Customs, Excise and Gold Tribunal - Delhi
Ester Industries Ltd. vs Collector Of Customs on 25 November, 1994
Equivalent citations: 1995ECR619(TRI.-DELHI), 1995(75)ELT635(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The appellants are engaged in the business of manufacturing of polyester chips, polyester film and polyester filament yarn at its works at Khatima, Distt. Nainital. For the manufacture of above-named items, plant and machinery were imported from various countries abroad. The second-hand plant for the manufacturing of polyester chips was imported from USA and subsequently, the appellants applied for grant of a supplementary licence for the import of spares for a value of Rs. 87,89,707/- for the second-hand Polyester Chips Plant vide letter dated 20th June, 1986. The licence dated 30th October 1986 was granted for the import of spares for a value of Rs. 87,89,707/-. As the said licence did not contain bifurcation of the products covered under OGL and not covered under OGL, the appellants applied vide letter dated 30th April 1987 to DGTD for doing the necessary bifurcation of the amount of Rs. 87,89,707/- as :
(i) Scientific and measuring instruments for Rs. 2,00,0007-
(ii) Restricted spares other than OGL Rs. 20,00,000/-
iii) Spares under OGL Rs. 65,89,707/-
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Rs. 87,89,707/-
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In the meanwhile, they were in receipt of a few consignments of spares for which bills of entry were filed for home consumption as per following details:
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Bill of Entry No. & Date Description of goods
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027579/19-5-1987 Bolt Hexogon 026802/15-5-1987 Ball bearing & packing material 026544/14-5-198 Packing material
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It was alleged by the Department that the said import was not covered by a valid licence, as the licence for the import of spare parts for a value of Rs. 87,89,707 /- was not considered as a valid licence as it did not specifically cover the restricted spares other than OGL. The Assistant Collector passed spot adjudication orders, imposing redemption fine/penalty under Sections 111(d) & 112 of Customs Act, 1962 as under :
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Order-in-Original Redemption Fine Personal penalty No. & Date
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971/22-5-1987 1,000/- - 1050/4-6-1987 20,000/- - 989/25-5-1987 15,000/- 5,000
The Assistant Collector also did not accept their contention for the debonding of the consignment on furnishing any bond or bank guarantee or undertaking. The appeals before the Collector of Customs (Appeals) were rejected vide Order-in-Appeal No. 897 to 899-C/DLH/90, dated 28-11-1990 on the ground that the amendment carried out subsequently in the licence cannot be made applicable retrospectively holding as follows :
"I have carefully examined the appellant's contentions. The appellant's contention is that the amendment to the licence should be given retrospective effect to cover the imports in these three cases and the imports found at the time of importation as unauthorised should be now considered as covered under the amended licence. Examining this, I find that the importers should have either furnished a valid import licence at the time of importation, or alternatively should have executed an ITC bond for getting the goods cleared and for producing the required amended licence within the specified period. The appellant's argument, in the appeal on this point, is that he was prepared to give an undertaking which the customs did not accept. I find that the Customs rightly did not accept the mere undertaking and it is clear that the appellant did not ask for the clearance on furnishing of a proper ITC bond. Since this procedure was not followed, I find no substance in the appellant's contentions that the subsequently amended licence obtained by them should be made applicable to the importations in these three cases, since it would be introducing a procedure by which the import licence can be produced by any importer as and when he obtains the same for the importation done by him even years before, and this would clearly be totally manageable and a messy situation, not permitted under the law".
Hence these appeals.
2. We have heard Shri R. Santhanam, learned Counsel and Shri Satish Shah, learned DR and perused the records.
3. The relevant correspondence on the subject is reproduced below :
"Letter No. EIL: 6-D dated 20th June 1986 from the Ester India Ltd. to the Chief Controller of Imports and Exports, Govt. of India, Udyog Bhawan, New Delhi through the Development Officer, Plastics & Polymers Dte. DGTD, New Delhi Dear Sirs, Sub : Request for grant-of supplementary licence for import of spares for a value of Rs. 87,89,707/- for the second-hand Polyester Chips Plant.
We beg to enclose herewith a copy of our letter No. EIL/ND/OD dated the 26th May, 1986 addressed to the Chief Controller of Imports and Exports, New Delhi and a copy of their reply No. IPC/4/5/252/85-88/Pt./1578 dated the 13th June 1986 which are self-explanatory. In line with this letter, we are now submitting herewith our application for the grant of a supplementary import licence for the import of spare parts for the second-hand plant and machinery which we have imported under import licence Nos. P/OG/2099586, dated 26-12-1985, P/OG/2099584/B/WP/97/H/85, dated 19-11-1985 and P/OG/2099765, dated 10-2-1986 issued from CCI & E File No. OD/III/1024/71/84-8S, for a total value of Rs. 87,89,707/- which are required by us urgently at the time of erection & commissioning and also for maintenance of machinery for a period of one year. The total value of the spares has been worked out as under :
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Name of the Items Qty. Value (FOB)
suppliers
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Samson AG, Control valves 67 Nos. DM203,049
West Germany
ARP Arneturen, Jacketted valves 51 Nos. DM 78,435
West Germany
Pier Arneturen, Safety valves 12 Nos. DM 87,600
West Germany
Automatik, Spares for Under Lot DM129,196
West Germany Water Granu-
lator UWG 36
Buhler-Miag DMT Feeding & 2 Nos. SFR 28,460
SPA, Discharge Device
Switzerland
Lightnin, UK Spares for Lot £ 14,496
esterifier mixer
...
...
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In this connection, we beg to submit as under :
We purchased a complete second-hand plant and machinery which was closed for some time, the available spare parts alongwith the plant and machinery were almost negligible and as such it has become necessary for us to import all the spare parts for this plant from the original manufacturers which are required not only for maintenance, but also for replacement during erection and commissioning of the plant and machinery. You will appreciate that in the case of a second-hand plant and machinery, a large number of spare parts may have to be replaced before we can start up the plant.
Though almost all the spare parts which are required by us are in the normal course allowed for import under Open General Licence, yet we are obliged to make the application for the grant of import licence in view of the fact that the provision for import of spare parts is applicable only for plant and machinery which are installed on the opening day of the licensing period. Since we are eligible to import spare parts only from 1st April 1987 it has become necessary for us to make an application for the grant of an import licence for a value of Rs. 87,89,707/-.
Though as per the provisions of the Import Policy, we are eligible to import spare parts upto 10% of the value of the import licence, yet we were unable to import any spare parts due to the fact that the available spare parts alongwith the plant and machinery were almost negligible. Further, there is no value available in the import licence for the import of spare parts. Moreover, the limit of 10% is justified in the case of new plant and machinery, but the same cannot be justified in the case of second-hand plant and machinery in view of the following reasons :
(a) That the CIF value of the second-hand plant & machinery is comparatively much lower than the CIF value of new plant and machinery.
(b) That the requirement of spare parts in the case of second-hand machinery is much more than the requirement of spare parts of new plant and machinery.
Though we are eligible to import all the spare parts under Open General Licence with effect from the next licensing period i.e. 1st April 1987 onwards, in view of the urgency of our requirement as the spare parts are required by us at the time of erection & commissioning, it is extremely essential to import the spare parts on a war-footing to enable us to get all the spare parts at site before we take up erection & commissioning of the plant by October, 1986.
It may kindly be noted that almost all the plant and machinery has already been shipped by the suppliers and the same will be ready for erection by July/August 1986. In case we do not import these spare parts in time, we are afraid that the commissioning of the plant will be substantially delayed, thereby putting us into very serious financial losses.
...
...
Letter No. EIL 6-D dated 30-4-1987 from Ester India Ltd. to the Directorate General of Technical Development, Polymer Directorate, GOI, Udyog Bhavan, New Delhi.
Sub : Import licence No. P/D/2245812 dated 30-10-1986 for Rs. 87,89,707/- for import of spares for our polyester chips plant: JCCI & E, Kanpur Ref. No. 47/3061 /AM-87/AU/SUPP/DGTD/JC/KAN We beg to enclose herewith one complete set of the copy of our application No. ND : EIL : 6-D dated the 20th June 1986 submitted to the Chief Controller of Imports and Exports, New Delhi through the DGTD, Plastics and Polymers Dte., New Delhi. Against this application, we have been granted an import licence No. P/D/2245812 dated the 30th October 1986 for Rs. 87,89,707/- by the Jt. Chief Controller of Imports and Exports.
In our above application, we had given the list of items which we have to import for the second-hand polyester chips plant which include items like valves, calibrators, dual trace oscilloscope etc. etc. We had also mentioned in the import licence application that though most of the items which we wish to import are covered under OGL, but because our plant has not yet gone into production we will not be able to avail of the OGL facility and accordingly the issue of an import licence was requested. However, some of the items as mentioned in our application are not covered under OGL and since the import licence mentioned within bracket (items covered under OGL), we will not be able to import those items like valves, calibrators etc. which are not covered under OGL.
In the above circumstances, we shall request you to kindly send your recommendations to the Jt. Chief Controller of Imports and Exports, Kanpur as follows :
1. Scientific & Measuring instruments for Rs. 2,00,000
2. Restricted spares other than OGL Rs. 20,00,000
3. Spares under OGL Rs. 65,89,707
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Rs. 87,89,707
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A photocopy of the above import licence is enclosed herewith for your ready reference. The original import licence will be sent to JCCI, Kanpur on hearing from you that the recommendations have been sent to them".
4. The relevant endorsements on the import licence reads as "this licence is valid for goods already shipped/arrived". A cumulative reading of the relevant correspondence and the endorsement leads to the inescapable conclusion that the spare parts in dispute are also covered by the endorsement which makes it clear to the effect that the endorsement was to retrospectively validate the prior imports. The contention of the learned DR that the endorsement in the licence is not applicable for the disputed spares is not acceptable in view of the fact that the list of goods enclosed with the application for licence incorporates the items in dispute in the appeals. We, therefore, accept the submissions of the appellants that the imported spares were covered by a valid licence, set aside the impugned order and allow the appeals with consequential relief, if any, due to the appellants. However, we make it clear that we are not pronouncing upon the eligibility of the imports to the benefit of Notification No. 69/87-Cus., dated 1-3-1987 as this issue was not agitated before either the adjudicating authority or the lower appellate authority.