading on the ground that the equipment imported, by itself could not substantially expand the production of the Laboratory. The Appellate Authority had allowed the appeal on the ground that the remaining machinery had been purchased locally and the imported equipment along with the indigenous equipment fulfilled the conditions under the Heading 84.66.
17. I have heard both the sides. On behalf of the Department, the learned SDR has cited the following cases :
(i) Uma Art Studio v. Collector of Customs - reported at 1989 (40) E.L.T. 115
(ii) Sujatha International v. CC - reported at 1989 (42) E.L.T. 413
18. The ratio of these two decisions is that the Unit seeking the benefit of Project Import should have been registered as a factory under the Factories' Act which condition according to the learned SDR has not been fulfilled.
19. Shri N.C. Sogani, learned Consultant has argued that the Heading 84.66 did not require that the unit should be registered as a factory under the Factories' Act. He cited the decision of the Calcutta High Court in the case of Asiatic Oxygen Ltd. v. A.C. Customs - reported at 1992 (57) E.L.T. 563 (Cal.) and the case of Sh. Satish Kumar Goyal v. Collector of Customs - reported at 1985 (21) E.L.T. 873.
20. The ratio of the first decision (supra) cited by the learned Consultant is that the imports under the Project Import could be made in phases. The ratio of the second decision is that the equipment imported for automatic Colour Film Process Laboratory was entitled to the concession under Heading 84.66, ibid.
21. Learned Member (J) while agreeing prima facie with the conclusion of the Collector (Appeals) in the light of the Calcutta High Court decision in the case of Asiatic Oxygen Ltd. (supra) has held that there was no finding regarding the satisfaction of the other conditions of the Project Import, namely, whether the unit was a factory registered under the Factories Act and has proposed to remand the case to the learned Adjudicating Authority.
22. The learned Member (T) relying upon the decision of the Madras High Court in the case of Dass Lab. and the series of judgments of the Tribunal based upon the said decision of the Madras High Court holding that Mini Colour Labs were eligible to the benefit of the Project Import has proposed to allow the appeal.
23. Considered. The Heading 84.66 did not require that the eligible importer must be registered as a factory under the Factories Act. (It only requires that the import should be for the initial setting up or substantial expansion of an industrial plant). However this condition, (viz. being registered under the Factories Act) imposed vide Govt. instructions issued under F. No. 526/52/83-Cus (TU) has been upheld by the Tribunal vide the decisions in Uma Arts Studio and Sujata International (supra).
24. As against this, the Tribunal has upheld in the case of Asiatic Oxygen Ltd. (supra) based on Madras High Court decision in the case of Dass Lab that automatic colour film Process Laboratory is entitled to the benefit of the Project Import facility.
25. The argument on behalf of the appellant that Heading 84.66 does not require that the importer should be registered as a factory appears to be supported by the definition of an "industrial undertaking" which is similar to the word "industrial plant" used in Heading 84.66 by the Supreme Court in Bangalore Water Supply and Sewerage Board v. Rajappa - AIR 1978 SC 548 = 1978 (52) FJR 197.
Relevant extracts are reproduced below:
"Industry" as defined in Section 2(i) has a wide import.
Where there is (i) systematic activity; (ii) organised by co-operation between employer and employee (the direct and substantial element is chemical), (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious but inclusive of material things or services geared to celestial bliss, e.g., making, on a large scale, prasad or food) prima facie, there is an "industry" in that enterprise."
[Emphasis supplied]
26. In view of this, even developing of films to produce photographs will be an "industry" irrespective of whether such photographs are "goods" or not, and the Film Processing Lab. will be an industrial plant.
27. However it was argued by the learned SDR that though 84.66 by itself does not lay down the condition that the unit should be a factory as per Factories Act, the condition has been upheld by the Madras High Court in the case of Dass Labs and that this interpretation was binding on the Tribunal.
28. Other judgments relied upon by learned Member (T) have not dealt with this aspect at all but have only held that "Service industries" are also "Industries" entitled to Project Import benefit.
29. There is prima facie some divergence between the Madras High Court decision in the case of Dass Labs and subsequent decisions relied upon by the learned Member (T). However, no subsequent judgment of the Tribunal does and, in fact, could not have negatived the Madras High Court decision in Dass Labs case, in the absence of contrary decision of any other High Court.
30. Following the said decision of Madras High Court in the case of Dass Labs, which has interpreted the scope of Heading 84.66, I agree with learned Member(J) that the matter has to be remanded to the Adjudicating Authority to decide the fulfilment of the said conditions laid down by the Government and upheld by the Madras High Court in the case of Dass Labs (supra). I order accordingly.
FINAL ORDER
31. In view of the majority opinion the matter is remanded to the original authority for de novo adjudication in the light of direction of the majority opinion.