Bombay High Court
National Machinery Manufacturing Ltd. vs Union Of India And Others on 1 January, 1800
Equivalent citations: 1980(6)ELT717(BOM)
ORDER Mody, J.
1. The Petitioner is a manufacturer of automatic looms for Textile Mills and is also a manufacturer- exporter. Spheroidal graphited cast-iron components are required in manufacture of auto looms. One of the material which is required manufacture of such casting is Nickel Magnesium alloy.
2. The Petitioner was a registered importer and by virtue of its exports, was entitled to obtain licence. The relevant policies applicable to this issue of such licence for the present Petition are for the periods. April 1971 to March 1972 and April 1972 to March 1973. The policy for each year is in two parts viz. Vol. I and Vol. II. For the year April 1971 to March 1972 in Vol. I section 2 the detailed policy in respect of actual users is given therein at page 41 in item 46(b) the description of the item with which we are concerned and the policy in respect thereof are mentioned. This reads as follows :
"46(b) Nickel base alloys and nickel A.U. on restricted basis. This provision chrome alloys including will also include import of Monel manufacturers and scraps Metal rods/wires.stips". thereof.
Similarly the policy regarding actually users for the year 1972- 73 is to be found in Vol. I at page 26, item 48(b) which reads as follows :
"48(b) Nickel and nickel base alloy semi (1) A.U. manufactures and manufactures (2) Import of nickel chromium alloy thereof like plates, sheets, bars, rods/strips/wires/flats will not rods, wires, tapes, foils, powder be permitted. and anodes. (3) A.U. for import of nickel base electrical resistance alloys wires/strips. (4) A.U. on restricted base for im- port of nickel and nickel base alloy rods/wires/electrodes. (5) A.U. for nickel anodes for ex- port production only".
3. In so far as the manufacturer-exporter is concerned the policy is to be found in Vol. II for each year. For the year 1971-72 it is in Vol. II. page 125, item A 129B read with item A 129.1 and for the next year 1972-73 it is to be found in Vol. II at pages 74-75. Item numbers being the same. The relevant item being item No. A 129.1 for the year 1972-73 reads as follows :
"A. 129.1 Others not specified 10% (a) All items of raw materials and components etc., as per normal actual user licences issued by the licensing authorities since the 1st April 1970, when stock is intended to be imported as a raw material its permissibility will be decided with reference to normal A.U. Licences issued since the 1st April 1971".
It is not necessary to set out item No. A 129.8 which relates to textile machinery because it merely refers back to item 129.1 meaning thereby that policy in respect of textile machinery is same as for "others" in item 129.1.
4. The petitioner was granted under the policy applicable for the year 1971-72 licence dated 12th January 1972 in which the description of the goods was originally given as follows :
"Components for BAZ Auto Looms in different width per list attached".
This licence was amended on 5th February 1972 whereby another list was attached. This list included various components as well as Nickel Magnesium only. In Item No. 3 the description of the goods in the licence was amended by adding the words, "and also additional list attached". According the description of goods as amended reads as follows :
"COMPONENTS FOR BAZ TYPE AUTO LOOMS IN DIFFERENT WIDTH AS PER LIST ATTACHED. AND ALSO ADDITIONAL LIST ATTACHED."
In this licence at the top right hand corner, class of importer is mentioned as "actually user".
5. Another licence dated 26th March 1973 was issued in favour of the petitioner wherein the description of the goods was as follows :
"Components for BAZ types auto looms as per AV. Licence No. 1354137 dated 12-1-1972".
This licence describes class of importer as actually user (RE). The letters RE stand for registered exporter and thereby make it clear that this licence is issued to the petitioner as actually user who has exported the goods as registered exporter.
6. Under the second licence the petitioner sought to import Nickel Magnesium alloy to which the Customs Authorities raised objection and ultimately, confiscated by an order dated 11th February, 1974, the said goods and in lieu of confiscation imposed a fine of Rs 21,600/-. It would appear from this order and the order in appeal dated 4-4-1975 that the reasons were given for such confiscation viz. (a) that the goods were not covered by the licence and (b) that the item imported was banned item. The order passed on revision upholds the order under revision only on ground (a) and the ground (b) was fairly not relied on by Mr. Talyarkhan.
7. This petition seeks to challenge the confiscation of the goods and the imposition of fine in lieu of confiscation on the ground that on true interpretation of the second licence the only possible conclusion is that the description in the second licence covered Nickel magnesium alloys and secondly that even if there was some doubt as to the true interpretation, the doubt should be resolved in favour of the petitioner if two meanings were possible and accordingly the licence should be held as covering Nickel Magnesium alloy. According to the petitioner the respondents by not having correctly interpreted and having misconstrued the licence, have acted beyond jurisdiction.
8. Mr. Talyarkhan on the other hand contends that the licence has been correctly construed and interpreted by the respondents. In any event, if two vies are possible and it it cannot be said that view adopted by respondents use was unreasonable or perverse, the Court should not interfere with the construction and decision of the respondents, they having acted within their powers. According to Mr. Talyarkhan, even if they arrived at a wrong conclusion, the Court should net interfere with such wrong conclusion.
9. It is clear from the provision of the Policies, set out above that though there is some difference in the words used in item A 129.1 for the two periods, 1971-72 at page 125 the permissible item were raw materials and components as per normally actual users licence issued by the licensing authorities since 1 st April 1969. It is not contended by Mr. Talyarkhan that Nickel Magnesium alloy was correctly included in the first licence which was issued pursuant to this policy. Accordingly even under the policy applicable to the year 1972- 73, Nickel Mangnesium alloy would be a permissible and not a banned item for import.
10. The second licence describes the goods not simpliciter as components for BAZ type Auto Looms but also refers to the first licence. It specifically states that the components would be those which are as per the licence. It is true that Mickel Magnesium alloy cannot be said to be a coroponent for BAZ type Auto looms. The grammatical meaning of the words used for describing the goods can only be that the items mentioned in both the lists attached are considered by licensing authorities as components. It would appear that since raw material as well as components were permissible items, the licensing authorities were not very particular or careful about differentiating between components and raw materials and described all of them as components in the first licence. In my view the second licence which describes the goods not as components only but as components as per the first licence, must necessarily give same meaning to the word components as in the first licence and must necessarily include Nickel Magenesium alloy. This is the only possible view on proper interpretation of the second licence read with the first licence.
11. In view that I have taken, it would have been unnecessary for me to decide the other contentions advanced by Mr. Rana and Mr. Rana and Mr. Talyarkhan regarding the construction to be given in favour of licensee, However as both of them have fully argued the matter on the second footing also, it would be fair to deal with their arguments. Mr. Rana relied strongly on an unreported judgment of Supreme Court dated 10th January 1967 in C.A. No. 801 of 1964, in the cause of M/s. Dagannath Agarwal v. B. N. Datta & Ors. It is unnecessary to go into facts of that case as what will be applicable is only the ratio. The principles emerging from the said judgment are (i) if the customs authorities on an erroneous construction of a license held that the import of a particular item was not authorised and confiscated the goods, it would amount to an error apparent on the face of the record going to the root of the jurisdiction and the decision will be liable to be quashed under Article 226 and (ii) in case of doubt as to the construction of a licence, the licence should be construed by giving benefit of the doubt to the licensee. Accordingly, ambiguity in the description of the goods in the licence should be resolved in favour of the licensee and if the Customs authorities have come to a conclusion without applying this principle they could be said to have wrongly assumed jurisdiction.
12. Mr. Talyarkhan has relied on a later of the Supreme Court in the case of Shri Prithvi Cotton Mills Ltd. etc. v. Breach Borough Municipality and others, . This case has referred to the aforesaid unreported decision which was cited before it but has not overruled it. In this case the question was whether the goods fell within one or the other item of I.T.C. Schedule. The question was not of interpretation of the licence. The unreported judgment was sought to be relied on to support the argument that in deciding this question also the principle to be adopted should be that in case of doubt construction should be in favour of the importer. The Supreme Court negatived that contention by holding that when two views are possible as to whether imported goods are covered by one item of the other of I.T.C. Schedule and if it cannot be said that the view taken by the Customs Authorities is unreasonable or perverse,the Court, should not interfere in the decision. The earlier unreported judgment of the Supreme Court obviously stands on the different footing and applies in different circumstances and the same not having been overruled either expressly or by implication, I am bound to follow it. Therefore, if there is an ambiguity or doubt as to the interpretation of the description of the goods in the second licence this must be resolved in favour of the importer i.e. the petitioner particularly when the earlier licence include Nickel Magnesium Alloy as component.