Customs, Excise and Gold Tribunal - Delhi
Universal Cans And Containers Ltd. vs Collector Of Customs on 11 September, 1989
Equivalent citations: 1990(26)ECC56, 1990(48)ELT266(TRI-DEL)
ORDER V. Rajamanickam, Member (T)
1. The issue involved is the application of Notification No. 40/CUS/78 dated 01-03-1978, Sl. No. 25 to the machine imported by the appellants.
2. The Assistant Collector in his order has stated that the appellants had brought catalogue and samples to prove their contention that the item imported by them was covered by Sl. No. 25 of Notification No. 40/CUS/78 and that the catalogue has stated "Machines for the manufacture of collapsible Tube, Seit 1913", covering Model AT which normally indicates that the machine is for manufacture of collapsible tubes. Catalogue of the manufacturer does not show that machine under reference is for "Rigid Cans" as stipulated in the Notification. Machine for manufacture of collapsible tube is not covered by Sl. No. 25 of the table appended to Notification No. 40/CUS/78 and catalogue and invoice indicates that machines are for use for collapsible tubes and, therefore, the benefit of concessional assessment in terms of Notification No. 40/CUS/78 was not permitted.
3. The Collector (Appeals) in his order has stated that the Claimant has produced the catalogue for the set of machines for the manufacture of "Collapsible Tubes" and they also plead that they are manufacturers of collapsible tubes and containers but has not produced any supporting evidence in the form of industrial licence to indicate that they carry out the manufacture of these end-products and the Collector (Appeals) has rejected the appeal filed by the appellant on the ground that the machine is for manufacture of collapsible tubes and the concessional rate of duty as per Notification is available for automatic Rigid Can Trimming Machine only.
4. Against the order of the Collector (Appeals), the appellants have filed their appeal before the Tribunal. They have claimed a refund of Rs. 1,61,148.86. They have stated that they are engaged in the manufacture of various tubes, containers and collapsible tubes. That they imported one automatic Rigid Can Trimming Machine required for trimming, threading, rolling, beading and knurling hollow bodies of non-ferrous metals. That at the time of importation they claimed for concessional rate of duty at 25% ad valorem as per Notification 40/CUS/78, Sl.No. 25. But, however, the assessment was made at the tariff rate and full duty of Rs. 3,14,916.86 was paid. Therefore, after clearing the goods, they filed a refund claim to the Assistant Collector (Refunds) who has however, rejected their claim and in their appeal before the Collector (Appeals), they had during the personal hearing pointed out that they were Can manufacturers and have an Industrial Licence. The Collector (Appeals) ignored their submissions and rejected the appeal.
5. In their grounds of appeal the appellants have stated that the goods imported by them were put to use in doing Can trimming, threading, rolling etc. of hollow bodies of aluminium and machine itself cannot be used for carrying out various operations required to be carried out in the manufacture of collapsible tubes. The Assistant Collector and Collector (Appeals) have erroneously reached a finding that the said machine is required only in the manufacture of collapsible tubes ignoring its function in Rigid Can trimming. That they are manufacturers of Cans and Containers including Rigid and Collapsible tubes, whereas the Collector has taken note of the fact that they are manufacturers of collapsible tubes and Containers only and omitting to make reference to Cans. That the catalogue produced is for Rigid Can Trimming Machine. That the Catalogue and the invoice clearly show the description and particulars of the machine imported.
6. During the hearing before the Tribunal, the Ld. Advocate Shri D.K. Sub-hedar has reiterated the grounds of appeal. He stated that the catalogue has been produced which relates to automatic Rigid Can Trimming Machine. That they are manufacturers of Rigid Cans and they had produced the catalogue to the Assistant Collector in their letter dated 15-12-1980. He said that as per the catalogue the item imported by them clearly covered Sl.No. 25 of the Notification No. 40/CUS/78. He also relied on the Supreme Court's decision in Hemraj Gordhandas v. H.H. Dave, Assistant Collector of C.E. & Customs Surat and Ors. - reported in 1978 (2) E.L.T. (J-350), wherein it has been indicated that "if the tax-payer is within the plain terms of an exemption he cannot be denied its benefit by calling in aid any supposed intention of the exemption authority. In a Court of Law or Equity what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact either in express words or by reasonable or necessary implication".
7. In his rejoinder, Shri C.V. Durghayaya, Ld. JDR, drew attention to the fact that the catalogue produced may not be the same as in respect of certain technical data, there was a variance in size which was however explained by the Ld. Advocate that this was due to inclusion of the height of the packing also. Shri C.V. Durghayaya, Ld. JDR referred to the invoice and stated that the notification referred only to Rigid Can Trimming Machine, whereas invoice stated one Automatic Trimming Machine, threading, rolling and knurling machine for Rigid and Collapsible Tubes. He said that the invoice specifically did not make the mention of automatic Rigid Can Trimming Machine, therefore, there was variance in the description in the notification. He cited the case-law of Calcutta High Court, 1988 (17) E.C.R. 148 (Cal.) : 1988 (34) ELT 473 (Cal.) Indian Tobacco Co. Ltd. And Anr. v. U.O.I. and Ors. on eligibility of exemption notification. The ratio of the decision is as follows : -
"In cases of interpretation of a notification regarding exemption the car-dinal principle is just the opposite to that of principle of interpretation as is applicable to a taxing statute. Here the petitioner is given certain benefits by way of exemption and that in my view, if a party intended to get the benefit of exemption notification, that party has to strictly follow the requirements of the notification and the benefit of doubt in cases of any ambiguity or doubt does not and cannot benefit the party."
8. In considering the submissions made by the appellants as well as by the department, it is seen that the appellants have filed a Bill of Entry dated 24-10-1979 the description of which is as follows : -
"One automatic trimming, threading, rolling, beading, knurling machine for Rigid and Collapsible Tubes or hollow bodies of non-ferrous metals, Model AT"
The invoice description is also the same, the packing list... same description.
The department's contention is that the Notification No. 40/78-Cus Sl.No. 25 reads as follows :-
"Automatic Rigid Can Trimming Machine for trimming, threading, rolling, beading and knurling hollow bodies of non-ferrous metals"
The word "Rigid Can" is missing in the Bill of Entry as well as in the invoice and has, therefore, held that the Machine is only for manufacture of collapsible tubes. It is seen from the letter of the appellants addressed to the Assistant Collector (Refund Department), dated.15-12-1980 they have stated that they have imported only one trimming machine i.e. Automatic Rigid Can Trimming Machine, Model-AT they have handed over a catalogue of 06-10-1980. They have further explained about the nature of manufacture as follows : -
"Para-2: All the aluminium tubes or Cans are rigid to be trimmed, threaded, rolled etc. A further process called Annealing is applied to make the required rigid tube collapsible as per client's requirements. Cans or Tubes, which are not annealed remain as Rigid and ones annealed become cellapsible. But since the trade name of the Aluminium tubes required for cosmetics; Pharmaceuticals etc. is collapsible Tubes, the name is added in the invoice. But in fact, all the tubes or Cans have to be rigid to be trimmed".' "Para-3 : The subject machine is used for trimming, threading, rolling etc. for Rigid Cans and also for Rigid tubes which are made Collapsible after a further process of annealing."
From their letter it is clear that the machine is used for trimming rigid Cans as well as rigid tubes which are made collapsible after a further process of annealing. Their catalogue shows that the machine imported is automatic and description contained therein is "for trimming, threading, rolling, beading and knurling of hollow bodies with round cross sections made of aluminium for synchronisation with impact extrusion presses and de-greasing machines, the machine operates fully automatically and can be setup either independently or incorporated in a Can production line. The department in denying the exemption has mainly held the view that the machine is for manufacture of collapsible tubes and no reference has been made for rigid Can as per the Catalogue. The Ld. Advocate Shri Subhedar during the personal hearing before the Tribunal had also made a mention that they had produced before the Assistant Collector a catalogue for machines for manufacture of collapsible tubes also in order to explain to him the difference in the process of manufacture and that the Assistant Collector has merely made a reference to that catalogue and, therefore, the order relating to the catalogue was not correct.
9. It is, however, seen from the invoice and the packing list the description is one automatic threading, rolling, beading, knurling machine for rigid and collapsible tubes or hollow bodies of non-ferrous metals, Model AT. They have explained the reason for adding word collapsible tubes in their letter dated 15-12-1980, but, however, they have stated that the machine is used for trimming, threading, knurling, etc. for rigid Cans and also for rigid tubes, which are made collapsible after a further process of annealing. The notification refers to : -
"Automatic Rigid Can Trimming Machine for trimming, threading, rolling, beading and knurling hollow bodies of non-ferrous matals."
Even if the invoice did not specifically mention the word "Rigid Can", if the other descriptions are taken into consideration as well as the letter dated 15-12-1980 to the Assistant Collector and the catalogue that has been produced relating to the automatic Rigid Can Trimming Machine, it can be concluded that the appellants have imported the machine for Rigid Can trimming and they have also stated in their appeal that they are manufacturers of Cans, their name indicates as "Universal Cans and Containers". Therefore, there is no doubt that they have imported this machine for the purpose of manufacturing the Cans and Containers and for trimming and threading etc. etc. While it is an admitted fact that the notification should be read strictly according to the wording contained therein that if at the time of importation the details of import were not scrutinised thoroughly and the assessment has been done at the higher rate on the basis of the invoice description only, it would be incorrect to deny the exemption if at a later stage the appellants produced the necessary documentary evidences which conforms to the items imported. Therefore, the appellants are eligible for exemption under Notification No. 40/78-Cus dated 01-03-1978 and the appeal is, therefore, allowed.